Lrp Group Reports Satisfactory Result For The Financial Year 2000

Mainz (PROTEXT) - * Continuous Profit Increase And Resource-Efficient Growth * Net Income For The Year Up 23.2 % * Cooperation With The Regional Savings Banks Intensified * Ready To Shape The Future "The financial year 2000 has been satisfactory overall for theLRP Group. We largely attained our ambitious targets which is,above all, reflected by a 23% increase in net group income to EUR95 million. Especially against the background of a highlycompetitive year marked by turbulent times in the financialmarkets and unusually difficult banking issues, the renewedimprovement of our profitability confirms in our opinion that wehave adopted the right policy by focusing on our corecompetencies and strict return targets. This is also expressed bya further increase of our return on equity (RoE) to 21.7%compared to 21.6% in 1999," said Board Chairman Klaus G. Adam atthe preliminary accounts press conference of LandesbankRheinland-Pfalz in Mainz on 8 March 2001. The Board Chairman isoptimistic that the Group will further improve on its success inthe current financial year. "The continued strengthening of ouroperations will enable us to successfully shape our future byourselves." High increase in net commission income At EUR 478 (520) million, the operating profit fell short oflast year's high level. This was mainly due to the decline innet interest income to EUR 360 (387) million attributable to non-recurrent effects from equity investments and a decrease of thenet income from trading activities to EUR 15 (22) million. Netcommission income continued to develop favourably. Increasing byabout one fifth to EUR 87 (73) million, it once again made astrong profit contribution. This also reflects the success of ourinvestment banking activities, where we further increased oursecurities business, gained investments in specialised funds andfurther heightened our profile as a qualified consultant tocompanies planning and preparing to go public. At EUR 254 million, administrative expenses remained almost atlast year's level thanks to consistent cost management. Whilepersonnel expenses increased by 5.7% to EUR 157 million,operating expenses including tax write-offs declined by 7.5% toEUR 97 million. Furthermore, the internal analysis of all ourcost structures is showing its first effects. With a cost incomeratio (CIR) of 53.1%, we did not fully attain our ambitioustargets. Compared to structurally similar competitors, however,we still achieved a satisfactory level. Risk provisions declined clearly At EUR 193 million, the operating profit was up 8.2% on theprevious year. Net risk provisions and other valuations clearlydeclined and totalled only EUR 31 (89) million. In view of ourcontinued conservative risk policy, this decline indicates animprovement in the quality of our loan portfolio which we intendto further increase by expanding our risk management process. Inaddition, the improved economic condition also eased the strain.After payments of EUR 2.3 million to the "Erinnerung,Verantwortung und Zukunft" foundation and profit-related taxes ofEUR 95 million, the net income for the year amounted to EUR 95million, up 23.2% on the previous year. This result allows us topropose payment of a net dividend of 7%, which corresponds to agross dividend of 15%, and a further significant strengthening ofour reserves by EUR 80 million which will broaden our equitycapital base. The LRP Group's capital funds increased by EUR 130 million toEUR 2.6 billion, EUR 2.2 billion thereof were liable capitalfunds pursuant to the German Banking Act. On the balance sheetdate, the Principle I ratio stood at 9.1% and the BIS ratio at8.5%. Securitised claims remain the key growth driver The LRP Group's total assets increased by a moderate 6.1 % toEUR 63.9 (60.2) billion, its business volume reached EUR 71.2(70.5) billion. Public-sector credits and mortgage loansaccounted for EUR 12.4 billion. Claims on banks remainedunchanged at EUR 16.3 billion on the previous year. Interbankbusiness declined for reporting date-related reasons, whilemedium-term and long-term loans to banks grew by 23.4%. Totalexposure to the savings banks in Rheinland-Pfalz increased by22.5% to EUR 5.9 billion. The securities portfolio was expandedby 12.4% to EUR 20.9 billion, with the emphasis on highly ratedsecurities issued, in particular, by sovereigns and corporates. Certificated liabilities amounting to EUR 27.3 (22.1) remainedthe main refinancing source. A significant part of the new issueswas placed in the international capital markets thus broading ourinvestor base. While liabilities to banks declined by 13.3 % toEUR 20.4 billion, liabilities to customers increased by 16.5 % toEUR 9.6 billion. Structural changes seen as an opportunity The current debate surrounding the structural-policy functionsof the German savings banks will also lead to changes at LRP. Thepending proceedings in the European courts of law are alreadyaffecting our refinancing costs even though existing creditorswill benefit from extensive protection irrespective of the finaldecision on the continued existence of the basic liabilityprinciples of the savings banks organisation (guaranteeobligation and maintenance obligation) given that the guaranteeobligation and the economic effects of maintenance obligation maynot be changed or eliminated with retrospective effect(grandfathering). LRP sees the emerging changes as an opportunityto accelerate the development of future-proof structures withinthe German savings banks organisation. Although LRP is notdirectly affected by the pending proceedings in Brussels, theBank's medium-term business strategy has been focused on thedemands of the future for a long time. A key aspect of all theseconsiderations is to maintain and intensify the cooperation withthe regional savings banks. Resource-efficient and profit-oriented business policies will allow us to shape our future byourselves. These will be complemented by cooperations wherevernecessary for the best possible benefit to all those involved.According to Klaus G. Adam, "as much decentralisation as possibleand as many centralised solutions as economically required" mustbe the Bank's maxim now more than ever before. Preliminary Results 2000 Group Balance Sheet *)

31 Dec.2000

31 Dec. 1999 (key-data)

preliminary figures

Changesin

Euro billions Euro billions Eurobillions % Balance sheet total

63.9

60.2

3.76.1 Business volume

71.2

70.5

0.71.0 Claims on banks

16.3

16.3

0.00.0 Claims on customers

22.9

21.6

1.36.0

including: building loans

of LBS building society 1.9

1.8

0.16.9 Securities

20.9

18.6

2.312.4 Trust assets

2.4

2.4

0.0

-0.6 Liabilities to banks

20.4

23.5

-3.1

-13.3 Liabilities to customers

9.6

8.2

1.4

16.5

including: savers'

deposits of LBS building

society

1.6

1.6

0.0

0.8 Certificated liabilities

27.3

22.1

5.2

23.5 Capital funds

2.6

2.5

0.1

5.2 Group Results

1 Jan. -

1 Jan. -

31 Dec. 2000

31 Dec. 1999

preliminary figures

Changesin

Euro millions

Euro millions Euromillions % Net interest income

360

387

-27.0 -7.0 Net commission income

87

73

14.319.5 Net income from trading activities

15

22

-7.7 -34.5 General administrative expenses

254

253

0.60.3 Other operating expenses/ income

16

37

-21.4 -57.3 Provisions for risks/ adjustments

-31

-89

57.2 -64.6 Operating profit

193

178

14.78.2 Extraordinary result

-2

-2.3 Taxes on income and revenues 95

101

-5.6 -5.6 Net income

95

78

18.023.2 Staff (number) Group / Bank 2,005 / 1,745 2,053 / 1,742 Return on Equity (RoE) in %

21.7

21.6 Cost Income Ratio (CIR) in %

53.1

48.7 Differences due to rounding *) The Group comprises apart from the Bank (with Luxembourgbranch and LBS) LRI, Meridian, LRA and WIB-Group (pro rata) Contact: LRP Landesbank Rheinland-Pfalz Jürgen Pitzer,Pressesprecher Tel.: ++49 (0)61 31 / 13 28 16 Fax: ++ 49 (0) 6131 / 13 25 60 e-Mail: presse@LRP.de

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