Deutsche Bank: Tax and Asset sales to offset Loses

Deutsche Bank AG expects to offset the U.S. subprime crisis loses with profits from asset sales and tax credits that would beat analysts’ estimates, it said on Wednesday. As much as €2.2 billion ($3.1 billion) of writedowns could be compensated by a net profit of €1.4 billion (US$1.98 billion), better than a year ago.

In spite of taking charges of €700 million on its leveraged loan commitments, in addition to €1.5 billion on items such as structured credit products and mortgage-backed securities, Germany's biggest bank said it expected quarterly net profit of above 1.4 billion euros ($2 billion), up from 1.24 billion euros a year earlier.

The bank restated its target of posting a pretax profit of €8.4 billion (US$11.9 billion) in 2008.

“Despite a challenging quarter for our investment banking franchise, our 'stable' businesses continue to perform well,” Chief Executive Josef Ackermann said in a statement. “We see substantial opportunities in investment banking after this period of correction. Therefore, we stay the course and remain committed to our publicly stated financial targets for 2008.”

The Frankfurt-based Bank said gains related to German tax changes and the sale of its North American headquarters helped soften the brunt of writedowns related to the seize-up in credit markets in the third quarter.

Two days ago Zurich-based UBS AG reported a dreadful third-Quarter loss and Citigroup said earnings, badly hit by the global credit crisis, fell about 60 percent. That put up pressure on Deutsche Bank to speak about write-downs shortly.

Shares of Deutsche Bank climbed as much as 2.8 percent, and were up €1.96, or 2.1 percent, to 9€5.48 at 12:02 p.m. in Frankfurt, taking the company’s worth to €50.4 billion.