Sept. 28 (Bloomberg) -- IKB Deutsche Industriebank AG, the German lender that had to be bailed out by KfW Group over subprime losses, said fiscal first-quarter profit tumbled after the bank wrote down the value of financial assets.

Net income in the three months through June 30 fell 67 percent to 11.7 million euros ($16.6 million) from 35.1 million euros a year earlier, the Dusseldorf-based bank said in a statement today, after postponing the release by six weeks.

``The impact of the current crisis is only reflected to a limited extent in the figures for the first quarter,'' the bank said in the statement. The figures assume the previous fiscal year's report is ``free of material errors.'' Results from a PricewaterhouseCoopers special audit are due in October.

IKB warned earlier this month that this year's loss could be as much as 700 million euros and said future earnings will be ``significantly lower'' than previous years as it curtails investments that brought it close to default.

``First-quarter figures carry little significance,'' said Andreas Weese, a Munich-based analyst at UniCredit SpA, who has a ``sell'' rating on the shares. ``There is not much positive in the operating results either, as margins in corporate lending remain under pressure.''

Net interest income declined 0.3 percent to 142.2 million euros, while commission income fell 9.1 percent to 23.1 million euros. Costs rose 16 percent to 76.8 million euros.

The bank's shares fell 10 cents, or 0.7 percent, to 13.80 euros at 9:19 a.m. in Frankfurt. They have lost 49 percent since the end of June, cutting the company's market value to 1.21 billion euros.

Shareholder Lawsuit

At least 40 shareholders are seeking damages from IKB in a lawsuit filed yesterday that claims the bank misled investors about the impact on earnings from rising U.S. subprime loan delinquencies.

On July 20, IKB said that it would meet its full-year profit target. It scrapped that pledge 10 days later after its affiliate Rhineland Funding Capital Corp., which invests in and sells short-term debt backed by asses including subprime mortgages, couldn't get financing.

State-owned KfW and German banking associations agreed to cover as much as 3.5 billion euros of losses at IKB and Rhineland Funding. The bank also replaced Chief Executive Officer Stefan Ortseifen and Chief Financial Officer Volker Doberanzke with managers from KfW, which owns 38 percent of IKB.

The bank, which already postponed its annual shareholders' meeting until the fourth quarter of this year, said it may push back the meeting into the first quarter of 2008.

To contact the reporter on this story: Elena Logutenkova in Frankfurt at elogutenkova@bloomberg.net

Last Updated: September 28, 2007 04:20 EDT