BERLIN (AP) - Germany's IKB Deutsche Industriebank AG, hit badly by its exposure to the U.S. subprime lending crisis, said
Friday its first-quarter profits fell nearly 67 percent.
IKB, which lends to small and medium-sized German companies, has received help from the state-owned KfW development bank
and other banks to help protect its exposure to subprime mortgage securities.
The bank said it earned 12 million euros ($17 million) in the April-June period, 66.7 percent less than during the same
period last year. It reported a widening loss from financial instruments _ 43 million euros ($60.8 million), compared with
6 million euros in last year's first quarter _ which "can be primarily attributed to the widening of credit spreads."
That loss, it said, pushed down operating profit to 18.4 million euros ($26 million) from the previous year's 54 million
The figures "are related to a time period before the start of the critical developments at IKB," the bank said in a statement.
"Thus, the impact of the current crisis is only reflected to a limited extent in the figures for the first quarter."
Duesseldorf-based IKB said in early September that it expects to lose up to 700 million euros ($990 million) this fiscal
year as it aims for a "fresh start."
The bank's problems sprang from its Rhineland Funding investment vehicle's apparent inability to cover its funding needs
because of exposure to U.S. subprime real estate loans, made to borrowers with weak credit histories.
In late July, IKB abandoned a profit forecast for the 2007-2008 fiscal year of 280 million euros ($396 million). It said
it had "felt the impact of the crisis in the U.S. subprime mortgage market," and said its chief executive, Stefan Ortseifen,
The subprime crisis has since made its impact felt at another German lender, the public-sector wholesale bank SachsenLB.
SachsenLB was hastily sold to a larger public-sector bank, Landesbank Baden-Wuerttemberg, after news emerged last month
of its exposure to subprime real estate loans.