FRANKFURT - Despite better-than-expected first-quarter results, Deutsche Bank, Germany's biggest bank, said Friday it was sticking to its controversial plans to cut thousands of jobs this year.
In the first three months of the current year, Deutsche Bank was able to lift net profit by 17 percent to 1.1 billion euros (1.4 billion dollars), the bank revealed in its first-quarter report published Friday.
Pre-tax profit rose by 14 percent at 1.8 billion euros and total revenues grew by seven percent to 6.6 billion euros.
The figures were much higher than analysts had been expecting.
"We are proud of what we have achieved in the first quarter," Josef Ackermann wrote in a letter to shareholders prefacing the report.
"This excellent result underlines our leading position, both in Germany and internationally."
Nevertheless, the situation on the international financial markets had become more difficult, Ackermann warned.
"Conditions in international financial markets became more challenging in mid-March," he said.
The weak economic climate in Germany was a particular challenge for the bank, Ackermann said.
As a result, "there can be no let-up in our determination to meet this challenge," the chairman continued.
"The measures we have had to take are painful, but there is no alternative. If we are to safeguard our future, we must tackle the issue of cost-efficiency in those parts of our business where we still need to match our world-class competitors," he said.
"Only by taking this course can we invest in the long-term success of the bank and in growth and jobs for our employees."
Deutsche Bank had come under heavy fire in February when it announced it planned to axe 6,400 jobs worldwide, including 1,920 in Germany, despite turning in record profits last year.
And in view of the record results again in the period from January to March, top members of the ruling Social Democrat SPD party have urged the bank to reverse its cost-cutting plans.
The SPD's regional chief in the state of the Saar, Heiko Maas, said Thursday that there was no longer any justification for the job cuts and he accused Ackermann of seeking to boost earnings "in an irresponsible manner and without any consideration for employees."
Ackermann noted that the first quarter was traditionally the strongest for the bank. Furthermore, earnings growth was driven almost exclusively by Deutsche Bank's overseas activities.
"Both revenue and profit growth was driven predominantly by our international business, and this reflects our operating environment," Ackermann said.
"On international markets, conditions were favourable. However our home market, Germany, remains challenging given the weak economic climate."
Ackermann said that, despite the challenges, the bank was sticking to its full-year target of a return on equity of 25 percent.
Investors appeared unimpressed by the figures, and Deutsche Bank shares were fractionally lower in early afternoon trading on the Frankfurt stock exchange, changing hands at 64.56 euros, down 0.14 euros or 0.22 percent on the day.
04/29/2005 11:11 GMT