Deutsche Bank Returns to Profit as Legal Costs Ease

FRANKFURT â€" Deutsche Bank, Germany’s largest bank, said Tuesday that it returned to profit in the first quarter of the year as it avoided the huge litigation expenses that characterized the end of 2013.

The bank, the main European competitor to large U.S. investment banks like JPMorgan Chase or Goldman Sachs, said that net profit in the first quarter was 1.1 billion euros, or $1.5 billion, a 34 percent decline compared with a year earlier but in line with expectations.

The profit was an improvement from the last quarter of 2013, when the bank reported a loss of €1.4 billion because of the cost of legal proceedings related to allegations of wrongdoing in the past.

Anshu Jain, the co-chief executive of Deutsche Bank, warned of increased costs in the future as the industry copes with regulations designed to prevent a repeat of the financial crisis that began in 2008.

“The regulatory bar is getting higher,” Mr. Jain said during a conference call with analysts Tuesday morning. But he added, “We are confident we can meet these challenges.”

The bank will also face additional litigation expenses in coming quarters, Stefan Krause, the bank’s chief financial officer, said during the conference call. But he said he was not yet able to give specifics.

Late Monday, Deutsche Bank announced that it would raise €1.5 billion in new capital to meet increased demands by regulators that banks reduce their dependence on borrowed money. The new capital, part of a plan to raise a total of €5 billion by the end of 2015, will take the form of debt securities that would convert to equity in a crisis.

Deutsche Bank said that Tier 1 capital, a key measure of the bank’s ability to absorb losses, declined to 9.5 percent of total assets in the first quarter from 16.9 percent in the previous quarter. The bank attributed the decline to tougher regulatory requirements that required it to recalculate its capital ratios.

The decline in profit during the first quarter was partly the result of lower revenue in investment banking, which Deutsche Bank attributed to reduced trading activity by clients unsettled by turmoil in emerging markets.

At the same time, the bank reduced the amount of money it set aside to cover problem loans, reflecting the strong economy in Germany.