DVB dips

A heavy write-down on debt with an Icelandic bank and rising costs in light of the financial crisis chipped away at DVB Bank’s profit in 2008.

Wolfgang Driese.

Its bottom line slipped 3.9% year-on-year but the Frankfurt-based lender has beefed up its dividend payout following what it called a very satisfactory result.

Wolfgang Driese, chairman and CEO of DVB Bank, said: "Despite adverse factors experienced during 2008 - indeed, there were many of those - we are delighted to present financial results which we are very much satisfied with.”

DVB posted a profit of EUR 104.9m ($133.92m), which was just shy of the record EUR 109.2m seen 12 months ago, as net investment income rose 1.7% to EUR 193.2m.

It also noted a 24.4% climb in net fee and commission income, but a EUR 35.8m write-down on a debt security issued by an Icelandic bank and a further EUR 29m charge due to a deterioration of the money market hurt the final figure.

DVB adds its interest rates are usually linked to the London Interbank Offered Rate (LIBOR), which no longer reflects the reality in the interbank money market.

It said: “DVB attempts to counter this distortion by gradually shifting the interest rate reference to interbank market rates. Some of DVB's competitors have meanwhile taken similar steps. Non-recurring effects which occurred outside DVB’s core business thus prevented the Bank from posting another record result.”

It has proposed a dividend of EUR 0.60 per share for the year, up from EUR 0.50 12 months ago.

Driese added: “A further aspect worth noting is that refinancing for our business is currently provided by the German Cooperative Financial Services Network. At present, there is no sufficient access to the money and capital markets without a sovereign guarantee.

“There is urgent need for action to restore functioning markets. However, nationalising the entire banking sector is not a viable solution."

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