Letter from the Chairman of the Management Board

Dear Shareholders (handwriting)

The recovery of the world economy continued in the first quarter and even accelerated in key countries. Sentiment indicators in the U.S. and the eurozone, especially Germany, have become distinctly more optimistic. However, the tragic events in Japan and the political unrest in the Middle East and Northern Africa could dampen optimism. Despite the agreement to expand the EU rescue package and the establishment of a permanent crisis mechanism to begin in 2013, uncertainties persist in the capital markets, mainly due to substantial refinancing requirements on the eurozone periphery.

Against this backdrop, our results validate the strategy we maintained through the crisis, of making focused acquisitions; these are now paying off nicely. The results also validate our renewed focus on our home market, Germany, and demonstrate that investment banking can deliver good returns in a tighter capital and risk environment. The capital strength of our group continues to grow; we are well on track to deliver on our ambitious Phase 4 targets.

Dr. Josef Ackermann, Chairman of the Management Board and the Group Executive Committee (photo)

Dr. Josef Ackermann

Chairman of the Management Board and the
Group Executive Committee

Deutsche Bank demonstrated the business and geographic diversity of its entire franchise, by achieving a pre-tax profit of € 3.0 billion for the first quarter – even higher than the exceptionally strong first quarter of last year. Net income of € 2.1 billion matches Deutsche Bank’s best ever quarterly performance. Income before income taxes from our business divisions, Corporate & Investment Bank (CIB) and Private Clients and Asset Management (PCAM), was € 3.5 billion – an important step towards delivering on our ambitious full year target of € 10 billion for 2011. More importantly, we achieved a high return on equity while reducing our risk-weighted assets by 5 % to € 328 billion during the quarter; and we improved our Core Tier 1 ratio to 9.6 %. Our funding profile remained extremely strong during the quarter: we completed almost two thirds of our 2011 funding plan and issuance conditions continued to improve for us.

CIB performed strongly across all major business lines. The results demonstrate the diversification of the franchise and synergies from the CIB integration. The whole division gained market share across many products and consolidated its position as one of the world’s leading investment banks. We continued to invest in growth and key talent while further improving our risk profile. Within CIB, the Corporate Banking & Securities Division (CB&S) earned a pre-tax profit of € 2.3 billion. Our global franchise offset weaker revenues from flow products – especially in the U.S. and Europe – with strong client demand for risk mitigation solutions and structured solutions, most pronounced among clients in Asia and other emerging market economies. In the Corporate Finance Business Division (CF), we advanced to No. 4 in the global ranking and we were ranked among the top 5 globally across M&A, ECM, High Yield and Investment Grade bonds.

The Global Transaction Banking Corporate Division (GTB) boosted its pre-tax profit to € 257 million, a rise of 115 % compared with the first quarter 2010. All major businesses recorded higher revenues than in the first quarter of 2010 thanks to a favorable environment for our depository receipts and custody business as well as continued strong demand for international trade products and financing. The turn in the interest rate cycle is starting to have positive effects on our business.

In PCAM, we achieved the best pre-tax profit ever at € 978 million. This reflects good progress toward our goal of rebalancing Deutsche Bank’s earnings mix and improving earnings quality.

The Asset and Wealth Management Corporate Division (AWM) reported a pre-tax profit of € 190 million as the restructuring and integration program undertaken in previous quarters began to take hold. Profitability increased in Asset Management Business Division, amid tight cost control and favorable asset mix shift to higher margin products as investors become less risk adverse.

Meanwhile, Private Wealth Management Business Division (PWM) delivered a very satisfying result of € 116 million before taxes. Sal. Oppenheim showed a positive contribution to this result, supported by good cost discipline. Net new money inflows of € 3 billion – mainly from Germany and Asia Pacific – positive market performance and a profitable shift in asset mix were key drivers of the positive overall earnings trend.

The Private & Business Clients Corporate Division (PBC) recorded income before income taxes of € 788 million: Of this, € 236 million net is attributable to a one-off effect relating to our stake in the Chinese Hua Xia Bank. This was the first full quarter in which Postbank was consolidated in our results and we are pleased with the strong contribution of € 221 million it already made to PBC’s pre-tax profit. The cooperation is well on track with synergies even greater than originally envisaged. In addition, the PBC business excluding Postbank is also performing strongly, driven by volume increases across all product categories, continued strong risk control and benefits from our efficiency program.

During the first quarter 2011, Deutsche Bank conducted exclusive negotiations on the sale of BHF-BANK with LGT Group (LGT), a Liechtenstein based bank. We regret that the transaction did not come about. The two institutions had reached a consensus on the sale of BHF-BANK and already drawn up, ready to sign, an agreement mutually beneficial to Deutsche Bank, LGT and BHF-BANK. Following discussions between the parties and with the competent supervisory authorities, however, Deutsche Bank and LGT decided not to pursue the transaction any further.

The outlook for the banking sector is marked, on the one hand, by increasing stability and by new uncertainties on the other. The new regulatory framework is beginning to take concrete shape, producing clarity on the future operating environment for banks. It is, however, becoming increasingly apparent that the actual implementation of these rules will differ between jurisdictions. The regulatory and fiscal challenges will have a significant impact on our international competitiveness as a globally operating bank, but they will also create opportunities.

Let me assure you that we will continue to do everything to strengthen our earnings capacity, to continue to manage our capital base efficiently and to deliver value for you, our shareholders. And we feel well prepared: we have made substantial investments over the past two years, which will drive very strong earnings growth. Our business in the CB&S Corporate Division is intently focused on delivering profitability in a Basel III environment. And our classic businesses are recalibrating around a more focused, profit- and growth-oriented model, which will drive a more balanced, less volatile earnings base. Based on the successful start to the year we are confident that we will reach our target for income before income taxes from our business divisions CIB and PCAM of € 10 billion in 2011.

I look forward to meeting many of you in person at our Annual General Meeting on May 26, 2011 in the Frankfurter Festhalle.

Yours sincerely,

Signature of Josef Ackermann (handwriting)

Josef Ackermann
Chairman of the Management Board and the Group Executive Committee

Frankfurt am Main, April 2011

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