DEPFA BANK With Strong Growth in High Quality Earnings; Second Quarter Net Profit Reaches EUR 140 m (+11%)

DEPFA BANK plc (GER:DEP) today released its second
quarter 2006 results. With a net profit of EUR 140 m it is the best
quarterly result ever and came on top of the good previous quarter's
level of EUR 134 m (+11% compared to the second quarter 2005). The RoE
of 23% after tax is well within the profit target for the full year.
DEPFA's earnings mix continued to shift towards client driven
businesses. The client segments combining Budget Finance,
Infrastructure Finance and Client Product Services made up 84% of
total revenues in the second quarter versus 77% in the first quarter
2006. Revenue synergies between the lending activities and Client
Product Services have opened up new channels of revenue.
Net interest income in the second quarter showed a healthy
improvement to EUR 110 m, which confirmed the upwards trend of the
year. This compares with EUR 96 m in the comparative quarter 2005. Due
to steady new business the portfolio of interest generating public
sector assets grew to EUR 187 bn whilst margins on new business
remained stable. Net fee and commission income more than doubled to
EUR 12 m (from EUR 5 m) due to advisory fees received and ongoing fees
accruing from the liquidity facilities that facilitate placement of US
municipal bonds. The trading result reached EUR 41 m whereas gains
from sale of financial assets totalled EUR 67 m. Total expenditure
showed a headline figure of EUR 56 m which represents a slight fall of
EUR 2 m against the first quarter 2006. Due to a higher staff number
personnel expenditure increased by 7% to EUR 33 m in comparison to the
second quarter of 2005. The cost/income ratio remained stable at 24%.
The bank is deriving good gains from its investments in new staff in
key growth areas; overall revenues in the first half of 2006 are 15%
higher than a year earlier. Profit before taxes in the second quarter
totalled EUR 174 m.

For further information see www.depfa.com