The BHW Group is reporting significant growth in new business and satisfactory earnings for the first nine months of 2003. The post-tax profit for the third quarter is also within the target range of € 100 million. New business and earnings were primarily driven by growth in Private Home Finance, the core segment of the Group. Sales in this division were up by 32 per cent to € 18.9 billion. The volume of Bauspar contracts taken up rose by 30 per cent to € 8.8 billion by the end of September, with the number of contracts a good 24 per cent above the previous year's level. Despite the recession in the construction industry, the volume of non-Bauspar home finance contracts concluded also increased by a considerable 17 per cent to reach around € 6 billion. Private Asset Accumulation has also expanded further, in line with the Group's private provisioning strategy. The division is dominated by life insurance and fund products, and new business in this growth segment rose by over 17 per cent in the first nine months to € 2.5 billion. The driving force behind this growth was traditional insurance products such as life insurance and pension plans (+22 per cent). As a result of more favourable stock market developments, the Group's investment fund business was also able to increase by almost 57 per cent. Good nine-month result confirms targets

Earnings at the end of the first nine months are characterised by Group net income of € 85.9 million. It is not feasible to compare this result with the same period in the previous year on account of the considerable impact on earnings brought about by the restructuring measures at AHBR, the risk potential of which was not recorded until the 2002 financial statements. The new strategic focus of the mortgage bank, combined with the intended cutback of risk in interest-bearing business and a reduction of our public sector loans portfolio, resulted in a decrease in net interest income of 20 per cent to € 546.4 million. Administrative expenditure was down 7.4 per cent to € 409.5 million. The balance of expenditure on risk provisioning amounts to € 73,1 million (previous year € 133 million). At € 74.7 million, Group operating profit is on target, as are Group retained earnings at € 73.9 million.

Importance of provisioning divisions
In a segment comparison, the core Private Home Finance segment has made the biggest contribution to the overall result, forming the basis of the whole Group's success. At € 94.8 million, the post-tax result for this segment was up by 31.7 per cent compared with the previous year. In Private Asset Accumulation, profits from life insurance alone reached € 11.7 million (+ 25 per cent). The considerable investment in the growth market of private provisioning - e.g. establishing a BHW pension fund and the company's commitment to "Metall" pensions and other forms of provisioning - is reflected in the operating profit of Private Asset Accumulation, which stands at € 8.2 million, compared to € 11.1 million in the previous year. In the medium term, this segment, which is still being established, is expected to contribute greatly to the Group result, for example through higher earnings from fund business.

Results for the third quarter confirm earnings forecasts
With Group retained earnings of € 20.7 million for the third quarter of 2003, the BHW Group is still on track with regard to the forecast annual result. Despite high commission payments due to excellent levels of new business, net commission income covers costs. The contracts concluded are also set to yield high dividends in the next few years. The risk provision balance has shown clear improvement and at € 18.3 million is well below the average for the previous quarter. Group net income for the quarter amounts to € 42.5 million.

Outlook
In spite of the current weak economy and adverse capital market conditions, BHW is confident of achieving a Group result of at least € 100 million after tax for 2003 as a whole. Thanks to its excellent position in the home finance market and investment in private and company pension provisioning, BHW anticipates continuous sales success in 2003. Political discussions about the continuation of the home ownership subsidy and construction incentive - the abolition of which BHW considers to be completely wrong, not to mention counterproductive in economic and social terms - may lead to the German population continuing to invest in housing sooner rather than later.

To the extent that this information contains forecasts or expectations, or provides statements on the future, such forward-looking statements may involve risks and uncertainty. We cannot therefore guarantee that expectations will prove to be correct. The actual results and developments may deviate significantly from the expectations expressed and assumptions made herein. Factors that may cause such deviations include changes in the general economic conditions and the competitive situation, especially in core business segments and markets, exchange rate and interest rate fluctuations, changes in national and international law, in particular taxation regulations, investment changes and changes to the business strategy. The company does not undertake to update the statements contained in this information.