Deutsche Bank, Germany's biggest lender, today reported a 64 per cent fall in net profit after writing down €2.3 billion (£1.8 billion) during the second quarter.

Today's result brings the German bank's total hit from the credit crunch to more than €7.3 biillion.

The Frankfurt-based group said today that net profit in the three months to June 30 fell from €1.8 billion to €645 million.

“The second quarter of 2008 proved to be another very challenging quarter for the banking industry,” said Josef Ackermann, Deutsche Bank’s chief executive.

Deutsche's corporate banking and securities business reversed a €1.8 billion profit last year to a €311 million loss in the second quarter.

Mr Ackermann said: “The environment continued to affect the performance of our investment banking business, but our 'stable' businesses again proved their resilience. Despite additional markdowns, we produced a solid profit."

The €2.3 billion of credit crunch-related markdowns included residential mortgage-backed securities, bond insurers, commercial real estate and other positions.

Net revenues for the quarter dived from €8.8 billion to €5.4 billion.

The market was unfazed by the large writedowns, concentrating on the core strength of the business. “This was a mixed set of results, but with a positive undertone as core business looks relatively strong on commission and net interest income,” said a Frankfurt-based trader.

Shares in the bank remained broadly stable at €58.21 today.

Mr Ackermann said Deutsche would seek to reduce costs and risks in the current economic slowdown.

"Looking forward, we remain cautious for the remainder of 2008. Deutsche Bank has clear priorities. We will continue to strictly manage cost, risk and capital, and to reduce our exposures in key areas," he said.

"We will seek opportunities to gain market share by capitalising on our relatively robust performance through the current downturn. We will continue to invest in all our core businesses, both organically and by acquisition, but we will not relax our discipline."

Deutsche's second-quarter markdowns mean that the collapse of the US sub-prime mortgage market has led to $476 billion (£240 billion) of credit losses and writedowns at financial institutions globally.

The results come three days after Merrill Lynch said it would sell $8.55 billion of stock and liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings. UBS, the largest Swiss bank, has recorded about $38 billion of markdowns.

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