With the best nine months in its history, the positive trend at Deutsche Postbank continued in the third quarter of 2004. As against the very good prior-year period, profit before tax rose by 33% to €160 million. It was also higher than the second quarter of 2004 by almost 10%. On a cumulative basis, profit before tax increased by approximately 39% to €449 million. After taxes and minorities, net profit for the first nine months totaled €291 million.

Thus Postbank is confident that it will be able to outperform its original objective of increasing profits before tax by 15% year-on–year. The company retains its 2006 objective of achieving a return on equity before tax of 15% and a cost-income ratio of under 65%.

Postbank increased earnings considerably and keep costs largely stable. At the same time, allowances for losses on loans and advances increased less than retail business volume. In the first nine months, total income increased by €130 million or 7.2% as against the prior year period to €1.94 billion. In the third quarter alone, the increase in earnings accelerated to almost 17% year-on-year.

On balance sheet income (total of net interest income, net trading income and income from investment securities) supported this development. It increased year-on-year by 2.9% or €42 million. With interest rates remaining low, the income structure again shifted. In the third quarter of 2004, net interest income, at €404 million, was higher than the equivalent period of the previous year. This was due to high volume growth.

The particularly encouraging increase in fee and commission income of 25.5% is due not only to continuing success in sales of products requiring substantial advisory services, but also to the insourcing of transaction banking. In the second quarter, Postbank had already assumed payment processing for Dresdner Bank. As at July 1, 2004, Deutsche Bank was added. As a result, the full income impacted the third quarter.

The increase in the allowance for losses on loans and advances against the first nine months of the previous year to €126 million remained below the growth rate for of retail lending.

Postbank kept administrative expenses stable as against the prior year period. This is particularly remarkable given the fact that in previous months additional costs for transaction banking were incurred. The number of employees in this area increased temporarily by 658, but will be considerably reduced again by contractual agreement in the coming quarters. This was the only reason for the number of employees increasing in the third quarter to a total of 10,174.

After nine months, the balance from other income and expenses was €10 million, €3 million higher than the same period of the previous year.

As of September 30, 2004, Postbank's total assets totaled €133 billion, the same level as the previous year. In line with bank strategy, the structure of the balance sheet was changed. The share of retail business was developed is a satisfactory manner, with the low interest bearing loans and advances to other banks and the comparatively expensive securitized liabilities being reduced considerably. The internally calculated BIS Tier 1 ratio was approximately 7.1% as of September 30, 2004.

Record growth in private checking accounts

In the third quarter alone, Postbank gained around 212,000 new customers. Very positive was particularly the increase in private checking accounts: 159,000 were opened in the third quarter, setting a new record. This is a year-on-year increase of almost 20%. The bank now has approximately 4.4 million private checking accounts.

As against December 31 2003, the savings volume increased by a further 2.7% to €40.1 billion. Postbank earnings savings introduced only seven months ago generated deposits in excess of €0.7 billion. In addition, in July 2004 the SparCard direkt broke the €2 billion barrier. As of the end of September, it had generated deposits of €2.3 billion.

Against the previous quarter, funds volume increased by 5.4% against the previous quarter to €4.1 billion. €2.6 billion of this is invested in investment funds. Against the end of 2003, the number of security accounts in Germany increased by 8.9% to 507,500. Postbank Vermögensberatung continued its rapid growth and now has over 370 mobile consultants. In terms of gross commissions generated, it is well above the figure scheduled.