Depfa, the IFSC bank with German roots, confirmed it is on track to make more than €500 million in profits this year, despite net income stalling in the third quarter, writes Claire Shoesmith

Results issued by the Dublin-based public-sector lender showed that net profits increased by only 0.8 per cent to €130 million in the three months to the end of September.

However, revenue increased by 11 per cent to €222 million after the group won €20 billion of new business in the quarter. Overall, it expects to win €70 billion of new business this year and €90 billion in 2006, Gerhard Bruckermann, the group's chief executive, said.

The US has accounted for a large part of the company's growth so far this year, he said, adding that, in the short term, Europe would remain the group's largest business.

Depfa, which employs more than 200 people in Dublin and a further 300 at its 17 other offices around the world, also reiterated its target for profits of €600 million next year. In 2004, the bank made €540 million.

Derek De Vries, an analyst at Merrill Lynch in London, described the results as disappointing. He also said the bank's announcement that it has put on hold plans to move into the bond insurance business in the US because it failed to earn an AAA rating from the credit agencies was disappointing.

While the business wouldn't have made any contribution to earnings this year or next, shelving the plans may prevent Depfa from growing its business in the US as planned, he said. Currently the region accounts for about 15 per cent of total earnings.

Depfa's net interest income was below forecasts for the second consecutive quarter. At €97 million, the third-quarter figure lagged the consensus forecast by €14 million.

Net profit for the first nine months of the year slipped 1.6 per cent, to €376 million. Revenue in the nine-month period rose 8.1 per cent, to €629 million.

The group, which has been involved in financing public-private partnerships (PPP) for Irish projects such as the Dundalk western bypass and the Ireland Group Schools Project, is seeking to expand its PPP financing business in Britain and Ireland.

Depfa is opening a new office in Warsaw this month to expand its budget financing business.