With profits before tax of Euro 399 million Postbank presented the best result in its history for the 2002 financial year. “We consolidated our position particularly well in the market. Overall, the 2002 financial year was a satisfactory one for Postbank, in spite of the adverse conditions”, Prof. Dr. Wulf von Schimmelmann, Chairman of the Management Board of Deutsche Postbank AG, told journalists on Monday in Frankfurt.

Return on equity improved by one percentage point to over ten percent, the core yields have increased considerably. For the fourth year running Postbank thus improved its standing considerably. It surpassed most of the goals it had set for itself and acquired additional market share in many areas.

On the Postbank recipe for success von Schimmelmann said: “Above all else we are retail bankers – and not because that happens to be the latest fashion either. And, as one can see, it certainly is possible to be successful in this segment of the market despite the many prophesies of doom.” Postbank has concentrated its efforts strategically on those areas in which it can offer its customers real competitive advantages, even at the present time. This is why it is adhering emphatically to its strategic orientation.

Von Schimmelmann announced that the company intends to intensify efforts considerably in all areas this year and further increase the development momentum. For the 2003 financial year he predicted a further improvement of the earnings situation, under the premise of more-or-less unchanged general conditions.

200,000 new checking accounts
According to its Chairman, Postbank made excellent use of the opportunities for growth – against the trend in the entire sector – by means of the consistent implementation of the private clients strategy introduced in 2002. “In the continuing stock market crisis we have focused more intensively on attractive, on-balance investment products. This step has been exceptionally well received and has brought large numbers of new customers to Postbank”. As a result of the Euro 3.5 billion increase in total savings volume to almost Euro 36 billion the market share held by Postbank advanced to 4.35 percent. The new “SparCard direkt”, which was introduced in July 2002, generated over Euro 600 million by the end of the year on its own. Postbank customers made new investments totaling Euro 1 billion in the DAX savings account. The limited time offer “Bonus Neugeld” brought an inflow of just under Euro 1.9 billion.

Mortgage lending was also extended considerably. The volume of the Postbank mortgages business grew by almost 20 percent. The DSL Bank brand posted even stronger growth and realized the best result in its over 150 year history: total loan commitments from housing loans increased by 37 percent to over Euro 2.1 billion. Portfolios grew by around Euro 1.5 billion to Euro 13.1 billion in this period.

In the area of private customer loans the internet in particular proved itself to be an especially successful distribution channel: the share of new business generated via the internet totaled over 40 percent. The overall number of accounts increased to around 142,000, covering a portfolio volume of just under Euro 1 billion at the end of the year.

Von Schimmelmann described the increase in the number of checking accounts as being especially pleasing. Postbank was once again able to top the positive development of the past few years and recorded the highest ever number of new accounts opened at over 400,000. The portfolio of private checking accounts rose by just over 200,000 in net terms to just under four million. For the first time in years the bank also able posted a net growth in business checking accounts. The number of accounts maintained with Postbank increased to around 380,000, a good two percent more than at the end of 2001.

The “sound barrier” of one million checking accounts managed online was broken as early as February last year. This figure increased to approx. 1.3 million by the end of the year under consideration. Together with the approx. 450,000 Postbank Easytrade securities accounts managed online, the total number of online accounts had reached 1.7 million at the end of 2002.

Von Schimmelmann announced that the direct broker Postbank Easytrade would be interlinked completely with the other Postbank business under the motto of “one customer, one account, one security account”. “Customers want everything from one source, even in the area of security accounts.” There was good news for customers: “Even in the future, there will only be one securities business at Postbank – and thus no two-class society in terms of price.”

Corporate clients: new sectors off to a good start
Postbank further extended its position as a leading transaction bank in the systems business with its over 45,000 corporate clients. The new company Postbank Leasing GmbH experienced considerable success in 2002. The volume of new business increased from Euro 10.7 million to Euro 45.7 million. The youngest sector, Factoring, also got off to a successful start. In 2002 the subsidiary PB Factoring GmbH took on receivables with a volume of around Euro 200 million.

The sector “Financial Logistic Solutions” increased the number of major projects from 14 to 18. Here Deutsche Post World Net customers can outsource parts of their logistics functions including the financing of properties and goods to a single service provider. This offers Postbank a particular strategic advantage: due to the integration into the group and its processes it has particularly good access to the customers’ outsourced goods in the area of logistics financing. This brings additional security and creates scope for providing entirely individual and value for money financial solutions to logistics customers.

The New York subsidiary PB Capital Corporation, which was acquired in 2001, also developed positively and made a larger contribution to profits than anticipated. The loan portfolio of PB Capital totals approx. Euro 2.2 billion. Its importance as a platform for international logistics financing will increase further, especially due to the ever-closer cooperation with DHL, the new logistics brand in the Deutsche Post group.

Von Schimmelmann underlined that Postbank intends to offer the low-cost processing provided by its back office functions to other banks and savings banks in future. “The banking industry as a whole is attempting to achieve decisive cost cuts in the short-term. We are a very interesting partner due to our technological advantage and the large volumes that accumulate in our business, which allow very low unit costs. We intend to use these opportunities, especially as we will be in a position to provide services of this kind to third parties at terms that are considerably under the cost prices they can achieve.”

The results for 2002 in detail

INCOME STATEMENT:
The profit before tax for the Postbank group in 2002 increased by 16.2% to Euro 399 million. Considerably increased overall earnings, a moderate increase in administrative expenses and a credit risk provision that, while higher, was not problematic led to this result. The largest share in this was accounted for by Private Customers with Euro 226 million, followed by the Corporate Banking with Euro 80 million and Financial Markets with Euro 88 million.

The Postbank group increased net interest income to Euro 1.85 billion (+13%/+Euro 213 Euro). This was largely due to the pleasing expansion of the customer deposits and customer lending business, the boosting of the money and capital market activities and the first complete consolidation of PB Capital Corporation.

The allowance for losses totaled Euro 137 million (previous year Euro 102 million). The vast majority of this increase resulted from the first complete incorporation of PB Capital Corporation.

Net fee and commission income was up Euro 47 million to Euro 455 million. Above all, there was a growth in earnings from transactions. Postbank kept commission income from the securities business at an almost constant level in spite of the difficulties plaguing the market.

Net trading income rose to Euro 80 million (Euro 56 million) due to increased trading activities. Net income from investment securities of Euro 36 million (Euro 63 million) contains write-downs on securities holdings affecting net income totaling Euro 238 million.

Administrative expenses climbed to Euro 1.9 billion (+4%), in part due to the first complete consolidation of PB Capital Corporation. Staff costs increased from Euro 603 million to Euro 641 million (Euro +38 million /+6.3%) and operating expenditure rose to Euro 1.2 billion (Euro +40 million /+3.5%). Depreciation and write-downs of property and equipment was under the value for the previous year.

The number of staff in the Postbank group dropped to 10,200 employees (previous year 10,450), 8,500 of whom are involved in banking operations.

The balance of other operating income and expenses sank Euro 94 million to Euro -4 million. In 2001 this position contained income from non-recurring writing back of provisions.

Net profit for the period of Euro 132 million results after allowances are made for the considerably increased income taxes and minority interests. The figure for the previous year was Euro 190 million.

DEVELOPMENT OF THE BALANCE SHEET
The balance sheet total increased in comparison to that of the previous year by Euro 1.3 billion to 141 billion. The slight increase of 0.9% resulted from the considerable increase in customer deposits with the simultaneous continued reduction of money and capital market refinancing.

An increase in trading assets of Euro 5.9 billion to Euro 11.3 billion offsets a decline in investment securities of Euro 3.8 billion to Euro 44.3 billion.

At Euro 43.9 billion loans and advances to customers were down Euro 0.3 billion on the previous year. Postbank increased the volume of mortgage lending by almost Euro 2 billion to Euro 15.2 billion. The volume of private customer loans was up 26% to Euro 0.9 billion. The most notable declines were in the areas of amounts due from public authorities and the total lendings of PB Capital Corporation.

Due to expiring issues, securitized liabilities sank by Euro 4.7 billion to Euro 34.8 billion. In contrast, amounts due to customers increased by Euro 4.3 billion to Euro 66.7 billion. The total savings volume in this figure grew more strongly than ever before to Euro 35.7 billion (+10%/ Euro +3.3 billion).

The slightly lower figure for group shareholders’ equity of Euro 4.3 billion owes primarily to the change made to the revaluation reserves in line with international accounting standards (IAS). At the end of the year the aggregate capital ratio was 9.6%, the core capital ratio was 6.9%.