DEUTSCHE BANK, Germany’s biggest finance house, returned to the black in the first quarter, boosted by a steep recovery at its investment bank.

Deutsche and Crédit Suisse, its Swiss rival, followed the lead of their US peers yesterday by reporting strong profits from investment banking operations.

Deutsche said its corporate and investment bank (CIB) had made a pre-tax profit of €1.2 billion (£800 million) for the March quarter, boosting the group’s first-quarter pre-tax profitability to €1.6 billion.

After tax, Deutsche’s group profit was €941 million, compared with a €219 million loss in the previous corresponding period.

Crédit Suisse told shareholders at its annual meeting in Zurich that its CS First Boston division was expected to report first-quarter net profits of SwFr750 million (£320 million), driven by strong revenue growth.

Oswald Grübel, the co-chief executive of Crédit Suisse, said: “We are particularly pleased by our strong first-quarter performance in private banking, as well as by the positive results at CS First Boston, which demonstrate its operating leverage.”

Despite a strong recovery in investment banking perfomance across the industry, news that Comcast, America's biggest cable television company, had this week decided to withdraw its hostile $48 billion (£27 billion) bid for Walt Disney, may deprive a series of investment banks of potentially huge fees.

Two weeks ago Merrill Lynch reported a first-quarter profit of $1.3 billion (£700 million) on the back of a surge in deal-making fees.

Goldman Sachs, Morgan Stanley, Bear Stearns and Lehman Brothers also reported strong first-quarter results.

Deutsche said its CIB result was driven by sustained strength in sales and trading. This quarter’s profit was below the €1.4 billion figure the previous corresponding quarter, which included a €508 million one-off gain from asset sales.

Analysts expressed surprise at a 4 per cent rise in operating costs, which the bank attributed to bonus accruals.