Thank you for joining us for our first quarter 2025 results call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available to download in the Investor Relations section of our website, db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials. With that, let me hand over to Christian.
Thank you, Ioana, and a warm welcome from me. Before we turn to our performance, I want to offer my perspective on recent events. The geopolitical landscape is rapidly evolving, and uncertainty and volatility are likely to stay elevated for the time being. This will likely impact the world economy. We still believe globalization will persist, but we expect to see a substantial reordering of trade corridors and supply chains, and this may accelerate some of the long-term trends we have spoken about for some time. We are particularly encouraged to see what is happening in our domestic market with regards to fiscal changes and structural reforms leading to a much-needed economic boost for Germany and Europe. All of this underscores why we believe our Global Hausbank business model and four strong businesses position us very well to support clients through these unsettled times.
Already, since the start of the second quarter, we are seeing clients increasingly seek our expertise and advice. Now, let me turn to our results. We are very pleased with a very strong first quarter performance. We delivered revenues of EUR 8.5 billion, up 10%, a strong start towards our full-year revenue objective of around EUR 32 billion. Our cost-to-income ratio was 61%, with adjusted costs of EUR 5.1 billion, in line with full-year guidance. Our loan portfolio quality remained solid. Stage three provisions are down nearly 30% year-on-year, normalizing as expected, while stage one and two provisions were higher and including overlays in this more uncertain environment. Our pre-tax profit of EUR 2.8 billion was up 39% year-on-year. With net profit of EUR 2 billion, our return on tangible equity was 11.9% in the first quarter.
Our CET1 ratio of 13.8% sets us up well for the rest of the year, both to support our clients and reward shareholders. To summarize, the start of the year was very strong. We believe that we have the right business model both to face uncertainties in the environment as well as to steer the bank towards delivery of our 2025 targets. Beyond that, we have a clear management agenda for further developing our Global Hausbank offering for our clients and sustainably increasing returns for shareholders beyond 2025, which I will talk about shortly. Let's now turn to our resilient operating performance on slide three. We delivered pre-provision profit of EUR 3.3 billion, up 34% year-on-year. Revenue momentum, combined with cost discipline, resulted in strong operating leverage of 11%, with each operating division delivering positive jaws. Revenue quality is strong.
71% came from more predictable revenue streams than the corporate bank, private bank, asset management, and FIC financing. Net commission and fee income increased by 5% year-on-year, in line with our goals and reflecting our strategic investments. Net interest income in key banking book segments and other funding also remained resilient year-on-year. Non-interest expenses declined 2% year-on-year to EUR 5.2 billion, as non-operating costs normalized as expected. Our progress on operational efficiencies enabled us both to deliver adjusted costs in line with plan and continue to self-finance investments. Turning to slide four, let's now look at the progress with our 2025 delivery. Turning first to revenue growth, since 2021, we have achieved a compound annual growth rate of 6.1% within our target range of 5.5%-6.5%. Double-digit first quarter revenue growth contributed EUR 700 million towards our target of EUR 2 billion incremental revenues in 2025.
Second, in respect of operational efficiencies, we have reached 85% of our EUR 2.5 billion target, with EUR 2.1 billion in cost efficiencies either delivered or expected from completed measures. Third, we have made further progress with our capital efficiency measures, with EUR 4 billion of RWA reductions delivered this quarter through a combination of data and process improvements and a sectorization transaction. This brings us cumulative RWA benefit to EUR 28 billion, at the high end of the bank's target range of EUR 25-EUR 30 billion by the end of this year. We have announced capital distributions of EUR 2.1 billion this year, including the 2024 dividend and our recently launched share buyback program. This will take cumulative capital returns to EUR 5.4 billion since 2022, and we remain committed to surpassing our capital distribution target of EUR 8 billion in respect of the years 2021 through 2025. Put simply, our 2025 targets are in sight.
Let me now turn to our long-term management agenda on slide five. Our aim is to deliver a sustainable increase in returns through three levers: increasing value generation for shareholders, re-engineering our target operating model, and reinforcing leadership. First, we will deploy shareholder value-add methodology in our planning process and decision-making to optimize resource allocations across the group. Progress is underway. In the private bank, we have reduced RWA exposures in below-hurdle mortgages, and in the corporate and investment bank, we are undertaking client-level reviews. We are also making progress in re-engineering our target operating model. In the private bank, we continue to transform our personal banking operations by reducing branches and moving to digital channels, resulting in a planned reduction of almost 2,000 FTEs. We are transforming our corporate bank German platform and overhauling front-to-back processes in the investment bank, leading to improved client experience and efficiency.
Finally, we are strengthening leadership by streamlining governance structures. We have already reduced our committees, councils, and internal policies by about half. This speeds up decision-making and increases accountability while maintaining a robust control environment. As promised, a few words on how we are well-positioned to help navigate clients through the dynamic environment on slide six. In Germany and across Europe, we see fresh commitment to support growth, boost competitiveness, and accelerate reform. We believe Germany's loosening of the debt brake will unlock considerable investment opportunities, and the proposed pension reforms are expected to boost activity in the capital markets. At the European level, we see commitments to invest in defense and infrastructure and much-needed embrace of structural reforms, for example, the Savings and Investment Union and measures to boost sectorization. Globally, trading patterns are shifting, supply chains are being rewired, and new partnerships and alliances are emerging.
All of this plays to our strengths. Clients need a partner with the expertise, financial strengths, product breadth, and global and local network to help them navigate this changing environment. We aim to be that partner, as our leading franchise and diversified businesses are best placed to advise clients at European and global levels. Our corporate bank was voted world's best bank for corporates by clients. We combine global reach with local presence to support multinational clients as their supply chains evolve. We are already a partner of choice, with around 40% of our revenues with multinationals coming from cross-regional corridors. With deep roots in Europe and in Germany's Mittelstand, we are ideally positioned to help clients benefit as fiscal stimulus feeds through the real economy. Our investment bank is also ideally placed to help institutional and corporate clients navigate this environment.
We have the leading global non-U.S. FIC franchise. We were the top-ranked European bank in global SSA issuance and in EMEA cash rates, while in Germany, we have the leading O&A franchise. We are well-positioned to support the broader German and European defense agenda, where we have the leading franchise in aerospace and defense in Germany, providing clients with holistic global coverage. We are also Germany's leading wealth manager and retail fund manager through our private bank and asset management businesses. This positions us well to help clients capitalize on savings and investment reforms. We have already rebalanced our wealth management business mix, resulting in increased assets under management flows, and we continue to scale up in our core growth markets.
DWS, with assets under management of over EUR 1 trillion, record net inflows of EUR 20 billion in the first quarter and a market share of 11% in European ETFs, is ideally placed not only to serve German and European investors but also to act as a gateway to Europe for investors globally. To sum up, across all our businesses, we believe we are very well-positioned to serve German, European, and global clients in a fast-changing environment. With that, let me hand over to James.
Thank you, Christian, and good morning. As you can see on slide eight, we saw strong delivery this quarter against all the broader objectives and targets we set ourselves for 2025. More importantly, we've done so without compromising on our investments, be it to support operating performance or our controls.
Our capital position is robust after absorbing deductions for dividends, share buybacks, and AT1 coupons, and the CRR3 impact. Equally, our liquidity metrics are sound. The liquidity coverage ratio was 134%, in line with our target, and the net stable funding ratio was 119%, at the upper end of our target range. While we recognize that the last few weeks have been turbulent and resulted in a significant amount of volatility and uncertainty, reflecting on the path ahead, our balance sheet remains strong. As shown on slide 28 in the appendix, asset quality is sound, the bank's liquidity profile is strong, and together with our robust capital position and strong earnings momentum, we believe that we are well-equipped to continue to support our clients globally and to provide advice and solutions as they navigate this time of uncertainty.
Our prudent approach to managing our trading book also paid off in April. Our trading P&L has stood up well throughout the market volatility and developed in line with the bank's risk appetite. With that, let me now turn to the first quarter highlights on slide nine. We have demonstrated strong franchise momentum across the bank. Investments across businesses continue to pay off, which drove a significant increase in revenues, both sequentially at 18% and year-on-year at 10%. The balanced portfolio mix also enables us to weather times of uncertainty. Our cost income ratio of 61.2% benefited both from our continued cost discipline and a normalization of non-operating costs. Non-interest expenses in the first quarter are in line with our guidance for 2025.
Profit generation was strong, and our post-tax return on tangible equity of 11.9% underpins the bank's ambition to deliver sustainable returns of greater than 10% in 2025 and beyond. Our tax rate in the first quarter came in at 29%. In the first quarter, diluted earnings per share was $0.99, and tangible book value per share increased to EUR 30.43, up 4% year-on-year. Before I go on, let me add a few remarks on corporate and other, where you can now find further information in the appendix on slide 39. With respect to developments this quarter, C&O generated a pre-tax loss of EUR 34 million, mainly from shareholder expenses and other essentially retained items, partially offset by positive revenues in valuation and timing. Let me now turn to some of the drivers of these results and start with net interest income on slide 10.
NII across key banking book segments and other funding was EUR 3.3 billion, broadly stable quarter on quarter. As in prior quarters, private bank continues to deliver strong NII supported by our structural hedge portfolio, while FIC financing continues to grow lending. The corporate bank is slightly down compared to the prior quarter, principally due to accounting reclassification effects in loan NII, which are offset in remaining income. Deposit NII was broadly flat, as hedge benefits offset a reduction in policy rates, and portfolio growth remained strong. With respect to the full year, in line with prior guidance, we continue to expect a material NII tailwind for the key banking book businesses and other funding versus 2024, which is principally driven by hedge rollover and deposit growth.
Compared to our disclosure a quarter ago, higher long-term rate expectations, specifically in euros, increased the expected benefit of our hedge portfolio in the outer years. In the appendix on slide 26, we illustrate the dynamics of the interest rate hedge in more detail. Turning to slide 11, adjusted costs were EUR 5.1 billion for the quarter, in line with our expectations. Cost discipline across the franchise remained high and materially offset an increase in compensation costs. This was driven by higher performance-related cash accruals and increased equity compensation costs as a result of a rising Deutsche Bank and DWS share prices during the first quarter. With that, let me turn to provision for credit losses on slide 12. Stage three provision for credit losses materially reduced in the first quarter to EUR 341 million, in line with expectations.
Stage one and two provisions were elevated at EUR 130 million and included around EUR 70 million of provisions related to the impact of weaker macroeconomic forecasts on forward-looking information, as well as overlays, including for direct tariff-driven impacts on select higher-risk names. The remainder was driven by model and portfolio-related effects. We feel comfortable with our underlying portfolio performance and the development of provisions, but we recognize the ongoing uncertainty around the macroeconomic environment and monitor these developments closely. With that, let me turn to capital on slide 13. Our first quarter common equity tier one ratio remains strong at 13.8%. The CRR3 go-live impact was one basis point since the reduction in credit risk RWA was largely offset by reductions in capital supply and an increase in operational risk RWA. Aside from the CRR3 go-live impact, risk-weighted assets increased, principally reflecting a normalization of market risk RWA, as previously guided.
This increase was partly offset by a reduction in credit risk RWA, as higher business growth was more than offset by capital efficiency measures, including a securitization transaction during the quarter. The CET1 capital increased as the strong first quarter net income, net of AT1 and dividend deductions, was offset by equity compensation, the FX impact on account of the AT1 call and other capital charges. At the end of the first quarter, our leverage ratio was 4.6%, up by one basis point, as higher trading inventory and high-quality liquid assets were offset by higher tier one capital alongside beneficial FX and CRR3 effects. With regard to bail-in ratios, we continue to operate with a significant buffer over all requirements. In short, our capital position remains strong. Let us turn to performance in our businesses, starting with the corporate bank on slide 15.
In the first quarter, the corporate bank delivered a post-tax return on tangible equity of 14.4% and a cost-to-income ratio of 62%, despite an uncertain geopolitical and macroeconomic environment and lower interest rates. Revenues were EUR 1.9 billion, essentially flat sequentially and year-on-year, supported by interest rate hedging, higher deposit balances, and growth in net commission and fee income, mostly offsetting ongoing deposit margin normalization. We continue to make good progress by further accelerating non-interest revenue development, with 6% growth in net commission and fee income, and benefiting from a particularly strong contribution from our institutional client services business. The deposit base remained strong. Adjusted for FX movements, deposits were up by EUR 13 billion year-on-year and by EUR 6 billion sequentially. Provision for credit losses was contained at EUR 77 million, including EUR 50 million of stage one and two provisions, of which EUR 29 million related to net management overlays.
Non-interest expenses were lower year-on-year, driven by the non-recurrence of a litigation item in the prior year and continued tight cost management. Looking ahead, we believe that our international presence, strength in all trade corridors, and strong footprint in Germany position the corporate bank well to support our clients on changes in trade flows and supply chains. I will now turn to the investment bank on slide 16. Revenues for the first quarter were 10% higher year-on-year, with strength in FIC driving improvement to the division's return on tangible equity and cost-to-income ratios. FIC revenues increased by 17%, with both rates and foreign exchange significantly higher year-on-year, reflecting heightened market activity and increased client engagement. We continue to support our institutional and corporate clients through volatile markets and saw activity increase across both groups in the first quarter, including our priority clients.
Meanwhile, we continue to advance the business strategy of developing existing and adjacent businesses. Financing revenues were also higher, reflecting strong fee income across the business, combined with an increased carry profile following targeted balance sheet deployment in line with our strategy. The targeted deployment in the business is also reflected in the increased loan balances compared to the prior year. Moving to origination and advisory, revenues were lower year-on-year due to a loss on the partial sale and markdown of a specific loan in leveraged debt capital markets, as guided. Excluding this item, revenues increased 5% on a like-for-like basis compared to the prior year quarter in a fee pool that was broadly flat. Advisory revenues were significantly higher in a static industry fee pool, with the business maintaining the momentum of a strong 2024.
Non-interest expenses were essentially flat, with higher adjusted costs, which were impacted by FX translation, offset by lower litigation and reduced severance and restructuring costs. Provision for credit losses were EUR 163 million, with the year-on-year increase driven by stage one and two provisions, which includes tariff-related overlays, model changes, and portfolio effects, largely offset by a material reduction in stage three impairments, including CRE. Let me now turn to private bank on slide 17. The private bank achieved a 43% increase in pre-tax profit, reflecting 7% operating leverage driven by revenue growth and further cost benefits from progress made in our transformation initiatives. Good business momentum continued with net inflows of EUR 6 billion and higher revenues driven by 5% growth in net commission and fee income from investment product revenues, in line with our strategy, while net interest income grew by 2%.
Revenues in wealth management and private banking grew 8%, reflecting double-digit growth for investment products, mainly driven by discretionary portfolio mandates. Revenues in personal banking reflect our decision to reduce capital-intensive loan products such as mortgages, while revenues from deposit and investment products were up 4%, mainly from discretionary portfolio mandates. The private bank has continued its transformation with an additional 60 branch closures and reductions of approximately 400 FTE in the quarter, on track to achieve almost 2,000 FTE reductions as part of further restructuring efforts in Germany. Benefits from these measures, coupled with normalized investment spend, including from the Postbank IT migration and lower regulatory costs, drove adjusted costs down by 4% year-on-year. Provision for credit losses in the private bank was impacted by the deteriorating macroeconomic environment, while underlying portfolio performance improved.
The prior year quarter was impacted by elevated provisions in wealth management and transitory effects from the operational backlog. We expect the private bank to continue benefiting from a combination of efficiency programs underway in Germany, Italy, and Spain, where benefits are yet to be realized: revenue growth initiatives and optimization of capital usage via recalibrating the lending book and higher focus on capital-light solutions, which in turn will lead to sustainable profitability and annual mid-teens RoTE in the near term. Turning to slide 18, my usual reminder, the asset management segment includes certain items that are not part of the DWS standalone financials. Asset management delivered materially improved profitability with a 67% increase in profit before tax. This was driven by higher revenues across all streams, resulting in a materially lower cost-to-income ratio and an improved return on tangible equity of 22.1%.
The EUR 730 million in revenues were primarily driven by higher management fees from both active and passive products, benefiting from growth in average assets under management. The increase in performance fees was driven by the ongoing recognition of performance fees on one infrastructure fund, while other revenues benefited from a more favorable outcome of fair value of guarantees. Slightly higher costs were driven by business growth and increased equity compensation costs as a result of a rising DWS share price during the first quarter. Assets under management remained over EUR 1 trillion, with record net inflows of almost EUR 20 billion, driven by passive products of EUR 13 billion, offset by negative FX and market impacts. Cash, SQI, and fixed income also contributed with combined further net inflows of EUR 11 billion, overcompensating for net outflows of EUR 3 billion in active equity, alternatives, and multi-asset products.
In the quarter, a new private credit partnership with the investment bank was launched to enhance the alternatives franchise, aiming to provide prospective investors with access to this highly sought-after asset class. Finally, let me turn to the group outlook on slide 19. In short, our outlook remains largely unchanged, and we are on course to deliver our full-year targets for 2025. We are steadfast in our aim to deliver improved profitability and shareholder returns. Our strong revenue performance in the first quarter provides the step off to deliver this year's revenue goal of around EUR 32 billion, with our complementary businesses all performing well. We remain committed to rigorous cost management while not making any compromises on controls and investments, as we continue to benefit from ongoing delivery of our cost efficiency initiatives. Our asset quality remains solid, and we continue to expect stage three provisions to normalize this year.
We are maintaining our full-year guidance for provision for credit losses, but the macroeconomic and geopolitical environment may continue to impact model-based stage one and two provisions. Yes, uncertainty has increased, and we need to remain vigilant, but considering our strong financial performance and levels of client activity, we remain comfortable with our trajectory to deliver an RoTE of above 10% and a cost-to-income ratio of below 65% in 2025, with strong operating leverage and balance sheet efficiency supporting further improved profitability beyond 2025. Our strong capital position and first quarter results also give us a solid step off for our distribution objectives. The EUR 750 million share buyback we announced in January is already underway, and we have proposed a dividend of EUR 0.68 per share, which brings us to EUR 2.1 billion of capital distributions so far this year.
We will assess the scope for additional distributions in 2025 and remain comfortable on outperforming our EUR 8 billion distribution target. With that, let me hand back to Ioana, and we look forward to your questions.