Hypo Real Estate posts another loss for Q3

BERLIN - Nationalized German lender Hypo Real Estate Holding AG on Wednesday reported another net loss for the third quarter as fallout from the financial crisis and loan-loss provisions continued to weigh on earnings.

The Munich-based company said it lost euro574 million ($860 million) in the July-September period, still an improvement on its huge loss of euro3.05 billion a year earlier.

The company said its earnings so far this year have been hurt by impairments "connected with the financial market crisis and the economic downturn, which in particular is also affecting the commercial real estate market."

Loan-loss provisions rose to euro810 million from euro177 milllion in last year's third quarter.

Hypo Real Estate had a net commission loss of euro97 million, a figure that it said was affected by expenses related to the liquidity support it has received. A year earlier, net commission income was euro35 million.

The bank is the most prominent German victim of the financial crisis. It ran into trouble in September 2008 after its Ireland-based unit Depfa Bank PLC failed to find short-term funding amid the widening credit crunch.

The German government, which argued that it needed to take direct control after intervening repeatedly to shore up the company with loan guarantees, completed its nationalization last month. Last week, the bank said the government had granted it another euro3 billion in fresh capital.

For the year's first nine months, Hypo Real Estate lost just over euro1.7 billion, compared with nearly euro2.9 billion last year. Loan-loss provisions increased to euro1.89 billion from euro247 million.

"The result of the first nine months of this year is not satisfactory," CEO Axel Wieandt said in a statement, but he added that "it is due to the difficult conditions on the market and the special situation of the group."

"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," he added. "Conditions on the market will continue to be difficult."

Hypo Real Estate said its core capital ratio, a key measure of a bank's health, improved to 6.1 percent at the end of September from 3.4 percent at the end of last year.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.