2005

The first quarter results of the specialist banks in Central Europe with the three corporate, local government and real estate segments followed the previous year’s rising trend in earnings. The improvement was primarily due to the rise in net interest income. At EUR 36.2 m, it exceeds the figure for the first quarter of the previous year by 8%. By 31 March 2005 net profit improved by 34% to EUR 18.3 m. Return on equity based on net profit improved further and now amounts to 18.1%.  Total assets in the first quarter rose by 7% to EUR 23.0 bn.

The Investkredit Group in figures as at 31.3.2005

DEVELOPMENTS IN THE CORPORATE SEGMENT

There was an increase in outgoing payments in the first quarter of 2005. The Budapest Representative Office was formally opened at the beginning of March. In Investkredit’s core market it is increasingly succeeding, together with its branch offices, in giving assistance to international corporate and real estate clients in several different countries. The pleasing business dynamism in the Eastern European markets led to the decision to enter the Romanian market. In a growing number of corporate acquisitions, Investkredit – both in Austria and at the Frankfurt Branch – is increasingly receiving the mandate to arrange the financing. The origination of three financing transactions in Czechia, Slovakia and Romania characterised real estate financing in the first quarter. The syndication platform  http://www.banks2banks.com/ has already won over 20 banks as partners. Making use of the debt issuance programme, 12 separate refinancing transactions with a volume of EUR 124 m have already been issued.

DEVELOPMENTS IN THE LOCAL GOVERNMENT SEGMENT

Total assets at the Kommunalkredit Group rose in the first quarter of 2005 by 10% to EUR 15.6 bn. The main factors behind this: a rise in loans and advances to customers based on international local government financing and expansion in the volume of securities. Net interest income for the first three months of 2005 was EUR 12.9 m (in the comparable period in 2004: EUR 8.9 m). Pre-tax profit was EUR 15.0 m, already 40% of the figure for the whole of the previous year. The tax ratio dropped against the first quarter of the previous year, whereby the after-tax result was 57% higher than in the same period in the previous year, standing at EUR 12.5 m. The solid performance in the first quarter of 2005 pushed after-tax return on equity up to 21.6%, already significantly higher than the figure for the previous year. Kommunalkredit is successful in all sectors of financing (public finance, CEE, SEE, healthcare, social housing, education, culture, infrastructure, public-sector above-ground construction). Outgoing payments in the first quarter were 12% over budget. In March 2005 Dexia Kommunalkredit Bank AG went into operation.  The business of this joint subsidiary of Dexia (50.84%) and Kommunalkredit Austria AG (49.16%) will mainly be in Central and Eastern Europe. It is also working – besides at its existing units and bank subsidiaries in Slovakia, Czechia and Poland – on its first financing transactions in the Bulgarian market. The first quarter of 2005 was also characterised by a large number of issues. There were in all 50 refinancing transactions with a total face value of EUR 1.72 bn.

DEVELOPMENTS IN THE REAL ESTATE SEGMENT

In January 2005, DIFA, a German real estate fund management company, took a 49% share in a total of seven Europolis property companies in Czechia and Hungary. DIFA also acquired 100% of a property company in Prague called “Hadovka”. The fair value of this real estate amounts to EUR 300 m. The fair value of the real estate consolidated in the Investkredit Group came to EUR 595 m as at 31 March 2005. Space standing empty now amounts to 14%. Development projects are being implemented in Czechia, Hungary, Romania and Croatia. New properties are being investigated for the “E2” portfolio in the core market countries as well as in Ukraine and Russia. An in-principle decision was made for an additional development project – a Ukrainian logistics centre.

OUTLOOK FOR 2005

Implementing Investkredit’s strategy – positioning itself in a lasting and qualitative way as a specialist niche banking group in a European core market – will involve the following steps in 2005:
> Growth in total assets should amount to more than EUR 2 bn. A major factor here will be
   the gradual introduction of the full range of services in Central Europe.
> Investkredit is aiming for a sustainable return on equity of 15%.
> At the same time, increasing economies of scale should allow a further reduction in the
   cost-income ratio from 43% to 40%.

Take advantage of the additional opportunities offered by the online version of this annual report. This and other tables are available for downloading at www.investkredit.at/ir.

For further information contact:
Hannah Rieger Tel. (+43/1) 53 1 35/112
Julius Gaugusch Tel. (+43/1) 53 1 35/330