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Last Updated: Thursday, 31 July, 2003, 06:47 GMT 07:47 UK
Tough times for German banks
Deutsche Bank headquarters
Deutsche Bank has scaled down its ambitions
Deutsche Bank has reversed nine months of losses with a modest profit in the second quarter of this year.

But its earnings were lower than many analysts expected, and the mood was further soured by another loss from HVB, Germany's second-biggest bank.

Deutsche Bank earned 572m euros (401m; $652m) in the three months to end-June, some way behind analysts' expectations, which had been as high as 860m euros.

The bank's chief executive, Josef Ackermann, said that drastic cost cuts had started to bite.

Deutsche Bank has slashed 15,000 jobs over the past couple of years, especially in its expensive international investment banking operations.

In a slump

HVB, meanwhile, posted a loss of 57m euros, a somewhat worse result than analysts had expected.

But it insisted that it was still on track to get back into the black this year.

Last year, HVB made a record net loss of 858m euros, blaming a rising tide of bad debt among its core German customers.

All German banks have suffered over the past couple of years, as the economy slows and borrowers find it harder to service their debts.

In addition, the country's bigger banks have left themselves vulnerable to a downturn, by spending heavily on acquiring or building ambitious international networks.

This year, banks such as Deutsche Bank, Commerzbank, Dresdner Bank and HVB have all taken steps to cut costs at their international operations.

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