In the first six months of 2005, Deutsche Postbank AG continued its successful course. At EUR338 million, profit before tax was 17% up on the first half of the previous year. The result was
also positive in a quarterly comparison. Against the strong first quarter, Postbank improved profitbefore tax by 4.8%, on a year-on-year basis by as much as 18.5%.After six months, the cost-income ratio was 68.6% against 70.8% in the comparable period of theprevious year. In its traditional banking business (without Transaction Banking), the figuredeclined from 69.9% in the first half-year of 2004 to as low as 65.9%. Return on equity beforetaxes increased to 14.0% after 12.6% in the comparative period of the previous year. The growthdriver was again higher income, up 10.6% to EUR 1.39 billion. Administrative expenses increasedcomparatively moderately by 7.3%, due to the start of the new Transaction Banking businessdivision. The 25.6% higher allowance for losses on loans and advances was in line with expectationsand moved parallel to expansion of the loan business.
Balance-sheet related income, i.e. the total of net interest income, net income from investmentsecurities and net trading income, moved up by 4.7% to EUR 1.04 billion. Despite the historicallylow interest environment, net interest income developed very positively. Particularly as a resultof the successful customer business, it moved up by 14.0% year-on-year to EUR 848 million. At EUR99 million, net income from investment activities was 20.2% lower year-on-year. For net tradingincome there was a comparable decline, by 25.2% to EUR 95 million. The significant increase of netfee and commission income by 33% to EUR 351 million reflects the new Transaction Banking businessdivision, which was only partly included in the previous year period. But ongoing cross-sellingsuccess in the core business also impacted here. The share of net fee and commission income tototal income was raised from 21.0% in the first six months of 2004 to a satisfying 25.2%. In thereporting period, the allowance for losses on loans and advances developed in line withexpectations. At EUR 103 million (+25.6%), it moved up somewhat less strongly than the customerloan volume, which increased by 28.7%.
Postbank was very satisfied with the moderate increase in administrative expenses by 7.3% to EUR956 million due to Transaction Banking. As a result of the scheduled alignment in TransactionBanking, the number of employees in the Postbank Group declined to 9,554 after 10,006 on December31, 2004. At EUR 4 million (EUR 3 million in HY1 2004), net Other operating income / expenses wasat the usual low level. In the first six months of 2005, Postbank increased profit before taxconsiderably against the equivalent period of the previous year, by 17.0% to EUR 338 million. ToJune 30, total assets at Postbank were EUR 136.8 billion, approximately EUR 8.6 billion higher thanat the end of 2004.
Customer growth stabilizes as a high level
Customer growth of the Postbank in its core business again achieved a satisfyingly high level.For Postbank, 2004 was an exceptional year due to the initial public offering and the highermarketing expenditure and the corresponding media presence. In this year it gained 890,000 newcustomers. In the first six months of 2005, the Bank gained 362,000 new customers after 454,000 inthe first six months of 2004. In the second quarter of this year alone, there was an increase of172,000 new customers. In the first six months of 2005, Postbank opened 239,000 new checkingaccounts after 280,000 in the first half-year of 2004. Savings volume improved slightly against theend of 2004, by 1.2% to EUR 41.3 billion. The key growth driver was Postbank “Gewinnsparen”, withwhich the Bank achieved a deposit volume of EUR 1.3 billion to June 30, 2005, after EUR 850 millionat the end of 2004.
Deposit overhang further reduced
In its private mortgage lending, Postbank posted strong gains. Against the end of the year,volume increased by EUR 4.5 billion or 20.2% to EUR 26.8 billion. There were no additions to theportfolio in the second quarter. Consumer loan volume also increased, from EUR 1.2 billion at theend of 2004 to just under EUR 1.4 billion as of June 30, 2005. As of June 30, 2005 overall customerdeposits reached a volume of EUR 72 billion and customer loans EUR 40.8 billion, so that Postbankreduced its deposits overhang from EUR 37.4 billion to the end of 2004 to EUR 31.2 billion on June30, 2005. Even in a relatively unfavorable interest environment, Postbank retains its 2006objective of achieving a return on equity of 15%, related to shareholders’ equity of approximatelyEUR 5.1 billion and reducing the cost-income ratio in the traditional banking business to under65%.
