Westdeutsche ImmobilienBank AG: Substantial increase in earnings and new business

• Earnings before taxes up by around 20% in 2006
• Record level of new business
• New WIB locations: representative office opened in Warsaw, and offices planned for Prague and Tokyo
• Peter Knopp joins WIB’s Managing Board

Frankfurt, 26 April 2007 - Westdeutsche ImmobilienBank AG (WIB) generated earnings before taxes of €47.9 million in fiscal year 2006 (previous year: €40.1 million, + 20%). The operating result improved by 12% to €75.6 million (previous year: €67.5 million).

“This substantial earnings growth shows that Westdeutsche ImmobilienBank AG is continuing on its growth path. We can be satisfied with these results. The increase is a result of systematically focusing on our core competencies and the significant increase in our new business. We are recording strong growth in international business in particular,” said Hubert Beckmann, Chairman of WIB’s Managing Board, on the occasion of the annual earnings press conference.

Earnings were mainly driven by net interest income, which rose by €13.3 million to €151.5 million (previous year: €138.2 million) thanks to the sharp increase in new business. Commissions received amounting to €20.7 million (previous year: €16.3 million) also improved and were offset by slightly higher commissions paid amounting to €21.3 million, due mainly to the brokerage of private construction finance and the Bank’s strong growth in this area.

Administrative expenses rose to €77.1 million (previous year: €73.1 million, +5%). This is due to staff expenses, which increased due to expanded capacity in the third quarter of 2005 and collective pay increases and inflation adjustments in 2006 to €44.6 million (previous year: €39.6 million). The number of employees at the Bank fell to 503 (previous year: 504). Although the Bank recorded significant growth in business and a substantial increase in requirements, it reduced other administrative expenses, including depreciation, amortization and write-downs, to €32.5 million (previous year: €33.5 million). In addition to strict cost management, WIB has adjusted its internal workflows. The Bank profited from efficiency gains in its core processes here, as well as from strict cost management.

“We have optimised our loan process in particular. Reliability and especially speed in granting loans are major competitive factors for us that play a key role in the satisfaction of our customers. The increase in our process efficiency is an important element of sustainable cost management accompanied by continuous growth,” said Hubert Beckmann.

The Bank’s net income for the year rose to €39 million (previous year: €26.3 million). The cost-income ratio improved to 50.5% (previous year: 51.9%). At €22.7 billion, WIB’s total assets remained at approximately the same level as the previous year (€22.9 billion). Receivables from customers increased to €18 billion (previous year: €17.2 billion).

The consolidated profit for the period in accordance with International Financial Reporting Standards (IFRSs) decreased slightly to €29.1 million (previous year: €33.9 million). Positive remeasurement effects resulting from the first-time adoption of IFRS accounting in 2005 were partially adjusted by corresponding countermeasures in 2006 to reduce the volatility of the Bank’s future results.

Sharp increase in new business
WIB’s new loan commitments amounting to €8.1 billion are the highest in its history. Driving forward its international activities in particular helped the Bank increase its volume of approved loans by €2.4 billion (+ 42%) in 2006. Business with national commercial real estate investors rose by 33% to €2.8 billion (previous year: €2.1 billion). Positive economic development and a significantly improved investment climate on the German market were particularly noticeable here. WIB’s international business recorded the highest growth rate, increasing by 56% to €4.2 billion (previous year: €2.7 billion). WIB has thus further extended its position on the international market. Foreign business rose to 51% (previous year: 47%) of the new business volume. The Bank has expanded business in its European target countries (United Kingdom, France, Spain/Portugal, the Benelux countries, Poland, the Czech Republic and Hungary) as well as in America. At the same time, it has entered new markets and served customers in Australia, Mexico and Japan for the first time.
“WIB was very successful on a national and international level in 2006. We systematically exploited our opportunities for growth. After opening a representative office in Warsaw at the beginning of 2007, we strengthened our commitment in Central and Eastern Europe further and expect to establish a representative office in Prague this year. In addition, we are planning to open a subsidiary in Tokyo to strengthen our activities in the Asia-Pacific region,” said Hubert Beckmann.

New business in the Private Residential Finance department exceeded €1 billion for the first time. Despite fierce competition, the volume of private residential finance rose by 22% to €1.1 billion (previous year: €0.9 billion). The bulk of these transactions were brokered by partners. Using ImmoBank direct as another sales channel, customers can conclude standardised mortgage finance via the Internet and by telephone.

The establishment of the Savings Banks department in 2006 has enabled WIB to intensify its contact with these institutions. The department has made loan commitments to the savings banks of around €200 million. The cooperation with WIB offers the institutions additional new business and earnings potential. WIB is available as a partner to the savings banks for commercial and private real estate finance, real estate joint ventures, public private partnerships and refinancing. In particular, the pilot project to issue mortgage Pfandbriefe launched with selected savings banks in 2006 was extremely successful. This cost-effective refinancing option is expected to be available to all interested savings banks from spring 2008.

Expansion of WIB’s Managing Board
Peter Knopp will join WIB’s Managing Board as at 1 August 2007 and take over the newly created Capital Markets Business function. Since 1999, Knopp has worked for Eurohypo and its predecessor institutions, most recently as head of the Debt Capital Markets unit.
In future, he will be responsible for WIB’s capital markets business, comprising syndicated loans, securitisation and structured finance.
“In Peter Knopp, WIB has gained an experienced capital markets expert. We will further expand our buy and sell activities and offer more capital markets products. This will allow us to sustainably strengthen our role as a centre of competence for real estate finance and real estate investment banking in the WestLB Group,” emphasised Beckmann.