Depfa Bank, the Irish-based, German-listed financial institution, recorded an 11 per cent increase in net profits in 2006 to €526 million, following a 26 per cent jump in its fourth-quarter profits.
Net profit rose to €123 million in the fourth quarter, up from €98 million in the fourth quarter of 2005, and meant the bank comfortably exceeded the €500 million full-year profits expected.
But growth in new business slowed, with new finance commitments of €13.5 billion in the fourth quarter down on the €16.2 billion announced in the third quarter and €20.6 billion in the fourth quarter of 2005.
The bank entered into €59 billion in new budget finance and infrastructure finance commitments last year.
The bank attributed its profits to the strength of its budget finance, infrastructure finance and client product services divisions, which increased their combined pre-tax result by 70 per cent to €628 million.
Depfa chief executive Gerhard Bruckermann said the performance of these divisions had more than compensated for the low yield from global markets, where operating income fell 58 per cent to €144 million.
Depfa said its priority was to conserve the profitability of its public finance portfolio, but with a lower amount of new business volume and reduced leverage. "With a tough margin environment, the bank appears to have sacrificed volume growth for margin stability," analysts from Citigroup commented.
Net interest income was almost flat at €425 million, compared to €422 million in 2005. However, the bank, which is one of the biggest financial institutions operating in the Republic, said interest income from its key budget finance and infrastructure activities had increased 20 per cent to €395 million.
The bank is involved in several public-private-partnership (PPP) projects in the Republic, where it is the lead arranger for funding of the €400 million National Conference Centre in Dublin. It is also one of the groups involved in the funding of the Thornton Hill prison in north county Dublin and is involved in the first phase of the schools' PPP programme.
About 250 of Depfa's 600 employees work in its IFSC headquarters in Dublin. Depfa said it planned to increase its dividend from 25 cent to 40 cent per share.
