The Irish-based Depfa Bank has reported a strong performance in the first quarter of 2003. The German bank, which specialises in providing funds to the international public sector for projects such as roads, recorded a 43 per cent rise in net profits to €83 million.

Announcing the figures yesterday, the bank reaffirmed its profit forecast for the current year of €250 million and hinted at the possibility that profits could even surge to €300 million.

"The success was based above all on an improvement in funding costs and the successful expansion of the product range in investment banking," it said yesterday.

Depfa achieved total revenues of €144 million, up 31 per cent on the same quarter last year. Income earned from derivatives increased by 18 per cent to €80 million while net commissions rose to €20 million. Administrative costs were higher at €27 million, up 35 per cent.

The bank has cautioned that while its cost-to-income ratio during the first quarter amounted to 19 per cent, this will rise significantly in the months ahead.

Depfa said it generated €12.4 billion in new business and that its public finance portfolio increased by 4 per cent to €115.2 billion.

The bank has established a US agency to build up its business in that market.

It will provide liquidity standby facilities and credit enhancement for public-sector bonds there and expects to be able to generate several billion dollars of new business over the next 12 months.