German lender IKB Deutsche Industriebank AG, whose near failure amid the subprime mortgage crisis sent shockwaves through Europe's financial sector, reiterated its full-year loss could reach almost $1 billion.
"In view of the crisis, the board of managing directors expects the group to record a net loss for the 2007/08 financial year (according to IFRS) of up to 700 million euros" ($990.9 million), IKB said on Friday, confirming its forecast. "For this reason, it is expected that there will be a negative impact on the profit-participation certificates and silent partnership contributions."
IKB made a net profit of 180 million euros a year earlier. Duesseldorf-based IKB said its annual meeting, now planned for the fourth quarter of 2007, could slip into the first quarter of 2008 if special audits of its books now under way affect its annual financial statements.
Its shares, which traded above 33 euros in February, retreated 1.9 percent in early business on Friday and were down 0.7 percent at 13.80 euros by 0750 GMT. UniCredit said in a note to clients that IKB's share price was practically unpredictable despite support of late from take-over speculation.
"However, we doubt that the burden of the risk backing will be totally assumed by the banking pool led by KfW without any further compensation. For this reason and the comparatively high valuation we continue to avoid ... the stock," it said.
IKB, which lends mostly to mid-sized companies, released delayed fiscal first-quarter results for the three months to June 30 that reflect events before the debt crisis exploded, triggering a 3.5 billion euro rescue by other German banks.
IKB's operating profit fell by two-thirds to 18.4 million euros, primarily due to a 37 million euro reduction in net income from financial instruments at fair value, it said. Consolidated net income fell by two thirds to 12 million.
German bank LBBW said the results were below expectations but were largely irrelevant because charges related to IKB's subprime investments would come only later. The IKB bailout made nervous peers wary about lending to German banks for a time.
Germany's government is thinking about selling the IKB stake that it holds through state development bank KfW, which itself put up more than 8 billion euros in liquidity guarantees to bolster IKB. Germany's public sector banks would be interested in buying the German government's 38 percent stake, the head of the country's savings banks association DSGV has told Reuters.
Commerzbank Chief Executive Klaus-Peter Mueller has also said he would look at IKB if it came up for sale, while co-operative banks DZ Bank and WGZ bank have also said in the past that they could be interested.