By Nicolas Parasie
(Adds detail, analyst comment.)
FRANKFURT (MarketWatch) -- Deutsche Postbank AG (DPB.XE), Germany's largest retail bank by customers, on Friday posted a 39% fall in fourth-quarter net profit from a year earlier, but said it escaped the worst of the subprime fallout.
The bank, which is widely expected to be a takeover prey in 2008, said quarterly net profit fell to EUR169 million from EUR275 million, slightly below analyst forecasts of EUR170 million.
Lower trading profits, higher operating costs and some relatively small subprime write-downs contributed to the net profit decline.
For the full year, Postbank said it would mark down a total of EUR112 million, far less than most of its European peers. In the fourth quarter alone, Postbank wrote down EUR51 million related to risky assets, following EUR61 million in the third quarter.
The bank's full-year net profit of EUR870 million, up 25% from EUR695 million the year before, benefited from a tax gain following corporate tax reform in Germany. The 2007 earnings, including the quarterly write-downs and the repetition of its 2008 and 2010 goals, were in line with expectations, said Merck Finck analyst Konrad Becker. He will retain his buy rating.
In recent weeks, Germany's top two banks Deutsche Bank AG /zigman2/quotes/203042512/composite DB -1.62% and Commerzbank AG (CBK.XE) said they would be interested in acquiring Postbank, as it would grant them access to a wide branch network across the country.
Postbank is majority-owned by Deutsche Post World Net AG (DPW.XE), which has 50% plus one share. Postbank has a market capitalization of just under EUR10 billion.
Postbank's full-year earnings could be overshadowed by news that German prosecutors said Thursday they are investigating Deutsche Post's chief executive Klaus Zumwinkel for tax evasion.
Zumwinkel's office and home were searched Thursday as part of the investigation and the manager had been detained and questioned as a suspect. He was released after giving a statement and putting up a security deposit.
Zumwinkel has led Deutsche Post as chief executive since 1990, making him the longest sitting chief executive of any of Germany's leading corporations. The 64 year-old manager was tipped to move to the company's supervisory board in November, when his current contract as CEO expires.
Shares in Postbank closed Thursday at EUR58.55, down EUR0.99 or 1.7%. Like its peers, the share has been battered over the past months in the wake of the broadening financial crisis.
For 2008, Postbank aims to generate pretax profit of around EUR1.22 billion, a pretax return on equity of above 20% and a cost-income in its core banking operations of below 63%. It also reiterated its 2010 goals, aiming at a pretax profit of between EUR1.4 billion to EUR1.45 billion and a cost-income ratio in core banking of below 58%.
Postbank said it would propose a EUR1.25 a share dividend for the full year, unchanged from 2006.
Company Web site: http://www.postbank.com