Deutsche Bank has announced sharply lower third-quarter profits after making a trading loss of DM 224m ($140m), mostly due to its exposure to Russia.

The bank has increased its loss loan provision to DM 1bn ($625m) and says it has DM 1.35bn ($844m) in loans to Russia not covered by state guarantees.

Operating profits dropped to just DM 70m ($44m) compared to DM 1.2bn ($750m) a year earlier.

For the first three quarters of the year, the bank's profits were down 24% at DM 3.1bn ($2bn), below market expectations.

But analysts were relieved that the bank was still in profit in a very difficult quarter on the financial markets.

"It's important that Deutsche did not make a loss and it managed to control cost growth," commented Britta Graf of BNP.

More to come

Chief Executive Rolf Breuer said that world market conditions would remain tough, but predicted that profits would improve.

"We remain confident that as a diversified universal bank we will be able to generate a satisfactory profit."

The bank benefited from its relationship with Daimler-Benz, which paid a substantial dividend in the third quarter.

Deutsche Bank owns a 21% stake in Daimler.

The stock market took the news calmly, with shares down by only 1.20 marks at 100.35 marks in mid-day trading.