DEPFA BANK Reports 2006 net Profit of EUR 526 m (+11%)

DUBLIN and FRANKFURT, February 12 /PRNewswire/ --

-- Continuous investments for Further Revenue Growth in 2007 and Beyond

DEPFA BANK plc released its preliminary 2006 full year results today. Net income rose by 11% to EUR 526 m. This corresponds to a Return on Equity of 21% after tax. A review of the results by business segments underlines a significant transformation in the Bank's earnings mix for 2006: the combined pre-tax result of the client facing segments Budget Finance, Infrastructure Finance and Client Product Services increased by 70% to EUR 628 m, which more than offset lower income from Global Markets. 2006 has been the most successful year in the long-term development of the Bank's public sector franchise. DEPFA BANK has further strengthened its position as the leading financial institution serving exclusively the financial needs of public sector authorities worldwide. Net interest income was virtually flat at EUR 425 m (2005: EUR 422 m). However, a deeper appraisal reveals a healthy underlying development as interest income from Budget Finance and Infrastructure Finance, which make up the great majority of the Bank's interest bearing assets rose by 20% to EUR 395 m. In 2006 DEPFA originated approximately EUR 59 bn in new Budget Finance and Infrastructure Finance commitments. The Bank's priority has been to conserve the profitability of its low risk/high quality public finance portfolio, albeit with a lower amount of new business volume. Rather than keep leverage at historical levels, DEPFA has opted for a more prudent strategy of reducing its leverage during the current cycle of compressed spreads. Net fee and commission income rose by 60% to EUR 32 m. Net trading income totalled EUR 140 m. This result is not comparable with the previous year's (-EUR 114 m) trading loss, that was weighed down by the accounting treatment of covered options in connection with profits from asset sales. Gains from sale of assets declined by 42% to EUR 277 m. The operating expenses rose by 6% to EUR 228 m. Staff expenditure rose by 5% to EUR 138 m due to the sizeable increase in staff over the past 2 years as part of the Bank's strong organic growth. At the end of 2006 the Bank employed 600 staff, compared with 500 staff at the end of 2005 (+20%). The cost/income ratio stood virtually unchanged at 26%. This is a very encouraging development during such an expansion phase as it demonstrates the speed at which investments in increased resources can be translated into revenues. Profit before taxation amounted to EUR 646 m, up 8% on the previous year. The effective tax rate moved up slightly to 22% from 20%. At the Annual General Meeting on 20 April 2007 in Dublin, DEPFA BANK plc will propose a substantial increase in the dividend from 25 to 40 cent per share (+60%). DEPFA BANK is very confident about its investment strategy and future business growth. It will continue to invest in its franchise, products and systems for future revenue growth in the years 2007 and beyond.

For more information see www.depfa.com

Contact: Henrik Hannemann, +49-69-92882275

Contact: Henrik Hannemann, +49-69-92882275