The balance sheet-related earnings of Postbank (net interest income, net trading income and net investment result) were up 3.4% in the 2005 fiscal year to EUR 2.13 billion (previous year: 2.06 billion EUR).

Despite the historically low interest rates, Postbank has managed to increase its net interest income by 6.9% to 1.67 billion EUR. Whilst net trading income was up 3.5% to EUR 205 million the net investment result, at EUR 252 million, was down 15.2% on the record level set the previous year.

Net commission income again developed pleasingly, increasing 14.2% against the previous year’s figure to EUR 699 million.

Net loan loss provisions were up 10.8% to EUR 205 million. This increase is below the rate of growth of customer lending.

At EUR 1.88 billion, administrative expenses were kept almost constant. Due to the planned reduction in the Transaction Banking area in particular, the number of employees in the Group as a whole sank from 10,006 full time equivalents on December 31, 2004 to 9,235 on Dec. 31, 2005.

Other operating income and expenditure was characterized by several special effects in 2005 which led to a negative balance overall of EUR -21 million (28 million EUR). In view of the integration of BHW, Postbank had already taken provisions totaling EUR 93 million which will reduce administrative expenditure in subsequent years. Additionally, it has adjusted the book values of real estate chiefly occupied by its owner to the current market values and implemented write-downs of EUR 24 million.

Retail Banking contributed EUR 588 million to the pre-tax result, which was up 11.0% to EUR 719 million (EUR 480 million /+22.5%). The corporate customers business generated earnings 19.2% higher than in 2004 at EUR 149 million and Financial Markets also grew 14.3% to EUR 120 million. Transaction Banking not only employed several hundred employees who would otherwise have been surplus to requirements in a manner that generated earnings, the segment also posted a result of EUR 23 million after EUR 9 million the previous year.

Taking into account the negative balance sheet effects of other income and expenditure, the segment “Others” was at EUR -161 million after EUR -71 million the previous year.

The net profit for the period was EUR 492 million, taking into consideration a taxation ratio of 31.4% and minority shareholdings of EUR -1 million and was thus up 13.1% on the previous year.

Earnings per share based on the 164 million registered shares issued increased from EUR 2.65 in 2004 to EUR 3.00.
The Management Board has once again proposed the payment of a dividend of EUR 1.25 per share to the Annual General Meeting, equivalent to an amount for distribution of EUR 205 million.

Balance sheet
The balance sheet total at Postbank was EUR 140.3 billion as at December 31, 2005 and thus EUR 12.0 billion up on the figure at the end of 2004. On the assets side, the increase was due primarily to the expansion of the customer lending business and monetary and capital market investments. On the liabilities side, these face increased monetary and capital market liabilities due to the reporting date.

Loans and advances to customers improved in terms of both their structure and their total in the period under consideration, expanding by EUR 5.1 billion. Postbank reduced loans and advances to public authorities by EUR 2.4 billion to EUR 8.7 billion in line with its strategy due to the low margins.
By way of compensation, it has increased the volume of construction financing in particular by EUR 6.6 billion. In addition to the successes in new business, Postbank also made portfolio acquisitions totaling EUR 3.3 billion.

At EUR 83.6 billion, monetary and capital market investments – loans and advances to other banks, trading assets and investment securities – were up around EUR 6.6 billion on the previous year’s figure. Whilst trading assets showed only a slight improvement on the previous year’s level with an increase of EUR 0.7 billion to EUR 10.4 billion there were some shifts between the items ‘Loans and advances to other banks’, which declined EUR 6.0 billion to EUR 17.8 billion, and ‘Investment securities’, which rose EUR 11.9 billion to EUR 55.4 billion.

Liabilities to customers sank EUR 2.0 billion to EUR 78.5 billion. Savings deposits again improved pleasingly by EUR 1.8 billion to EUR 38.0 billion. Other liabilities were down EUR 3.8 billion to EUR 40.5 billion.

Postbank’s comparatively expensive existing holdings of securitized liabilities continued to decline, going down EUR 1.9 billion to EUR 14.6 billion. On the one hand, the expansion of liabilities to banks by EUR 14.6 billion to EUR 30.8 billion replaces the repatriation in the area of securitized liabilities and other amounts due to customers; on the other hand it reflects the expansion of the investment securities due to the reporting date.

Equity increased to just under EUR 5.2 billion. The BIS core capital ratio as at December 31, 2005 was 8.3% compared with 8.5% at the end of the previous year.

Postbank also made pleasing progress in the key ratios for its management: the return on equity before tax improved from 14.0 to 14.6%. The cost income ratio sank in the classical banking business from 67.7% to 63.7%, thus already reaching the target set for 2006 of decreasing to below 65% in the last fiscal year. Including the Transaction Banking segment, the cost income ratio totaled 66.6% (69.9% in the previous year).