Credit squeeze hits Deutsche Bank

The company is Germany's largest bank

Deutsche Bank has reported a 48% drop in profits for the last three months of 2007, as the global credit squeeze hit earnings at its key investment arm.

Its net profit for the fourth quarter fell to 954m euros ($1.39bn; £709m) from 1.84bn euros a year earlier, but was still ahead of market expectations.

It also did not reveal any further bad US sub-prime debt on top of the 2.2bn euros announced in October.

Deutsche Bank's quarterly revenues rose just 1.4%, to 7.3bn euros.

'Challenging times'

The bank said its only write downs for the fourth quarter amounted to losses of less than 50m euros connected to the funding of failed takeovers.

Deutsche Bank chief executive Josef Ackermann said its latest results represented "a solid performance in challenging times".

"We expect conditions to remain challenging in 2008," he added.

German's largest bank, last month it announced 300 job cuts, warning that the slowdown in the global credit markets would cut its earnings growth.