Deutsche Bank says goals are at risk

Deutsche Bank AG, Germany's biggest bank, said the US subprime collapse and slowing economic growth will make it harder to reach a full-year profit goal.

Deutsche Bank fell as much as 2.9 percent in Frankfurt trading after it said possible asset writedowns and a worsening economy would "adversely affect our ability to achieve our pre-tax profitability objective". The bank aims for pre-tax earnings of 8.4 billion euros, excluding one-time items.

The German bank boosted profit last year after skirting the worst of the US subprime mortgage market crash that left UBS AG and Citigroup Inc with record losses. Deutsche Bank will probably have further writedowns on its 36.2 billion euros in loans for leveraged buyouts because of "deteriorating" prices, the company said in its annual report published yesterday.

"I'm not sure people actually expected them to reach the targets after what's happened to the markets," said Derek Chambers at Standard & Poor's Equity Research in London, who has a "hold" recommendation on the stock.

"The immediate concern is leveraged loan writedowns. Conditions also remain difficult for fixed income, which is a large part of their business."

Deutsche Bank fell 1.61 euros, or 2.2 percent, to 71.89 euros by 11:07 am, bringing declines this year to 20 percent and cutting its market value to 38.2 billion euros. The 60-member Bloomberg Europe Banks and Financial Services Index has fallen 18 percent so far this year.

"The near-term outlook continues to be very challenging," Chief Executive Officer Josef Ackermann said in the report. "Conditions remain difficult both in financial markets and the wider economy."

The world's largest banks and securities firms have posted writedowns and credit losses of more than $195 billion since the beginning of 2007 amid the collapse of the US subprime mortgage market. Deutsche Bank reported 2.3 billion euros in markdowns in 2007 on leveraged loans and asset-backed securities.

That compares with about $19 billion at Zurich-based UBS and $22 billion at Citigroup of New York.

Agencies

(China Daily 03/27/2008 page17)