The Dublin unit of Germany's fourth largest bank, Landesbank Baden-Württemberg, reported a 6.6 per cent drop in net profits to €25.4 million last year due to a reduction in trading income and a lower return on capital, new filings reveal.
However, LBBW Bank Ireland plc is projecting profit growth this year. "That is what's in the budget," said finance and operations director Tony McPoland.
The bank's IFSC operation increased its dividend by 8.7 per cent last year to €25 million, but it also took a capital contribution of €126.3 million from its parent to fund the development of the business.
Accounts lodged in the Companies Office on February 7th show that shareholders' funds in the bank increased to €363.37 million at the end of 2005 from €234.7 million a year earlier. Pretax profits fell to €27.93 million from €30.52 million and total operating income fell to €39.48 million from €41.07 million.
"The reduction in profitability was primarily due to a lower return on capital of the bank, and to a reduction in trading income in the year," said the directors' report with the accounts.
"The credit portfolio increased substantially during the year, but, like other market participants, the bank saw a reduction in credit margins, a key indicator of the performance of the business.
"The company foresees continuing development of its core business activities in 2006 of management of credit portfolios, funding and market trading."
The IFSC unit was established in 1994 as a subsidiary of BW Bank, which merged last August with Landesbank Baden-Württemberg. It was renamed LBBW Bank Ireland at that time.
The Dublin office formerly held the mandate for all international banking for BW Bank. Landesbank already had international banking operations elsewhere, so the Irish unit is introducing new products this year that will see it manage credit for third parties for the first time.
"Following the merger with LBBW, the fourth largest bank in Germany, the Irish bank will focus more on the provision of credit fund advisory services to institutional clients in Europe," said managing director Liam Miley.
"This is a natural evolution towards optimising the high value skills base in Dublin. The bank is in the process of launching its first product offering."
LBBW Bank Ireland increased its staff to 47 from 39 last year.
