Depfa third-quarter profits slip to €110m

Third-quarter profits at Depfa Bank, the Irish-based German-listed financial institution, slipped on the earnings recorded in the first half of the year, according to results released yesterday.

Depfa said yesterday that net profits for the three months ended in September were €110 million, below the record €140 million surplus it earned in the second quarter and the €134 million it returned in the first quarter.

In a statement, the bank said reduced contributions from its largely Irish-based global markets business and its corporate centre were the main reasons behind the fall in profits.

Pre-tax income in its global markets operation fell to €25 million in this year's third quarter from €101 million during the same period in 2005.

Chairman and chief executive, Gerhard Bruckermann, told The Irish Times yesterday that the fall in earnings from global markets was largely the result of the bank closing off some market positions during the period.

The corporate centre posted an operating loss of €24 million, compared to a €3 million deficit in 2005. Pre-tax losses were €43 million. Mr Bruckermann said this was a result of hedging part of its risk in this business.

He pointed out that, as a result, the deficit was balanced in the bank's reserves.

The bank said that it was still on target to deliver shareholders a return on equity of 20-25 per cent at the year's end.

"We don't run the bank quarter by quarter," Mr Bruckermann said yesterday.

"If you look at the last nine months, you will see growth in profitability."

Net profits for the nine months ended September were €384 million, compared to €377 million during the same period in 2005, an increase of close to 2 per cent.

He explained that the bank was increasing its profitable client-focused businesses like infrastructure lending.

Depfa Bank is headquartered in Dublin's International Financial Services Centre (IFSC), where it employs 250 people, and is listed on the Frankfurt Stock Exchange.

It has assets of €220 billion and has offices in 15 locations around the globe.

It one of the biggest financial institutions operating in the Republic.

Its chief areas of business are budget finance, infrastructure finance, client services, global markets and corporate banking.

For the third quarter, net interest income was flat at €101 million.

The combined interest from the budget finance, infrastructure finance and client services operations was up 18 per cent year on year at €100 million.

Budget finance alone contributed €89 million to interest income.

The same sector was the most profitable, delivering pre-tax earnings of €140 million, a 63 per cent increase on the €84 million profits it delivered during the third quarter in 2005.

Nine-month interest income was €318 million, a 4 per cent increase on the first nine months of 2005, when it was €306 million. Pre-tax profits grew at a similar rate, to €494 million from €478 million.