Depfa Bank, the IFSC-based public-sector lender, has beaten market forecasts by posting profits of €125 million after tax for the first quarter.
The result, which was 51 per cent ahead of the same month of 2003, was not welcomed by the market however, with Depfa shares down almost 8 per cent at €11.50 on the German DAX index at the close.
Analysts attributed the drop to the high level of profits drawn from asset sales over the quarter.
"The top-line growth has been weaker than expected and compensated for by the sale of assets," said Mr Metehan Sen, an analyst with Sal Oppenheim. "This will not be appreciated by the market."
A spokesman for Depfa said asset sales, which amounted to €97 million over the first three months of the year, formed "a perfectly normal part" of the bank's business. Depfa sold €18 million in assets in the first quarter of 2003.
Depfa went on to reaffirm earlier guidance that full-year profits would come in at €400 million for the year. This would be €30 million higher than 2003.
Plans are on track to sell off Depfa's German-based Pfandbriefe Bank as part of a plan to "streamline" its operations.
The Dublin-based parent yesterday moved to scotch fears that the move could signal an exit from the German market, however, noting that Depfa will actually strengthen its coverage of the area.
Depfa also expects to get an insurance licence in the US later this year which will allow it to sell default insurance to the owners of local government bonds. The US market, which is still relatively new for the bank, was on track to generate €20 billion in new business in 2004, Depfa said.
