Deutsche Bank posts 39% rise in first-quarter profit, but tariffs weigh

By Tom Sims and Matthias Inverardi

FRANKFURT (Reuters) -Deutsche Bank on Tuesday posted a 39% rise in first-quarter profit after its global investment banking division generated a big increase in revenue in bond and currency trading during volatile markets.

The profit increase comes despite a writedown for a leveraged-finance deal and the bank's additional provisions for the possible impact of tariffs on clients.

Germany's largest lender recorded net profit attributable to shareholders of 1.78 billion euros ($2.03 billion) in the quarter, compared to 1.28 billion euros a year earlier, and exceeding analysts' expectations of 1.64 billion euros.

The figures kick off a crucial year for Deutsche as it winds up a three-year plan and attempts to meet a series of targets that some analysts deem overly ambitious.

The results "put us on track for delivery on all our 2025 targets," CEO Christian Sewing said.

Sewing, who was awarded another term as the bank's CEO in March, is in the process of tweaking the bank's strategy and formulating targets for next year and beyond.

With the first-quarter results, Deutsche has now cumulatively earned more in profit than it has lost over the last 10 years, and has made up for the hefty losses it posted between the years 2015 and 2019.

Revenue in its fixed-income and currency trading, one of the bank's largest businesses, rose 17%, better than expectations for a 10.3% gain.

Origination and advisory, after making big gains in recent quarters, saw an 8% drop in revenue. It posted a 90 million euros writedown for an unnamed position in its leveraged finance business.

Deutsche is one of several big European banks publishing its quarterly report card this week after a slew of strong earnings from their U.S. counterparts.

After U.S. President Donald Trump unleashed a global trade war earlier this month, investors are watching how banks plan to navigate an anticipated slowdown in economic growth that could hit loan demand and their customers' financial health.

"We have taken additional provisions to cover higher macroeconomic uncertainties caused by the tariff discussions and, as a result, our overall provisions were higher year-on-year," Sewing wrote in a memo to staff.

Deutsche operates from Sydney to New York, but the economy of its important home market in Germany has been stagnating.

The nation's top central banker warned last week that the German economy, Europe's largest, faces a possible slight recession in 2025, something that could eat into banks' profits and result in loan defaults by corporate clients.

As Sewing strives to meet his ambitious profit and cost targets, some analysts remain sceptical about the bank's ability to meet all its goals. In January, Deutsche abandoned a key cost target.

Still, Germany's bold move to ease longstanding caps on government spending has been seen as a positive for the lender and economic growth in Europe's largest economy.

($1 = 0.8782 euros)

(Reporting by Tom Sims and Matthias Inverardi; Editing by Thomas Seythal, Kim Coghill and Varun H K)