DVB Bank AG, the Frankfurt-based bank which specialises in global transport finance, today announced its results for the year to 31 December 2004. Overall, the year 2004 proved highly successful. The operating result, excluding loan loss provisions, registered an increase of 15.2% to EUR 60.7 million (2003: EUR 52.7 million). However, if the contribution from ReiseBank/CashExpress Group, which was divested at the end of 2003, is excluded, a more accurate comparison shows a 28.6% increase in the operating result, excluding loan loss provisions. Profit from ordinary activities increased by 15.6% from EUR 44.8 million to EUR 51.8 million, while net income totalled EUR 32.5 million (2003: EUR 71.6 million). Commenting on the results, Wolfgang F. Driese, Chairman of the Board of Managing Directors of DVB Bank AG ("DVB"), said: "After the completion of the sale of ReiseBank at the end of 2003 and the transformation of DVB into a specialist bank operating on a global basis, the year 2004 was focused on the realisation of the revenue potential of our unique business model. In the event, the year 2004 brought a record operating result despite a further weakening of the US Dollar, the principal currency in the international transport finance business. DVB's revenue potential is well illustrated by the significant increase in net commission income: a clear indication that our investments of recent years are now paying dividends. Our core operations will consist of our long-term secured international transport finance business and our associated corporate finance services. We will, however, continue to expand our services, witness our decision to broaden our service range in the area of engine financing last year through the formation of a dedicated Aero Engine Finance Unit. We are intent on ensuring that our global clients perceive DVB as the most competent partner in terms of all transport finance related issues." The operating result, excluding loan loss provisions, reflects various contributions. Net interest income amounted to EUR 102.2 million (2003: EUR 96.2 million). It is important to note that this 6.2% increase was achieved despite the further rise in the EUR versus the USD, the currency which dominates the international transport finance business. Expressed in USD terms, net interest income recorded a substantial increase, while interest margins on transport finance operations remained at a high level. The average margin in respect of new shipping transactions remained stable at 144 basis points, whereas the interest margin on new aviation business averaged 206 bps (2003: 176 bps). Net commission income rose 33.1% from EUR 35.4 million to EUR 47.1 million. This reflects a further increase in fee income from syndicated loan structures in transport finance and from corporate finance activities. The net income from financial transactions showed a modest loss of EUR 0.9 million. After having completed a major cost savings programme in 2003, cost disciplines were carefully monitored. Budgets in respect of both staff and administrative expenses were met and, more to the point, cost levels were further reduced. General administrative expenses (including depreciation) fell 2.3% from EUR 95.5 million to EUR 93.3 million. Staff expenses decreased by 2.5% from EUR 47.3 million to EUR 46.1 million, while other administrative expenses (including depreciation) fell 2.1% from EUR 48.2 million to EUR 47.2 million. Changes in net income are as follows: net loan loss provisions of EUR 12.0 million (2003: EUR 20.9 million) have been set aside. For the first time, DVB´s new Internal Rating Model, which complies with the requirements under the Basel II Accord, was used to calculate the "Expected Loss". The balance sheet total of DVB Bank AG amounted to EUR 9.25 billion (2003: EUR 9.07 billion). Customer lending (the aggregate of loans and advances to customers, guarantees and indemnities, irrevocable loan commitments and securities held as a result of customer business) totalled EUR 8.16 billion in 2004. This represents an increase of 7.4% compared with the EUR 7.60 billion achieved in 2003 and largely reflects movements in currency exchange rates. As much as 78.5% of the shipping portfolio and 93.2% of the aviation portfolio, which together represent almost two thirds of the total loan portfolio, are USD denominated. Some 52.6% (EUR 4.29 billion) of DVB´s overall lending portfolio was attributable to shipping finance (including container finance) (2003: EUR 3.95 billion). In USD terms, the shipping portfolio (including container finance) increased by 17.2% from USD 4.98 billion to USD 5.84 billion. Customer lending in the aviation finance sector amounted to EUR 2.20 billion (2003: EUR 2.05 billion), which represents 27.0% of the total loan portfolio. In USD terms the aviation portfolio increased by 15.4% from USD 2.60 billion to USD 3.00 billion. Loan volume in respect of Land Transport amounted to EUR 0.90 billion (2003: EUR 0.80 billion) raising the share of the total loan portfolio to 11.0%. Transport Infrastructure succeeded in expanding its loan portfolio to EUR 0.52 billion (2003: EUR 0.47 billion) and its share of the total loan portfolio to 6.4%. The loan portfolio of D-Marketing, which manages loans that no longer relate to the Banks ongoing strategy, has been reduced from EUR 0.33 billion to EUR 0.25 billion. Return on equity (before taxes and excluding goodwill) was 15.7% (2003: 9.6% - excluding ReiseBank/CashExpress Group). The cost/income ratio further decreased to 57.8% (2003: 63.8% - excluding ReiseBank/CashExpress Group). The core capital ratio remained stable at 6.7% (2003: 6.8%), while the total capital ratio decreased marginally from 11.1% to 10.7%. A dividend of EUR 2.00 per share, which represents an increase of EUR 0.50 per share, will be proposed at DVB Bank AGs Annual General Meeting which will be held in June 2005 (2003: dividend of EUR 1.50 per share plus a bonus of EUR 0.50 per share). On the basis of DVBs year-end share price of EUR 103.75, this equates to a dividend yield of 1.93%. To improve comparability the income and expenses figures in respect of 2003 have been adjusted to take account of the effects of the sale of the ReiseBank/ CashExpress Group which took place on 31 December 2003.