> Nine-month report More customers, more orders, more volume comdirect increases profit target

Transcription

1 > Nine-month report 2005 More customers, more orders, more volume comdirect increases profit target

2 > Key figures of comdirect bank group Nine months Change in % Customer figures as of Total customers 623, , Customers in the segment comdirect online 622, , Customers in the segment comdirect offline 6,301 1, Business line comdirect online Placed orders 6,139,450 5,292, Executed orders 4,840,001 4,624, Average order activity per custody account (annualised) Share of fund transactions in executed orders in % Order volume per executed order in 4,865 4, Total assets under custody as of in million 11,946 9, of which: portfolio volume (excluding funds) in million 6,762 5, of which: funds volume in million 2,652 1, of which: deposit volume in million 2,532 2, Credit volume as of in million Number of custody accounts as of , , Number of securities-based savings plans as of ,228 62, Number of current accounts as of ,279 84, Business line comdirect offline Advisers as of Offices as of Total revenues in thousand 4,270 1, Earnings ratios Net commission income in thousand 70,490 67,420 2) 4.6 Net interest income before provisions in thousand 47,964 42,751 2) 12.2 Administrative expenses in thousand 85,167 77,914 2) 9.3 Profit from ordinary activities in thousand 44,851 42, Pre-tax profit in thousand 44,851 42, Net profit in thousand 30,140 28, Earnings per share in Balance-sheet key figures as of Balance-sheet total in million 3,192 3, Equity in million Equity ratio 1) in % Risk weighted assets according to BIS in million Tier I capital according to BIS in million Own funds according to BIS in million Own funds ratio according to BIS in % Relative ratios Return on equity before tax (annualised) in % Cost/income ratio in % ) 0.6 Earnings per customer (annualised) in Employees figures as of Employees of which: in the segment comdirect online of which: in the segment comdirect offline Employees full-time basis ) Equity ratio = (subscribed capital + reserves + consolidated profit) / balance-sheet total 2) Contributions from comdirect ltd in the first quarter 2004 are taken into account. Figures for the previous year are included in the table of key figures as published in the interim report for the first nine months of The following text excludes comdirect ltd to facilitate a better comparison. comdirect ltd, London was sold on 15 June 2004 and deconsolidated on 31 March 2004.

3 > Contents 02 Management report 03 Strategy 03 Market 04 Number of customers and customer structure 04 Online Investment and Direct Banking fields of competence 05 Financial Advisory field of competence 05 Innovation and product development 06 Earnings situation 08 Events since the end of the 3rd quarter 08 Outlook 09 The share 10 Nine-month statement of the comdirect bank group 10 Income statement 11 Quarter-on-quarter comparison 12 Balance sheet 13 Statement of changes in equity, cash flow statement 14 Segment reporting 16 Accounting standard and other information 17 Financial calendar, contacts 1

4 > Management report Dear shareholders, comdirect bank achieved exceptional results of 20.4m before tax in the third quarter. With pre-tax profit of 44.9m after nine months, we are already around 6% up on the very good figures recorded in the previous year, despite the additional expenses associated with our growth and value added programme, comvalue, which was launched at the beginning of this year. We have therefore considerably increased our target range for 2005 as a whole and now aim to achieve pre-tax profit on a par with the previous year (2004: 51.1m). This is despite a further rise in investment in growth in the fourth quarter. Dr. Andre Carls CEO of comdirect bank There are three main reasons for the upward trend in earnings. First of all, the number of orders has risen against the backdrop of a generally favourable stock market. Secondly, thanks to comvalue, there has been a strong increase in the volume of non order-based business. Our interest income is increasing through growth in current and call-money deposits, and the upturn in funds business is generating higher commission contributions, as is our Financial Advisory field of competence. Thirdly, we have posted non-recurring income in connection with the resale of comdirect ltd by the original buyer. comvalue stands for higher performance products, faster processes and a more exclusive service as well as more aggressive new business campaigns and closer integration of our fields of competence. We have achieved a great deal again in the third quarter. In brokerage, we are now offering a LiveTrading limit function, while in banking, we launched the Festgeld PLUS fixed-term deposit account offering an attractive interest rate, and in advice we have a new analysis tool to develop optimal retirement provisioning strategies. Our top customers can also benefit from the new comdirect first service package. A raft of measures has been introduced, all with the same aim: as a full-service bank, comdirect adds more value for its customers and investors. 2

5 > Strategy: top provider with full-service range Value-driven strategy As the only online bank in Germany, comdirect provides brokerage, banking and advice from under one roof. With this combination we offer demanding online private customers uniform and comprehensive financial services covering all life phases. With our growth and value added programme, comvalue, comdirect bank will further interlink and enhance its service offering, thereby attracting new customers and providing more for its existing customers. The overarching aim is to strengthen our market position through faster growth and stabilise our earnings base. By 2009, 50% of our income should largely be generated by business that does not depend on the stock market. Number of orders on German stock exchanges (in million) M M 2005 Q Q XETRA FFM Other stock exchanges comvalue The product and sales offensive covers all three of comdirect bank's fields of competence. The focus on the product and service side in the third quarter was to expand LiveTrading, offer a new fixed-term deposit product in banking and provide better support for overall Financial Advisory services using innovative analysis tools for example to optimise retirement provisioning in terms of taxation. We continued our market campaign with extensive coverage in the press, TV, radio and the Internet. In addition to advertising our current account, we launched a campaign to advertise our funds business. Up to 22 October 2005, new and existing customers who transfer their investment fund units to comdirect bank will receive a bonus of 1% of the value of their holding up to a maximum of 500. Parallel to this, we have improved the efficiency of our internal processes and the increasing level of automation is creating scope for the bank to increase its focus on sales. > Market: buoyant trading, funds business growing The German stock markets continued their upward trend in the third quarter. The DAX exceeded the psychologically important 5,000 points mark and closed the third quarter at 5,044.12, up 9.98% on the end of June The MDAX climbed 12.39% to reach a new all-time high and the TecDAX rose 11.34%. Trading volumes were also up. German stock markets saw an 18.8% increase in orders executed compared to the second quarter of Year-on-year the spot market for trades rose by 13.0% and securities turnover by 13.2%. The Eurex futures market has also picked up and orders here increased by 16.7%. In 2005 investors shifted their attention from direct investment in equities to funds. According to the Deutsches Aktieninstitut, the number of people investing in funds rose by 2.7% while the number of people investing only in shares (excluding funds) barely changed. German retail funds recorded inflows of 40.0bn in the period January to September The framework conditions for reinvesting customer deposits in the capital market have not altered significantly since the beginning of the year. The oneweek money market rate for the euro zone (Euribor) remained unchanged 3

6 compared with the previous year at 2.1%. The yield for domestic bearer bonds outstanding stood at 2.95% at the end of September (year-end 2004: 3.37%). Number of customers (in thousand) 800 > Number of customers and customer structure: on course for growth in all fields of competence 600 comdirect bank increased the number of its customers in the third quarter by 7,307 to 623,852 (year-end 2004: 620,952 customers). Again a large proportion of this rise is due to the marketing campaigns for the current account. Customers were also attracted by the bonus comdirect paid to new custody account customers for any fund units transferred. The number of customers at comdirect private finance AG (comdirect offline business line) rose in the third quarter by 1,280 to 6,301. Around 80% of these advice customers also use the services offered by comdirect bank's online business line The success of comvalue is also reflected in the broader spectrum of products used by existing customers. In the third quarter, the number of current accounts increased by 12,211 to 120,279 (year-end 2004: 88,905), recording much faster growth than the total number of customers. The number of custody accounts rose by 3,076 to 536,133 (year-end 2004: 538,522 custody accounts). As of 30 September, 17.7% of customers (year-end 2004: 14.6%) were active in both brokerage and banking. Number of current accounts (in thousand) > Online Investment and Direct Banking: more trades, more funds business, more current accounts Order figures and order volume comdirect bank benefited from the upswing in trading on the stock markets and in funds business, with 1.80m orders executed, which represents a 21.5% increase on the second quarter. The result for the period January to September exceeds the figure for the previous year by 4.7%. With an order frequency per custody account of 12.0, order activity on an annual basis is also up on the previous year (11.3). Securities turnover totalled 23.5bn over the nine-month period (previous year: 21.5bn); this equates to an order volume per order executed of 4,865 (previous year: 4,640). Portfolio volume Securities buying by our customers and increased share prices lifted the portfolio volume (excluding funds) to 6.76bn (year-end 2004: 5.75bn), the highest level for five years. In the third quarter alone, the upturn amounted to 9.7%. Growth in funds volume outperformed this trend, climbing 19.3% to 2.65m, since the end of June. As a result, comdirect bank has gained 821m in fund deposits since the start of the year. In addition to share price gains and one-off investments, this growth also reflects monthly deposits into fund-based savings plans. The number of securities savings plans (funds and certificates) rose to 85,228 (year-end 2004: 68,401) Executed orders (in million) M M 2005 Q Q

7 Volume of total assets under custody (in billion) Deposit and credit volume The deposit volume increased in the third quarter to 2.53bn (year-end 2004: 2.33bn). Growth in demand deposits held in current and call-money accounts was strong, whilst fixed-term deposits were down compared to the previous year's figure which reflected the impact of high interest rate campaigns. The credit volume rose from 166m at year-end 2004 to 179m. Customer assets Assets under custody which comprise the sum total of portfolio, funds and deposit volumes, stood at 11.95bn. Since year-end 2004, customer assets have risen by 20.5% Funds volume Portfolio volume (excluding funds) Deposit volume Customers of comdirect private finance AG 7,000 6,000 5,000 4,000 3,000 6,301 2,000 1,000 2,114 1, > Financial Advisory: over 4,000 new customers this year With customer numbers tripling in the first nine months of the year, Financial Advisory is well on the way to meeting its target of 5,000 new customers in We have already exceeded our goal of increasing the number of offices by four to total twelve by the end of the year. Following the opening of the second office in Hamburg to take account of the huge customer potential there, as well as an office in Mannheim, comdirect private finance now has 13 teams in ten locations. The number of advisers providing comprehensive and individual support to customers on retirement provisioning, personal finance provision, asset accumulation and property finance has increased by 26 since the end of June to stand at 97. The structures for further growth over the coming months and years are therefore already in place. Total revenues rose year-on-year from 1.9m to 4.3m, of which 1.3m was attributable to the third quarter. Compared to financial year 2004, which reflected the boom in life assurance business, sales are significantly more balanced in terms of structure. Financial investments in funds have risen considerably over the year with closed-end funds also accounting for the larger proportion of sales. In addition, demand for further private pensions, including via Riester and Rürup products, has noticeably increased. Home finance was also very popular as a result of low interest rates. > Innovation and product development: more exclusive service, new functions, leaner processes The comdirect first programme launched in the third quarter offers top customers a more exclusive service package. This comprises preferential access to comdirect services via a separate phone number and address as well as the use of the professional trading platform, ProTrader, and an American Express Gold card at no fee. comdirect first also provides customers with a specialised team of experts for customer service. The programme is available to customers executing more than 125 trades over a half-year period, with assets exceeding 500,000 or a monthly income on their current account of 10,000 or more. 5

8 Further progress was made on expanding our website into a sales platform. The measures taken in the third quarter include the launch of a test account on the personalised section of the website. Customers can benefit from the ongoing process improvements at comdirect bank, including faster and easier opening of current accounts online. Net commission income (in million) In brokerage, comdirect bank has made its OTC LiveTrading even more attrac- 50 tive for its customers. LiveTrader can now prescribe a limit for the buy or sale transaction when placing the order. In the third quarter, here were a total of four no-fee campaigns during which traders could trade in attractive reverse convertible bonds, currency derivatives and warrants as well as certificatebased savings plans with no execution fees In banking, we have extended our product portfolio with a new fixed-term deposit account. For investments ranging from 500 to 5,000 and with a short term of one month, comdirect Festgeld PLUS currently offers an annual interest rate of 2.5%, which is more than most of our competitors. 0 9M M 2005 Q Q Germany United Kingdom In advice, we offered easy online access to the analysis and optimisation of custody accounts in line with the portfolio theory of Harry W. Markowitz for a period of four weeks. Strong demand has led to further interlinking of our online and advisory services as portfolio optimisation goes hand in hand with new investments and investment restructuring. In addition, our new analysis tool is helping our advisers in Financial Advisory develop the best strategy for retirement provisioning and asset accumulation as well as in the choice of suitable products. Net interest income before provisions (in million) > Earnings situation: target exceeded after very good third quarter comdirect bank reported exceptionally good results in the third quarter of 20.4m before tax (previous year: 9.4m) and has therefore already achieved pre-tax profit of 44.9m at the end of nine months (previous year: 42.4m). After tax, the results for the nine-month period stand at 30.1m (previous year: 28.6m) with earnings per share of 0.21 (previous year: 0.20). 0 9M M 2005 Q Q Germany United Kingdom The quarterly results, which far exceed the original target, are attributable in part to non-recurring income totalling 6.9m relating to the resale of former subsidiary comdirect ltd, which was deconsolidated as of 31 March 2004 and has been sold on by the original buyer. Net of this extraordinary income, the quarterly results were still very good at around 13.5m. The cost/income ratio for the period from January to September 2005 stood at 65.0% (previous year: 64.6% including comdirect ltd). Annualised earnings per customer stand at (previous year: excluding comdirect ltd) compared to expenses of (previous year: excluding comdirect ltd). 6

9 Administrative expenses (in million) M M 2005 Q Q Personnel costs Other administrative expenses Depreciation United Kingdom Net commission income and net interest income Net commission income in the first half of the year was down on the previous year, but after nine months is now reporting a clear increase at 70.5m (previous year: 64.4m excluding comdirect ltd). comdirect bank has not only benefited from the increase in the number of orders, but also from growth in earnings from front-end loads and commission in funds business. In addition, income benefited from the growing contribution from Financial Advisory and comdirect private finance achieved net commission income of 1.6m (previous year: 0.7m). In the first nine months of 2005, comdirect bank generated net interest income before provisions of 48.0m. The previous year s figure ( 41.6m excluding comdirect ltd) reflected additional interest expenses for special fixed-term deposit campaigns. However, the marked increase is also due to growth in current and call-money accounts. Moreover, comdirect bank has further developed its Treasury strategy and this is producing sustainable higher interest income. After provisions, net interest income amounts to 46.9m (previous year: 41.4m excluding comdirect ltd). Number of employees comdirect online comdirect offline Income from investments and securities portfolio and other operating result The income for the first nine months from investments and securities portfolio amounting to 7.1m includes additional revenue from the resale of comdirect ltd of 5.4m; the previous year s figure of 5.5m included the earnings contribution from the divestment of comdirect ltd of 2.4m. Other operating result rose from 4.8m to 5.7m and includes 1.5m from the reversal of a provision for contingent losses set up in 2004 in relation to the sale of comdirect ltd. Administrative expenses Administrative expenses totalled 85.2m, up 11.4m on the previous year ( 73.8m excluding comdirect ltd). The increase is due to planned expenses in connection with the growth and value added programme, comvalue. comvalue primarily impacted on other administrative expenses which climbed 11.2m to 56.6m (previous year: 45.4m excluding comdirect ltd). As in the first half of the year, marketing and IT expenses increased in particular. Depreciation fell 8.5m (excluding comdirect ltd) to 6.9m. As a result of greater process efficiency, personnel costs rose only slightly by 1.8m to 21.7m. As of 30 September, comdirect bank had a staff complement of 637, 12 more than at the end of June 2005 and 21 more than at year-end Of these, 19 (year-end 2004: 15) were employed in Financial Advisory. Results in the business lines At 47.2.m, profit from ordinary activities for the comdirect online business line (Online Investment and Direct Banking fields of competence) outperformed the previous year s figure of 44.5m. The result for comdirect s offline business line (Financial Advisory) amounted to 2.3m (previous year: 2.0m). 7

10 > Events since the end of the third quarter In October 2005, comdirect bank reached an agreement with American Express Bank GmbH, a German company within the American Express Group, to take over a portfolio of approx. 45,000 customers for a price of around 13m. 70% of this sum will be paid when customers are transferred to comdirect bank, which is scheduled for 1 January The remainder of the payment is due a year later with the amount depending on customer turnover. The transaction will take effect subject to approvals including from the regulatory authorities, especially the German Cartel Authority. With the acquisition of the portfolio, we will gain customers who are high-earning online users with fund custody accounts, foreign currency accounts, call-money accounts and current accounts. > Outlook: profit target raised In the fourth quarter, we will again step up our product and market offensive. Despite the additional expenses and after a very good third quarter, we are aiming to achieve results for the year as a whole on a par with the previous year (2004: pre-tax profit of 51.1m). In brokerage, we intend to gain new custody account customers through an attractive comdirect special offer. In banking, there will be a new HBCI interface with PIN/TAN authentication which will make account management much easier and quicker for customers using special home banking programmes. In advice, we are expecting a seasonally-driven increase in sales as the number of transactions usually rises in the fourth quarter. The positive trend in our business activities, which are largely independent of the stock exchange, provides a good basis on which to continue our growth and value added programme, comvalue, over the next two years. Through comvalue we are adding value to the bank to increase the stability of its earnings base. Sincerely yours, Dr. Andre Carls CEO 8

11 > The Share > Small share price gains change in shareholder structure The comdirect share price rose by around 4% in the third quarter. In July, Commerzbank acquired the stake previously held by T-Online and now holds 79.85% of the share capital. After announcing positive order figures in August, the price of comdirect bank shares exceeded 7 for a short time. Profit-taking pushed the price back down to 6.64 by 30 September 2005, which is 3.8% higher than at the end of June Over the same period, the SDAX climbed 12.7% and the Prime Financial Services Index by 17.7%. Data and key figures on comdirect share German Securities code no ISIN code DE Stock-exchange code COM Reuters: CDBG.DE Bloomberg: COM GR Stock-exchange segment SDAX Number of shares issued 140,760,138 no-parvalue shares Designated Sponsor Commerzbank AG At the end of July, 30m shares held by T-Online International AG in comdirect bank AG were taken over by Commerzbank AG. Commerzbank now indirectly holds 79.85% of the shares; the remaining 20.15% is in free float. In the third quarter, Investor Relations once again focused on providing up-todate and transparent information. Just 21 days after the close of the second quarter, we presented our interim figures in July in a conference call. We also held many individual meetings with investors and analysts during roadshows in Frankfurt, Stuttgart and Zurich. comdirect bank s 2004 annual report ranked sixth in the SDAX group in the manager magazine competition, scoring an overall mark of good, and won the gold medal at the International ARC Awards 2005 in New York. Only 7% of the 1,900 annual reports submitted won gold. Performance 9 months 2005 Average daily turnover in units XETRA 118,387 Frankfurt 22,006 Other stock exchanges 5, ,057 Opening quotation XETRA ( ) 7.20 Highest price XETRA ( ) 7.70 Lowest price XETRA ( ) 5.57 Closing quotation XETRA ( ) 6.64 Market cap ( ) 934.6m Earnings per share 9M M 2004 Earnings per share in Shareholders structure 79.85% Commerzbank AG (indirectly) 20.15% Free float Development of share price of comdirect share to Euro Jan Feb March April May June July Aug Sept comdirect share MDAX SDAX (Indices normalised to value of comdirect share) 9

12 > Income statement Income statement of comdirect bank group according to IFRS/IAS* thousand 1.1. to to Interest income 65,300 65,554 22,705 20,874 Interest expenses 17,336 22,803 5,960 7,540 Net interest income before provisions 47,964 42,751 16,745 13,334 Provision for possible loan losses 1, Net interest income after provisions 46,879 42,552 16,259 13,150 Commission income 82,661 77,687 31,010 19,511 Commission expenses 12,171 10,267 4,275 2,747 Net commission income 70,490 67,420 26,735 16,764 Result from hedge accounting Income from investments and securities portfolio 7,101 5,540 5,680 1,634 Administrative expenses 85,167 77,914 30,022 23,800 Personnel costs 21,676 21,176 7,937 7,118 Other administrative expenses 56,557 47,743 19,969 14,028 Marketing costs 21,924 12,517 8,780 3,252 Communication costs 1,396 1, Consulting costs 6,431 5,764 2,808 1,504 External services 14,503 15,651 4,723 4,976 Sundry administrative expenses 12,303 11,877 3,179 3,827 Depreciation of office furnitures and equipment and intangible assets 6,934 8,995 2,116 2,654 Other operating result 5,654 4,840 1,801 1,689 Profit from ordinary activities 44,851 42,438 20,365 9,437 Pre-tax profit 44,851 42,438 20,365 9,437 Taxes on income 14,711 13,805 5,844 3,413 After-tax profit 30,140 28,633 14,521 6,024 Net profit 30,140 28,633 14,521 6,024 Earnings per share 1.1. to to Net profit thousand 30,140 28,633 14,521 6,024 Average number of ordinary shares Shares 140,663, ,505, ,743, ,504,350 Basic earnings per share Net profit thousand 30,140 28,633 14,521 6,024 Adjustment to the number of ordinary shares issued due to outstanding option rights Shares 717, , , ,801 Weighted average shares outstanding (diluted) Shares 141,380, ,974, ,460, ,973,151 Diluted earnings per share * unaudited 10

13 > Quarter-on-quarter comparison Income statement of comdirect bank group according to IFRS/IAS on a quarterly comparison* thousand Q1 Q2 Q3 Q4 Q1 Q2 Q3 Interest income 23,964 20,716 20,874 20,563 20,743 21,852 22,705 Interest expenses 7,728 7,535 7,540 6,362 5,521 5,855 5,960 Net interest income before provisions 16,236 13,181 13,334 14,201 15,222 15,997 16,745 Provision for possible loan losses Net interest income after provisions 16,281 13,121 13,150 14,110 15,001 15,619 16,259 Commission income 35,558 22,618 19,511 23,970 26,812 24, Commission expenses 4,696 2,824 2,747 4,297 4,578 3,318 4,275 Net commission income 30,862 19,794 16,764 19,673 22,234 21,521 26,735 Result from hedge accounting Income/loss from investments and securities portfolio 1,515 2,391 1,634 1, ,099 5,680 Administrative expenses 28,795 25,319 23,800 25,645 26,136 29,009 30,022 Personnel costs 7,856 6,202 7,118 7,625 6,717 7,022 7,937 Other administrative expenses 17,498 16,217 14,028 15,497 17,221 19,367 19,969 Marketing costs 4,027 5,238 3,252 3,943 6,665 6,479 8,780 Communication costs Consulting costs 2,521 1,739 1,504 3,786 1,635 1,988 2,808 External services 5,578 5,097 4,976 3,153 4,565 5,215 4,723 Sundry administrative expenses 4,589 3,461 3,827 4,504 3,901 5,223 3,179 Depreciation of office furniture and equipment and intangible assets 3,441 2,900 2,654 2,523 2,198 2,620 2,116 Other operative result 1,110 2,041 1,689 2,196 1,621 2,232 1,801 Profit from ordinary activities 20,973 12,028 9,437 8,652 13,042 11,444 20,365 Pre-tax profit 20,973 12,028 9,437 8,652 13,042 11,444 20,365 Taxes on income 7,431 2,961 3,413 3,316 4,753 4,114 5,844 After-tax profit 13,542 9,067 6,024 5,336 8,289 7,330 14,521 Net profit 13,542 9,067 6,024 5,336 8,289 7,330 14,521 * unaudited 11

14 > Balance sheet Balance sheet of comdirect bank group according to IFRS/IAS* Assets thousand as of as of Cash reserve 51,400 3,532 Claims on banks 1,202,162 1,371,129 Claims on customers 179, ,140 Provision for possible loan losses 2,770 2,456 Positive fair values from derivative hedging instruments Investments and securities portfolio 1,735,261 1,413,205 Intangible assets 9,348 10,090 Fixed assets 11,644 12,546 Tax assets Other assets 5,109 3,778 Total assets 3,192,278 2,977,982 Liabilities and equity thousand as of as of Liabilities to banks 11,064 0 Liabilities to customers 2,534,952 2,338,461 Negative fair values from derivative hedging instruments 0 0 Provisions 12,627 15,359 Tax liabilities 10,951 9,932 Other liabilities 21,717 13,704 Equity 600, ,526 Subscribed capital 140, ,508 Capital reserve 368, ,261 Retained earnings Other revenue reserves 55,931 56,161 Revaluation reserve 5,812 2,874 Consolidated profit ,722 Consolidated profit 1.1. to ,140 Total liabilities and equity 3,192,278 2,977,982 * unaudited 12

15 > Statement of changes in equity thousand Equity as of , ,287 Changes in the financial year a) Subscribed capital b) Capital reserve 1, c) Retained earnings d) Revaluation reserve 2,938 1,015 e) Dividend payout comdirect bank AG 33,722 22,481 f) Consolidated profit as of 1.1. to ,140 28,633 Equity as of , ,035 The changes in the capital reserve and retained earnings in financial year 2005 result from the first-time adoption of IFRS 2 Share-based payment and the exercising of stock options issued. > Cash flow statement thousand Cash and cash equivalents as of ,532 1,749 Cash flow from operating activities 81,170 70,232 Cash flow from investment activities Cash flow from financing activities 33,380 38,515 Cash and cash equivalents as of ,400 32,939 Cash and cash equivalents correspond to the balance-sheet item cash reserve and include cash on hand and balances held at central banks. Apart from the net profit, changes in assets and liabilities from operating activities after correction for non-cash items e.g. depreciation cash flow from operating activities also includes interest and dividends paid and received as well as taxes on income paid. 13

16 > Segment reporting Segment reporting by business lines* thousand 1.1. to comdirect comdirect Group comdirect online offline management/ bank consolidation/ group others total Net interest income before provisions 47, ,964 Provision for possible loan losses 1, ,085 Net interest income after provisions 46, ,879 Net commission income 69,572 1, ,490 Result from hedge accounting Income from investments and securities portfolio 7, ,101 Administrative expenses 81,690 4,995 1,518 85,167 Other operating result 5,433 1, ,654 Profit/loss from ordinary activities 47,175 2, ,851 Pre-tax profit/loss 47,175 2, ,851 Taxes on income 14, ,711 After-tax profit/loss 32,464 2, ,140 Net profit/loss 32,464 2, ,140 Acquisition costs of segment assets 5, ,289 Depreciation on segment assets 6, ,933 Cost/income ratio 62.9% 187.0% 65.0% Segment income 157,358 5,521 1, ,343 Segment expenses 110,183 7,845 1, ,492 Segment assets 3,166, ,166,132 Segment debt 2,546, ,546,016 Allocation to the segments is based on the business lines of the comdirect bank group. Determination of the business lines was carried out in compliance with IAS 14 and its principle of materiality. * unaudited 14

17 > Segment reporting Segment reporting by business lines* thousand 1.1. to comdirect comdirect Group comdirect online offline management/ bank consolidation/ group others total Net interest income before provisions 42, ,751 Provision for possible loan losses Net interest income after provisions 42, ,552 Net commission income 66, ,420 Result from hedge accounting Income from investments and securities portfolio 5, ,540 Administrative expenses 75,841 2, ,914 Other operating result 5, ,840 Profit/loss from ordinary activities 44,461 2, ,438 Pre-tax profit/loss 44,461 2, ,438 Taxes on income 13, ,805 After-tax profit/loss 31,287 2, ,633 Net profit/loss 31,287 2, ,633 Acquisition costs of segment assets 3, ,587 Depreciation on segment assets 8, ,995 Cost/income ratio 62.9% 312.3% 64.6% Segment income 152,756 2, ,007 Segment expenses 108,295 4, ,569 Segment assets 3,048, ,041 3,047,500 Segment debt 2,448,067 1,041 1,041 2,448,067 Allocation to the segments is based on the business lines of the comdirect bank group. Determination of the business lines was carried out in compliance with IAS 14 and its principle of materiality. * unaudited 15

18 > Accounting standard and other information The report of comdirect bank as of 30 September 2005 conforms to the rules of the International Financial Reporting Standards (IFRS) and the rules of the International Accounting Standards (IAS). The same measurement and calculation methods were applied as for the 2004 consolidated financial statements of comdirect bank. As a result of the first-time adoption of the approved and published IFRS and the IFRS revised by the Improvement Project, the following changes have been made to the accounting methods used in the 2004 consolidated financial statements: 1. Claims on banks and customers Previously the reporting of the claim depended on whether it was an original claim or one acquired in the secondary market: Original claims were carried at amortised cost as Claims on banks or Claims on customers. Claims acquired in the secondary market (especially promissory notes) were carried at fair value in the Investments and securities portfolio. Gains or losses on disposal were reported in Income from investments and securities portfolio. In accordance with the new regulations under IAS 39, claims are now reported according to whether or not they are quoted in an active market. As a result: Claims not quoted in an active market are reported at amortised cost as Claims on banks or Claims on customers and any gains or losses on disposal are recognised in Net interest income. Claims quoted in an active market are reported at fair value in the Investments and securities portfolio and gains on disposal recognised in Income from investments and securities portfolio. 2. Employee payment plans IFRS 2, which applies as of 1 January 2005, states that the fair value of the employee payment plans must be reported in expenses across the term of the plans. On the balance sheet, equity-settled plans are reported under equity. For reasons of materiality, we have not taken account of these changes in the comparative figures. During the reporting period, interest rate swap agreements were concluded to hedge against fair value fluctuations on individual underlying transactions. The rules of micro hedge accounting were applied to the combination of underlying transaction and hedging transaction. The derivative hedging instruments are carried at fair value. The fair values determined are reported in the balance sheet under Positive fair values from derivative hedging instruments or Negative fair values from derivative hedging instruments. The changes in the fair value of the hedge and the underlying transaction resulting from the hedged risk are netted off and charged to income in the item Result from hedge accounting. Segment reporting by business lines is shown on pages The comdirect online business line includes the Online Investment and Direct Banking fields of competence and the comdirect offline business line comprises the Financial Advisory field of competence. In the third quarter, two separate trust assets were set up for comdirect bank AG, which are treated as special purpose vehicles in line with SIC-12. From now on, in addition to the parent company, the scope of consolidation will include the subsidiary, comdirect private finance AG, and a total of five special funds. As part of our stock option programme set up in line with the resolution of the annual general meeting on 11 May 2000, we issued a total of 3,104,580 subscription rights to employees of comdirect bank as of 30 September As of the reporting date, 851,240 of these have expired. 16

19 > Financial calendar January CAI Cheuvreux German Corporate Conference in Kronberg/Ts. 14 February Press/Analysts conference in Frankfurt/Main 15 March Annual report April Quarterly report May Annual general meeting in Hamburg 19 May Dt. Börse & DrKW German Mid Cap Investment Conference in New York 25 May WestLB German Mid & Small Cap Conference in London 25 May Sal. Oppenheim Mid-Cap Financials Conference in London 1 June Deutsche Bank German Corporate Conference 2005 in Frankfurt/Main 21 July Half-year report October Nine-month report November Deutsches Eigenkapitalforum, Frankfurt/Main > Financial calendar February Press/Analysts conference in Frankfurt/Main 14 March Annual report April Quarterly report May Annual general meeting in Hamburg 21 July Half-year report October Nine-month report 2006 > Contacts Investor Relations Daniel Fard-Yazdani, CEFA Tel / Fax / investorrelations@comdirect.de Ullrike Hamer Tel / Fax / investorrelations@comdirect.de comdirect bank AG Pascalkehre 15 D Quickborn Concept and layout ergo Unternehmenskommunikation, Cologne/ Frankfurt/Main Press Relations Johannes Friedemann Tel / Fax / presse@comdirect.de You can download our annual and interim reports in German or in English from our website at under Publications. Our order service also offers the option of inclusion in the distribution list, which means that the reports will be sent to you on publication. An online version of the 2003 and 2004 annual reports is also available here. You can find our published press releases in German or in English on our website at Photography Schlüter Fotografie, Essen Translation AGET Limited, London 17

20 comdirect bank AG D Quickborn/Germany