Oct. 21 (Bloomberg) -- Deutsche Bank AG, Germany’s biggest bank, fell in Frankfurt trading after third-quarter pretax profit missed some analyst estimates.

Pretax profit climbed to 1.3 billion euros ($1.94 billion) from 93 million euros in the year-earlier period, the Frankfurt- based company said in a statement today. That was less than the 1.5 billion-euro forecast of analysts at Keefe, Bruyette & Woods Ltd. and WestLB AG. The number matched forecasts from Morgan Stanley and Bernstein Research while the median estimate of 10 analysts was 1.19 billion euros.

JPMorgan Chase & Co. last week reported its highest profit since the subprime mortgage market collapsed while earnings at Goldman Sachs Group Inc. more than tripled, helped by investment banking. That raised expectations for Deutsche Bank, which dodged the worst of the financial crisis and generates more than two-thirds of profit from the securities unit, analysts said.

“The headline pretax figure wasn’t a blow out,” said Matthew Clark, an analyst at Keefe, Bruyette in London who has an “outperform” rating on the stock. “We need to wait before we can judge the quality.”

Deutsche Bank fell 1.34 euros, or 2.4 percent, to 54 euros in Frankfurt trading after declining as much as 5 percent earlier in the day. The stock has gained 94 percent this year, valuing the company at 34 billion euros.

Capital Ratio

“After the good figures from Goldman and JPMorgan, analysts expected pretax profit to exceed all estimates, but they didn’t,” said Olaf Kayser, an analyst at Landesbank-Baden Wuerttemberg, who has a “hold” rating on the stock. “Some people on the market are speculating that Deutsche Bank came out with the figures early to prepare for a capital increase.”

The bank’s Tier 1 capital ratio, a measure of financial strength, rose to 11.7 percent from 11 percent at the end of the second quarter.

Preliminary net income more than tripled, boosted by tax credits and the resolution of tax audits related to prior years, the bank said. Earnings rose to 1.4 billion euros from 435 million euros a year earlier, beating the 811 million-euro median estimate of 12 analysts surveyed by Bloomberg News.

The German lender may have booked about 500 million euros in tax gains in the quarter, according to an estimate from Munich-based analyst Konrad Becker of Merck Finck & Co.

Acquisitions

Credit Suisse Group AG, the largest Swiss bank by market value, will tomorrow probably report net income of 1.74 billion francs ($1.72 billion) after a loss a year earlier, according to the median estimate of 14 analysts surveyed by Bloomberg. UBS AG may report a 281 million-franc third-quarter loss on Nov. 3. The Zurich-based bank probably missed out on the credit-market rebound after closing debt units and cutting jobs, analysts said.

Deutsche Bank Chief Executive Officer Josef Ackermann is trying to cut the firm’s reliance on investment banking by acquiring companies with more stable revenue in areas such as retail and transaction banking as well as asset management.

The German bank yesterday agreed to buy some ABN Amro Holding NV assets that the Netherlands must sell to satisfy European Union regulators. Deutsche Bank is also in talks to buy a stake in Germany’s largest independent wealth manager, Sal. Oppenheim Jr. & Cie., and purchased shares in domestic retail lender Deutsche Postbank AG earlier this year.

The bank may need to raise “at least” 1 billion euros this year to strengthen its capital, according to LBBW’s Kayser.

‘Fragile’ State

Chief Financial Officer Stefan Krause said on Oct. 1 he sees no need for “substantial recapitalization” because the lender’s reserves will be sufficient even if regulators lift requirements. The bank is confident it can raise funding from the market to finance purchases if needed, he added.

Ackermann, 61, said earlier this month that while rising stock and bond markets led to a “significant improvement” in sentiment, the financial industry and economy remain “fragile” because of rising corporate insolvencies and unemployment.

Deutsche Bank’s securities unit, led by Anshu Jain, 46, and Michael Cohrs, 53, may have earned 811 million euros in the third quarter, helped by rising revenue from trading stocks and bonds, according to estimates from eight analysts.

The asset and wealth management unit returned to a profit in the third quarter after four straight quarterly losses, based on Deutsche Bank’s statement today that all business segments were profitable. The company will report detailed third-quarter earnings, including divisional figures, on Oct. 29.

‘De-Risking’ Progress

JPMorgan said Oct. 14 third-quarter profit rose to $3.59 billion from $527 million, surpassing the highest estimate, after a surge in investment-banking revenue. Goldman said on Oct. 15 that net income climbed to $3.19 billion from $845 million, driven by trading and investments with the firm’s own money.

“The headline results do not place Deutsche in the camp of Goldman or JPMorgan which last week significantly beat expectations,” UBS analysts led by Philipp Zieschang wrote in a note to investors. “In addition, probably contrary to management perception, the current about 8 percent core tier 1 ratio of Deutsche might not put capital raising concerns by the market at rest.”

Morgan Stanley today reported its first profit in a year, surpassing analysts’ estimates as underwriting fees climbed and an increase in risk-taking boosted trading revenue to the highest in 12 months.

To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

Last Updated: October 21, 2009 12:33 EDT