German state-owned bank Hypo Real Estate reported on Wednesday a net loss of 574 million euros (860 million dollars) in the third quarter of 2009, a strong improvement from its loss of three billion euros in the same period a year earlier.
HRE was nationalised in several steps this year as the government sought to rescue a bank deemed critical to Europe’s biggest economy because it plays a major role in the issuance of “Pfandbriefe,” bonds in which small investors, savings banks and insurance companies have placed large sums.
The real estate lender had been expected to post huge losses this year, and in the first nine months it lost 1.71 billion euros, a statement said.
“The result of the first nine months of this year is not satisfactory; however, it is due to the difficult conditions on the market and the special situation of the group,” chief executive Axel Wieandt was quoted as saying.
HRE booked 810 million euros in provisions against losses on bad loans and advances in the three months from July to September, and 1.89 billion euros for the first nine months of the year.
That was much more than the 177 million euros and 247 million euros booked in the respective periods of 2008.
Operating revenues were nonetheless positive this year, showing gains of 244 million euros for the quarter and 512 million euros for the nine months from January to end September.
In the third quarter of 2008 HRE had reported a loss of 345 million euros, though it squeaked out a nine-month gain of 78 million euros.
German authorities, fearing that the bank’s collapse would trigger financial market chaos, ordered this year the first full bank nationalisation since the republic’s birth in 1949.
“We still have a long way to go before we will meet our objective – but good progress is being made with the process of restructuring,” Wieandt said.
“Conditions on the market will continue to be difficult,” he nonetheless warned.
