The WSJ reports, "Deutsche Bank on Tuesday pledged to take all possible measures to bolster its capital as first-quarter profit tumbled 34%.
"We would take all measures to reach our capital targets but keep focused on organic capital creation," Co-Chief Executive Anshu Jain told analysts Tuesday after reporting that the bank's key capital ratio actually worsened in the first quarter with analysts predicting it will come under further regulatory pressure later this year.
Chief Financial Officer Stefan Krause said additional regulatory charges will weigh on the bank's core tier one capital ratio, a key measure of balance sheet strength that compares equity to assets weighed by riskiness. This meant that further measures including "bonus reduction, dividend reduction and authorized capital" could no longer be excluded, Mr. Krause said.
Germany's largest lender reported a net profit of €1.08 billion ($1.5 billion) for the three month ending March 31, down from €1.65 billion a year earlier but above analysts' estimates of €927 million. The bank's revenue for the quarter fell to €8.39 billion from €9.4 billion a year earlier.
The combination of results that were actually better than some analysts had expected and the pledge to solve the bank's capital problem buoyed investors. Deutsche Bank's shares were up 2.7% in early afternoon trading, outperforming the Stoxx European banks index which rose 1.5%.
Low interest rates and sluggish client activity in key investment banking products are denting Deutsche Bank's efforts to boost capital by retaining earnings and shedding unwanted assets. The core tier one ratio fell to 9.5% at the end of March, slightly down from the end of last year and below the 10% minimum target it has set for the end of the first-quarter 2015".
