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Last Updated:  Wednesday, 19 February, 2003, 11:05 GMT
Historic loss for German bank giant
Customers at a HVB branch
In spite of the loss, the bank believes the worst is now over

HVB Group, Germany's second largest bank, has posted its first ever annual loss.

The bank was hit hard by the dire state of the German economy.

The loss at Europe's largest lender was mainly due to due to spiralling bad debts and a sharp drop in income.

The year 2002 was the most difficult and the worst in the bank's history
Dieter Rampl, chief executive, HVB
HVB said on Wednesday it made a net loss before taxes of 858m euros (576.9m) in 2002, which was far worse than expected.

The year before, Hypovereinsbank had made a profit of 1.5bn euros.

"The year 2002 was the most difficult and the worst in the bank's history," chief executive Dieter Rampl said.

Worst is over?

Bad debts at HVB shot up to 3.79bn euros last year, well above the bank's target of 3.3bn euros.

It was also far more than the 1.3bn euros in bad debts at Commerzbank and 2bn euros at Deutsche Bank.

But Mr Rampl added that he believed the worst was over and that things had looked better in January.

The bank said it was on track for its "transformation 2003" programme, aimed at improving earnings, and said it was making good progress in bringing down administrative costs.

As part of a restructuring effort, it will sell some of its assets and spin-off its commercial real estate activities.

HVB shares were trading at 11.12 euros, up 1.8%, in early trading in Germany on Wednesday.

The sluggish state of the German economy has led to severe problems in the country's bank sector.

Rival bank giants Commerzbank and Deutsche Bank have also recently reported disappointing results.





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SEE ALSO:
Red ink for German bank giant
05 Feb 03 |  Business
German inflation at three-year low
14 Jan 03 |  Business
Business gloom deepens in Germany
18 Dec 02 |  Business
German confidence falls again
26 Nov 02 |  Business


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