EUROPE – Assets under management at Deutsche Bank’s asset management division fell by 15 billion euros, or two percent, in the second-quarter.

“Invested assets within Asset Management declined by 15 billion euros, or two percent from the first quarter 2004,” the bank said in its earnings statement.

Revenues at the group’s portfolio/fund management arm fell 5.1% to 609 million euros from 642 million euros a year earlier.

It said: “During the second quarter, portfolio/fund management revenues in Asset Management suffered from lower performance fees because of continued difficult market conditions in certain countries in Continental Europe and market corrections that impacted the bank’s hedge fund business.

It added, “revenues were affected by shifts in the UK institutional market away from large-scale balanced portfolios.

“Net asset outflows accounted for eight billion euros of this decline, largely a result of a five billion-euro decline in our institutional distribution channel.”

Its alternative investment business gained a net one billion euros in new assets.

Overall, Deutsche’s Private Clients and Asset Management unit reported underlying pre-tax profit that was 40% higher at 380 million euros. Revenues were stable at two billion euros.

Asset and Wealth Management reported a pre-tax profit of 136 million euros, a 26% rise.

The bank’s total net income rose 15% to 656 million euros, from 572 million euros a year ago.

“Business conditions in the second quarter 2004 were very challenging,” said Josef Ackermann, chairman of Deutsche’s executive committee.

“This impacted our revenues. But due to the enhanced operating strength of our platform after the transformation, we turned in a solid result. This allowed us to close the first half of 2004 with substantial growth in profitability, and returns to our shareholders.”