Bumper profits from investment banking polished Deutsche Bank's third-quarter figures, even as Germany's flagship lender grappled with the economic slump by more than doubling provisions for problem loans.
Deutsche said all divisions were profitable in the quarter, but the main driver of earnings was the corporate and investment bank, which accounted for €1.18 billion of the group's €1.3 billion pre-tax profit.
In early trade the bank's shares were down 1.4 per cent at €48.21, underperforming the DJ Stoxx European bank sector index, which was up 0.9 per cent.
Deutsche said its provisions for credit losses rose to €544 million in the third quarter from €236 million in the year-earlier period, but down from €1 billion in the second quarter and less than analysts had expected.
Deutsche's provisions related mainly to exposure in leveraged finance and commercial real estate and deteriorating loans in Poland and Spain, the company said.
Loan loss provisions in the US and most European countries should peak within the next six months, Deutsche said, adding that favourable valuations in some asset classes should support the bank's securities business in the fourth quarter.
Chief executive Josef Ackermann said the global credit crisis created opportunities for Deutsche to bolster its long-term competitive position.
"Looking ahead, we see challenges and opportunities in the environment. We are well prepared for both," he said in a statement.
Like rivals Credit Suisse, JP Morgan and Goldman Sachs, Deutsche's sales trading business was boosted by a recovery in equity markets.
Deutsche said it would continue to reduce its risk profile at its trading business and had taken steps to diversify its business into corporate banking and wealth management with the acquisition of Sal. Oppenheim and parts of ABN Amro.
Deutsche Bank made a net profit of €1.4 billion, flattered by €369 million in net tax benefits relating to tax audit settlements for prior years, and gains from the sale of a stake in carmaker Daimler.
Reuters