Vienna - Austria's largest bank, Bank Austria, said Thursday its net profits for the first quarter of 2008 dropped by 23 per cent to 410 million euros (629 million dollars), but losses were partly cushioned by strong growth in the Central and Eastern Europe region.

The bank, a member of UniCredit Group, was affected by the international credit crisis.

Losses in its trading portfolio and a weaker operating performance led to trading losses of 143 million euros, compared with a record performance of 161 million euros in the same period last year.

Trading losses weighed heavily on Bank Austria's operating profit, which was down to 603 million euros from 769 million euros in the first quarter of the previous year.

Valuation losses on the structured credit portfolio amounted to 141 million euros.

Bank Austria's CEE division, which spans 19 countries, increased pre-tax profits by 38 per cent to 420 million euros, thereby helping to cushion the losses incurred by the credit crisis.

Net interest income rose by 26 per cent to 1.12 billion euros, net fees and commissions increased slightly to 519 million euros, compared with 517 million euros in the first three months of 2007.

Operating expenses were up 11 per cent to 941 million euros, due to the acquisition of two banks in Kazakhstan and Ukraine, the bank said.

Return on equity was 11.5 per cent, down from 16.9 per cent in Q1 2007, the cost/income ratio was at 60.9 per cent, up from 52.5 per cent.

Bank Austria CEO Erich Hampel stressed that the banks broadly diversified business model proved resistant to the crisis.

"The favourable development of our sustainable income components, the continued gratifying business development at our banking subsidiaries in Central and Eastern Europe as well as strict cost management provide a strong basis for the rest of the year," Hampel said in a press release. (dpa)