Concern mounted today that Deutsche Bank would be the next investment banking heavyweight to suffer the fallout from the credit rout as analysts and investors began to digest yesterday's profit warnings from UBS and Citigroup.

Goldman Sachs cut its earnings forecasts for Deutsche, Germany's biggest bank, predicting that pre-tax profits would halve in the third quarter from €1.8 billion to only €900 million (£624 million).

Goldman argued that "the bulk of the earnings decline is coming from the investment bank", as it suggested that third-quarter pre-tax profits here would come in at only €315 million.

This is more than two thirds down on the €1.1 billion that Deutsche reported for the same period last year.

As a big player in the credit and leverage lending markets, the leading German bank is seen as particularly exposed.

Goldman's bank analysts reckon that Deutsche will record a mark-to-market loss of €1.4 billion on leveraged loans, take a €1 billion hit on its structured credit book and see trading profits slump by €800 million.

Reuters has reported that Deutsche Bank is expecting to disclose a writedown of as much as €1.7 billion on its leveraged loans.

Stefan-Michael Stalmann, of Dresdner Kleinwort, said: "We believe that there is a good chance that Deutsche will also issue a profit warning before chief executive [Josef] Ackermann speaks at a banking conference tomorrow.

"This would just formally reiterate the thinly veiled warning already given in early September."

Deutsche Bank shares rose more than 2 per cent to above €93 as analysts argued that "kitchen-sink" writedowns by UBS and Citigroup yesterday suggested that conditions were expected to improve during the fourth quarter.

Mr Stalmann added: "If it's not too bad [and we don't think it will be], then the shares may even have 1 per cent or so to catch up with peers."

Deutsche Bank did not return calls seeking comment. It is scheduled to report its third-quarter profits on October 31.

Shares in Citigroup and UBS rallied yesterday, despite the Swiss bank reporting its first quarterly loss in nine years and the American financial services giant taking a $6 billion (£2.9 billion) writedown.

The European banks team at Keefe, Bruyette & Woods said of UBS this morning: "The increased clarity on results and restructuring was well received by the market, with the stock rising 3 per cent on the day."

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