FRANKFURT (Reuters) - Germany's largest lender, Deutsche Bank (>> Deutsche Bank AG), made a profit in the first quarter despite absorbing litigation costs of about 1.5 billion euros (1.07 billion pounds), it said on Wednesday.

"Deutsche Bank will be profitable in the first quarter and will report near record revenues," it said in a statement. The bank is due to report first quarter earnings on April 29.

The lender did not give details of the litigation costs but said they were for the most part not tax deductible.

Reuters reported on Tuesday that U.S. and British officials were preparing to announce a settlement with Deutsche Bank as soon as Thursday over allegations it tried to rig benchmark interest rates such as Libor, according to two sources with knowledge of the matter.

Reuters reported earlier this month that penalties were likely to exceed $1.5 billion, the amount UBS Group AG (>> UBS Group AG) paid in 2012.

A settlement of the Libor case could help remove uncertainty that has burdened Deutsche Bank shares for years, but would not wipe the slate clean.

The world's second-largest foreign exchange trader still faces potential claims or settlements over past issues including alleged attempts at foreign exchange benchmark manipulation and alleged violations of U.S. sanctions on Iran.

At the end of 2014, Deutsche Bank had set aside 3.2 billion euros in litigation reserves, outlined another 1.9 billion in potential risks and indicated it faced an additional 4.8 billion in mortgage repurchase claims.

(Reporting by Jonathan Gould; Editing by Harro ten Wolde and David Clarke)

Stocks treated in this article : Deutsche Bank AG, UBS Group AG