Feb. 6 (Bloomberg) -- Deutsche Bank AG, Germany's largest bank, may fall short of Chief Executive Officer Josef Ackermann's profit goal for 2008 even after sidestepping the worst of the U.S. subprime mortgage crash.

``Their profit guidance is unrealistic,'' said Kian Abouhossein, a London-based analyst at JPMorgan Chase & Co. who rates the company ``underweight.'' ``Deutsche Bank has done very well at managing risk in this environment, but they have the wrong business mix on a long-term basis.''

While early bets against U.S. subprime mortgages helped Deutsche Bank avoid the record losses reported by UBS AG, Citigroup Inc. and Merrill Lynch & Co., the ensuing slowdown in debt markets threatens to stifle growth. Deutsche Bank gets about half its profit from fixed-income, including asset-backed and other structured securities, Abouhossein said.

Deutsche Bank will earn 7.29 billion euros ($10.7 billion) before taxes this year, according to the median estimate of 10 analysts surveyed by Bloomberg. That would be 13 percent less than a target of 8.4 billion euros announced by Ackermann in October 2006. The goal excludes one-time costs and gains.

Stuart Graham, a London-based analyst at Merrill who expects Deutsche Bank will miss its goal, said in a note the company has ``defied the skeptics'' in the past. WestLB AG analyst Georg Kanders, who is based in Dusseldorf, predicts the bank will earn 8.2 billion euros, the highest among those surveyed.

Deutsche Bank spokesman Armin Niedermeier declined to comment.

`Very Dependent'

The investment banking unit, run by Anshu Jain and Michael Cohrs, may post profit of about 3.03 billion euros in 2008, or 43 percent less than management's goal, Citigroup analysts including Jeremy Sigee said in a Jan. 8 note to clients.

The Frankfurt-based bank may report a 50 percent drop in fourth-quarter net income to 923 million euros tomorrow, on lower revenue from trading bonds and stocks, analysts estimate.

Fixed-income sales and trading may decline 27 percent this year at Europe's biggest banks as investors shun mortgage-backed bonds and collateralized debt obligations, or bonds created by bundling together debt securities, according to JPMorgan. The slowdown will hurt Deutsche Bank more than Zurich-based UBS or Credit Suisse Group because it gets a bigger chunk of revenue from these markets, according to JPMorgan.

``Deutsche Bank is very dependent on investment banking,'' said Helmut Hipper, who helps manage $205 billion at Union Investment in Frankfurt and owns shares of Deutsche Bank, Credit Suisse and UBS. ``It doesn't have the big stable businesses to fall back on like wealth management at Credit Suisse and UBS.''

UBS Writedowns

Deutsche Bank generates about 5 percent of profit from private banking, compared with 41 percent at UBS and 35 percent at Credit Suisse, Abouhossein said.

The German bank rose 80 cents, or 1.1 percent, to 75 euros in Frankfurt trading, paring declines this year to 16 percent.

Analysts at ABN Amro Holding NV cut their rating on Deutsche Bank today to ``sell'' from ``hold'' on concern the company will be forced to make further writedowns as credit markets worsen.

In the third quarter, Deutsche Bank's revenue from fixed- income trading dropped 71 percent to 576 million euros from a year before.

``We expect the next couple of quarters to be quite tough on fixed income,'' Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan said in a Dec. 13 interview. Lehman, the largest U.S. underwriter of mortgage-backed bonds, said fixed- income trading revenue fell 60 percent in the fourth quarter.

Departed CEOs

The worst U.S. housing market in a quarter century led to more than $145 billion of subprime-mortgage-related losses and markdowns at the world's biggest financial institutions.

UBS posted the biggest loss ever by a bank after $14 billion of fourth-quarter writedowns on securities infected by U.S. subprime mortgages. The quarterly loss of 12.5 billion Swiss francs ($11.4 billion) saddled the company with an annual loss of about 4.4 billion francs.

Credit Suisse, Switzerland's second-biggest bank after UBS, may report full-year profit of 8.7 billion francs on Feb. 12, down from 11.3 billion francs, according to analyst estimates. Fourth-quarter earnings probably fell 69 percent to 1.47 billion francs.

The 59-year-old Ackermann, who has run Deutsche Bank since 2002, raised profit 15-fold by expanding the securities unit, cutting more than 14,000 jobs and selling assets. He signaled in November that the bank didn't expect to add to the 2.28 billion euros of writedowns reported in the second and third quarters.

Dodging the `Bullet'

UBS had write downs and credit losses of about $18.7 billion, compared with $22.1 billion at Citigroup and $24.5 billion at Merrill. Losses linked to the U.S. subprime collapse already led to the departure of UBS CEO Peter Wuffli, Merrill CEO Stan O'Neal, and Citigroup's Charles O. Prince. Merrill and Citigroup are based in New York.

``Deutsche, along with Credit Suisse and Barclays, have so far been able to dodge the bullet very well,'' said Huw van Steenis, a London-based analyst at Morgan Stanley.

Credit Suisse wrote down the value of fixed-income securities and leveraged loans by about $2 billion in the third quarter. Barclays Plc, the U.K.'s No. 3 bank, said it will mark down credit-market related assets by about $2.6 billion.

Deutsche Bank had the most fixed-income revenue of any bank in the first half of 2007, according to Citigroup analysts, who predict revenue will decline industry wide this year to levels last seen in 2004 and 2005.

Ackermann reiterated the company's profit forecast on Oct. 31, with a caveat. ``Assuming markets function at normal levels, we reaffirm our commitment to delivering on our 2008 financial targets,'' he said in a letter to shareholders.

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

Last Updated: February 6, 2008 12:11 EST