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VW Financial - profit continues to fall: financial crisis depresses result of VW service provider

dpa
VW Financial - profit continues to fall
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This drop in earnings is mainly due to the strong to explain increased risk costs resulting from the financial market crisis, 'said the CEO of Volkswagen Financial Services AG (Braunschweig), Frank Witter, on Thursday (March 18) in Frankfurt. The surplus fell by almost a third to 395 million euros. 2010 expected Witter a 'result at least at the level of 2009'.

paragraph lull is putting pressure on the business

Thanks to the scrapping bonus and similar government support in other countries, the VW subsidiary increase its contract portfolio by almost eleven percent to 6.03 million . The number of new contracts rose by 16.4 percent to 2.79 million.

Due to the low sales expectations in many car markets, the service provider expects new business to stagnate at the 2009 level in this and the coming financial year. The Board of Management sees clear opportunities in the growth markets of China, India and the USA.

Volkswagen Direktbank was able to expand its customer base from 812,000 to 942,000. Deposits jumped 42.7 percent to 18.3 billion euros.

High risk provisions burdened

Last year, what it claims to be the 'largest automotive financial service provider in Europe' had to significantly increase its risk provisioning from 360 million euros in 2008 to 654 million euros. Witter said: 'In dealer financing, the weak economic framework conditions led to an increasing number of bankruptcies. The resulting increase in defaults was a significant burden for us.' Refinancing problems for medium-sized companies and a low level of consumer confidence would have left their mark Leasing business. The used car business is also to be expanded, said Witter: 'We are pursuing the goal of market leadership in the re-marketing of young used cars.'

Volkswagen Financial Services AG is a wholly-owned subsidiary ofVolkswagen AG and controls the international financial services business for the car group with 6,775 (previous year: 6,639) employees. The operating business in Germany is handled by the holding companies Volkswagen Bank GmbH, Volkswagen Leasing GmbH and Volkswagen Versicherungsdienst GmbH.

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