Hypo Real Estate, the property lender that was saved from collapse last year, on Friday all but ruled out a return to profitability before 2012, prolonging the expected pain for German taxpayers who now own 90 per cent of the bank.

The Munich-based lender, whose liquidity crisis sent tremors through the German financial system, revealed a net loss of €750m ($1.1bn) in the past three months as loan loss provisions from its massive property portfolio widened.