Volkswagen's largest financial services unit forecast earnings this year would at least be flat if not better after pretax profit fell 30 percent to 554 million euros ($756.7 million) in 2009, it said on Thursday.
Rising refinancing costs, dealer loan losses, and higher impairments on residual values for vehicles coming off lease depressed results last year at Volkswagen Financial Services AG (VW FS).
"We believe that we will have our growth, costs and earnings under control just as much as last year so we expect a profit for 2010 that is at least at the level of 2009," said Chief Executive Frank Witter.
Helping to offset increased funding costs last year and prevent a steeper decline in earnings, customer deposits at Volkswagen's direct bank rose 42 percent to a record 18.3 billion euros at the end of December.
"We could cover the entire refinancing needs of Volkswagen Bank GmbH last year with it and hence avoid having to resort to other instruments where risk premiums rose sharply -- particularly during the first half," Witter explained.
VW FS paid its parent Volkswagen as dividend its entire German GAAP profit of 478 million euros.
