German public-sector bank BayernLB on Tuesday reported a first-half profit, citing strong customer business and lower costs, but warned that risk provisions rose and the year's second half won't be easy.
BayernLB, which received a rescue package from the Bavarian and German governments, had a net profit of ⁈llion ($514 million) in the January-June period. That compared with a ⁈llion loss a year earlier.
The bank did not immediately give second-quarter figures.
"Performance in the customer business is very satisfactory," chief executive Michael Kemmer said. "At the same time, the risk protection plan ... had a stabilizing effect" and the bank made progress cutting administrative costs.
Net interest income was down 1.5 percent at ⁈billion, the bank said. Income growth in customer-related business areas "was offset by higher expenses for ensuring liquidity," it added.
Risk provisions for the credit business swelled to ⁈llion in this year's first half from last year's ⁈llion.
BayernLB had a full-year net loss of ⁈illion in 2008, following heavy hits from write-downs, loan-loss provisions, bank failures in Iceland and the collapse of U.S. investment bank Lehman Brothers.
It won a ⁈lion capital injection from the Bavarian state government and the German federal government, plus a Bavarian ⁈llion risk shield covering its asset-backed securities portfolio.
In Tuesday's earnings report, the bank reiterated its warning that it could still end up losing money this year.
Serious full-year forecasts are impossible due to continued economic and market uncertainty, and "a loss for the year still cannot be ruled out," Kemmer said. The bank said it expects more credit risk provisions in the second half.
"The second half of the year will not be easy," Kemmer said. He added, however, that BayernLB has a "solid capital base."
BayernLB and other public-sector wholesale banks are owned by a combination of state governments and municipally backed local banks.