Germany's largest lender Deutsche Bank made more than expected first-quarter profits on strong investment banking performance on Tuesday, but raised credit rules as Europe's largest economic lender navigates turbulence in U.S. tariffs.

Net profit attributable to shareholders hit 17.75 billion euros ($20.19 billion) in the first quarter, up 39% year-on-year, while analysts expected it to be about 1.64 billion euros, according to a Reuters poll. The bank reported a December quarter profit of €106 million.

Revenue reached 85.24 billion euros during the period, with revenues up 10% year-on-year in the fourth quarter, up from $7.224 billion.

Deutsche Bank CEO Christian Sewing said in a statement of the results that the print "puts us on the horizon to deliver on all 2025 goals" and tagged "our best quarterly profits in fourteen years."

Shortly after the market opened, at 08:11 am London time, the lender's share price rose 2.5%.

Other fourth quarter highlights include:

• Profit before tax was 2.837 billion euros, up 39% year-on-year.
• The capital ratio of CET 1 is a measure of bank solvency, unchanged than in the fourth quarter.
• The return on tangible equity after tax (rotto) is 11.9%, compared with a 2025 target of 10%.
• Credit losses are regulated at €471 million and €420 million in the fourth quarter as the bank marks “coverage related to uncertainty in the geopolitical and macroeconomic outlook in the United States, as well as macroeconomic and portfolio effects and model changes in the first quarter.”

The lender's core investment banking division saw net income rise 10% year-on-year to €3.4 billion in the first quarter, with traditionally strong fixed income and currency (FIC) units up 17%, and its origins and consulting divisions declined 8%.

Net asset management revenue rose 18% to 730 million euros in the first quarter.

Deutsche Bank relies on its investment sector to bridge interest rates, reducing the yield on loans from loans. The lender's investment banking business is the backbone of its growth, growing 30% annually to €2.4 billion in the fourth quarter and 15% year-on-year to €10.6 billion in full year.

"We see the momentum of the whole business and we think that will be done for the rest of the year. We also maintain expense discipline, so we beat those two lines," Deutsche Bank's chief financial officer James Von Moltke told CNBC's Annette Weisbach on Tuesday.

"Overall, a solid set of results, but perhaps not as powerful as it looks at first glance," Citi analysts said in a note.

German banks will benefit from the country's political environment, under potential management of a centrist coalition led by Friedrich Merz of the Christian Democratic Union, culminated in snapshot elections earlier this year after a drastic change in late 2024.

Berlin has since signed a signing for reforming its landmark debt fiscal policy toward higher defense spending, waving expectations for major regional investments and promoting German stocks.

Von Moltke told CNBC that he added: "We obviously dealt with a lot of uncertainty in the policy side of a few minutes, but we also have some certainty, for example, in terms of net interest income." Von Moltke added that Deutsche Bank hedged all interest rate risks in 2025 on the package, which gave it confidence in the upcoming performance of its private banking units.

"We see the momentum there is strong. We also think that () corporate banks will... as the years pass, especially in Germany, some policy changes in fiscal aspects will bring about confidence flows, which will develop rapidly."

“In Germany, the stock market is actually getting stronger and stronger, so investors’ beliefs and beliefs are fundamental in terms of the German and European economies and the new governments and the policies they have set,” Stefan Simon, CEO of Deutsche Bank, said in a Bloomberg TV interview last week. He noted that in a broader wake-up call for a potential trade war currently under U.S. President Donald Trump, it is necessary to "enhance" Europe's competitiveness.

Under the latest trade protectionist measures from the White House, the EU has a tariff rate of 20%, although those tariffs are currently reduced to 10% until July 9, paving the road to additional trade negotiations.

"It is fair to say that the United States and the Americas are one of the major regions of Deutsche Bank, especially in terms of growth expectations," Simon said.

Von Moltke commented in January that lenders accounted for 20% of their operations in the U.S. and stressed that its operations in the region still have room for "future delivery and crystallization."

On Tuesday, the CFO acknowledged the current uncertainty in the financial markets due to U.S. tariff policies, which benefited lenders’ FIC trading operations while infiltrating its credit regulations guidelines.

“We are actually close to guidance on the provisions regarding credit losses,” he said. “However, what we do is placed on some overlay to reflect the abnormal environment we are in and really expect potential drifts in macroeconomic variables. We think this is prudent and appropriate, but where we land this year will depend heavily on the macro direction.”