Dresdner Bank- developments during the first quarter of 2004

Best quarterly operating result of the past three years
Positive trend continues - costs and loan loss provisions reduced substantially

During the current year’s first quarter, Dresdner Bank Group achieved an operating result of €187 million, the best quarterly result since the takeover by Allianz three years ago. The result has more than doubled compared to the reference period in 2003. The improvement is attributable to the ongoing drive to reduce administrative expenses and to significantly lower loan loss provisions.

A break-even result was achieved in the non-operating area, resulting in a profit before taxes of €187 million for Dresdner Bank during the first quarter of 2004 compared to €3 million in the first quarter of 2003. After tax expenditure of €31 million, the Bank achieved a profit after taxes of €156 million compared to - €186 million in the 2003 reference period.
The Chairman of Dresdner Bank’s Board of Managing Directors, Dr. Herbert Walter, explained: "The first quarter results show that we are on the right track with our ‘New Dresdner’ Programme. Our costs and risks are under control, and we have seized new growth initiatives."

Walter drew attention to the fact that the figures cannot be extrapolated to the whole year: "In our field of business, the first quarter typically contributes strongly to results." The Bank’s goals of achieving a positive result after taxes in 2004 (before restructuring costs) and earning its capital costs in 2005 remain unchanged.

Profit/loss components in detail
During the first quarter of 2004, Dresdner Bank achieved an operating income of €1,707 million. Unadjusted, this corresponds to a decline of 13.3 percent; on an adjusted basis (exchange rate effects, IAS 39, cutbacks in IRU/RWA), operating income has remained largely stable.

Net interest and current income declined by 18.5 percent to €520 million during the first quarter of 2004, primarily because of ongoing cutbacks in risk-weighted assets, which were reduced by 19 percent to €108.3 billion.

Net fee and commission income increased by €23 million to €747 million. Greater income from the securities business was the principal cause.

Net trading income amounted to €440 million after the first three months, approximately €167 million lower than the previous year’s exceptionally high result. Valuation effects resulting from the application of IAS 39 and a weaker currency trading result contributed to the development.

Net loan loss provisions were reduced to €135 million, 60 percent below the reference period’s value and below our own expectations. The decline can be attributed inter alia to an accelerated cutback in loans and to an improvement in the quality of the credit portfolio.

Administrative expenses amounted to €1,385 million after three months, a decline of 9.4 percent compared to the 2003 reference period. Apart from decreasing material costs, staff reduction measures are also taking effect as planned. Compared to the previous year, the number of employees was reduced to 34,123 at the end of March 2004. In March 2003 the number of employees was 38,063. In relation to the overall objective of cutting back 4,700 full-time equivalents (FTE), around 2,300 or approximately half of the total, had been realised by the end of the first quarter.

Liable capital for regulatory purposes (BIS) at the end of the first quarter totalled approximately €15 billion. The core capital ratio was 6.8 percent, while the total capital ratio was 13.9 percent.

Segment results
In total, an operating result of €237 million was achieved based on the strategic business activities of the four divisions Personal Banking, Private & Business Banking (still shown jointly as Private and Business Clients), Corporate Banking, and Dresdner Kleinwort Wasserstein. This is contrasted by an operating loss of €50 million in the area of non-strategic business, namely in the Institutional Restructuring Unit (IRU) and in Corporate Investments.

The Private and Business Clients division experienced a very successful start to 2004. In a market environment characterised by exceptionally intense competition, the division posted an operating result of €169 million for the first quarter of 2004 compared to €59 million during the previous year’s reference period. An increase of 6.5 percent in operating income to €855 million as well as a reduction by €33 million or 5 percent in administrative expenses contributed to the positive development of the result. Furthermore, loan loss provisions declined by €25 million, compared to the previous year’s figure, to €65 million. Profits before taxes increased sharply to €164 million compared to €49 million in the first quarter 2003.

The Corporate Banking division increased its operating result by more than 60 percent to €92 million during the first three months. In spite of a targeted reduction of risk capital, operating income just managed to achieve the reference year’s level because of slightly increased margins. Administrative expenses dropped by 12.5 percent; loan loss provisions for the first three months totalled €44 million, i.e. €30 million less than the previous year.

Profits before taxes rose strongly to €92 million compared to €59 million in the 2003 reference period.

The DrKW division posted an operating result of €83 million for the first quarter of 2004. This corresponds to a decrease of €34 million compared to the previous year’s first quarter. Operating income dropped by 7 percent to €559 million. Though the result from equity transactions developed positively, DrKW could not repeat the exceptionally good result from interest-related operations achieved during the first quarter of 2003. It also has to be taken into account that the investment bank further reduced its utilisation of risk capital because of volatile markets. The decrease in income was partially compensated by the rigorous lowering of administrative expenses. Overall, the division posted a profit before taxes of €75 million compared to €120 million in the first three months of the year 2003.

The Institutional Restructuring Unit (IRU) recorded an operating loss of €52 million for the first quarter of 2004. The IRU has thereby reduced its negative contribution to the result by more than half compared to the first three months of the previous year. The portfolio cutback was reflected in a decline by €62 million in operating income and a reduction by €34 million in administrative expenses. The improvement in the operating result is due to a lower need for value adjustments. The result before taxes amounted to - €71 million compared to - €142 million in the 2003 reference period.

Best quarterly operating result of the past three years
Positive trend continues - costs and loan loss provisions reduced substantially
During the current year’s first quarter, Dresdner Bank Group achieved an operating result of €187 million, the best quarterly result since the takeover by Allianz three years ago. The result has more than doubled compared to the reference period in 2003. The improvement is attributable to the ongoing drive to reduce administrative expenses and to significantly lower loan loss provisions.
A break-even result was achieved in the non-operating area, resulting in a profit before taxes of €187 million for Dresdner Bank during the first quarter of 2004 compared to €3 million in the first quarter of 2003. After tax expenditure of €31 million, the Bank achieved a profit after taxes of €156 million compared to - €186 million in the 2003 reference period.
The Chairman of Dresdner Bank’s Board of Managing Directors, Dr. Herbert Walter, explained: “The first quarter results show that we are on the right track with our ‘New Dresdner’ Programme. Our costs and risks are under control, and we have seized new growth initiatives.”
Walter drew attention to the fact that the figures cannot be extrapolated to the whole year: “In our field of business, the first quarter typically contributes strongly to results.” The Bank’s goals of achieving a positive result after taxes in 2004 (before restructuring costs) and earning its capital costs in 2005 remain unchanged.
Released by: Dresdner Bank AG, Press 60301 Frankfurt/Main, Germany, phone: +49 (0)69 2631–2631, fax: +49 (0)69 263–15839 www.dresdner-bank.com/press
Profit/loss components in detail
During the first quarter of 2004, Dresdner Bank achieved an operating income of €1,707 million. Unadjusted, this corresponds to a decline of 13.3 percent; on an adjusted basis (exchange rate effects, IAS 39, cutbacks in IRU/RWA), operating income has remained largely stable.
Net interest and current income declined by 18.5 percent to €520 million during the first quarter of 2004, primarily because of ongoing cutbacks in risk-weighted assets, which were reduced by 19 percent to €108.3 billion.
Net fee and commission income increased by €23 million to €747 million. Greater income from the securities business was the principal cause.
Net trading income amounted to €440 million after the first three months, approximately €167 million lower than the previous year’s exceptionally high result. Valuation effects resulting from the application of IAS 39 and a weaker currency trading result contributed to the development.
Net loan loss provisions were reduced to €135 million, 60 percent below the reference period’s value and below our own expectations. The decline can be attributed inter alia to an accelerated cutback in loans and to an improvement in the quality of the credit portfolio.
Administrative expenses amounted to €1,385 million after three months, a decline of 9.4 percent compared to the 2003 reference period. Apart from decreasing material costs, staff reduction measures are also taking effect as planned. Compared to the previous year, the number of employees was reduced to 34,123 at the end of March 2004. In March 2003 the number of employees was 38,063. In relation to the overall objective of cutting back 4,700 full-time equivalents (FTE), around 2,300
Released by: Dresdner Bank AG Press Department 60301 Frankfurt/ Main, Germany, phone: +49 (0)69 2631–2631, fax: +49 (0)69 263–15839 www.dresdner-bank.de/presse Page 2 of 5
or approximately half of the total, had been realised by the end of the first quarter.
Liable capital for regulatory purposes (BIS) at the end of the first quarter totalled approximately €15 billion. The core capital ratio was 6.8 percent, while the total capital ratio was 13.9 percent.
Segment results
In total, an operating result of €237 million was achieved based on the strategic business activities of the four divisions Personal Banking, Private & Business Banking (still shown jointly as Private and Business Clients), Corporate Banking, and Dresdner Kleinwort Wasserstein. This is contrasted by an operating loss of €50 million in the area of non-strategic business, namely in the Institutional Restructuring Unit (IRU) and in Corporate Investments.
The Private and Business Clients division experienced a very successful start to 2004. In a market environment characterised by exceptionally intense competition, the division posted an operating result of €169 million for the first quarter of 2004 compared to €59 million during the previous year’s reference period. An increase of 6.5 percent in operating income to €855 million as well as a reduction by €33 million or 5 percent in administrative expenses contributed to the positive development of the result. Furthermore, loan loss provisions declined by €25 million, compared to the previous year’s figure, to €65 million. Profits before taxes increased sharply to €164 million compared to €49 million in the first quarter 2003.
The Corporate Banking division increased its operating result by more than 60 percent to €92 million during the first three months. In spite of a targeted reduction of risk capital, operating income just managed to achieve the reference year’s level because of slightly increased margins. Administrative expenses dropped by 12.5 percent; loan loss provisions for the first three months totalled €44 million, i.e. €30 million less than the
Released by: Dresdner Bank AG Press Department 60301 Frankfurt/ Main, Germany, phone: +49 (0)69 2631–2631, fax: +49 (0)69 263–15839 www.dresdner-bank.de/presse Page 3 of 5
previous year. Profits before taxes rose strongly to €92 million compared to €59 million in the 2003 reference period.
The DrKW division posted an operating result of €83 million for the first quarter of 2004. This corresponds to a decrease of €34 million compared to the previous year’s first quarter. Operating income dropped by 7 percent to €559 million. Though the result from equity transactions developed positively, DrKW could not repeat the exceptionally good result from interest-related operations achieved during the first quarter of 2003. It also has to be taken into account that the investment bank further reduced its utilisation of risk capital because of volatile markets. The decrease in income was partially compensated by the rigorous lowering of administrative expenses. Overall, the division posted a profit before taxes of €75 million compared to €120 million in the first three months of the year 2003.
The Institutional Restructuring Unit (IRU) recorded an operating loss of €52 million for the first quarter of 2004. The IRU has thereby reduced its negative contribution to the result by more than half compared to the first three months of the previous year. The portfolio cutback was reflected in a decline by €62 million in operating income and a reduction by €34 million in administrative expenses. The improvement in the operating result is due to a lower need for value adjustments. The result before taxes amounted to - €71 million compared to - €142 million in the 2003 reference period.
Note:
The figures quoted in this press release apply for Dresdner Bank subgroup according to IFRS. The data are comparable with those of other major German banks that draw up their balances according to IFRS. The figures for Dresdner Bank subgroup according to IFRS are not identical to the Segment Banking published by Allianz, in which all of Allianz’s banking activities are combined.

Contact: Simone Stein phone: +49 (0)69 263–4960
Karl-Friedrich Brenner phone: +49 (0)69 263–83637

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