Dresdner Bank produces record results

Frankfurt - 26 February 2007

• Strong growth in customer business – income up 13 percent
• Costs decline by 2 percent
• Operating result more than doubled
• Return before taxes rises to 15.6 percent

Dresdner Bank produced a record operating result in 2006 of €1,350 million, driven by strong income growth. The operating result rose by €755 million year on year. Income rose by a clear 13 percent to €6,813 million. The return before taxes improved to 15.6 percent. “For the third time in a row we have not only achieved our annual targets, but clearly exceeded them”, said Herbert Walter, Chairman of the Board of Managing Directors of Dresdner Bank, presenting the 2006 results. “We more than doubled our operating result and recorded profitable growth. Both divisions contributed to Dresdner Bank’s encouraging overall result. This shows that our growth initiatives are taking effect.”

Continued decline in costs

Thanks to its successful cost management activities, Dresdner Bank was able to cut its operating expenses by 2 percent year on year to €5,436 million. The cost-income ratio also improved tangibly, declining by 12.2 percentage points to 79.8 percent. “We also made good progress in improving our efficiency”, said Walter. “Nevertheless, we still have potential for improvement in this area. In the medium term, we are aiming for a cost-income ratio of less than 75 percent.”

Sustained increase in return

Dresdner Bank generated a return on equity before taxes of 15.6 percent in 2006. This represents a substantial improvement in profitability of 6.9 percentage points as against the comparable figure year on year year. The return after taxes as calculated by Allianz increased by 1.9 percentage points to 10.9 percent. “We set ourselves the target of a return after taxes of 10 percent for last year”, said Herbert Walter. “Here, too, we exceeded our goal. As a result, our return on equity was clearly in excess of our cost of capital. We are creating sustained value again.”

Dresdner Bank’s income before taxes amounted to €1,204 million. Profit after taxes amounted to €946 million.

Clear growth in customer business

All income categories recorded clear growth rates as against the prior-year period. Net interest and current income increased in 2006 by more than 20 percent to €2,664 million, while net fee and commission income rose 5.4 percent to €2,841 million. Dresdner Bank’s net trading income also performed positively, rising 16 percent year on year to €1,278 million.

Strong growth in divisions’ earnings

The two divisions recorded strong growth and made a substantially larger contribution to the Bank’s overall earnings in 2006.

Private & Business Clients lifted operating income by €172 million or just under 6 percent as against the previous year, to €3,204 million. The operating result rose from €470 million to €654 million. The fee and commissions business was the main driver behind this encouraging development. The cost-income ratio improved from 80 percent to 76.6 percent.

Corporate & Investment Banking increased its operating income in 2006 by 16.1 percent to €3,526 million. The operating result was €693 million. This represents a rise of €181 million as against the previous year. The cost-income ratio declined by 3.6 percentage points year on year to 80.0 percent.

Risks under control

Net additions to loan loss provisions amounted to €27 million, following a net release in 2005. This corresponds to an increase of €140 million as against the previous year. Gross additions of €508 million were partly offset by gross releases of €305 million and recoveries on loans previously written off of €176 million. Total loan loss allowances at the reporting date amounted to €1.2 billion, or 1.1 percent of the lending volume.

At €112 billion, the lending volume was 13 percent above the figure at the prior year-end. The Dresdner Bank Group’s total assets rose by 8.0 percent as against 31 December 2005, to €497 billion.

Implementation of new business model going fully according to plan

During the presentation of the results, Chairman of the Board of Managing Directors Herbert Walter emphasised that the new business model was now being swiftly implemented following the agreement reached with the Works Council. “Our strategy is clear”, said Herbert Walter. “We are laying the foundations for sustained profitable growth with our ‘Neue Dresdner Plus’ growth programme, so as to achieve our ambitious medium-term goals”, he concluded.

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