Postbank growth continues

In the first quarter of 2007, Deutsche Postbank AG improved further. Despite fiercer competition, it generated a pre-tax profit of EUR222 million, 7.2% up year-on-year. Adjusted for one-off costs, e.g. from the integration of BHW and VAT increase, the pre-tax profit rose by 13.9% to EUR246 million. The cost-income ratio improved by 1.8 percentage points to 69.4% against the comparative quarter in 2006. In the classical banking business, i.e. without Transaction Banking, the ratio declined by as much as 2.5 percentage points to 67.3%. The return on equity before tax rose from 16.1% to 17.0%. In the first three months, the Postbank Group gained more than 260,000 new customers, 17,000 more than in the first quarter of the previous year. It is thus on track to reach its objective of a million new customers in 2007.

The balance-sheet related revenues (net interest income, net trading income and net income from investment securities) moved up by 4.0% to EUR674 million in comparison to the equivalent quarter in the previous year. Net interest income rose by 5.2% to EUR543 million. Net trading income and net income from investment securities at EUR61 million and EUR70 million respectively remained stable against the equivalent quarter of the previous year.

In the first quarter of 2007, net fee and commission income rose slightly by EUR1 million to EUR357 million.

Risk provisions increased by 4.7% to EUR90 million. They thus again moved up less than the credit volume, which expanded by 16.8% to EUR83.4 billion.

At EUR715 million, administrative expenses were at the same level of the equivalent quarter of the previous year. The stable development is all the more encouraging as administrative expenses contain both non-recurring charges, e.g. from integrating BHW and the branches, as well as the sales tax increase.

Net other income and expenses was minus EUR4 million, after a plus of EUR4 million in the previous year.

With a tax rate of almost 35%, net income of EUR144 million resulted, EUR11 million or 8.3% more than in the equivalent quarter of the previous year. The equates to earnings per share of EUR0.88, after EUR0.81 in the first quarter of 2006.

Retail outlets successful

The positive trend of the retail outlets continued in the first quarter. Training measures implemented in 2006 are already paying off. In the savings area, the focus point of sales activities in the retail outlets, the newly acquired gross volume improved from EUR490 million to EUR2.25 billion. As a result the Bonn-based bank increased its total savings portfolio against the end of 2006 from EUR42.1 billion to EUR43.7 billion. Despite fiercer competition, sales of checking accounts remained stable year-on-year at approximately 78.000. Postbank also posted gains in the credit business: in the retail outlets, new business with installment credits rose by 28.1% to EUR82 million. In the area of insurance, the Bonn-based bank sold contracts with a sum assured of EUR110 million in the first quarter of 2007.

Savings volume increased

Against the end of 2006, Postbank increased total savings volume including home savings deposits by EUR1.8 billion to EUR60.5 billion. Due to the succes the quarter saving product ("Quartal-Sparen") with particularly attractive interest rates, its portfolio of classical deposits improved considerably by EUR1.6 billion to EUR43.7 billion. This is particularly pleasing as Bundesbank statistics show that the volume of savings deposits declined in the first three months of the year.

Portfolios in securities accounts and investment accounts increased
In the Securities business, in the first quarter gross inflows increased year-on-year by 1.7% to EUR712 million. The sale of certificates and Postbank pension accounts developed particularly well. In the first quarter, the Postbank Group opened 32,000 new securities accounts. Total securities account holdings increased from EUR9.8 billion at the end of the first quarter in 2006 to EUR10.9 billion on March 31, 2007. The number of securities accounts declined slightly from approximately 928,000 to approximately 915,000. The main reason was streamlining empty security accounts.

Expansion of transaction banking

In the first quarter of 2007, Postbank processed 1.9 billion payment transactions, after 1.6 billion in the equivalent period of the previous year. The increase is largely due to assuming payment transaction processing for HypoVereinsbank. Integration of the payment units assumed from HVB is on schedule.