DEUTSCHE Bank AG, Germany's biggest bank, yesterday reported its first quarterly loss in five years after writing down the value of loans for leveraged buyouts and asset-backed securities by 2.7 billion euros (US$4.2 billion).
The Frankfurt-based company had a first-quarter net loss of 131 million euros after earning 2.12 billion euros a year earlier, according to a statement on its Website. Earnings were lifted by almost 1 billion euros from selling stakes in companies and a tax gain. Deutsche Bank fell as much as 1.6 percent in Frankfurt trading.
Chief Executive Officer Josef Ackermann avoided the worst of the subprime contagion because of early bets against US housing and said yesterday there are "encouraging" signs that markets are stabilizing.
By contrast, UBS AG, the largest Swiss bank, recorded almost 38 billion Swiss francs (US$36.7 billion) of markdowns since July, while Credit Suisse Group last week posted its first loss since 2003 on 5.3 billion francs of writedowns.
"The figures look great if you take the Swiss rivals as the benchmark," said Juergen Meyer, who helps manage 1.2 billion euros, including Deutsche Bank shares, at SEB Asset Management in Frankfurt. "If you take a closer look, the numbers really aren't that good and were helped by share sales."
Deutsche Bank fell 0.5 percent to 76.28 euros. The German bank has declined 33 percent in the past year, compared with a 30-percent drop in the Bloomberg Europe Banks and Financial Services Index of 59 stocks.
The investment-banking unit, which accounted for almost half of last year's earnings, reported a 1.6-billion-euro pretax loss, exceeding the 903-million-euro loss forecast by analysts. The division, run by Anshu Jain and Michael Cohrs, had a 2.2-billion-euro profit a year earlier.
Deutsche Bank wrote down the value of leveraged loans and loan commitments by 1.8 billion euros and of securities backed by residential and commercial mortgages by 885 million euros in the first quarter. The writedowns are net figures after hedges and fees. The company said on April 1 that it would book about 2.5 billion euros in markdowns on top of 2.3 billion euros in 2007.
The median estimate of 13 analysts surveyed by Bloomberg was for a net loss of 174 million euros. The bank posted a pretax loss in the quarter of 254 million euros after a 3.2-billion-euro profit a year earlier. The diluted loss per share was 27 cents after a profit of 4.28 euros the year before.
The company generated 854 million euros from selling shares in companies, including car maker Daimler AG, insurer Allianz SE and industrial gas maker Linde AG.