Munich - Germany's HVB banking group said Thursday it had slumped into the red during the first quarter as global financial market turmoil resulted in the company posting a pre-tax loss of 318 million euros (488 million dollars).

This compared to a profit of 1.105 billion euros for the Munich- based bank, which is the German offshoot of Italy's Unicredit.

Helping to lead to the fall in earnings was a slump in investment banking revenue with the upheaval in world markets following the US subprime mortgage industry crisis also leading to HVB's after-tax profit sliding into a loss of 282 million euros.

"In the first quarter of 2008 the financial market crisis due to the widening of the credit spreads left a significant mark also on us leading to revaluations in our structured credit portfolio," said HVB chief Wolfgang Sprissler releasing the results.

Sprissler was also cautious about the outlook for financial markets in the months ahead.

"Even though there were weak signals of a stabilization of the financial markets in April 2008, we still regard the situation on the financial markets as being very unstable," he said.

"The development of the fiscal year is depending on the course of the financial market crisis and is therefore hardly predictable," Sprissler said.

However, HVB also successfully managed to tackle costs during the quarter, with operating costs declining by 8.8 per cent. (dpa)