Deutsche Bank AG reported a better-than-expected 68-percent surge in second-quarter profits on Tuesday, powered by a strong recovery in global capital markets.

The Frankfurt-based bank, Germany's largest, said net profit jumped to 1.09 billion euros ($1.55 billion) in the fourth, fifth, and sixth months of the year, up from 649 million euros in the same period in 2008.

The figure was better than the average 985 million euros forecast by economists in a Thomson-Reuters poll.

The German lender was buoyed by the resumption of trading after global monetary and financial authorities injected hundreds of billions of dollars of liquidity into the world financial system, trying to end the freeze in credit markets.

Deutsche Bank chief Josef Ackermann said upon releasing the results that he was hopeful that the global financial industry was emerging from the crisis that began to take hold in late 2007. The bank posted it first annual loss in half a century last year in the wake of the worldwide financial meltdown.

"Increased liquidiy and lower volatility in financial markets are both supportive for our business," Ackermann said, adding that the bank was well positioned "to take full advantage of opportunities, as and when business conditions improve."

Investment banking has shown a rapid recovery recently. Two weeks ago, Goldman Sachs in the US far exceeded expectations for the second quarter. Deutsche Bank's net profits from corporate banking more than doubled.

But that recovery has also prompted criticism that the banking industry has returned to "business as usual" while consumers and businesses are still suffering from the recession.

Rainy day preparations

Despite Deutsche Bank's solid performance, Ackermann expressed caution about the prospects for the rest of the year.

"The outlook for the remainder of 2009 is strongly influenced by the development of the global economy," he said.

Ackerman also said the bank had taken precautions to face uncertain times ahead.

"We have cut costs, reduced balance-sheet risk, and reinforced our liquidity and capital position," he said.

Responding to concerns that Germany may face a domestic credit crunch in the second half of 2009, Ackermann said Deutsche Bank was willing to extend credit to help the economy recover.

"We are going to help out clients, just as we have been doing, in this difficult credit environment," he said.

Shares of Deutsche Bank, although up 77 percent this year, fell 5.3 percent in Frankfurt trading Tuesday morning.

mrh/jam/dpa/AFP

Editor: Charles Penfold