You can tell a bank by the company it keeps

7 February 2003

Writedowns and a higher tax bill are to blame. The good news is that costs are falling faster than revenues. The bank is optimistic about 2003. But, given the state of Germany s economy, claims that bad debt charges have peaked are odd indeed.

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Deutsche Bank had its second quarterly net loss as writedowns on equities wiped out gains from disposals and its tax bill increased. Germany's biggest bank said it had had a strong start to 2003.

Deutsche had a fourth quarter net loss of E105m against analyst expectations of an E211m profit. On a pretax basis, the bank made a E237m profit, about half forecasts due to bigger than expected writedowns.

Our loan loss provisions have peaked and our cost base is falling, chief executive Josef Ackermann said in a statement. Following a strong start to 2003, we are confident that Deutsche Bank's transformation has prepared it to take advantage of global market conditions.

Deutsche booked E423m in bad debt charges, against a E790m charge in the third quarter. Operating costs fell by 2.5% from the thrid quarter, against a 1% drop in revenues. Compared to last year, fourth quarter costs fell by 20% while revenues fell by 17%.

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