Deutsche Bank posted near record first-quarter profit, driven by investment banking market share gains and acquisitions in retail banking and wealth management.
The additions made in the wake of the financial crisis, including retail lender Deutsche Postbank and wealth manager Sal. Oppenheim, helped offset a slight fall in profit from investment banking.
But even in this area Deutsche performed better than peers, seeing profit dip 5 percent from a bumper year-ago period, but rise to more than three times the previous quarter.
The first-quarter result lifted confidence that Germany's biggest lender can hit its ambitious 10 billion euro ($14.67 billion) pretax profit target this year.
Deutsche Bank said on Thursday net profit rose 18 percent to 2.1 billion euros, higher than a forecast of 1.82 billion in a Reuters poll. The profit almost matched its record from the first quarter of 2007.
Shares in the bank were 4.6 percent higher by 1000 GMT, among the biggest gainers on the FTSEurofirst 300 index of top European shares.
Deutsche Bank significantly outperformed its peers in fixed income while at the same time cutting risky assets. The more traditional banking areas also showed a strong quarter, said Oliver Flade, an analyst at Allianz Global Investors.
The results imply the lender is well on track to deliver its 2011 target, several analysts said.
But fund manager Torsten Martens from Munich Re's investment arm Meag -- a large Deutsche Bank shareholder -- also pointed to technical reasons for the share price development.
Expectations for bank earnings and bank shares are very low. So when results come in okay, we often witness a short squeeze as funds rebalance their portfolios, he said.
Deutsche Bank's investment bank unit delivered the lion's share of group pretax profit -- 2.6 billion euros of a total 3 billion -- thanks to strong revenue from rates, money markets, foreign exchange and commodities trading.
That was a far stronger performance than rivals. Investment banking profits fell by a third from a year ago at UBS, a quarter at Credit Suisse and by 15 percent at Barclays. U.S. peers have also seen revenue rise from the fourth quarter, but fall from the strong year-ago.
Deutsche Bank made a push in debt advisory and capital raising, with revenues in equity origination jumping 56 percent as it cemented its grip on company listings -- an area rivals such as UBS slipped up in during the first quarter.
Chief Financial Officer Stefan Krause said the German lender had a long-term goal to generate around half of group profits from investment banking, with the other half coming from retail banking, asset and wealth management.
Thanks to recent acquisitions, Deutsche Bank's private clients and asset management section division posted a record pretax profit of 978 million euros, more than five times its year ago level.
Postbank also contributed 221 million euros of profit, more than expected.
We will continue to invest in our franchise and are confident that we will deliver on our ambitious target of income before income tax of 10 billion euros from our business divisions, Chief Executive Josef Ackermann said.
Higher volumes, improved market share and the benefits from an efficiency program will help the investment bank deliver the lion's share of the target, the bank has said previously.
Deutsche Bank said it had reached No. 4 spot globally by share of corporate finance fees, up from No. 5 at the end of 2010. Top five rankings were achieved across mergers and acquisitions, equity capital markets, high yield and investment grade bonds globally.
Since last year, a raft of banking rules and economic wobbles in the euro zone as well as political turmoil in North Africa and Japan's earthquake have rattled markets and dampened traditionally strong investment bank earnings.
Deutsche Bank has said it expected the corporate banking and securities division to contribute 6.4 billion euros in 2011 pretax profit, up by a quarter.
Revenues in the investment bank grew 1 percent on the year, although compensation jumped 10 percent to nearly 2.1 billion euros after staff numbers grew 9 percent in the division.
Rival Santander, the euro zone's largest bank, flagged a turning point for its struggling domestic Spanish business, shrugging off a slight fall in first-quarter earnings on Thursday.
(Editing by Erica Billingham and Jon Loades-Carter)