8:00AM New York - Germany’s biggest bank Deutsche Bank reported a net loss of €141 million compared with a profit of €2.1 billion in the first quarter of 2007 as markdown for leveraged loans, loans commitments and residential mortgage backed securities topped €2.7 billion.

Quarterly Earnings Review

Deutsche Bank reported that net revenues in the quarter ended March 31st slumped to €4.6 billion from €9.6 billion in the first quarter of 2007 as revenues in corporate and investment bank divisions slipped to €1.5 billion from €6.7 billion in the same quarter a year ago.

For the quarter, the bank’s net loss was €141 million compared to a profit of €2.1 billion last year. Diluted earnings per share were negative 25 cents versus €4.28 in the year-ago quarter.

Loss before income tax in the quarter reached €254 million from €3.2 billion in the first quarter 2007.

A gain of €77 million resulted from the widening of credit spreads on certain Deutsche Bank debts, for which the fair value option was elected, while the Tier 1 capital ratio at the end of the quarter, reported under Basel II, was 9.2%.

Business Review

Corporate and Investment Bank Group Division (CIB)

Corporate Banking & Securities (CB&S)

In the first quarter 2008 revenues generated in Sales & Trading (Debt and Other Products) fell 61% to €1.3 billion from the same period a year ago on net markdowns of €885 million on residential mortgage-backed securities and commercial real estate loans.

In the period under review, earnings in the structured credit business declined after depressed client activity in CDOs and related products. However, revenues in foreign exchange, money markets, interest rate products and commodities increased substantially year-on-year due both to increased customer volumes and favorable market positioning.

Sales & Trading (Equity)

Revenues in the division slumped 57% to €745 million in the first quarter from the same period a year ago.

Equity derivatives were mainly affected by increased correlation between equity markets, which negatively impacted the value of residual derivative positions arising from activities in European retail structured products.

Although cash equities revenues rose in Asia and North America, they declined in Europe.

During the quarter, prime services business benefited from investors'' increasing preference for more stable prime brokerage counterparties.

Origination and Advisory

Revenues in the unit fell to a negative €1.2 billion in the first quarter 2008 compared to a gain of €797 million a year earlier owing to the further deterioration in the market for private equity leveraged loans and financing experienced since the latter part of 2007.

Market-to-market losses, net of fees, of €1.8 billion were recorded against leveraged finance loans and loan commitments during the first quarter. This was however offset by positive net interest revenues of €206 million from funded leveraged finance loans.

The bank managed to increase its share in both Origination and Advisory divisions.