German market operator posts 34 pct drop in profits

FRANKFURT: German stock market operator Deutsche Boerse said Tuesday that its second-quarter profit fell by 34 percent owing to lower trading volumes and higher costs amid the financial crisis.

Deutsche Boerse posted a net profit of 164.9 million euros (237 million dollars) as the financial crisis cut into its core business.

The result was well below an average analyst forecast compiled by Dow Jones Newswires of a 27 percent drop to 181 million euros.

"Persisting uncertainty in the financial markets and the resulting reluctance shown by market participants had a negative effect on trading volumes," a company statement said.

Sales fell by 12 percent to 515.6 million euros, it added, while total costs increased to 322.5 million euros from 297 million in the second quarter of 2008, in part owing to plans to move to a Frankfurt suburb.

The market operator recorded net interest income of 25.9 million euros, a 56 percent drop that marked the effect of historically low short-term interest rates on its Clearstream clearing and settlements unit.

Chief executive Reto Francioni nonetheless insisted that "despite continued reluctance of market participants in the cash and derivatives markets compared to record year 2008, we were able to achieve a solid result for the first half-year 2009."

The volume of transactions contracted by seven percent on Deutsche Boerse's Xetra trading platform to 43.2 million, and by 14 percent on its pan-European Eurex platform to 709.5 million.

The company reiterated that 2009 costs would not exceed 1.28 billion euros but did not immediately provide an outlook for the remainder of the year.

A telephone conference with analysts is scheduled on Wednesday.

"No decision has been made on resuming share buybacks in 2009," the statement said.

Shares in Deutsche Boerse have lost 13 percent of their value over the past year, narrowly outperforming the broader German market, which is down by 13.5 percent over the same period.

Elsewhere in the European financial sector meanwhile, the French bank BNP Paribas and British lender Standard Chartered posted solid quarterly profits on Tuesday despite a surge in bad loans.

Swiss peer UBS and the Italian banking group UniCredit reported heavy losses however.

The global banking sector was badly hit by the economic crisis and has received billions of dollars, euros, pounds and yenh in state aid. It is being closely watched by economists as an indicator for a possible economic recovery.