2010 to 2009 Three Months Comparison


Net revenues for the quarter were € 7.2 billion, compared to net revenues of € 7.9 billion in the second quarter 2009. Included were charges of approximately € 270 million related to Ocala Funding LLC, a commercial paper vehicle, an impairment charge of € 124 million on The Cosmopolitan Resort and Casino property and net mark-downs of € 57 million. These negative effects were partly counterbalanced by a € 208 million gain representing provisional negative goodwill from the commercial banking activities acquired from ABN AMRO in the Netherlands. In addition, the bank recognized € 101 million of fair value gains from changes in the credit spread on certain of Deutsche Bank’s own debt on which the bank elected to use the fair value option, compared to € 176 million fair value losses on own debt in the prior year period.

In Corporate Banking & Securities (CB&S), net revenues were € 3.6 billion versus net revenues of € 4.6 billion in the second quarter 2009. In Sales & Trading (debt and other products) net revenues were € 2.1 billion versus € 2.3 billion in the second quarter 2009 and included the aforementioned charge related to Ocala Funding LLC of € 270 million. In addition, the reporting period included net mark-downs of € 64 million, mainly related to residential mortgage-backed securities, compared with € 108 million in the prior year period. Revenues in Credit and Emerging Markets were impacted by the European sovereign debt crisis and a reduction in investors’ appetite for risk. These factors were counterbalanced by a record second quarter result in Foreign Exchange and good performances in Money Markets, Rates and Commodities. For the first time ever, we were ranked number one in U.S. Fixed Income according to the industry benchmark client survey by Greenwich Associates for 2010. In Sales & Trading (equity), revenues were € 642 million compared to € 927 million in the second quarter 2009, due to difficult market conditions and substantially lower primary market activity. Equity trading revenues were solid, on the back of good secondary commissions and Prime Brokerage was voted number one Global Prime Broker by Global Custodian for the third consecutive year. Advisory revenues were € 124 million, up 72 % versus the prior year quarter, reflecting market share gains in mergers and acquisitions. Origination revenues were € 418 million versus € 652 million in the second quarter 2009. The reduction was primarily driven by the non-recurrence of mark-to-market gains in the leveraged finance business and significantly lower client activity due to the challenging market environment.

In Global Transaction Banking (GTB), net revenues were € 1.1 billion versus € 654 million in the second quarter 2009. The increase was primarily due to the first time consolidation of the business acquired from ABN AMRO. This led to additional net revenues of € 338 million (thereof € 208 million representing negative goodwill). Excluding the impact of the acquisition, the increase was driven by continuing strong performance in Trade Finance and Trust & Securities Services.

In Asset and Wealth Management (AWM), net revenues were € 969 million, up 57 % versus the second quarter 2009. The improvement included € 148 million attributable to Sal. Oppenheim Group (including BHF) in PWM, which was consolidated for the first time in the previous quarter. In addition, the second quarter performance reflected higher commissions and fee income mainly due to improved asset valuations in Asset Management, and an increase in asset based fees and client demand in the Private Wealth Management business. The prior year quarter was adversely impacted by impairment charges of € 110 million related to RREEF investments.

In Private & Business Clients (PBC), net revenues were € 1.4 billion, slightly better than in the second quarter 2009. Positive margin development led to record quarterly results in deposits. Higher revenues were also recorded in all remaining product categories with the exception of other products, where revenues were lower due to the expected normalization of results from asset and liability management activities.

In Corporate Investments (CI), net revenues were € 44 million versus € 660 million in the second quarter 2009. The current quarter included € 116 million related to Deutsche Postbank and € 39 million arising from the sale of investments, partly offset by an impairment charge of € 124 million on The Cosmopolitan Resort and Casino property. In the second quarter 2009, net revenues included € 519 million related to Deutsche Postbank and € 132 million from the sale of industrial holdings as well as gains from our option on Hua Xia Bank.

Provision for credit losses was € 243 million versus € 1.0 billion in the second quarter 2009. CIB recorded a net charge of € 77 million versus € 779 million in the second quarter 2009. The significant decrease in CIB was attributable to a number of events occurring in the previous year quarter that were not repeated in the current quarter. The prior year quarter was impacted by € 508 million of provisions for assets reclassified in accordance with IAS 39, mainly related to two specific counterparties. In PCAM, provision for credit losses was € 175 million, down 21 % compared to the same quarter last year. This mainly reflects various measures taken on portfolio and country level which led to significant reductions in provision for credit losses throughout all major portfolios.

Noninterest expenses were € 5.4 billion in the quarter versus € 5.6 billion in the second quarter 2009. Compensation and benefits were € 3.0 billion, down 3 % versus the second quarter 2009. The non-recurrence of major severance costs was counterbalanced by higher amortization of bonuses deferred from previous years as well as increased compensation and benefits resulting from acquisitions. Increases in compensation and benefits of € 121 million and € 33 million were related to the consolidation of Sal. Oppenheim Group and the commercial banking activities acquired from ABN AMRO, respectively. In addition, the U.K. bank payroll tax attributable to the second quarter 2010 was € 56 million. General and administrative expenses were € 2.3 billion versus € 2.2 billion in the second quarter 2009. The increase was primarily attributable to the aforementioned acquisitions, related integration costs and foreign exchange movements, partly offset by the non-recurrence of a € 316 million charge from a legal settlement with Huntsman Corp. recorded in the second quarter 2009. Policyholder benefits and claims were € 2 million in the second quarter 2010, compared to € 126 million in the second quarter 2009.

Income before income taxes was € 1.5 billion in the second quarter 2010, up 16 % from € 1.3 billion in the second quarter 2009. The cost income ratio was 75 %, compared to 71 % in the same period last year.

Net income in the quarter was € 1.2 billion versus € 1.1 billion in the second quarter 2009. The tax expense of € 358 million recorded for the second quarter 2010, versus a tax expense of € 242 million in the second quarter 2009, benefited from tax exempt negative goodwill related to the business acquired from ABN AMRO and a favorable geographic mix of income. Diluted earnings per share were € 1.75 versus € 1.64 in the second quarter 2009.