Deutsche Postbank AG intends to realize its IPO plans earlier than originally scheduled. "Should nothing unforeseen occur, the Postbank share will be listed on the German exchanges before the summer break." This was the message from the Chairman of the Management Board, Prof. Wulf von Schimmelmann, to journalists in Frankfurt am Main on Wednesday. "As one of the few "genuine" retail banks, Postbank will have scarcity value with its strategy clearly oriented to private clients. We are very confident that our relatively low-risk business model will also convince the capital markets. We will make our preparations in as reputable and rigorous a fashion as investors would expect from us. We will maintain our line and are not targeting quick success, which is fleeting.” This was also the philosophy of the IPO campaign which was presented by von Schimmelmann. "Assets move" is the motto the bank will use to woo investors.

Postbank presents a new record result

Despite the unfavorable interest rate situation for Postbank as a private customer bank with a large liabilities overhang, it again generated an improved result in 2003. Profit before tax increased by almost 25% to €497 million (PY: €399 million), net income more than doubled to €352 million.

"Particularly for a bank that wishes to have itself measured on the capital market against other banks, it is very satisfying that we considerably increased return on equity," stated von Schimmelmann when presenting the business figures. Return on equity before tax in line with IAS increased to 10.7%. Return on equity after tax improved even more strongly, from 2.9% in 2002 to 7.6% in 2003. The cost income ratio was again improved, down by a further 1.6 percentage points to 76.1%, thus continuing the positive trend of recent years.

In the 2003 financial year, Postbank further reduced total assets, by €8.5 billion to just over €132 billion.

Great success in product sales

Despite the difficult economic situation and the unfavorable interest rate development, the 2003 fiscal year was a successful one for Postbank. Sales figures posted new record highs with Postbank considerably improving the cost basis and the result development in a pleasing fashion.

With 11.5 million customers, Postbank is the largest private customer retail bank in Germany, based on customer numbers. In 2003 alone, 770,000 new private and business customers opened accounts with Postbank. Since 1999, it has gained almost two million new customers in net terms. With these successes it further strengthened its position as the largest single bank in the retail sector – measured by customers, accounts, deposit volume and branches.

The Postbank checking account posted high growth. In 2003, the bank gained more than half a million new checking accounts, more than ever before. The total of private and business accounts increased by 5.2% to 4.4 million.

Investment volume increased by 11.8% or €6.4 billion, bringing up the total volume to €62.6 billion. The DAX Sparbuch was again particularly successful. DAX savers at Postbank now have investments of €4.3 billion in more than 390,000 securities accounts. In the whole deposit area, the Postbank has a current market share exceeding 4.8%. Last year, the Bank also made gains in the fund area. Customers responded particularly well to the range of guarantee products.

Business with private loans moved up by €74 million to €1.01 billion. Postbank already acquires 50% of its new business via the internet and its call centers. Since the end of 2003, Postbank has also been selling private loans via the broker operations of its second brand, DSL Bank.

With growth of 13.1% to €17.2 billion, 2003 was the year of private construction financing for Postbank. Here it posted new business of €3.4 billion, considerably outperforming the previous record of 2002.

With more than 1.9 million online accounts – 1.6 million of which are current accounts and 300,000 security accounts – Postbank is the largest single bank in the online sector in Germany.

Transaction Banking: future core business

Transaction Banking: future core business With 3.2 billion transactions annually, such as transfers, debits, incoming checks and standing orders, Postbank is one of the major players in payment processing. With considerable investments in technology and processes exceeding €200 million, it achieved more than just substantially improving its own cost efficiency. In doing so, Postbank also created unused technical and personnel capacity that can be logically used for other banks by the new Transaction Banking business division.

Postbank has already gained a prominent partner for its new Transaction Banking business division in Dresdner Bank. A preliminary agreement has also been signed with Deutsche Bank, with final agreement is expected to be concluded shortly. "I am convinced that this will bring us a great deal of pleasure in the future – both as a result of the income generated from this year onwards and from the reduction of other remaining residual costs. We are confident of becoming one of the leading suppliers of insourcing bank services,” stated Wulf von Schimmelmann.

Cost basis considerably improved

Over the last ten years, Postbank has greatly reduced its cost basis. The most important factor leading to success was being precisely in time and budget for going into production in October with the IT-platform for its core business developed in cooperation with SAP AG. This resulted in efficiency improvements of more than 50%, with a further 20 percentage points being targeted in coming years.

At the Bonn-based bank, the number of employees was reduced by 15% from 10,228 to 8,697. At the same time, the savings in external consultancy costs were in the double-digit millions, with high utilization of internal resources. "Genuine cost management is one of our particular strengths," stated von Schimmelmann.

Details of fiscal 2003

With the very strong growth in the customer business, Postbank almost completely offset the charges resulting from the lower interest level on the income side. For this reason, income related to recognized assets (net interest income, net trading income and net income from investment securities) declined by only 2.9%. At €2.38 billion, total income (total of income related to recognized assets and commission income) was down only 1.9% year-on-year.

The net interest income was most strongly impacted by declining interest rates. The 10.7% decline to €1.65 billion was largely due to accounting reasons.

At €2.38 billion net trading income and net income from investment securities developed pleasingly. The pre-tax profit at €258 million was considerably up on the prior-year value of €116 million.

In the turbulent stock exchange year of 2003, Postbank increased net fee and commission income by 2.6% to €467 million.

At €154 million (€137 million), the allowance for losses on loans and advances remained at its traditionally low level.

In the reporting year, overall administrative expenses also declined. This relates not only to staff costs, but also to expenses for property, plant and equipment. A combination of other income/other expenses and only a slight increase in the allowance for losses on loans and advances resulted in a pleasing increase in earnings.

As a result of strict cost management, Postbank reduced Administrative expenses by 4.0% to €1.81 billion. At €1.21 billion Property plant and equipment was 3.4% down year-on-year. Staff costs declined by more than 5% to €608 million. The transfer of interServ Gesellschaft für Personal- und Beraterdienstleistungen to Deutsche Post in November 2003 also had a tangible impact here.

The transfer of interServ is fully reflected in 2003 in the Other income and expenses position. A provision of €64 million which is no longer required was reversed. This was the key factor in this position increasing to €83 million.

With €381 million, the Retail Banking segment made up the lion's share of the profits before taxes. It increased by 87%. With an increase in profit before taxes of almost 27% to €118 million, the Corporate Banking segment also developed in a pleasing fashion.

In the reporting year, the Financial Markets business division posted a slight decline to €96 million (€117 million), primarily due to a changed distribution of fund charges. The earnings downturn in the Other Segment (-€98 million) is due to the fact that the charges resulting from the lower interest rate level were not balanced out, as was the case in the operating business divisions, by increasing volumes from the successful customer business.

Postbank continued its reduction of total assets by €8.5 billion to just under €132 billion, considerably improving the balance sheet structure. This is all the more remarkable with the customer-related volume being increased in a pleasing manner.