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Germany's largest retail bank, Deutsche Postbank, has exceeded expectations by posting a 40 per cent increase in net profits for the year.

In a statement the bank said that its net profit for 2006 was €695 million (£475.8 million), with its performance aided by increased lending to consumers and a growth in interest income.

The Bonn-based company said that it had attracted 962,000 new customers over the year, exceeding a target of 900,000, while new consumer loans were up 31 per cent to €1.354 billion (£0.93 billion).

Deutsche Postbank also expanded its mortgage book, with new mortgage loans amounting to €10.8 billon (£7.38 billion).

Earnings were boosted by an 11.6 per cent rise in net interest income, which climbed to €2.17 billion (£1.48 billion).

However, despite the reported increase in profits, Deutsche Postbank said that it intended to keep its dividend payout unchanged at €1.25 (£0.85) per share.

The bank said that it expected the "positive development" it recorded in 2006 to continue in 2007, with net interest income set to continue driving increased revenues, boosted by an expansion of the company's consumer loans business and a reduction in "expensive" refinancing instruments.

Nonetheless, Deutsche Postbank said that it was set to experience a "moderate rise" in administrative expenses in the coming year, in part stemming from costs associated with remaining work needed to complete the integration of its newly-acquired mortgage business, BHW and 850 bank branches of the German post office.