2005

• Total assets exceed EUR 25 bn for the first time
• Net profit up 56% to EUR 37.3 m
• ÖVAG now holds more than 97% of the shares

The results of the specialist banking group with its three market segments corporates, local government and real estate continued to show a very positive development in the first half-year. Investkredit consistently concentrated on its innovative business in the period under review. The Bank executed its first ABS transaction – a new instrument for securitising trade receivables – for the Austrian company Breitenfeld Edelstahl AG in June. Investkredit issued a Mittelstandsbond for Getzner Werkstoffe GmbH. Kommunalkredit further built up its leading position in the public finance market. Europolis reported a large number of successful lettings. There has been a speedy start in the first half-year to the build-up of the new real estate portfolio with the EBRD.

Total assets rose by 19% to EUR 25.5 bn. Net profit to 30 June 2005 went up by 56% to EUR 37.3 m. Return on equity based on net profit improved to 17.9%. The cost-income ratio of 43.3% continues to be significantly better than the average for the banking industry. The Bank’s market capitalisation as at 30 June 2005 of EUR 890 m shows the value added to the company in recent years: it has risen by 300% since the beginning of 2001.

The main feature of the first half-year was the takeover by ÖVAG, which now holds more than 97% of the shares. At the time the takeover bid was made in March, ÖVAG was already the largest shareholder with 45.5% of the shares. By the end of the extension period on 17 June, this figure stood at 46.21% and on 19 July – the 48th anniversary of Investkredit’s formation – ÖVAG raised its stake in Investkredit to over 97%. BA-CA, RZB, and RLB Wien-NÖ sold their Investkredit shares to ÖVAG at a price of EUR 141 per share. In the course of the takeover process, the free float has dropped in recent months to below 3%.

The Investkredit Group in figures as at 30 June 2005

DEVELOPMENTS IN THE CORPORATE SEGMENT

The improvement in the Investkredit Group’s earnings is disproportionately due to the corporate segment. Besides the business with Austrian corporate customers, the fields of business that were more intensively marketed have made significant contributions towards earnings in recent years. These include the core market in Central and Eastern Europe, specialist financing transactions at the Frankfurt Branch, real estate financing transactions and investments in asset backed securities.

Owing to sustained positive demand for corporate lending, all fields of business again reported increases in the amounts paid out in the second quarter, with the trend in Austria continuing to favour specialist solutions and capital market instruments. Investkredit reacted early to this development by developing innovative capital market products, such as the Mittelstandsbond and securitisation of customers’ trade receivables. By continuing to expand existing offices and with the forthcoming entry into the Romanian market, the Bank has been quick to progress on its path towards internationalisation. In the real estate financing field, Austria’s share of the portfolio has fallen in the space of four years from more than 60% to less than 40%, while the share of financing transactions in the EU accession countries has risen to over 60%. The syndication platform www.banks2banks.com has already won over 26 banks as partners.

DEVELOPMENTS IN THE LOCAL GOVERNMENT SEGMENT

The growth trend in the local government sector carries on the Kommunalkredit Group’s total assets have risen since the beginning of the year by more than 25% to EUR 17.8 bn. Structured products continue to be in strong demand. Besides those in Switzerland, international deals were mainly in the European Union (Germany, Italy, Greece, the Netherlands, Poland and Hungary). On the refinancing side, a strong flow of issues was the feature of the first half-year of 2005. There were in all 90 transactions to date with a total face value of EUR 2.7 bn.

Dexia Kommunalkredit Bank AG, which is responsible for Central and Eastern Europe (and in which Kommunalkredit holds more than 49% of the shares), reported total assets of EUR 3.3 bn only three months after it was formed. It mainly achieved this growth in Poland, Hungary and Slovakia.

DEVELOPMENTS IN THE REAL ESTATE SEGMENT

The partial sale of the Czech and Hungarian real estate portfolio to the German real estate fund management company DIFA, which had already been agreed in the first quarter, was completed in April.  The transaction encompassed eight Europolis properties with a market value of around EUR 300 m. Nevertheless, earnings from rentals were maintained at virtually the same level as in the previous year. This is due to a large number of new and extended lets. The development of Danube House was given the highest award for a real estate development at the beginning of June – the ULI Award for Excel¬lence: Europe Competition. The market value of the Investkredit Group’s real estate stands at EUR 619 m.

Acquisitions and developments for the first portfolio with the EBRD (“E1”) in Czechia, Hungary, Romania and Croatia are running to plan. Europolis has made additional investments for the portfolio newly conceived in 2004 (“E2”): there are shopping centres planned in Czechia and Romania, logistics centres in Poland and Ukraine and an office building in Russia. This means that this E2 portfolio – with a planned real estate volume of around EUR 1 bn – is already about 20% invested after six months.

Investkredit will also continue under the new shareholder situation to aim for quality in developing its profile as an innovative specialist bank for medium-sized and large companies as well as local government and real estate. 2005 should see a push given to providing the whole range of services in Central Europe. The plan is for the core capital ratio to improve by year-end. Investkredit is aiming for a sustainable return on equity of 15%. At the same time, increasing economies of scale should allow a reduction in the cost-income ratio over the medium term from 43% to 40%.

Please turn to the newly designed website www.investkredit.at and to the page with the online version of the interim report at www.investkredit.at/ir for additional information.

Please direct your questions to:
Hannah Rieger Tel. (+43/1) 53 1 35/112
Gerald Stich Tel. (+43/1) 53 1 35/592