Shares in Germany's biggest bank were 3 percent lower in early trade compared with a flat German blue-chip index <.GDAXI>, with analysts pointing to the 9 percent revenue fall, putting pressure on chief executive John Cryan to deliver on his pledge last month to focus on growth.

"Increasing revenues remains an important challenge for the bank," Philipp Haessler from brokerage Equinet said, while Berenberg analysts said revenues had slowed further since Deutsche's comments in its rights issue prospectus last month.

Other analysts voiced doubts about Deutsche's business model. "We believe the core bank is still massively loss-making," said Enrico Racioppi at brokerage Hammer Partners.

Cryan, however, pointed to the effect of the revaluation of Deutsche Bank's own debt, which it has to value at market prices. That has meant the bank was able to book profits when its own debt value fell during last year's turbulence, but now booked losses as investor confidence returned.

"Without these accounting effects, revenues would have been broadly flat. Our first-quarter results were made weaker by Deutsche Bank getting stronger," Cryan told staff.

The bank’s first-quarter net profit rose to 575 million euros ($627 million) compared to 236 million a year ago.

Cryan added that a 5 percent fall in adjusted costs showed the progress the bank was making in restructuring, while it lowered its cost-income ratio to 86 percent. But this still lags rival banks, many of whom manage 60 to 70 percent ratios.

Deutsche's headcount, which it has unsuccessfully tried to cut for years, was 3,300 lower at the end of March despite 370 hires in compliance and anti-financial crime.

The bank's core tier 1 equity ratio rose to 14.1 percent from 11.8 percent at the end of 2016, if this month's $8.5 billion cash call is taken into account.

CLIENTS COME BACK

Although revenues at Deutsche Bank's bond-trading division rose 11 percent as it benefited from a surge in trading across interest rate products, commodities and foreign exchange (FICC), sales were down 10 percent in equity trading among other areas as hedge funds withdrew after Deutsche's crisis last year.

"Clients are returning following the turbulence late last year," Cryan said.

Wall Street banks have also reported big gains in bond trading, with investors adjusting their portfolios in response to interest rate movements, elections in Europe and Brexit.

Bond trading revenues at Deutsche's Wall Street rivals rose by an average 21 percent in the first quarter, benefiting partly from a surged in securitised trading.

Deutsche Bank exited this as part of a strategy to simplify its business and cut ties with thousands of clients. It had slipped to sixth place for global FICC trading by the end of 2016 from third in 2013, the latest data from industry analytics firm Coalition showed.

In its small asset management business, Deutsche reversed a trend of asset outflows it had seen for the past six quarters and posted net new money of 5 billion euros in the quarter.

It plans to list the unit on the stock exchange within the next two years and wants to wrap up preparations within the next two quarters so it is able to pick the right moment for a sale.

Litigation reserves fell sharply after it had booked record fourth-quarter sums for settlements, including for the sale of toxic mortgages and sham Russian trades.

The U.S. Federal Reserve fined Deutsche Bank $157 million this month for violating foreign exchange rules and running foul of the Volcker Rule on speculative investments.

After incurring a litigation bill of 15 billion euros since 2009 on extravagant bets and poor conduct, a probe into alleged sanctions violations is the only large legal headache remaining at present, which Deutsche expects to conclude before year-end.

(Additional reporting by Tom Sims; Editing by Georgina Prodhan/Susan Thomas/Alexander Smith)

By Arno Schuetze