Consolidated Results of Operations


Net revenues for the quarter were € 9.0 billion, up 24 % versus € 7.2 billion for the first quarter of 2009. This performance reflects strong revenues in Corporate Banking & Securities as well as lower mark-downs and impairments. First quarter revenues in 2010 reflected € 241 million of net mark-downs predominantly related to monolines. The first quarter of 2009 included € 1.0 billion of mark-downs, primarily against monoline insurers, and an impairment charge of € 500 million on The Cosmopolitan Resort and Casino property.

In the Corporate and Investment Bank (CIB), net revenues were € 6.6 billion versus € 4.9 billion in the first quarter 2009.

In Corporate Banking & Securities (CB&S), net revenues were € 6.0 billion, up from € 4.3 billion in the prior year quarter. Revenues in Sales & Trading (debt and other products) were € 3.8 billion, virtually unchanged versus the first quarter 2009. The impact of lower mark-downs and a strong performance in the quarter in Credit Trading was offset by lower revenues in Foreign Exchange, Money Markets and Rates arising from the expected normalization of the market environment. In Sales & Trading (equity), net revenues were € 944 million in the quarter, versus € 215 million in the first quarter 2009. This improvement primarily reflected the non-recurrence of losses in Equity Derivatives which occurred in the first quarter of 2009 as well as increased contributions from Equity Trading. Revenues in Origination and Advisory were € 563 million in the quarter, up from € 349 million in the first quarter 2009. Debt Origination revenues increased by € 186 million, reflecting increased volumes and the non-recurrence of mark-downs in leveraged lending. Equity Origination revenues were up by 29 %, reflecting significantly increased market activity compared to the prior year quarter. Loan products revenues were € 513 million for the first quarter 2010, compared to € 645 million in the first quarter 2009. The decrease was primarily due to losses from reductions of legacy assets. Other products revenues were € 170 million in the first quarter 2010, compared to negative revenues of € 765 million in the first quarter 2009. The swing in profitability of € 935 million was mainly attributable to an impairment of € 500 million in the first quarter 2009 related to The Cosmopolitan Resort and Casino property. The improvement also reflects a positive movement in mark-to-market results on investments held to back policyholder claims in Abbey Life, which are offset in noninterest expenses. Additionally, the prior year quarter was burdened by impairment losses on certain private equity investments.

In Global Transaction Banking (GTB), net revenues were € 636 million, compared to € 666 million in the first quarter 2009. Growth in Trade Finance revenues was offset by lower revenues in Corporate Cash Management and Trust and Securities Services, reflecting prevailing low interest rates and lower transaction volumes in our domestic custody business.

In Private Clients and Asset Management (PCAM), net revenues were € 2.2 billion, compared to € 1.9 billion in the first quarter 2009.

In Asset and Wealth Management (AWM), net revenues were € 831 million, compared to € 514 million in the first quarter 2009. The increase was favorably impacted by the non-recurrence of impairment charges of € 120 million in the RREEF business recorded in the first quarter 2009. The development was also aided by the acquisition of Sal. Oppenheim which added € 79 million in revenues since January 29, 2010, upon receipt of all significant legal and regulatory approvals. In addition, the first quarter 2010 included higher revenues from discretionary portfolio management/fund management, credit products and advisory/brokerage activities.

In Private & Business Clients (PBC), net revenues were € 1.4 billion, up 2 % versus the first quarter 2009. This reflected higher revenues from discretionary portfolio management/fund management and from deposits, partially offset by reduced revenues from other products.

Revenues in Corporate Investments (CI) were € 220 million versus € 153 million in the first quarter 2009. Revenues in the first quarter 2010 included € 148 million related to Deutsche Postbank AG and € 68 million related to BHF-Bank AG, which was acquired as part of the Sal. Oppenheim transaction.

In Consolidation & Adjustments (C&A), revenues were negative € 93 million in the first quarter 2010 versus positive net revenues of € 267 million in the first quarter 2009, mainly reflecting effects of different accounting methods used for management reporting and IFRS in relation to economically hedged short-term positions.

Provision for credit losses was € 262 million versus € 526 million in the first quarter 2009. CIB recorded a net charge of € 90 million in the first quarter 2010, compared to a net charge of € 357 million in the prior year quarter. The decrease was partly attributable to reduced provisions for credit losses on assets reclassified in accordance with IAS 39. The remaining reduction reflects improved credit conditions. In PCAM, provision for credit losses was € 173 million, versus € 169 million in the first quarter 2009. This reflects lower credit losses in Spain, but also included the positive effect of a € 60 million one-time release in the first quarter of 2009 and lower provisions of € 28 million in the current quarter, both in relation to revised parameter and model assumptions.

Noninterest expenses were € 5.9 billion in the quarter, versus € 4.9 billion in the first quarter 2009. Compensation and benefits were € 3.6 billion, compared to € 3.0 billion in the prior year quarter, reflecting approximately € 350 million of increased deferred compensation expenses, predominantly including accelerated amortization of deferred compensation for employees eligible for career retirement. In addition, the U.K. bank payroll tax attributable to the first quarter of 2010 was € 120 million. Both items related to deferred compensation awards granted during the quarter. The aforementioned inclusion of Sal. Oppenheim increased compensation and benefits by € 90 million. The ratio of compensation and benefits to revenues was 40 %, versus 41 % in the prior year quarter. General and administrative expenses were € 2.2 billion, compared to € 2.0 billion in the prior year quarter. Current quarter general and administrative expenses include higher IT and professional services costs as well as € 95 million expenses relating to the inclusion of Sal. Oppenheim for the first time. Other noncompensation expenses include € 140 million of policyholder benefits and claims and an impairment charge on intangible assets of € 29 million.

Income before income taxes was € 2.8 billion in the quarter, versus € 1.8 billion in the first quarter 2009. The cost-income ratio for the quarter was 66 %, compared to 68 % in the same period last year.

Net income was € 1.8 billion in the quarter, versus € 1.2 billion in the first quarter 2009. The effective tax rate for the quarter was 36.4 % compared to 34.9 % in the prior year quarter. The increase was mainly driven by the geographic mix of income and the non-tax deductible bank payroll tax in the U.K. Earnings per share, on a diluted basis, were € 2.66, compared to € 1.92 in the prior year quarter.