July 30 (Bloomberg) -- Deutsche Postbank AG, the German bank that may be sold by Deutsche Post AG, said second-quarter profit declined 21 percent because of writedowns on debt-related investments.

Net income fell to 119 million euros ($186 million) from 151 million euros a year earlier, the Bonn-based bank said on its Web site today. Earnings met the 118 million-euro median estimate of 11 analysts surveyed by Bloomberg News. Postbank wrote down the value of securities by 143 million euros.

Postbank, Germany's largest consumer bank by clients, rose in Frankfurt trading after boosting interest income and commissions by offering bank accounts at non-traditional outlets like gas stations and selling car loans and mutual funds to some of its 14.5 million customers. The bank is at the center of takeover speculation after parent company Deutsche Post said on June 25 it's holding ``exploratory'' talks with potential buyers.

``Profit would've grown if you take out the writedowns,'' said Olaf Kayser, a Mainz-based analyst at Landesbank Baden- Wuerttemberg, who recommends investors buy the stock. ``The core retail business remains stable.''

Postbank rose as much as 5 percent, and was up 1.73 euros, or 3.8 percent, to 46.95 euros by 9:48 a.m. in Frankfurt. The shares have fallen 23 percent this year, valuing the company at 7.7 billion euros.

Markdowns

The second-quarter markdowns bring Postbank's total losses related to the U.S. subprime-mortgage market collapse to 429 million euros. Postbank booked impairments of 72 million euros in investment income in the quarter related to about 6 billion euros in structured-credit investments. It also marked down the value of derivatives by 71 million euros in trading profit.

The world's largest banks and securities firms have reported credit losses and writedowns of $474 billion linked to the subprime meltdown, Bloomberg data shows.

Postbank's tier 1 ratio, which regulators monitor to assess a bank's ability to absorb loan losses, was 6.3 percent at the end of the quarter, compared with 6.9 percent at the end of 2007.

The lender said it is ``well on track'' to reach its forecast to increase pretax profit to as much as 1.2 billion euros this year after 1 billion euros in 2007.

Net interest income, the difference between what the bank earned in lending and paid for funding, rose 12 percent to 622 million euros in the quarter. Commissions and fees gained 3.2 percent to 350 million euros.

The bank increased the number of checking accounts by 250,000 to 4.9 million in the first six months of the year. Installment loans such as credit for cars climbed 72 percent to 821 million euros in the first half.

Costs declined 1.3 percent to 698 million euros and the bank set aside 86 million euros for possible loan defaults. Trading profit fell 46 percent to 58 million euros and the company posted a loss of 80 million euros on investment securities because of markdowns.

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

Last Updated: July 30, 2008 03:51 EDT