Postbank Has Loss on Higher Provisions, Writedowns
July 30 (Bloomberg) -- Deutsche Postbank AG, the Germanretail lender part-owned by Deutsche Bank AG, posted a second-quarter loss after setting aside more money for bad loans andcredit-related writedowns.
The net loss was 14 million euros ($20 million), comparedwith a profit of 121 million euros a year earlier, the Bonn-based company said today. Postbank rose as much as 2 percent inFrankfurt trading as the loss was smaller than the 42 million-euro estimate of analysts surveyed by Bloomberg.
Chief Executive Officer Stefan Juette took over early thismonth to steer the retail bank through Germany’s worst recessionsince World War II. The company set aside 157 million euros forbad loans in the quarter, 83 percent more than a year earlier,as corporate insolvencies increased. It predicted loan-lossprovisions will rise further.
“The economic development should lead to a growing numberof insolvencies and higher loan defaults,” the company said.Postbank expects to be less affected than competitors because ofits focus on private clients in Germany, it added.
Postbank gained 24 cents, or 1.2 percent, to 20.34 euros by9:08 a.m. in Frankfurt. The stock advanced 31 percent this year,valuing the company at about 4.4 billion euros.
Interest Income Drops
The lender incurred 148 million euros in writedowns in thesecond quarter, including 128 million euros related to embeddedderivatives in its structured credit portfolio. The portfolio,consisting mainly of corporate collateralized debt obligations,had a nominal volume of 6.2 billion euros in the quarter.
Postbank expects it took most of the impact from thefinancial-market crisis in the first half of the year and thatthe charges will “subside as the year progresses.”
At the same time, “for the remainder of 2009, difficultconditions in the capital markets and the real economy, aspreviously stated, are expected to continue,” the bank said.
Net interest income fell 9 percent to 566 million euros,missing a 605 million-euro analyst estimate. The company swungto a trading loss of 103 million euros from a 61 million-europrofit because of the losses related to embedded derivatives.
Postbank’s core capital ratio, a key measure of financialstrength, stood at 8 percent at the end of June, up from 7.2percent at the end of March. Deutsche Bank, Germany’s biggestbank, said this week its Tier 1 ratio reached 11 percent at theend of the second quarter.
Juette took the helm on July 1 after his predecessor,Wolfgang Klein, quit following a disagreement over strategy. Thelender had its first annual loss in 12 years in 2008 amid theworst financial crisis since the Great Depression.
Return on Equity
Postbank predicted it will reach its target of a return onequity after tax of 13 percent to 15 percent after the economyand financial markets stabilize. It didn’t provide a specifictime frame.
Deutsche Bank took a stake of about 25 percent in Postbankearlier this year as part of a strategy to expand consumerbanking. The Frankfurt-based lender reported on July 28 a seven-fold increase in provisions for bad loans in the second quarter,sending its stock lower and overshadowing a 68 percent increasein net income.
Postbank said earlier this month it will examine whether tomake use of Germany’s so-called bad-bank plan, which allowslenders to sell toxic assets to the state. The model is aimed atencouraging banks to boost lending.
To contact the reporter on this story:Jann Bettinga in Frankfurt at jbettinga@bloomberg.net
Last Updated: July 30, 2009 03:13 EDTSource: Bloomberg
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