IFSC-based Depfa Bank reported its best quarterly results yesterday, posting net profits of €140 million for the three months to the end of June.
The 11 per cent annual increase was driven mainly by growth in lending and securities trading.
Henrik Hannemann, director of corporate communications at Depfa Bank, said the second-quarter figures were "completely in line" with the bank's expectations, but outperformed the average market net profit estimates of €133-€135 million.
Despite record results, analysts remain sceptical and many have predicted that the level of new business acquired in the second quarter may cause the German-listed bank to fall short of its €90 billion target for 2006.
"The share value went down by [ approximately] 3 per cent on the Frankfurt stock exchange, because most traders are disappointed about new business volume," conceded Mr Hannemann, but he emphasised that the bank was "absolutely happy" with new business commitments, which grew 43 per cent quarter-on-quarter to €18.8 billion.
Profits from trading securities reached €41 million in the second quarter, and the sale of financial assets resulted in gains of €67 million.
However, Merrill Lynch analyst Derek De Vries voiced concerns about the sustainability of Depfa's gains from trading and assets sales in the face of rising interest rates.
"Depfa remains the least expensive stock in our European bank universe on a price/earnings ratio basis," Mr De Vries said.
While the bank's global markets business has reduced, this has been balanced by increased business in other divisions, according to Mr Hannemann.
"Earnings have shifted very much towards client-driven business," he said, adding that analysts previously complained that there was too much emphasis on global markets. "Direct client business now makes up 84 per cent [ of total revenue]."
Having recorded a 23 per cent return on equity in the second quarter, the public-sector lender appears to be on track for reaching its 2006 target range of 20 to 25 per cent after tax.
Higher staff numbers pushed up personnel expenditure by 7 per cent to €33 million in the period.
Since locating its head office in Dublin four years ago, Depfa's headcount has grown from 80 to 200 in Ireland.
