Hypo Real Estate, the German lender rescued by the government, reported a fifth consecutive quarterly loss as it set aside more money for risky loans and on costs for its bailout.
The third-quarter net loss was €574 million, compared with a loss of €3.05 billion a year earlier, the Munich-based company said.
In the year-ago quarter, a €2.5 billion goodwill writedown for the lender's Dublin-based Depfa Bank unit weighed on earnings.
"We still have a long way to go before we will meet our objective, but good progress is being made with the process of
restructuring," said chief executive officer Axel Wieandt. "Conditions on the market will continue to be difficult."
Hypo Real Estate, which received a total of €102 billion in credit lines and debt guarantees from government and financial institutions to save it from a collapse, announced earlier this month that it received €3 billion in additional capital from Germany's Soffin bank-rescue fund.
Soffin got full ownership of the lender last month following a so-called squeeze-out, that forced minority investors including US investor J. Christopher Flowers to sell their remaining shares.
Following the capital increase by Soffin, Hypo Real Estate's core capital ratio, a measure of a bank's ability to cover unexpected losses, improved to 9.7 per cent from 6.1 per cent at the end of September.
Hypo Real Estate almost collapsed last year when its Depfa unit, which it agreed to acquire in July 2007 for €5.3 billion, failed to secure short-term funding after the bankruptcy of Lehman Brothers froze credit markets. It plans to close a total of 26 of its 35 locations and cut 1,000 jobs by 2013 as it focuses on real estate and public-sector financing combined under a new core bank named Deutsche Pfandbriefbank.
Hypo Real Estate set aside €810 million in provisions for risky loans in the third quarter, up from €177 million a year earlier, it said.
Net commission income showed a loss of €97 million in the quarter, after a €35 million profit a year earlier, as expenses for the company's bailout amounted to €382 million for the first nine months of the year.
Bloomberg