Performance indicators of the commercial banks

Net interest income at the big banks and the branches of foreign banks contributes significantly less to their total earnings than is the case at the regional banks. This is principally due to the fact that these banks do a large amount of business in securities trading and in the interbank market.

(2000/2004 annual average)   All comm. banks   Big banks   Regional banks   Branches of foreign banks Net interest income (% balance sheet total)   1.22   0.94   1.89   0.56 Net commission income (% balance sheet total)   0.63   0.56   0.83   0.35 Gross earnings (% balance sheet total)   1.85   1.52   2.72   0.91 Staff costs (% balance sheet total)   0.77   0.73   0.92   0.25 Other administrative spending (% balance sheet total)   0.79   0.67   1.10   0.42 Other operating income (net, % balance sheet total)   0.22   0.23   0.21   0.21 Operating income before provisions (% balance sheet total)   0.51   0.35   0.92   0.45 Provisions (% balance sheet total)   - 0.28   - 0.25   - 0.35   - 0.12 Operating results (% balance sheet total)   0.23   0.10   0.57   0.33 Extraordinary income and expense (net, % balance sheet total)   - 0.18   - 0.16   - 0.25   - 0.03 Profit for financial year (% balance sheet total)   0.05   - 0.06   0.31   0.30 Return on equity   1.44   - 1.73   6.97   7.32 Cost/income ratio   75.48   80.20   68.78   59.38 Net interest income as % of gross earnings   58.80   54.85   64.61   51.02 Net commission income as % of gross earnings   30.55   32.23   28.12   31.20

1)Figures slightly distorted by the transfer in 2004 of Postbank AG from the regional banks to the big banks

The differences in clientele also play an important role (many corporate customers at the big banks, more Mittelstand customers at the regional banks). Since the big banks have an extensive – and costly – branch network, their cost/income ratio is considerably less favourable than that of the other two sub-groups, which, on average, have far fewer branch offices.

Extraordinary expenses were quite considerable at both the big banks and regional banks in recent years. This put an additional strain on their already lacklustre profitability. In terms of average figures over the last five years, the big banks made a loss. In contrast, pre-tax profits at the regional banks and branches of foreign banks were relatively high compared to those in the German banking market as a whole.