The staff of Deutsche Hypo ... ... the basis of our success

ANNUAL REPORT 2005
DEUTSCHE HYPO
ANNUAL REPORT
2005

KEY FIGURES ➞

DEUTSCHE HYPO AT A GLANCE
Business progress figures
2005 2004 Change
€ millions € millions %
Mortgage loans 1,231 1,014 21.4
Capital market transactions 4,554 6,629 – 31.3
of which public-sector loans 1,900 2,321 – 18.1
Loan drawdowns 5,755 7,694 – 25.2
Initial bond sales 10,337 13,000 – 20.5
Balance Sheet figures
Mortgage loans (including interest) 7,890 8,459 – 6.7
Public-sector loans (including interest) 13,941 14,796 – 5.8
Securities 9,415 9,045 4.1
Borrowed funds 32,141 32,956 – 2.5
Equity 797 783 1.8
of which core capital 457 440 3.9
Total assets 33,164 33,896 – 2.2
Profit and Loss Account figures
Net interest and commission income 104.5 100.7 3.8
Administrative expenses including depreciation allowance 32.7 30.5 7.2
Result from normal business activity 48.6 47.8 1.7
Net income for the year 32.7 30.5 7.2
Other information
Dividend per unit share (in €) 11.00 11.00 -
Special dividend per unit share (in €) - - -
Share price as at year-end (in €) 302.00 337.52 – 10.5
Return on equity before tax 11.8 % 12.1 % -
Cost/income ratio 31.3 % 30.3 % -
Core capital ratio 6.0 % 5.9 % -
2005 2004
Rating S & P Moody’s S & P Moody’s
Public Pfandbriefe AAA Aaa AAA Aaa
Mortgage Pfandbriefe - Aaa - Aaa
Long-term liabilities* - Aa3 - Aa3
* Outlook negative

2003 2002 2001 2000 1999 1998 1997 1996
€ millions € millions € millions € millions € millions € millions € millions € millions
1,259 1,965 1,808 1,416 1,474 992 803 923
7,019 2,344 2,801 1,930 3,732 3,429 4,398 3,420
4,401 1,673 1,706 1,425 2,459 1,883 3,621 3,037
8,061 4,348 4,592 3,368 5,242 4,476 4,229 4,114
10,378 5,160 5,608 3,270 4,802 4,198 5,734 4,726
8,768 8,600 7,642 6,615 5,882 5,002 4,621 4,228
14,673 12,559 12,565 12,194 12,296 11,362 10,829 9,036
5,702 4,051 4,006 3,434 3,196 2,364 1,217 650
30,328 25,181 24,273 22,245 21,378 18,984 16,953 14,719
712 656 561 472 421 401 392 373
422 389 309 271 221 209 199 190
31,222 26,043 25,046 22,951 21,990 19,542 17,483 15,226
99.2 92.7 92.2 92.4 93.0 88.8 84.9 76.7
32.5 30.8 28.8 26.5 27.4 28.8 27.7 27.5
47.3 43.3 46.1 51.5 47.4 41.8 39.4 34.2
33.1 28.4 30.12 32.13 21.20 18.05 16.57 15.54
11.00 10.00 10.00 9.00 9.00 8.69 8.18 7.41
- - - 26.70 - - - -
285.00 259.00 282.50 214.00 277.00 255.65 205.54 179.21
12.5 % 12.6 % 17.4 % 22.7 % 21.5 % 20.0 % 19.6 % 18.0 %
32.8 % 33.2 % 31.2 % 28.7 % 29.5 % 32.4 % 32.6 % 35.8 %
5.6 % 5.3 % 5.0 % 5.1 % 4.9 % 5.0 % 5.2 % 5.5 %
S&P S&P S&P S&P S&P S&P
AAA AAA AAA AAA AAA AAA
- - - - - -
- - - - - -

Benedikt von Abendroth, Alois Algermissen, Pascale Angelopoulos, Wolfgang Aust, Volker Basler, Andre
Baule, Mario Beckschulte, Jürgen Becksvoort, Ulrike Behnsen, Nadja Bengsch, Marco Bertram, Heike Bien,
Gunter Bierwisch, Dieter Bläck, Dirk Blissenbach, Joachim Bloß, Martina Blum, Jürgen Bode, Klaus-Werner
Börner, Marianne Böx, Jennifer-Marie Brand, Wolfgang Breitung, Brigitte Brenning, Jochen Bucek, Jens
Bütehorn, Dirk Büttcher, Edith Burmeister, Wolf-Günther Burucker, José Luis Calderón Martínez, Juan Manuel
Casas Guillen, Paul Caspers, Amaya Castaneda, Melanie Cholewa, Ursula Czech, Gabriele Däwes, Dennis
Dasselaar, Melanie Decker, Ulrich Deppe, Julia Deppen, Frank Dittmann, Tanja von Döllen, Reinhard Drexler,
Beate Droste, Leopold von Drygalski, Jürgen Eckert, Iris Kerstin Ewert, Tobias Faust, Hauke Finger, Christian
Fischer, Hannelore Fobel, Jörg Franz, Oliver Frerking, Andreas Froebus, Christian Gail, Michael Gehrig,
Christoph Gennrich, Elke Görg, Jutta Graf-Frieling, Jürgen Grieger, Detlev Grote, Helga Christina Guilherme,
Tanja Gumny, Dieter Haasemann, Ralf Hagendorff, Anne-Kathrin Haidt, Burghard Hanke, Iris Hauser, Brigitte
Heep, Joachim Heinrich, Markus Heinzel, Janos Hielscher, Ralf Hinrichs, Ingrid Hitzeroth, Achim von Hoegen,
Heinrich Hoffmeyer, Helmut Hornung, Gertraud Hutterer, Axel Intemann, Peter Jabs, Anna-Dorothea Jäger,
The staff of Deutsche Hypo ...
... the basis of our success
Claudia Jenner, Gareth Jones, Thorsteinn Jonsson,
Georg Kaisler, Dirk Kallikat, Christina Kanning, Gudrun
Karges, Ludger Katz, Andreas Kemme, Dorothea Kind, Ruth Kirchstein, Claudia Kirsch, Andreas Kirschner,
Jürgen Klebe, Gerald Kölle, Helmut Kördel, Heiko Kollmann, Jutta-Carola Kopp, Renate Koppitz, Gabriele
Kornweih, Ulrich Krogmeier, Elke Kücken, Roger Kücken, Frank Kühne, Eike Oliver Laase, Bernd Lademann, Elfi
de Laer, Thomas Lang, Sascha Langeheine, Annemarie Leeuwen, Dr. Pia Leipertz, Gerhard Lieske, Marianne
Lips, Veit Look, Walter Love, Alexander Ludwig, Karin Ludwig, Hans-Joachim Luther, Manfred Matthies,
Albrecht Mayer, Uwe Menninger, Karen Mergelsberg, José Ignacio Merinero Munoz, Eleonore Meyer, Jens
Meyer, Elly Möller, Irina Monsler, Jürgen Morr, Frank Müller, Brigitte Müller-Bühren, Dirk Neugebauer,
Evelin Neuhäuser, Michael Niemeyer, Markus Nitsche, Ralf Obst, Andrea Olthaus, Henk Dirk Oostmeijer,
Lorenz Ostermeyer, Jan Christoph Paape, Ita Paat, Rainer Passiel, Andreas Peter, Meike Peter, Gudrun
Pösger, Michaela Porter, Arne Preuß, Jörg Quentin, Uwe Radloff, Iris Reese, Andreas Rehfus, Gisela Reinecke,
Roland Reschke, Thomas Rode-Kalkenings, Stefan Roggelin, Nicole Rossi, Sebastian Rudolph, Regina Rüter,
Jens-Oliver Ruff, Petra Ruff, Monika Rust, Stefan Ryll, Elke Schäper, Katharina Schauer, Patricia Scherer,
Claudia Schijf-Brand, Veronika Schindler, Andreas Schlüter, Elena Schnar, Dirk Schönfeld, Erik Schramm,
Wiebke Schramm, Dr. Jörg Schröder, Roland Schröter, Matthias Schroff, Heike Schünemann, Ulf Schuh-
macher, Matthias Schwarz, Dr. Olaf Selke, Fredrik Serck, Kristof Sidorowicz, Petra Söfker, Sascha Sonntag,
Thomas Staats, Karl Heinz Stein, Mathias Stolte, Gabriele Strienke, Bianca Ströhla, Ingeborg Tebbenhoff,
Christiane Terlunen, Ella Teschmit, Martina Teutloff, Bettina Thiedtke, Regina Thomalla, Maik Töpperwien,
Thomas von Tucher, Manja Vogel, Carina Vondran, Dr. Wulfgar Wagener, Hans-Ernst Warczok, Sabine
Watermann, Paul Weber, Angelika Wellmann, Aenne Wendeling, Ansgar Werner, Simone Wilhelms, Dirk Wilke,
Bärbel Willert, Immo Willner, Bernd Wißmach, Renate Wittkowski, Dirk Wömpner, Frank Wolff, Christopher
Woodard, Michael Woodgate, Anita Wrosch, Martina Wulschläger, Frank Zimmermann, Jörg Zimmermann.
··· 1 ···

··· 2 ···

CONTENT
LETTER TO OUR SHAREHOLDERS 5
AGENDA FOR THE ANNUAL GENERAL MEETING 9
THE SUPERVISORY BOARD AND ITS COMMITTEES 10
MANAGEMENT 11
PUBLIC TRUSTEES 11
REPORT OF THE BOARD OF MANAGING DIRECTORS 12
The general economic environment 12
MANAGEMENT REPORT 17
Business development 17
Mortgage loan business 18
Capital market business 21
Refinancing 22
Rating 24
Cover at net present value 24
Income position 25
Proposed appropriation of profit 26
Development of equity capital 27
Risk report 27
Membership of ING Group 34
Forecast 35
PERSONNEL REPORT 38
CORPORATE GOVERNANCE 40
DEUTSCHE HYPO SUPPORTS MEDICAL RESEARCH 42
ANNUAL ACCOUNTS 45
Balance Sheet 46
Profit and Loss Account 48
Notes 49
AUDITOR’S REPORT 71
REPORT OF THE SUPERVISORY BOARD 72
ORGANISATIONAL STRUCTURE OF DEUTSCHE HYPO 74
ADDRESSES IN GERMANY AND ABROAD 75
ING GROUP 76
GLOSSARY 78
··· 3 ···

··· 4 ···

LETTER TO OUR SHAREHOLDERS
Dear Shareholders,
Dear Sir or Madam,
In the 2005 financial year, Deutsche Hypo has
maintained its position well. In spite of the unchan-
ged difficult conditions in the sector, the bank was
again able to demonstrate that its business model,
as a clearly positioned international property
investment bank concentrated on its two core
businesses, is competitive and successful.
We are, therefore, pleased to be able to inform you
in this Annual Report for 2005 of the bank’s satis-
factory profit development. The main key figures
for the bank as a whole developed as follows in
comparison to the previous year:
·· The net interest and commission income was
increased by 3.8% to € 104.5 million.
·· The cost-income ratio increased only slightly by
one percentage point to around 31%.
·· The result from normal business activity increa-
sed by 1.7% to € 48.6 million.
·· The net income for the year increased by 7.2%
to € 32.7 million.
As you know, the market for commercial property
financing is fiercely contested, and this is accom-
panied by a not yet finalised process of concentra-
tion within the sector. Against this background, the
pleasing development in the volume of new busi-
Jürgen Morr, Thomas v. Tucher, Jürgen Grieger
ness in the bank’s mortgage loan business should
be particularly emphasised. Above all, in the sector
of foreign financings, we were able to achieve an
increase of a good 78%. Here the share of the
total volume of commitments of around 49% rose
to over 72 percent. Therefore, in foreign financings,
after the difficult year of 2004, the good result for
2003 was even exceeded. Further evidence of the
positive trend in foreign business was provided by
the bank’s increased market share in comparison
with other Pfandbrief banks.
··· 5 ···

··· 6 ···
It is in this context that we decided on the conti-
nued development of the Spain business:
Our strategy is to open up the Spanish market
from Hanover and, when positive experience is
gained, to increase business with the aim of ope-
ning an agency locally. This step will now be taken
this spring, because after initial business, we can
see the potential for development in the Spanish
market, which should be fully developed whilst
maintaining the bank’s conservative lending policy.
Our USA business also experienced a positive
development. Its volume of new business more
than tripled by comparison with the previous year.
The bank contributes, by way of syndicates, to
larger scale financings in line with its strict portfo-
lio requirements. Our market assessment of the
most important American locations continues to
be positive, with the result that we intend to
expand business there.
There is a slight disappointment with regard to
portfolio developments, which were down in 2005,
200
180
160
140
120
100
80
60
6.7% below the previous year’s level. In the sector
of commercial property financing, an increased
speed of transaction has generally been establis-
hed with the result that existing financings are
being repaid increasingly frequently, even in our
portfolios. Changes in market structures and new
products, such as mortgage backed securities,
which are competing with “traditional” property
financings and taking increasing market shares,
resulted, particularly in our UK portfolio, in shorter
terms for existing financings. However, a slight
and, in our opinion, short-term move away from
the portfolios also creates space for new busi-
ness, which the bank will use to its benefit.
The developments in capital market business in
the year under review were completely in line with
expectations. Naturally the volume of new busi-
ness in this area was not able to reach the record
levels of the two previous years, which were
influenced by special factors. Nevertheless, the
result is still significantly above the average over
several years.
Interest rate trends
vs. DAX and CDAX-Bank Index 30.05.1997 = 100; Month-End Values
220
40
Jun 97 Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05
CDAX DAX Dt. Hypo

In capital market business, foreign business was
also expanded and so continues to follow the
route of internationalisation and diversification of
the bank’s cover pool.
In this international environment, especially within
the framework of the expansion of the European
covered bond market, Deutsche Hypo is in a good
position with its efficient refinancing strategy. Our
complete product range is therefore arousing
much investor interest. In addition to the bank’s
own measures, the quality and appeal of the
Pfandbrief was further increased by the Pfandbrief
Act, which came into force last July.
This Pfandbrief Act (PfandBG) retains the well-
established quality assurance elements of the
Mortgage Bank Act. As the cover pools of the
mortgage banks organised under private law were
considerably strengthened by the last amendment
of the Mortgage Bank Act (HBG) in April 2004, it
was no longer necessary to combine the privilege
of Pfandbrief issued by credit institutions organi-
sed under private law with restrictions on the
scope of business. Therefore, in future, all credit
institutions will be able to issue Pfandbriefe, provi-
ded they meet the conditions and strict quality
requirements of the Pfandbrief Act. On the other
hand, the Pfandbrief Act allows the established
Pfandbrief banks to apply for a full banking licence
so they have the option of extending their busi-
ness to the point where they can operate an all-
purpose bank.
Deutsche Hypo has obtained this full banking
licence. However, we will not change our business
policy focus as a Pfandbrief bank, which has been
··· LETTER TO OUR SHAREHOLDER ···
able to achieve its expertise and its successful
market position in the areas of international com-
mercial property and public sector financing. We
are confident that Deutsche Hypo, with its short
decision-making processes and close proximity to
customers, will also be able to successfully
defend and expand its business model in the new
legal environment.
We are therefore continuing to concentrate our
efforts in the area where Deutsche Hypo and its
employees have already achieved considerable
success.
Irrespective of the ten percent drop in the bank’s
end-of-year share price when compared on the
balance sheet date with the previous year, the
long-term trend continues to be upward. The
Deutsche Hypo share is not a short-term invest-
ment but offers a stable, low-risk form of continu-
ous investment growth, which is fully in line with
our corporate philosophy of sustainability and con-
tinuity.
We would be pleased to see you at the 123rd
Ordinary General Meeting of Deutsche Hypo on
18 May 2006 at the Arabella Sheraton Pelikan
Hotel in Hanover so we can inform you in more
detail about the last financial year and future pro-
spects.
Yours faithfully
··· 7 ···

··· 8 ···

AGENDA FOR THE ANNUAL
GENERAL MEETING
·· AGENDA
for the 123rd Ordinary General Meeting
of the shareholders of
Deutsche Hypothekenbank (Actien-Gesellschaft)
on 18 May 2006, 11 a.m.
in the Mozart Room of the
Arabella Sheraton Pelikan Hotel
Pelikanplatz 31, 30177 Hanover
1. Presentation and review of audited Annual
Accounts as at 31 December 2005, the Man-
agement Report for the 2005 financial year, the
Report of the Supervisory Board and the propo-
sal regarding the appropriation of profit.
2.Resolution on the appropriation of profit.
3.Resolutions on the approval of the actions of the
Board and the Supervisory Board for the 2005
financial year.
4.Resolutions on the amendment of the Com-
pany’s Articles of Association.
5.Election of auditor for the 2006 financial year.
The Deutsche Hypo share is identified as follows:
Security code no.: 804200
ISIN: DE0008042003
··· 9 ···

··· 10 ···
THE SUPERVISORY BOARD
AND ITS COMMITTEES
Louis Graf von Zech
Frankfurt am Main
Member of the Board of
Managing Directors of
BHF-BANK AG
– Chairman –
to 12 May 2005
Wolfgang Hollender
Wedemark
Member (retired) of the Board of
Managing Directors of
Deutsche Hypothekenbank
(Actien-Gesellschaft)
– Chairman –
since 12 May 2005
Roland Scharff
Frankfurt am Main
Member of the Board of
Managing Directors of
BHF-BANK AG
– Vice-Chairman –
to 12 May 2005
Sytse Adriaan Andringa
AP Sloten (FR), Netherlands
Speaker (retired) of the Board of
Managing Directors of
ING Bank Deutschland AG
– Vice-Chairman –
since 12 May 2005
Reinhard Drexler
Hanover
since 12 May 2005
Ralf Hinrichs
Hanover
since 12 May 2005
Paul Koopmans
Frankfurt am Main
Speaker of the Board of
ING Bank Deutschland AG
Managing Director of
ING Holding Deutschland GmbH
since 12 May 2005
Klaus Maier
Frankfurt am Main
Member of the Board of
ING Bank Deutschland AG
Managing Director of
ING Holding Deutschland GmbH
since 12 May 2005
Andreas Peter
Hanover
to 12 May 2005
Horst Podella
Hanover
to 12 May 2005
Dietmar Schmid
Frankfurt am Main
Member of the Board of
Managing Directors of
BHF-BANK AG
to 12 May 2005
Ben Tellings
Frankfurt am Main
Chairman of the Board of
ING-DiBa AG
Speaker of the Executive Board of
ING Holding Deutschland GmbH
since 12 May 2005
Igno van Waesberghe
Amsterdam
Executive Vice President
CEO Central and Eastern Europe
of ING Bank N.V.
since 12 May 2005
Frank Wolff
Hanover
Wilhelm Zeller
Hanover
Chairman of the Board of
Hannover Rückversicherung AG
to 12 May 2005
Lending Committee
Klaus Maier
– Chairman –
Wolfgang Hollender
Paul Koopmans
Igno van Waesberghe
– Substitute member –
Personnel Committee
Wolfgang Hollender
– Chairman –
Sytse Adriaan Andringa
Ben Tellings
Paul Koopmans
– Substitute member –
Audit Committee
Sytse Adriaan Andringa
– Chairman –
Wolfgang Hollender
Frank Wolff
Igno van Waesberghe
– Substitute member –

MANAGEMENT
·· BOARD OF MANAGING DIRECTORS
Jürgen Grieger
Hanover
·· EXECUTIVE MANAGERS
Andreas Rehfus
Dr. Jörg Schröder
PUBLIC TRUSTEES
Wilfried Bandmann
Hanover
Retired Bundesbank director
– Trustee –
Jürgen Morr
Hanover
·· DEPARTMENTAL MANAGERS
Volker Basler
Gunter Bierwisch
Joachim Bloß
Hauke Finger
Markus Heinzel
Albrecht Mayer
Uwe Menninger
Markus Nitsche
Dr. Gunther Krajewski
Hanover
Assistant Director
– Deputy trustee –
Thomas Frhr. v. Tucher
Hanover
Jörg Quentin
Thomas Staats
Dr. Wulfgar Wagener
Paul Weber
··· 11 ···

··· 12 ···
REPORT OF THE BOARD
OF MANAGING DIRECTORS
·· THE GENERAL ECONOMIC
ENVIRONMENT
·· GLOBAL ECONOMIC SITUATION
The world economy was able to grow strongly again
in 2005 despite some considerable negative factors.
However the rate of growth was not as dynamic as
in the previous year. The US economy continued full
steam ahead in its capacity as an engine of growth.
Whilst total economic production in the USA would
have been significantly higher were it not for the na-
tural disasters that occurred in September and Octo-
ber, the world’s leading economy proved itself to be
robust enough to remain one of the most important
sources of momentum for the global economy. Along-
side the USA, China once again made a key contri-
bution to the global economic upturn, recording
economic growth of well over 9% and forcing its
way ever deeper into the circle of major economic
regions and industrial nations. This up-and-coming
economy is consequently well on the way to esta-
blishing itself as the world’s fourth-strongest econo-
mic power behind the USA, Japan and Germany.
On the old continent, meanwhile, the figures were
modest by comparison. With a growth rate of
around 1.4%, the Europeans continue to lag well
behind the global average of over 4% and are a
long way off their target, set in Lisbon six years
ago, of becoming the world's most dynamic eco-
nomic region by the year 2010.
Nevertheless, the mood within the eurozone
brightened considerably during the second half of
the year, with a tangible increase in economic
growth that was primarily attributable to stronger
increases in industrial output, which further incre-
ased confidence in manufacturing.
·· ECONOMIC ENVIRONMENT
IN OUR TARGET PROPERTY
MARKETS
·· GERMANY
It is a long time since the Germans have ended a
year on such a confident note, looking to the futu-
re with a great deal more optimism than in pre-
vious years. The reasons are relatively obvious. As
far as the German export sector was concerned,
2005 was another record year with an expected
foreign trade surplus of in excess of € 160 billion,
a result that could not fail to have an impact on
companies' willingness to invest. The retail indu-
stry was satisfied with trading over the Christmas
period and is confident that the period of consu-
mer reticence has been overcome.
German companies, which must hold their own in
the face of global competition, have grown mar-
kedly more competitive. This has not yet had any
fundamental effect on employment. Yet, for the
first time in fifteen years, the Federal Employment

Agency was able to report a smaller increase in
the jobless figures in December.
There are also signs of a gentle recovery in the
construction sector, an area that is so critical to
the real estate sector. As business developed
favourably, a situation occurred that has not been
experienced for some time, with the volume of
new orders up on the previous year. This was part-
ly due to the high level of public investment in
road construction. Developments in terms of
house building, which is still in negative territory
overall, were mixed. Whilst there was a slight
recovery in the construction of detached family
homes and freehold apartments, construction of
rented accommodation continued to fall.
There was also a lack of uniformity about develop-
ments on the German office property market.
Numerous analysts have come up with different
assessments of the future development of the
five main office locations, namely Frankfurt,
Munich, Hamburg, Berlin and Düsseldorf. The total
volume of newly rented office space at top loca-
tions rose for the third quarter in succession, the
number of buildings being completed fell and the
number of empty properties is also continuing to
drop. Yet the sector will have to continue to put up
with a residual stock of unattractive properties that
it will always struggle to market. The mood was
further depressed by difficulties in the area of
open-ended real estate funds. Due to what remai-
ned a poor situation overall on the German office
property market, a whole series of fund properties
had to be devalued.
Demand from foreign financial investors, and
Anglo-American investors in particular, was and
remains keen, with yields on the German residen-
tial property market being attractive to this group.
Purchase prices are rising as a result, despite only
a minor rise in rent levels.
The retail property sector continued to stagnate,
with falling retail sales in some sub-segments.
This means that rent rises can only be expected in
the case of particularly sought-after locations over
the next few years.
·· EUROPE
In the United Kingdom growth for 2005 as a
whole looks like being on a par with the previous
year. On the demand side, the rise in energy pri-
ces did leave its mark, yet consumption by private
households once again provided the main econo-
mic support. Even the terrorist attacks failed to
dampen the positive mood of the retail sector
across the country.
The rate of inflation, at 2.4 percent for the third
quarter, was well above the British government's
self-imposed target of 2%. The main reasons lay
in the strong spending by the private sector and
the ongoing rise in UK house prices.
In France GDP is expected to have grown by
1.6%, down on the 2% growth recorded in 2004.
During the year under review, consumption by pri-
vate households was again the main engine of
growth, even if the momentum tailed off in the
autumn. Thanks to the favourable international
environment, robust levels of domestic demand –
primarily corporate investment in building projects
and services – also supported economic growth in
France.
··· 13 ···

··· 14 ···
In Greater Paris, the Île-de-France, office premises
were in strongest demand, accounting for more
than 80% of all real estate investments. Foreign
investors, led by those from the US, accounted for
75% of all transactions. The attractiveness of the
office property market means that the level of
excess demand remains as high as ever, causing
yields to fall further, lying at around the 5% mark
for top properties. The solid rental market coupled
with the favourable interest-rate level will keep
demand strong and yields low.
In Spain domestic demand remained strong in the
first half of 2005. Once again, it was private con-
sumption coupled with investment in construction
projects that got the Iberian economy moving. The
reasons for the ongoing boom in consumption lie
in the low level of real rates, the increase in
employment and residential property prices. But
this trend is not without its risks. If property prices
stop rising or should interest rates creep up, the
current level of willingness to spend on the part of
Spanish consumers, who are now relatively highly
indebted, would start to wane. This would also
impact on the keen level of building activity cur-
rently in evidence.
Demand for office property in Madrid remains
high. However, rental prices are being damaged by
the high vacancy rates, particularly in some areas
of the city, and by the large number of new builds.
The vacancy rate in Barcelona is falling, albeit
more slowly than last year, with positive growth in
rent levels not expected until later in 2006.
Consumer and industrial confidence in the
Netherlands remains low. GDP was falling again
at the end of the first half of the year, unemploy-
ment is high, and there is a general mood of
uncertainty as far as the country's economic futu-
re is concerned.
Hopes are once again being pinned on exports.
The improving state of the economy in neighbou-
ring Germany, which takes up around a quarter of
Dutch exports, as well as the stable global
economy, are contributing to an optimistic outlook
for the second half of 2006, the hope being that
the momentum from foreign trade will see the
country catch up again in terms of investment
and, at the same time, support private consump-
tion and consequently the weak retail sector.
The property markets in the Netherlands and, in
particular, the office property segment, remain
weak. Little is changing with regard to the excess
supply of office properties in Amsterdam and this
will continue well into 2006.
·· USA
In the USA the two key factors generating uncer-
tainty remain the high levels of private debt and
the deficits in the balance of payments and state
budget. Nevertheless, strong economic growth
was maintained in 2005. Even hurricane “Katrina”
caused little more than a short-lived upset, failing
to have any long-term impact on the dynamic level
of private consumption. The effects of a more
restrictive monetary and fiscal policy will not be
felt until 2006 at the earliest in the form of more
moderate consumption growth.
On the USA property markets, the conurbations
continue to enjoy a high level of demand for pre-
mises and rental activity that is strong as ever,
with the number of construction projects falling
slightly. These developments are affecting all of
the key property types to the same extent. The

unparalleled liquidity surplus in the markets has
pushed the yields on new investments to new all-
time lows. For a lack of anything better, the high
rate of investment in real estate will continue.
In particular, apartments and office real estate are
set to become more attractive, whilst retail pro-
perty will maintain its position as the top perfor-
mer, enjoying constant growth in 2006.
Interest rate movements from 1996 to 2005 (in %)
7
6
5
4
3
2
··· REPORT OF THE BOARD OF MANAGING DIRECTORS ···
·· CAPITAL MARKET DEVELOPMENT
Over the course of the year the yields on 10-year
federal loans dropped well below the previous all-
time lows recorded in summer 2003. Early pessi-
mism about the state of the economy and a slight
weakening in global economic dynamism due to
the strong rise in energy costs were the factors
behind this development. After the summer,
however, there was a clear improvement in the
leading indicators, in turn generating a more posi-
tive assessment of economic development on the
market. The emergence of debate on interest rate
rises, culminating in an initial interest rate hike by
the European Central Bank in December, allowed
yields to rise strongly, particularly at the shorter
end. The spread between two and ten-year federal
loans closed by 80 basis points over the course of
2005 to 42 points at the year-end. The investment
pressure of numerous institutional investments at
the longer end was certainly a determining factor
in this respect.
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Three-month money Federal bonds in circulation/residual maturity of 5 years
Federal bonds in circulation/residual maturity of 10 years
Following the ECB’s decision in
early December to raise its key refi
rate from 2.00% to 2.25 %, most
analysts are now expecting further
interest rate moves in 2006. The
extent of these measures will
depend on what happens to infla-
tion, the EUR/USD exchange rate
and, of course, how the economy
develops.
··· 15 ···

··· 16 ···

MANAGEMENT REPORT
·· BUSINESS DEVELOPMENT
Once again, in the Bank’s 134th business year,
there was no fundamental improvement in the
basic parameters, particularly with regard to
domestic real-estate financing business, with the
result that the market environment remained diffi-
cult. Nevertheless, Deutsche Hypo was able to
improve on its results, contributing to what was a
satisfactory year overall. Business developed as
follows:
·· Net interest and commission income rose by
€3.8 million to € 104.5 million (previous year:
€100.7 million). This equates to a rise of 3.8%,
primarily due to an improved commission result
in mortgage and capital market business.
·· Administrative expenses (including depreciation)
rose by € 2.2 million to € 32.7 million (previous
year: € 30.5 million). This rise of 7.2% is due to
an increase in personnel expenses (+ 8.2%) and
also the higher general administrative expense
(+ 7.3%). Due to the stronger increase in admi-
nistrative expenses compared with net interest
and commission income, the cost/income ratio
rose from 30.3 % to 31.3 %. However, this is still
well below the industry average of 42.8 % (as at
September 2005).
·· Risk provisioning amounted to € 25.0 million,
€ 0.5 million lower than in the previous year. This
level of risk provisioning is judged to be appro-
priate to cover all discernible risks.
·· The result from normal business activity, at
€ 48.6 million, was € 0.8 million up on the pre-
vious year’s result (€ 47.8 million, + 1.7%). Net
income for the year grew by € 2.2 million to
€ 32.7 million (+7.2 %). The comparatively strong
rise in net income was due to lower tax expen-
ses in the year under review.
·· In a gratifying development, new mortgage loan
commitments were up by 21.4% to € 1.23 billion
(previous year: € 1.01 billion). The increases can
be allocated more or less equally to the com-
mercial sector (+ 22.7 %) and residential property
(+ 18.8 %). The sector as a whole recorded a
rise in commitments of some 28 percent as at
30 November 2005.
·· In terms of capital market business, commit-
ments were down by just under € 2.1 billion to
€ 4.55 billion (previous year: € 6.63 billion).
··· 17 ···

··· 18 ···
·· MORTGAGE LOAN BUSINESS
·· NEW MORTGAGE BUSINESS
New real estate financing commitments totalled
€ 1,231 million, up 21.4% on the previous year’s
level.
New mortgage business (in € millions)
€ millions
2,000
1,500
1,000
500
0
1,965
622
2002
1,259
31
New mortgage business comprised € 354 million
(28.8 %) from financings for residential property
and € 877 million (71.2 %) from commercial finan-
cings. It is gratifying to note that the previous year’s
result for residential properties, which featured the
acquisition of a portfolio worth approximately
€ 243 million, was exceeded this year through
individual transactions.
1,014
298
Commercial loans Residential loans
1,231
354
1,343 1,228 716 877
2003 2004 2005
In terms of the commercial sector, office and retail
property continued to account for the majority of
new mortgage loan commitments, at € 653 million
(previous year: € 626 million). There has been a
shift in favour of retail properties (2005: € 342 mil-
lion, 2004: € 126 million). With regard to office pro-
perties, however, with commitments totalling
€ 311 million, the previous year’s level of € 500
million was not matched.
Commitments for management properties rose by
€ 89 million to € 224 million. The underlying
financings were also included in the books after
particularly careful review. They do not represent
any significant increase in the credit risk. The exi-
sting limits on management property as a propor-
tion of the total portfolio were not exceeded.
New business by property type (in € millions)
€ millions
2,000
1,500
1,000
500
0
Domestic new mortgage business fell by € 175
million to € 340 million. Financings in eastern
Germany rose by € 40 million to € 113 million,
accounting for 9.2 % of all mortgage commit-
ments.
105
584
654 138
607 89
126
224
342
500
622
484
311
30
299
354
2002 2003 2004 2005
Residential properties Office properties
Retail properties Management properties
Meanwhile, commitments abroad rose consider-
ably, up € 392 million to € 891 million.

New business by regions (in € millions)
€ millions
2,000
1,500
1,000
500
0
1,079
100
786
2002
The rise in the volume of commitments abroad
resulted from business in the UK (+ € 223 million)
and the USA (+ € 179 million). The level of new
commitments in France and the Benelux countries
is still not satisfactory. Measures have been intro-
duced with regard to personnel and the hope is
that better results for new business can be achie-
ved in future.
791
54
414
499
40
475
2003 2004 2005
Western Germany Eastern Germany Foreign
Foreign mortgage loan commitments
(in € millions)
€ millions
1,200
1,000
800
600
400
200
0
10
782
18
269
417
101
273
891
113
227
101
41
21
61
2002 2003 2004 2005
Benelux France UK
USA Spain
63
294
50
242
517
·· INCREASING PROPORTION OF FOREIGN
FINANCINGS
The rise in commitments abroad meant that the
proportion of foreign financings rose from 49.2%
to 72.4%.
·· MARKET SHARES
··· MANAGEMENT REPORT ···
New mortage business abroad (in € millions)
80%
60%
40%
20%
0%
1,079
55%
63%
791
49%
499
891
2002 2003 2004 2005
Mortage loan commitments outside Germany
Proportion of total commitments
72%
There was also a rise in commitments in the mort-
gage banking sector (+28 %). Overall, mortgage
commitments (as at 30.11.05) amounted to € 34.0
billion (previous year: € 26.6 billion). The Bank’s
market share of mortgage commitments amoun-
ted to 2.9 % (previous year: 3.2 %). With regard to
commitments relating to residential properties,
the level of market share was more or less main-
tained. In terms of commercial financings, the
share was down slightly at 3.1% (previous year:
3.5 %), whilst there was a clear rise from 4.0% to
5.1% with regard to foreign commitments.
€ millions
1,200
1,000
800
600
400
200
0
··· 19 ···

··· 20 ···
Market shares of mortgage loan commitments
(in %)
8.0
6.0
4.0
2.0
·· MORTGAGE LOAN PORTFOLIO
The mortgage loan portfolio was down by 6.7 %
from € 8,459 million to € 7,890 million. Unlike in
previous years, when reductions in the portfolio
could be primarily attributed to the foreign compo-
nent, significant redemptions were also recorded
for the first time this year with regard to domestic
financings. These were higher in percentage
terms than for the foreign component (domestic:
-8%, foreign: -4%).
There were two main reasons for this develop-
ment:
0.2
2.7 2.6
0 Residential
financing
6.2
Firstly, as part of its portfolio management to
improve structure, the Bank parted company with
or reduced particular commitments.
Secondly, the loan portfolio has become increasin-
gly volatile. Particularly in our core area of busi-
ness, commercial real estate, the speed at which
transactions are being effected is rising, with the
result that existing financings are being repaid
increasingly frequently.
3.5
Commercial
financing
3.1
5.8
31.12.2003 31.12.2004 30.11.2005
4.0
Foreign
Lending
5.1
Deutsche Hypo has pursued its development of
an MBS portfolio, with the aim of optimising the
real estate credit portfolio, particularly from a
regional perspective and in terms of fungibility.
The volume of the MBS portfolio was € 254.4 mil-
lion during the year under review (previous year:
€ 142.8 million).
Development of mortgage loan portfolio
(in € millions)
10,000
8,000
6,615
6,000 1,154
1,471
4,000
2,093
2,000
1,898
7,643
992
1,976
2,574
2,101
2000 2001 2002 2003 2004 2005
The foreign portfolio accounted for 25.6 % of the
total mortgage loan portfolio, up slightly on the
previous year (25.0%).
8,600 8,766 8,459
1,004 1,056 993
2,244 2,372
2,128
2,718 2,832 2,709
7,890
1,113
1,911
2,299
2,634 2,506 2,629 2,567
Residential Retail Office
Management
10,000
8,000
6,000
4,000
2,000

·· CAPITAL MARKET BUSINESS
As in previous years the focus in capital market
business was on achieving sufficiently high mar-
gins taking equity and liquidity costs into conside-
ration.
New capital market business
Total volume € 4,554 millions
New business, worth € 4.6 billion, was, as expec-
ted, down on the previous year’s record level of
€ 6.6 billion. Debt instruments from state banks
(Landesbanken) and savings banks (Sparkassen)
accounted for 22.6 % (previous year: 38.5 %) of
new business. Against the background of the
modification of Anstaltslast (maintenance obliga-
tion) and abolition of Gewährträgerhaftung (gua-
rantee obligation of the owner) in July 2005, this
group had already issued major volumes back in
2004, with the result that the issuing volume was
significantly down in 2005. As part of our portfolio
strategy, we have considerably extended the resi-
dual maturities applicable to this asset class. This
means that we can continue to profit until the end
of 2015 from the attractive margins of this type of
debtor quality, which is no longer available on the
primary market.
Public bank 22.6 %
Other
States municipalities 24.6 %
State and special funds
5.6 %
1.1%
Foreign debtors 46.1 %
··· MANAGEMENT REPORT ···
New capital market business (in € millions)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
3,429
1998
3,732
1999
1,930
2000
2,801
2001
Instruments from domestic debtors weighted
with a solvency coefficient of zero, such as those
of the Federation, states (Länder), municipalities
or of support bodies and other bodies guaranteed
by the former – accounted for 26 % of new busi-
ness (previous year: 32.3 %).
2,344
2002
7,019
2003
6,629
2004
4,554
2005
With a view to the extended options available
since the introduction of the Pfandbrief Act with
regard to using claims against public debtors from
the USA, Canada and Japan as cover, we have
been expanding our activities with these target
groups. As a result, there was an increase in busi-
ness with foreign issuers, up to 46.1% of total
new business on the capital market (previous
year: 27.3 %). We will be continuing this approach
in 2006 in a bid to further internationalise our capi-
tal market business and, as a result, to increase
the diversification of our public sector loan pool.
··· 21 ···

··· 22 ···
Within the context of our strict approach to risk, all
debt instruments acquired have a minimum rating
of A in keeping with the Bank’s business policy.
Instruments with an AAA rating accounted for
30.7%, with AA ratings accounting for 45.3% and
A ratings making up 24 % of new business.
Public sector loan pool by rating class
Total volume € 21.3 billion
As well as using the ratings provided by the leading
rating agencies, we also base our credit decisions
on an internal scoring model.
AAA 22.0 %
AA+ 13.3 %
AA 28.2 %
AA- 26.0 %
A+ 2.3 %
A 6.3 %
A- 1.9%
·· REFINANCING
An increasing preference among investors for
high-quality assets and for risk-based issue markups
characterised 2005. The spread differentiation in
the international covered bond markets – in con-
trast to previous years – rose markedly. It should
be noted that market making and the resulting
secondary market spreads for players like
Deutsche Hypo with excellent credit ratings conti-
nue to function without any problems. The focus
on issues with good credit ratings increased, so
that a pleasing level of demand for Deutsche Hypo
issues was in evidence throughout the year.
Since the abolition of the Gewährträgerhaftung
(guarantee obligation of the owner) with regard to
Landesbank issues, investors are increasingly tur-
ning to the Pfandbrief. Another source of competi-
tion is emerging, as the developing European
covered bonds market expands and joins the
ranks of those competing for investors' money.
Deutsche Hypo is well positioned in this regard,
with the result that the competition is actually pro-
ving beneficial to business. In a global context,
covered bonds as an asset class are becoming
ever more present.
An efficient and optimised refinancing strategy
remains the basis on which to compete on the
international capital markets.
Our product range, which is continuously being
extended and adjusted in line with investor needs,
is the foundation on which our demand-oriented
issuing activity is based.

Allocation of issue volume of € 10.3 billion
The total issuing volume of € 10.3 billion – also
against the background of the slightly lower volu-
me of new lending business – was down on the
previous year’s level of € 13.0 billion. Structured
issues accounted for 28.2 % (previous year: 15 %),
with further private placements making up 56 %.
Registered instruments and borrowers’ notes
were in greatest demand from domestic investors
from the insurance sector.
The Debt Issuance Programme launched in
January 2004 forms an important pillar of our
issue business, accounting for an issue volume of
€ 2.4 billion in 2005, of which 46.3 % was deno-
minated in euros and 33.2 % in US dollars. Further
key currencies were the Swiss franc, Japanese
yen and pound sterling. This proves that Deutsche
Hypo enjoys international recognition as a quality
debt issuer.
Standardissues
€ 3.5 bn
Jumboissues
€ 1.5 bn
Structured
issues € 2.9 bn
DIP € 2.4 bn
Another pillar of our issuing business is the Jumbo
Pfandbrief. In February, we were easily able to
place a new issue worth € 1 billion and with a term
of six years on the capital market. Due to strong
demand from international institutional investors,
a further € 250 million was added to this issue in
June. We also increased an older issue by € 225
million, raising the total volume to € 1 billion.
The Pfandbrief Act, which entered into force in
July 2005, further reinforced investor confidence
in the Pfandbrief “brand”. All Pfandbriefe issued in
Germany will now be issued within a uniform legal
framework, making the product more attractive,
particularly at an international level.
·· PRICE-REGULATING OPERATIONS
As in previous years, we acquired own bonds as
part of our policy of active market support. The
greater part of the volume of € 743 million (pre-
vious year: € 2.3 billion) related to issues from the
Debt Issuance Programme. The secondary market
liquidity demanded by investors was provided
with our securities at all times. The task of regula-
ting the price of our outstanding Jumbo issues
(worth € 8.9 billion as at the year-end) is guaran-
teed by the syndicate bank.
During the year under review, premature redemp-
tions from our own holdings brought redemption
losses in the amount of € 7.5 million, reducing
future interest expenses.
As at the year-end the nominal value of our own
holdings stood at € 118 million (previous year:
€ 140 million).
··· MANAGEMENT REPORT ···
··· 23 ···

··· 24 ···
·· RATING
Deutsche Hypo Pfandbriefe continued to be rated
as AAA, the top rating, by the rating agencies
Moody’s and Standard & Poor’s.
Following the annual rating review, Moody’s rating
for our long-term uncovered debt instruments
remained at Aa3. This has been with a “negative
outlook” since the end of 2004, resulting from the
reorganisation of its holdings in Germany by our
Deutsche Hypo rating
·· COVER AT NET PRESENT
VALUE
Pfandbrief banks are bound by Section 4 of the
Pfandbrief Act to ensure that the total nominal
value of all outstanding Pfandbriefe is covered at
all times by assets of at least the same amount
and with at least the same interest income.
Additionally, the respective cover based on the net
present value must be covered inclusive of a safe-
guard in the form of 2% surplus cover. This net
present value cover must be able to withstand par-
ticular fluctuations in interest and foreign exchange
rates. The Pfandbrief Cash Value Ordinance stipu-
lates both the extent of this interest and currency
rate fluctuation as well as the details of the net
present value calculation method.
parent company ING, which took place at that
time.
Our Pfandbrief ratings and the credit ratings for
our long-term uncovered liabilities continue to
place us among the top group in the industry and
are evidence of the high quality of our Pfandbriefe
and public sector loan pool.
Public Mortgage Short-term Long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Moody´s Aaa Aaa Prime Aa3 *) C+
Standard & Poor´s AAA - - - -
* Outlook “negative”
Deutsche Hypo met the requirements at all times
during the year under review. The average net pre-
sent value excess cover for the year as a whole
was 15.3 % for mortgage Pfandbriefe and 8.9 %
for public Pfandbriefe.
During the year under review Deutsche Hypo did
not include any derivatives in its cover pool.

Net present value excess cover for mortgage Pfandbriefe (in € billions)
€ billions
8
7
6
5
4
3
€ billions
25
24
23
22
21
20
19
31.01.2005
31.01.2005
·· INCOME POSITION
·· SATISFACTORY INCOME SITUATION
The Bank was able to raise its net interest and
commission income to € 104.5 million during the
2005 financial year. The Bank’s two business units
– mortgage and capital market business – were
both able to make stable contributions to the
result at a high level.
In conjunction with securities lending business,
the Bank earned dividend income from shares
provided as collateral, leading in the year under
review to a shift between interest income and
current income.
··· MANAGEMENT REPORT ···
25.02.2005 31.03.2005 29.04.2005 31.05.2005 30.06.2005 29.07.2005 31.08.2005 30.09.2005 31.10.2005 30.11.2005 30.12.2005
Outstanding mort. Pfandbriefe at net present values Net present value of mortgage loan pool Net present value excess cover in percent
Net present value excess cover for public Pfandbriefe (in € billions)
25.02.2005 31.03.2005 29.04.2005 31.05.2005 30.06.2005 29.07.2005 31.08.2005 30.09.2005 31.10.2005 30.11.2005 30.12.2005
Outst. public Pfandbriefe at net present values Net present value of public sector loan pool Net present value excess cover in percent
Structure of income and expenses
(in € millions)
€ millions
120
100
80
60
40
20
0
5.2
100.7
2004
income
3.7
104.5
2005
income
17.3
25.5
30.5
2.2
2004
expenses
15.9
25.5
32.7
25 %
20 %
15 %
10 %
5%
0%
14 %
12 %
10 %
1.5
2005
expenses
Net interest and commission income
Other income including income from the adjustment of specia items
Risk result (including expenses from assumed losses)
Taxes Other expenses
General admin. expenses including exceptional capital allowance
8%
6%
4%
2%
0%
··· 25 ···

··· 26 ···
·· ADMINISTRATIVE EXPENSES
Administrative expenses (including depreciation)
rose by 7.2 % to € 32.7 million, an increase that is
predominantly attributable to the basis effect of the
previous year with regard to personnel expenses,
as well as to higher personnel costs due to a slight
rise in the number of employees. Additional IT
expenses led to an increase in general administra-
tive expenses.
The cost/income ratio was only slightly up, at
31.3 % (previous year: 30.3 %) and continues to
confirm the Bank’s exceptionally good performance.
·· OTHER OPERATING INCOME AND
EXPENSES
The balance of other operating income and expen-
ses, at € 2.2 million, was € 0.9 million down on the
previous year. The result is more or less free of any
special effects and essentially includes income
from the rental of the bank’s own real estate.
·· RISK PROVISIONING
The risk result was € 25 million (previous year:
€ 25.5 million). The credit risk result included in
this figure was € 23.7 million and thus € 1.1 million
lower than the risk provisioning figure for 2004.
In its risk provisioning the Bank has reacted appro-
priately to all discernible default risks.
·· RESULT OF NORMAL BUSINESS ACTIVITY
Deutsche Hypo was able to achieve a slight incre-
ase of € 0.8 million to € 48.6 million in the result
from normal business activity during the 2005
financial year (previous year: € 47.8 million). The
return on equity before tax was 11.8 %. The lower
tax burden resulted in a clear € 2.2 million rise in
net income for the year to € 32.7 million. The
return on equity after tax rose from 7.7% to 7.9%.
·· REPORTING ON SUBSEQUENT EVENTS
There were no events of significant importance
following the close of the 2005 financial year
which had a material impact on our commercial
result for 2005.
·· PROPOSED APPROPRIATION
OF PROFIT
The Board of Managing Directors and the
Supervisory Board have decided to allocate € 11.0
million of the year’s net income of € 32.71 million
to the revenue reserves. This leaves a net profit for
the year of € 21.71 million.
The Board of Managing Directors and the
Supervisory Board shall propose to the sharehol-
ders at the General Meeting that the net profit for
the year be used to pay a dividend of € 11 (pre-
vious year: € 11) per unit share and to make a furt-
her transfer to other revenue reserves in the
amount of € 6.9 million. Based on the year-end
price of € 302.00, this dividend equates to an
interest return of 3.64 %.

·· DEVELOPMENT OF EQUITY
CAPITAL
The core capital will rise to € 457.2 million follo-
wing the allocation of € 5.7 million as resolved by
the Annual General Meeting in 2005 and the prior
allocation to the revenue reserves of € 11.0 million
as resolved by the Board of Managing Directors
and Supervisory Board.
Subordinated liabilities were increased by € 2.2
million to € 210.2 million, of which € 197.5 million
was included in the liable equity capital.
Participatory capital fell by € 5.2 million to € 129.4
million, of which € 78.0 million was included in the
liable equity capital.
The balance-sheet equity (including participatory
capital and subordinated liabilities) thus totalled
€ 797 million. The Bank’s total equity ratio accor-
ding to Principle I lay at 9.9 % excluding the early
year-end allocation. The core capital ratio totalled
6.0 %, clearly exceeding the minimum prescribed
ratio of 4%.
Rising equity (in € millions)
875
750
625
500
375
250
125
0
95
106
203
95
157
204
95
173
279
44
23
44
60
44
66
44
81
44
81
44
81
2000 2001 2002 2003 2004 2005
95
196
135
208
297 316 333
Participatory rights Subordinated liabilities
General reserves Capital of undisclosed partners
Subscribed capital Core capital
129
210
·· RISK REPORT
··· MANAGEMENT REPORT ···
·· RISK-ORIENTED BUSINESS POLICY
The aim of Deutsche Hypo’s credit business is to
achieve a long-term return by assuming managea-
ble and viable risks whilst pursuing a risk-oriented
pricing policy. In this regard, the primary aim of our
risk management is to recognise, evaluate and
deal with risks. The overriding objective is to limit
the risk of an unexpected negative development
and to ensure that sufficient resources are availa-
ble to cope with any such development should it
actually occur in practice. By monitoring the
Bank’s capacity to assume risk on an ongoing
basis, we ensure that the Bank's commercial acti-
vity does not suffer any lasting impairment as a
result of any unexpected negative events.
In the first instance, the Bank’s commercial policy
is designed to avoid major risks, as can be proved
by Deutsche Hypo’s record once again during the
year under review. Any losses or losses in value
that occurred were detected at an early stage and
lay entirely within our expectations and plans. This
policy will be maintained by the Bank in the futu-
re, even if, in individual cases, it can mean that
supposedly attractive opportunities to earn inco-
me cannot be utilised.
Managing the risks to the bank as a whole
remains as high a priority as ever. Our system for
measuring and monitoring risk, with its proven
track record, is continuously being further improved.
··· 27 ···

··· 28 ···
·· THE RISK MANAGEMENT SYSTEM
The Bank's risk management system is based on
the following basic parameters:
·· Clear separation of market areas from market
monitoring and risk controlling at all levels of the
Bank;
·· Clearly defined levels of authority and responsi-
bilities set out in writing, adhering to the principle
of keeping market and market monitoring sepa-
rate from one another;
·· Overall responsibility of the Board of Managing
Directors for the risks assumed by the Bank; the
Board, together with the Supervisory Board,
sets out the Bank's risk profile and risk limits on
the basis of the strategic commercial orienta-
tion;
·· Monitoring of risk profile and risk exposure by
the Supervisory Board;
·· Calculation of risk volume and monitoring of the
Bank’s overall capacity to assume risk by the
Risk Controlling unit, which reports directly to
the Board of Managing Directors and is inde-
pendent of the operating divisions;
·· Technical supported processes to measure,
monitor and manage the different types of risk,
with these being regularly reviewed and adap-
ted as and when required;
·· Comprehensive – in some cases daily – risk
reporting to provide an up-to-date overview of
the Bank’s current risk situation and enable
timely action to be taken where necessary;
·· Consistent implementation of the minimum
requirements stipulated by the bank supervisory
authorities with regard to operations.
In order to be able to counter unexpected risks,
one of the key objectives of the risk management
system lies in the development of instruments
that can be used to recognise and assess risks in
good time. This is a prerequisite with regard to
preventing any significant impairment of the
Bank’s ability to act. The following is a description
of the risks typical to our area of business and of
the processes used to measure and assess these
risks.
The following types of risk are relevant to the
Bank:
·· Counterparty and loan default risk
·· Market price risk
·· Liquidity risk
·· Operational risk
·· COUNTERPARTY RISK AND LOAN DEFAULT
RISK
Counterparty risks are the risks of losses or pay-
ment problems caused through the default or
deteriorating solvency of our contractual partner.
In the first instance, this includes classic credit
default risk, which describes the potential loss in
value of claims due to a deterioration in the sol-
vency or default of the customer (credit default
risk in the narrow sense), as well as settlement
risk and sovereign risk.
The credit default risk strategy as drawn up by the
Board of Managing Directors provides guidelines
on entering into and managing counterparty risk.
This strategy is subject to ongoing review and,

following the abolition of the minimum require-
ments applicable to lending, already complies in
the main with the new Minimum Requirements
for Risk Management (MaRisk).
·· CREDIT DEFAULT RISK IN THE NARROW
SENSE
Property financing segment
Managing credit default risk operates at two
levels:
·· Processes and measures to limit risk in terms of
credit processing with regard to individual loans
·· Measurement and assessment of credit default
risks at the level of the entire loan portfolio.
The following management tools are used at both
levels to varying extents:
·· General portfolio management principles based
on an in-house traffic light model
·· Risk-oriented limit system for individual loans,
counterparties, industries and types of financing
·· Internal rating procedure that complies with the
requirements of Basel II
·· Clear work instructions and allocation of authori-
ty based on the risk element of the financing
·· Risk-oriented pricing
·· Model to measure and analyse the overall portfo-
lio risk
··· MANAGEMENT REPORT ···
For the purposes of putting its credit default risk
strategy into practical effect, the Bank has created
a traffic light model to manage new business.
This model classifies all types of financing based
on industry and region into three different catego-
ries which are subject to varying levels of require-
ments. The categorisation process is based on the
risk element involved. The traffic light system is
subject to regular reviews by the management
and is adapted accordingly.
The limit system for the award of individual loans
stipulates limits not just for individual financings
but also for groups of borrowers and parties assu-
ming risk (e.g. tenants). Further limits are in place
for individual types of financing that may not
exceed a stipulated level of the total portfolio. In
this way, any undesired accumulation of risk is avo-
ided. Meanwhile, limits are also in place with
regard to the risk element of the overall loan port-
folio.
The rating procedure introduced in 2004 com-
plies with the requirements of Basel II. In 2005
the entire mortgage loan portfolio, with the excep-
tion of retail business, was fully rated using the
new procedure. One of the results of applying this
procedure is that a probability of default (PD) can
be allocated to the individual borrowers. This has a
direct impact on pricing and, as a result, improves
the risk-based setting of terms and conditions.
··· 29 ···

··· 30 ···
Individual financings (new business and loan port-
folio) are processed on the basis of clearly defi-
ned, tried-and-tested work instructions and
levels of authority. The latter are based primarily
on the risk element of the individual financing.
Problem loans are processed by a team of
experts, which operates independently from the
Bank’s operational divisions. Over and above dea-
ling with ailing financings, one of the focuses lies
in the preventive management of cases that are
not yet non-performing so that suitable measures
can be introduced in good time to avert default.
With regard to risk-oriented pricing, the risk
costs included in the margin are continuously
monitored and adapted, taking into account the
current development of the markets and the risk
expenses incurred in practice. The stipulation of
the equity capital costs contained in the margin is
also based on risk aspects. During the year under
review the Bank already implemented key areas of
the new equity regulations (Basel II) in the design
of its terms and conditions applicable to long-term
lending. These new regulations are more strongly
geared towards the risk element of financing.
Alongside risk monitoring of individual cases,
various models are also in place to measure
credit default risk across the entire portfolio.
The Bank uses its own technical processes, which
have been proven to provide a high degree of fore-
casting accuracy in the past.
Public-sector lending and derivative partners
segment
Despite the fundamentally lower-risk character of
business with the public sector and suitable banks
in the area of derivatives business, the same
benchmarks and processes as detailed above with
regard to property financings apply in this seg-
ment too.
Risk management in this area focuses on the limit
system, which, in addition to the usual limits for
counterparties, also includes sub-limits for indivi-
dual countries. A minimum rating of A is, as a
general rule, required for any new business. The
average rating of the claims allocated to the public
sector loan pool is AA.
In this segment too, limits and the stipulation of
minimum ratings help to avoid any concentration
of risk and to guarantee the high quality of new
business and of the public sector loan pool.
·· SETTLEMENT RISK
Settlement risks arise with regard to all transac-
tions involving the delayed transfer of cash or
securities in order to settle the transaction. This
risk is somewhat less relevant to our commercial
practice. With regard to trading, limits apply in this
respect. In terms of property financing, measures
are taken to secure the Bank's position. Notaries
are involved in the process and additional insuran-
ce is taken out to cover damage caused by breach
of trust.

·· SOVEREIGN RISK
Sovereign risks encompass all risks that involve
the Bank suffering a loss arising in connection
with the award of credit to borrowers outside
Germany and relating to the uncertainty surroun-
ding the political, economic or social situation of
another state. The Bank limits these sovereign
risks by such measures as setting country limits
based on states' ratings. The minimum acceptable
rating is A.
·· MARKET PRICE RISK
Market price risks may result from currency or
interest rate elements, arising when unexpected
market price changes occur in these areas at
times when the Bank holds corresponding out-
standing positions. Quite generally, this can lead
to not insignificant losses. This is why significant
importance is attached to monitoring and mana-
ging market price risks.
·· CURRENCY RISKS
Deutsche Hypo is not exposed to major currency
risks. Whenever transactions are effected in
foreign currencies, the currency risk is as a gene-
ral rule eliminated through the corresponding
countertrade. For security reasons, this is carried
out on an individual basis i.e. congruent countert-
rades are concluded for each individual transaction
to offset the currency risk.
·· INTEREST RATE RISKS
··· MANAGEMENT REPORT ···
Interest rate risks typically arise when lending
transactions are not subject to term-congruent
refinancing. This approach provides scope for addi-
tional income opportunities, since, if market rates
fall, subsequent refinancing will increase the
Bank’s margin. In some cases this method is the
only way, particularly in public-sector lending, to
actually achieve satisfactory margins at all.
However, these additional income opportunities
obviously also entail corresponding risks, since
the market may not develop as anticipated. For the
purposes of keeping interest rate risk in check,
limits are in place that have been agreed with the
Supervisory Board.
Interest rate risk is subject to ongoing monitoring,
with daily reporting to the Board of Managing
Directors.
The following methods are used:
·· Basis-Point-Value-Methode (100 bp)
·· Value-at-Risk-method
·· Scenario analyses
··· 31 ···

··· 32 ···
In the case of the basis-point-value method, an
interest rate rise of 100 bp is simulated by means
of a parallel shift in the yield curve. The total resul-
ting change in the present value of all balance
sheet and off-balance sheet positions indicates
the level of interest rate risk. This is calculated on
a daily basis and verified in terms of limit compati-
bility. Any instances of the limits being exceeded
are eliminated immediately by concluding the cor-
responding transactions.
There were no instances of the limits being excee-
ded during the financial year under review.
An alternative method is the value-at-risk method.
This involves calculating the maximum potential
for loss which will not be exceeded subject to
99 % probability and a holding period of ten days.
As at 31 December 2005, the value-at-risk was
€ 4.3 million (previous year: € 8.9 million). The
maximum value was € 8.9 million (previous year:
€ 11.8 million), with the lowest value being € 1.4
million (previous year: € 1.9 million). For the year as
a whole, the average was € 4.0 million (previous
year: € 5.9 million).
10
8
6
4
2
0
–2
–4
–6
–8
–10
The values calculated using this method are fore-
cast values and are subject to regular backtesting.
This involves a comparison of the actual changes
in the cash value of the Bank’s portfolio with the
predicted changes. Backtesting has confirmed
that the forecast values are observed in practice.
The changes in value are given for positions that
are assumed to be unchanged during the holding
period. This means that they only result from chan-
ges in the market data (clean backtesting).
The above methods to measure interest rate risk
are supplemented by scenario analysis. This provi-
des further findings by simulating various different
interest-rate scenarios. Particular focus is placed
on volatility and the impact on the income and risk
situation.
The Treasury department is responsible for the
operational management of the interest rate risk,
applying the limits and taking account of how mar-
ket rates are expected to develop.
In addition, the risk controlling unit, which operates
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Change in value Value at Risk

independently of the Treasury department, calcu-
lates the interest rate risk position on a daily basis
and verifies that the risk limits are being observed.
·· LIQUIDITY RISK
Liquidity risks arise when the Bank cannot meet
its payment obligations on time or in the full
amount or when the required liquid assets can
only be procured at elevated market prices. The
supervisory authorities have provided a specific
definition of the guarantee of sufficient liquidity in
the form of Principle II.
Deutsche Hypo adhered to the requirements of
Principle II throughout 2005 without any problems
– as at 31 December 2005 its liquidity ratio was
1.58 (previous year: 1.56). This means that short-
term payment obligations were covered by short-
term incoming payments by a factor of 1.58.
As part of its short-term liquidity planning, the
Bank calculates a daily liquidity status, providing a
detailed breakdown of all incoming and outgoing
payments over the coming months.
Longer-term liquidity requirements are also calcu-
lated as part of strategic liquidity planning.
This means that the Bank is always in a position to
provide a reliable assessment of liquidity for any
future deadline, enabling it to plan accordingly.
Theoretically possible but unforeseeable liquidity
requirements can be covered by means of ade-
quate liquidity reserves and access to the money
markets.
·· OPERATIONAL RISK
Operational risk is the risk of losses being incurred
due to the unsuitability or failure of internal pro-
cesses and systems, due to human error or inade-
quacy, or as a result of external events.
Deutsche Hypo distinguishes between the follo-
wing types of risk:
·· Strategic risks
·· Product and customer-related risks
·· Organisational and business process-related
risks
·· Legal risks
··· MANAGEMENT REPORT ···
The Bank’s risk situation is analysed on an ongoing
basis and at regular intervals. Standardised record
sheets are used to record all risks and the poten-
tial loss amount, the likelihood of the risk occur-
ring, early warning options and the measures to
be taken in the event of the loss occurring. The
Board of Managing Directors is briefed at regular
meetings and, where necessary, in the form of ad-
hoc assessments of any major changes to the risk
position. At the present time we are not aware of
any risks posing a major threat to the Bank.
Once again during the year under review the
reporting and recording systems were additionally
improved and brought further into line with the
reporting requirements of ING Group. The
Operational Risk Committee, composed of mem-
bers of the Board of the Managing Directors, met
on a quarterly basis. Through cooperation with the
internal auditors, weaknesses were again identi-
fied and process flows further optimised.
··· 33 ···

··· 34 ···
All occurrences of losses were recorded and ana-
lysed.
Deutsche Hypo can state that it does not face any
risks over and above the standard level of risk
encountered within its field of business.
·· RECENT DEVELOPMENTS
New requirements were introduced during the
financial year under review with regard to risk
management.
On 20 December 2005 the Federal Financial
Supervisory Authority (BaFin) published its final
version of its “Minimum Requirements for Risk
Management” (MaRisk), the aim of which is to
implement key quality-related elements of Basel II
into national law. The focus lies on the risk
management of banks and financial service-provi-
ders and the supervisory review process, which is
to become binding as of 1 January 2007 through
EU directives.
The new MaRisk brings together the individual
requirements in terms of MaH, MaK and MalR,
with which the Bank has long been familiar, whilst
also incorporating some new areas, including
interest rate risk.
The Federal Financial Supervisory Authority itself
regards MaRisk as the basis for a new qualitative
supervision of banking in Germany. The opening
provisions grant the institutions the freedom to be
flexible in implementing the new MaRisk in line
with their size and area of activity.
For its part, Deutsche Hypo already complies with
a significant number of the requirements of
MaRisk in practice. The remaining outstanding
requirements will be implemented in the course
of 2006.
·· MEMBERSHIP OF ING GROUP
ING Groep N.V., Amsterdam, has been the majori-
ty shareholder of ING Bank Deutschland AG (ING
BHF-Bank Aktiengesellschaft until 28 December
2004) since 21 September 1999.
As announced, ING Bank Deutschland AG holds
the majority of the share capital of Deutsche
Hypothekenbank (Actien-Gesellschaft), Hanover/
Berlin. The Bank's Board of Managing Directors
has produced a report on relations with affiliated
companies, and declared as follows, in accordance
with Section 312, paragraph 3 of the Joint Stock
Companies Act:
"With regard to the legal transactions listed in
the report on relations with affiliated companies,
Deutsche Hypothekenbank (Actien-Gesellschaft)
has - on the basis of the circumstances which
were known to it at the time of the respective
legal transaction - consistently been in receipt of
an appropriate counter-performance.
It has not been disadvantaged by any measures
taken or by any lack of measures during the year
under review at the instigation of or in the inter-
ests of ING Groep N.V. and/or ING Bank
Deutschland AG or any affiliated companies."

·· FORECAST
Pfandbrief banks, which were previously restric-
ted by the limits of the Mortgage Bank Act, now
find themselves with new business opportunities
provided by the Pfandbrief Act. Deutsche Hypo is
carrying out a very careful review to determine
which new asset classes and products are com-
patible with what will remain its low-risk strategy.
With this in mind, we will be successively adding
to our product range with a view to tapping new
sources of income.
·· ECONOMY AND REAL ESTATE MARKETS
The generally optimistic mood in the German eco-
nomy that emerged towards the end of last year
will continue in 2006. The global economy will
essentially be driven by familiar sources of momen-
tum: America and Asia, although the importance
of the economic boom in China for the world eco-
nomy as a whole is now considerable. The world’s
most highly populated country will account for
around a quarter of the 4.3% growth predicted by
the International Monetary Fund for 2006.
The US economy can expect a somewhat weaker
year. In an economy in which some two thirds of
GDP depend on private consumption, there are
signs that the property boom is drawing to a
close, and the positive wealth effect – the result of
a long period of rising property prices and an
effect that has permanently fuelled consumers’
propensity to spend – cannot be expected to con-
tinue to rise in 2006. Nevertheless, the world’s
largest economy will probably continue to adhere
to its robust growth path.
··· MANAGEMENT REPORT ···
As far as the eurozone is concerned, there is no
sign of any fundamental dynamic upturn either,
with growth probably only set to accelerate slight-
ly – from 1.3% in 2005 to a probable level of 1.6%.
The reasons for these growth rates, which are low
by international comparison, remain the employ-
ment problems facing the three major economies
of Germany, France and Italy, the high degree of
market regulation, high public spending ratios,
massive budget problems, and the ever more
complex financing problems associated with social
security systems.
It is all the more remarkable that, for the first time
in many years, the German economy is making a
key contribution to the positive growth outlook for
the eurozone. The German economy found its foo-
ting again in the second half of 2005 and the pro-
spects for the coming year are brightening
somewhat. The first signs of the beginnings of an
investment economy give reason to hope for a
broader basis for growth in 2006.
The figures for new orders, which continue to rise,
provide a more secure indicator of an economic
upturn in 2006, as do levels of domestic demand,
which are gradually starting to recover again. In
addition, the first positive signs are emerging from
the labour market and from the SME sector.
Economic impetus from the global economy
therefore ought to filter through to domestic
demand in 2006, not least due to the fact that
German companies have tackled their backlog of
modernisation measures over the past few years.
··· 35 ···

··· 36 ···
The basic conditions on the European commercial
property markets are visibly improving. In terms of
the property sector, more and more cities have
moved out of the doldrums, with key market data
at many investment locations consistently impro-
ving. The end result is that demand for rented
premises is on the rise again and vacancy rates are
falling. Within a short space of time the way the
market has developed has generated greater trans-
parency and more liquidity as well as more diversi-
ty among the market operators. Equity capital and
borrowed capital is flowing into the European pro-
perty markets at unparalleled levels. Added to this
is the fact that the real estate market has grown
more attractive compared with the equity and bond
markets, whilst the increasing shortage of good
and very good properties has sparked fierce com-
petition and, as a result, forced prices up.
Forecasts for the second half of the decade lead us
to expect that the recovery in the European economy
will continue. As this happens, conditions on the
various different property markets, and on the retail
and office property markets in particular, will under-
go consolidation.
As far as Deutsche Hypo is concerned, there may
be opportunities in the markets in which the Bank
has many years' experience for the further positive
development of new mortgage business. Looking
at office property for example, the volume of new
rentals has grown significantly in both London and
Paris. In London in particular, office property prices
have risen considerably following the recovery of
the stock markets, as a result of which demand for
premises from the financial sector is up again.
In the USA the mood barometer for commercial
properties remains positive. The situation in the key
conurbations is marked by high rental prices and
stable occupancy ratios, whilst the largest US pro-
perty market - New York - can be seen to be bene-
fiting from falling vacancy rates and rents that are
on the rise again.
·· CAPITAL MARKET DEVELOPMENT
Positive leading indicators in the eurozone made
for a much brighter outlook at the year-end. Capital
market development in 2006 will hinge on future
inflation expectations, including on the basis of
energy prices.
Following the first interest rate hike by the ECB in
December 2005 and against the background of
moderate wage pressure coupled with little scope
to pass on price increases, we expect to see a
small number of measured interest-rate moves.
The fact that there is still a high level of liquidity
searching for attractive investment opportunities
on the capital markets ought to make the upward
potential of capital market yields appear limited.

·· INCOME SITUATION
The income prospects for 2006 will depend to a
large extend on the general state of the market
economy in our target countries, the related
potential for new business and the resulting deve-
lopment of the loan portfolio and of our provisio-
ning for credit risks.
Despite the fact that there have been frequent
positive signals from the economy of late, we still
expect a rather reserved market environment
again in 2006. It is generally accepted that the real
estate market lags about three years behind the
general economic cycle. With this in mind, we will
be carefully strengthening our sales sector at this
early stage to enable us to react appropriately to
an improvement in the market, expected in the
medium term. Looking to 2006 we are assuming
that, with regard to new mortgage business, we
can match the solid level achieved last year.
We will be particularly focusing on the develop-
ment of our loan portfolio, believing that a short-
term financing philosophy is also increasingly in
evidence among our customers on the domestic
market too. Our task must be to maintain our port-
folio’s greater earning power, achieved over the
last few years through improving margins.
In terms of capital market business, where the
changes in the basic legal conditions have resulted
in the de factor elimination of public-sector credit
institutions as a source of demand, we envisage
more difficult market conditions ahead. However,
given our good standing on the market, we are
··· MANAGEMENT REPORT ···
positive going forwards, and confident that we
can achieve a satisfactory volume of new business
at acceptable conditions in this sector too. The flat
yield curve in evidence at the current time offers
little opportunity for generating greater income.
For these reasons we expect net interest and
commission income in the 2006 financial year to
correspond in terms of volume and structure to
the previous year's result. Similarly, in terms of
administrative expenses, we do not envisage any
major change compared with 2005. We are positive
in our assessment of the development of the
required provisioning for risk, even if here too, set-
backs can never be entirely excluded, however
careful our approach. We will continue to pursue
our reserved policy of allocating credit on a selec-
tive basis with due account for margins and risks,
an approach that has proved its worth to date.
Overall, we expect to be able to achieve a satis-
factory operating result once again in 2006.
··· 37 ···

··· 38 ···
PERSONNEL REPORT
In today’s global markets, it is highly trained
employees who, more than ever, can secure a
company’s economic success. The Bank’s ability
to compete on the global market will in future
depend to an ever greater extent on the skills and
motivation of its employees. Promoting our
employees by investing in personnel development
and adapting our corporate structure and culture
are therefore key components of our modern take
on personnel management.
The requirements made of every individual have
grown. As part of our personnel planning measu-
res, we have invested more than € 1,800 per
employee in both specialist training activities and
personnel development measures. The key factors
in our success, however, have been the ambition
of our employees and their willingness to adapt to
changing processes thanks to a readiness to learn.
We would like to take this opportunity to thank all
of our employees for their contribution to our suc-
cess during the past financial year and to pay tri-
bute to what they have achieved.
The total number of employees has risen slightly
to 200 (previous year: 194); including the Board of
Managing Directors and trainees, the total number
is 209 (previous year: 203).
The “Financial Management” training offensive
launched in 2004 with the support of the Uni-
versity of Frankfurt an der Oder has been conti-
nued. Twelve employees have now successfully
completed this training programme by submitting
a final dissertation. Seven modules out of a total
of 16 from a second course were completed in
2005. This course is scheduled to end in summer
2006, with preparations for a third course already
being made.
Additional continuing education measures were
taken up by our young banking staff to a greater
extent during the year under review, with
Deutsche Hypo employees gaining qualifications
from the Bankakademie, Leibnizakademie and
further institutions of higher education.
There has also been a clear rise in foreign language
skills with a total of 55 banking staff, most of them
young employees, regularly attending in-house
language courses. Some employees have also
attended courses at language schools in their lei-
sure time as a means of improving their foreign
language skills. Deutsche Hypo assumed the cost
of this type of course.
Three of our young trainees passed their Chamber
of Commerce examination in banking, attaining
above-average marks in the process.
Our deferred compensation scheme, as in pre-
vious years, was taken up by approximately 30 %
of our employees.
The average age of our employees was 43.5 years
(previous year: 43.1 years). The number of days

lost through illness rose from 2.2 % in 2004 to
3.2 % in 2005 but is still significantly below the
average for the banking sector.
Five employees celebrated 25 years' service with
Deutsche Hypo, whilst ten reached ten years' ser-
vice. Two employees celebrated their 40th anni-
versary with the Bank. Our thanks go to all of our
long-serving employees for their loyalty and dedi-
cation.
We would also like to thank the members of the
Bank’s Work Council for their constructive coope-
ration and the sound working relationship enjoyed
over the year.
··· 39 ···

··· 40 ···
CORPORATE GOVERNANCE
·· CORPORATE GOVERNANCE
CODE
The Government Commission on the German
Corporate Governance Code monitors corporate
governance developments and reviews at least
annually whether adjustments need to be made to
the Code. At the Commission meeting on 2 June
2005, several amendments to the Code were
agreed. These entered into force with their publi-
cation in the electronic Federal Gazette on 20 July
2005.
The amendments mainly related to a strengthe-
ning of the independence of members of the
Supervisory Board. By way of example, it should
not be standard practice for previous members of
the Board of Managing Directors to take up the
position of Chairman of the Supervisory Board or
Chairman of a committee. The elections to the
Supervisory Board should be held as separate
elections. Moreover, the Supervisory Board
should be composed of a sufficient number of
independent members.
The current version of the Corporate Governance
Code is available for consultation on the Bank’s
website.
The amendments to the Code did not involve any
changes for Deutsche Hypo as the new recomen-
dations were already adhered to or are due to be
adhered to in future.
·· DECLARATION
The annual declaration required in accordance
with Section 161 of the German Joint Stock
Companies Act was issued by the Board of
Managing Directors and Supervisory Board on
16 December 2005 and may be consulted on our
website. It is worded as follows:
2005 Declaration
of Deutsche Hypothekenbank
(Actien-Gesellschaft) Hanover/Berlin
with regard to the recommendations of the
“Government Commission on the German
Corporate Governance Code”
The Board of Managing Directors and the
Supervisory Board of Deutsche Hypothekenbank
(Actien-Gesellschaft), Hanover/Berlin hereby
declare in accordance with Section 161 of the
Joint Stock Companies Act:
1. Since its last declaration of 16 December 2004,
Deutsche Hypothekenbank (Actien-Gesellschaft)
Hanover/Berlin has complied with the recom-
mendations of the Government Commission on
the German Corporate Governance Code in the
version of 21 May 2003 and, with effect from
2 June 2005, in the revised version (published
on 20 July 2005) with the following exceptions:

a) A D&O policy has been taken out for the
Board of Managing Directors and Supervisory
Board without a suitable deductible (No. 3.8),
b) The Board of Managing Directors does not
have a chairperson or spokesperson
(No. 4.2.1),
c) The Bank’s annual accounts and interim
reports are only published in accordance with
German accounting regulations (No. 7.1.1),
d) The 2004 annual accounts were published on
12 April 2005 and thus slightly later than 90
days after the year-end (No. 7.1.2),
e) The emoluments of the members of the
Board of Directors and the Supervisory Board
were not listed individually in the notes to the
Annual Accounts (Nos. 4.2.4 and 5.4.5).
2.Deutsche Hypothekenbank (Actien-Gesellschaft),
Hanover/Berlin shall adhere to the recommen-
dations of the Government Commission on the
German Corporate Governance Code as last
amended on 2 June 2005 subject to the excep-
tions listed under 1.a) to 1.e).
Hanover, 16 December 2005
The Supervisory The Board of
Board Managing Directors
·· EMOLUMENTS OF MEMBERS OF THE
SUPERVISORY BOARD
The Supervisory Board received € 269 k, of which
€ 110 k was paid as a fixed component and € 159 k
as variable remuneration (all amounts excluding
turnover tax).
··· 41 ···

··· 42 ···
DEUTSCHE HYPO SUPPORTS
MEDICAL RESEARCH
Medical research in Germany ranks among the
best in the world and Hanover Medical School,
thanks to its outstanding scientific work and inter-
disciplinary approach, is a leader in its field.
Scientists from this renowned institution, as well
as from the Universities of Göttingen and
Frankfurt am Main, form the academic jury of the
Johann Georg Zimmermann Association, founded
by Deutsche Hypo in 1972 to recognise outstan-
ding achievements in the field of cancer research.
Every year Deutsche Hypo awards two prizes to
researchers whose work is particularly admired
and pioneering. These prizes are held in high
esteem, both in the medical establishment and
beyond.
Jürgen Morr, Prof. Dr. Rolf Sauer, Dr. Carsten Müller-Tidow, Prof. Dr. Dieter Bitter-Suermann
This year, the Johann Georg Zimmerman Research
Prize for 2005/2006, worth € 10 k, was awarded to
Privatdozent Dr. med. Carsten Müller-Tidow, Chief
Physician at the Medical Clinic A, Haematology
and Oncology, at the University Clinic in Münster,
in recognition of his comprehensive research into
the occurrence and progres-
sion of acute myeloid leukae-
mia (AML). His pioneering
publications are making it
possible for a molecular the-
rapy to be developed. AML is
a form of cancer of the blood
involving an overproduction
of immature myeloid white
blood cells in the bone mar-
row. Despite major advances
in the area of leukaemia

esearch, AML remains a life-threatening condi-
tion. Almost every fifth child suffering from an
acute form of leukaemia and 80 % of adult leu-
kaemia patients suffer from this specific form. Dr.
Müller-Tidow is involved in researching the mole-
cular mechanisms associated with the occurrence
of the disease.
The Johann Georg Zimmermann Medal for
2005/2006, worth € 5 k, was awarded to Professor
Dr. Rolf Sauer, Director of the Clinic and Policlinic
for Radiotherapy at the University of Erlangen-
Nuremberg. Professor Sauer has also been the
Clinical Director and Chairman of the Board of the
University Clinic of Erlangen since 1996. He is a
member of the board/honorary member of nume-
rous expert societies and last year received the
German Cancer Prize awarded by the German
Cancer Society. Professor Sauer, a leading radio-
therapist, has made a major contribution to new
multimodal concepts in the standard treatment of
breast, bladder and bowel cancer. It is thanks to
his study into preoperative multimodal therapy for
the treatment of low-lying rectal tumours, with
which he has set a new international standard,
that the sphincter can now be preserved in twice
as many patients suffering from this type of can-
cer.
··· 43 ···

··· 44 ···

ANNUAL ACCOUNTS
·· BALANCE SHEET AS AT 31 DECEMBER 2005
·· PROFIT AND LOSS ACCOUNT
FOR THE 2005 FINANCIAL YEAR
·· NOTES
··· 45 ···

·· BALANCE SHEET
·· ASSETS
··· 46 ···
See Notes 31.12.2005 31.12.2004
No. € thousands € thousands € thousands € thousands € thousands
1. Cash reserve
a) cash and cash equivalents 51
b) balances with central banks
of which:
32,599 32,650 109,994
with Deutsche Bundesbank 32,599 (109,930)
3. Due from banks 1.
a) mortgage loans 35,101
b) loans to the public sector 5,410,684
c) other claims
including:
1,205,999 6,651,784 6,687,636
due daily 436,302 (400,850)
collateralised against securities - (0)
4. Due from non-bank customers 1.
a) mortgage loans 7,855,330
b) loans to the public sector 8,530,217
c) other claims
including:
180,421 16,565,968 17,512,966
collateralised against securities
5. Bonds and other fixed-income
- (0)
securities 3./6.
b) bonds and debentures
ba) from public issuers
including: eligible as collateral
4,734,279
for advances from the Deutsche Bundesbank 3,640,973 (4,060,431)
bb) from other issuers
including: eligible as collateral
4,681,191 9,415,470 9,044,897
for advances from the Deutsche Bundesbank 4,211,581 (3,984,966)
c) own bonds 118,780 9,534,250 146,758
nominal amount 118,493 (139,903)
6. Shares and other 3.
variable-yield securities 204,192 204,427
7. Investments
including:
42. 1,064 1,052
in banks - (0)
in financial services institutions - (0)
8. Shares in affiliated companies
including:
42. 1,807 1,807
in banks - (0)
in financial services institutions - (0)
9. Trust assets
including:
4. 6,524 6,860
loans on a trust basis
10.Equalisation claims against the public
sector, including obligations arising from
6,524 (6,860)
the exchange of public authority bonds 0 1,722
11.Intangible assets 8. 644 503
12.Tangible fixed assets 9. 25,042 25,541
15.Other assets 11 11. 11,093 5,528
16.Deferred items 12 12.
a) from issuing and lending business 128,901
b) other deferred items 90 128,991 146,672
Total assets 33,164,009 33,896,363

·· LIABILITIES
··· ANNUAL ACCOUNTS ···
See Notes 31.12.2005 31.12.2004
No. € thousands € thousands € thousands € thousands € thousands
1. Due to banks 1 .
a) registered mortgage Pfandbriefe issued 308,308
b) registered public Pfandbriefe issued 931,705
c) other liabilities
including:
1,947,761 3,187,774 2,923,145
due daily
collaterialised against securities
delivered to lenders
122,769 (24)
registered mortgage Pfandbriefe and 511 (511)
registered public Pfandbriefe 2,556 (4,602)
2. Due to non-bank customers 1.
a) issued registered mortgage Pfandbriefe 1,315,889
b) issued registered public Pfandbriefe 5,785,232
d) other debts
including:
981,850 8,082,971 7,130,334
at call
as security for loans
delivered to lenders
12,792 (7,775)
registered mortgage Pfandbriefe and 12,271 (17,384)
registered public Pfandbriefe 0 (0)
3. Bonded liabilities 1.
a) bonds issued
aa) mortgage Pfandbriefe 3,341,674
ab) public Pfandbriefe 14,085,842
ac) other bonds 3,442,825 20,870,341 22,902,202
4. Liabilities 4. 6,524 6,860
of which loans on a trust basis 6,524 (6,860)
5. Other liabilities 13 13. 40,308 13,023
6. Deferred items 12 12.
a) from issuing and lending 94,875
b) other 30,798 125,673 86,894
7. Provisions
a) provisions for pensions and
similar obligations 14,750
b) tax provisions 4,724
c) other provisions 12,489 31,963 30,360
9. Subordinated liabilities 14 14. 210,226 208,008
of which maturing in less than two years 20,452 (15,338)
10. Participatory capital 15 15. 129,355 134,589
of which maturing in less than two years
12.Equity
51,129 (25,565)
a) subscribed capital 17 17. 80,640 80,640
capital held by dormant partners 19 19. 44,000 44,000
b) capital reserve 20. 131,314 131,314
c) retained profits 20.
ca) legal reserve 18,918
cd) other retained profits 182,292 201,210 184,494
d) net profit 21,710 20,500
478,874 460,948
Total liabilities 33,164,009 33,896,363
1. Contingent liabilities 21 21./43. ./43.
b) liabilities from guarantees
and indemnitiy contracts 1,280 2,978
2. Other obligations 22.
c) irrevocable loan commitments 307,469 261,126
··· 47 ···

··· 48 ···
·· PROFIT AND LOSS ACCOUNT
See Notes 2005 2004
No. € thousands € thousands € thousands € thousands
1. Interest income from
a) lending and money market transactions 1,178,386
b) fixed-income securities and
government-inscribed debts 356,361 1,534,747 1,616,459
2. Interest expenses 1,451,266 1,524,134
83,481 92,325
3. Current income from
a) shares and other
variable-yield securities 18,162
b) investments 302
c) shares in affiliated companies 141 18,605 8,900
4. Income from profit-pooling, profit-transfer or
part-profit transfer agreements 0 14
5. Commission income 4,355 3,472
6. Commission expenditure 1,966 3,953
2,389 – 481
8. Other operating income 35. 3,677 7,421
9. Income from the release of special items
with partial reserve character 0 0
10.General administrative expenses
a) personnel costs
aa) wages and salaries 13,970
ab) compulsory social insurance contributions
for pensions and other employee benefits 4,575 18,545
including:
for pensions € 2,348 k (2,251)
b) other administrative expenses 13,168
31,713 29,420
11.Depreciation and write-downs on
intangible and tangible fixed assets 958 1,076
12.Other operating expenses 36. 1,525 4,340
13.Write-down of and adjustments to claims
and certain securities, allocations to
provisions for possible loan losses 25,002 25,544
16.Income from reversals of write-downs of investments,
shares in affiliated companies and securities
treated as fixed assets 156 0
17. Absorbed losses 512 0
19.Result from ordinary activities 48,598 47,799
23. Taxes on income and earnings 37. 15,842 17,256
24. Other taxes not
posted under item 12 46 43
15,888 17,299
27. Net income for the year 32,710 30,500
32. Allocation to retained profits
d) to other retained profits 11,000 10,000
34. net profit 21,710 20,500

·· NOTES
·· GENERAL INFORMATION
·· ACCOUNTING REGULATIONS
The Annual Accounts for the 2005 financial year
have been prepared in accordance with the provi-
sions of the German Commercial Code in con-
junction with the Ordinance on the Presentation of
Accounts of German Banks (RechKredV) and in
compliance with the provisions of the Joint Stock
Companies Act.
·· ACCOUNTING AND VALUATION
PRINCIPLES
The Bank's receivables are reported at their nomi-
nal value according to Section 340e, paragraph 2
of the German Commercial Code (HGB). Any dif-
ferences between the nominal value and the pay-
out value are reported under accrued and deferred
items, which are written back on a scheduled
basis.
Appropriate valuation adjustments and provisions
are set aside in relation to detectable individual
risks. Account is taken of contingent risks in the
form of a lump-sum valuation adjustment.
Additionally, reserves have also been formed in
accordance with Section 340f of the Commercial
Code. The setoff opportunities provided under
Section 340f, paragraph 3 of the Commercial Code
have been utilised.
Securities held in the liquidity reserve are valued
according to the strict principle of the lower of
cost or market according to Section 253, para-
graph 3 of the Commercial Code, insofar as they
are not included in separate valuation units.
Insofar as the securities in the liquidity reserve are
included in a valuation unit, they are reported at
their nominal value. Securities held as fixed assets
are valued at their depreciated historical costs.
Such securities are written up or down on a
straight line basis until they mature based on their
nominal value.
Holdings and shares in affiliated companies are
reported at their historical values, taking account
of necessary write-downs and of the requirement
to reinstate original values as set out in commer-
cial law.
Tangible fixed assets and intangible fixed assets
are valued at historical cost and, where depreciable,
valued taking account of write-downs.
Tangible and intangible fixed assets are stated at
historical costs reduced to take account of
straight-line scheduled depreciation over the esti-
mated useful life. Minor-value assets are written
down in accordance with Section 6, paragraph 2 of
the German Income Tax Act.
··· ANNUAL ACCOUNTS ···
Debts are carried as liabilities in their repayment
amount. Any difference between the nominal
value and payout amount is reported under accruals
··· 49 ···

··· 50 ···
and deferrals, which are written back on a schedu-
led basis. Zerobonds are reported at the price of
the issue plus a pro-rata amount of interest based
on the issue yield.
Pension provisions are formed on the basis of an
actuarial expert opinion according to the going
concern method in accordance with Section 6a of
the Income Tax Act, using the 2005 G Heubeck
guide tables. The discount rate is 6%. Other pro-
visions and tax provisions have been formed in
line with the principle of cautious commercial
assessment.
Contingent liabilities are carried in the balance
sheet at their nominal value.
·· CURRENCY CONVERSION
The assets, debts and off-balance-sheet transac-
tions denominated in foreign currencies are con-
verted in line with the principles stipulated in
Section 340h of the Commercial Code.
Fixed assets that are separately covered in the
same currency are valued at their current price.
Current assets, insofar as they are separately cove-
red by swap transactions, are valued at their
cost/swap price. Transactions covered separately
by forward deposits or borrowers' notes and all
other balance sheet items and spot transactions
are valued at their current swap price. Forward
transactions are valued at the current forward
price.
Expenses arising from currency conversion are
included in the profit and loss account. Income
resulting from currency conversion is only taken
into account insofar as it is based on separately
covered transactions. If no separate cover exists,
but there is cover in the same currency, then income
that balances out a temporary expense arising from
the transactions serving as cover will be taken into
account. In all other cases, income is not included
in the profit and loss account.
All foreign exchange rates are calculated by and
taken from the European System of Central Banks.

·· NOTES TO THE BALANCE SHEET
·· 1. BREAKDOWN OF RESIDUAL MATURITIES (IN T THOUSANDS)
2005 2004
3. Due from banks
- up to three months 864,269 620,509
- between three months and one year 619,548 636,322
- between one and five years 3,483,086 3,538,358
- more than five years 1,035,947 1,282,416
- total pro-rata interest 648,934 610,031
Balance sheet value 6,651,784 6,687,636
4. Due from clients
- up to three months 540,454 448,106
- between three months and one year 1,267,278 2,008,167
- between one and five years 5,421,117 5,812,930
- more than five years 9,103,909 8,979,823
- total pro-rata interest 233,126 263,024
16,565,884 17,512,050
Claims without an agreed term 84 916
Balance sheet value 15,565,968 17,512,966
5. Bonds and other
fixed-income securities
- due in the following year 499,880 2,273,585
1. Due to banks
- up to three months 815,455 1,095,548
- between three months and one year 120,528 193,163
- between one and five years 609,550 509,304
- more than five years 998,745 514,856
- total pro-rata interest 643,497 610,274
Balance sheet value 3,187,775 2,923,145
2. Due to non-bank customers
- up to three months 164,117 109,439
- between three months and one year 287,807 222,609
- between one and five years 1,793,693 1,851,319
- more than five years 5,640,594 4,772,114
- total pro-rata interest 196,760 174,853
Balance sheet value 8,082,971 7,130,334
3. Bonded liabilities
- due in the following year 5,586,244 7,090,898
··· ANNUAL ACCOUNTS ···
··· 51 ···

··· 52 ···
·· 2. AMOUNT DUE FROM AND TO AFFILIATED AND ASSOCIATED COMPANIES (IN T THOUSANDS)
Balance sheet amount of which:
Affiliated companies Associated companies
2005 2004 2005 2004 2005 2004
Due from
banks 6,651,784 6,687,636 7,564 4,358 - -
non-bank customers 16,565,968 17,512,966 8,685 1,624 9,525 14,712
of which: subordinated 400 - 950 950 - -
Bonds and other
fixed-income securities 9,534,250 9,191,655 - - - -
Due to
banks 3,187,775 2,923,145 205,395 10,011 - -
non-bank customers 8,082,971 7,130,334 777 198 - -
Bonded liabilities 20,870,341 22,902,202 - - - -
Subordinated liabilities 210,226 208,008 - - - -
·· 3. MARKETABLE SECURITIES AND HOLDINGS (IN T THOUSANDS)
1) excluding pro-rata interest
2) exclusively funds containing interest-bearing securities
Balance sheet amount of which: of which:
marketable 1) quoted unquoted
2005 2004 2005 2004 2005 2004 2005 2004
5. Bonds and
other fixed-income
securities 9,534,250 9,191,655 9,396,316 9,039,840 8,950,716 8,766,497 445,600 273,343
6. Shares and other variableinterest
securities 2) 204,192 204,427 25,240 25,475 25,240 25,475 - -
7. Holdings 1,064 1,052 2 2 2 2 - -
8. Shares in affiliated
companies 1,807 1,807 - - - - - -

·· 4. TRUST ACTIVITIES (IN T THOUSANDS)
* of which minor assets € 16 k (previous year: € 29 k)
··· ANNUAL ACCOUNTS ···
Trust assets Trust liabilities
2005 2004 2005 2004
Due from banks - - - -
Due from non-bank customers 6,524 6,860 - -
Total assets 6,524 6,860 - -
Due to
banks - - 5 6
non-bank customers - - 6,519 6,854
Total liabilities - - 6,524 6,860
·· 5. ASSETS (IN T THOUSANDS )
Acquisition Additions Real- Disposals Write-ups (wu) or additions (a) Write-downs (wd) or depreciations (d) Residual
and pro- financial locations financial Previous Financial Previous Financial book value
duction costs year year years year years year 31.12.2005
Additions (A)
Disposals (Di)
Securities held
as fixed assets 7,367,358 1,181,337 5,770 1,264,630 6,108(wu) 1,478(wu) 62,280(wd) 19,129(wd) 7,216,012
Holdings 1,127 - - 8 - 20(a) 75(d) - 1,064
Shares in
affiliated
companies 2,053 - - - - - 246(d) - 1,807
Intangible
fixed assets 6,043 354 - - 692(a) - 6,232(d) 213 (A) 644
Tangible fixed 45,661 247* - 313 2,580(a) - 22,700(d) 745*(A) 25,042
assets 312 (Di)
Assets
Total 7,422,242 1,181,938 5,770 1,264,951 9,380 1,498 91,533 19,775 7,244,569
··· 53 ···

··· 54 ···
·· 6. SECURITIES HELD AS FIXED ASSETS
Under point 5 of Assets “Bonds and other fixed-
income securities”, securities with a volume of
€ 7,216 million are, as resolved, treated as fixed
assets and carried at historical cost. The result of
write-ups/write-downs of – € 17,651 k is recorded
in the P&L item “interest income from fixed-inco-
me securities and government-inscribed debts”.
These commercial papers, which should remain
permanently in the Bank’s possession, may for the
greater part be used as cover for the issuance of
public Pfandbriefe.
·· 7. FINANCIAL INVESTMENTS
The holding BNL – Beteiligungsgesellschaft Neue
Länder GmbH & Co. KG, Berlin – was written up
by the claim from the liquidation proceeds in the
amount of € 20 k.
The holding in Nigra GmbH & Co. KG, Munich,
was sold at book value. There were no write-
downs relating to holdings during the year under
review.
·· 8. INTANGIBLE FIXED ASSETS
Other software licences acquired for a considera-
tion are included under intangible fixed assets. The
additions totalling € 354 k relate to the other soft-
ware licences.
·· 9. TANGIBLE FIXED ASSETS
The reported tangible fixed assets include land
and buildings used by the Bank, at € 12,031 k
(previous year: € 12,156 k) and plant and office
equipment, at € 806 k (previous year: € 820 k).
·· 10. OWN SHARES
During the period from May to October in the year
under review we purchased 316 shares in 5 trans-
actions at a price of € 99 k and offered these to our
employees for purchase at € 79 k. The difference
was borne by the Bank in accordance with Section
19a of the German Income Tax Act. At a nominal
amount of € 18,960.00, the share of subscribed
capital was 0.02 %. As at the balance sheet date,
the Bank held none of its own shares in its portfolio.
·· 11. OTHER ASSETS
The amount reported in the balance sheet essen-
tially includes the repurchase value of reinsurance
policies in the amount of € 3,978 k, claims against
the tax authorities worth € 3,623 k, payments due
from derivatives in the amount of € 2,342 k and
claims against an insurance company worth
€ 387 k.

·· 12. ACCRUED AND DEFERRED ITEMS
(IN T MILLIONS)
·· 13. OTHER ACCOUNTS PAYABLE
These include participatory rights due for the first
time as at 31 December 2005 worth € 25.6 mil-
lion, pro-rata interest on participatory capital
amounting to € 7.3 million (previous year: € 6.4 mil-
lion) and pro-rata interest on subordinated liabili-
ties amounting to € 4.6 million (previous year:
€ 5.4 million).
·· 14. SUBORDINATED LIABILITIES
Subordinated liabilities are subject to nominal
rates of interest of between 4.01% and 8.50 %
and fall due from 2006 to 2023. Premature repay-
ments and conversions are excluded.
Individual subordinated liabilities exceeding 10 %of
the total amount posted amount to € 25 million in no-
minal terms at an interest rate of 6.25 %, due in 2011.
The liabilities reported correspond with the
requirements of Section 10, paragraph 5a of the
German Banking Act (KWG).
The sum of € 20.5 million shall fall due within
the next two years.
2005 2004
Assets
Issuing discount
from bonds 52.6 57.2
Premium on claims 76.3 87.2
Liabilities
Losses from claims 42.4 45.3
Premium on bonds 49.1 13.4
··· ANNUAL ACCOUNTS ···
Expenses in the year under review totalled € 12.1
million (previous year: € 13.1 million).
·· 15. PARTICIPATORY CAPITAL
The nominal value of the reported participatory
capital is € 129.4 million. The participatory rights
meet the requirements of Section 10, paragraph
5 of the German Banking Act (KWG). They are divi-
ded into 120,000 participation certificates with a
par value of € 511.29 each and into 68 with a par
value of € 1.0 million each. The term ends with
effect from 31 December 2007 (nom. € 51.1
million), 31 December 2009 (nom. € 10.2 million),
31 December 2016 (nom. € 63.0 million) and
31 December 2018 (nom. € 5.0 million). A total of
€ 51.1 million will fall due within the next two
years.
·· 16. AUTHORISED PARTICIPATORY
CAPITAL
Pursuant to a resolution of the Annual General
Meeting of 12 May 2005, the Board of Managing
Directors is authorised to issue participatory rights
with a total nominal value of € 100 million as a
single amount or on several occasions. € 28 million
of this amount was issued during the financial year
under review.
·· 17. SUBSCRIBED CAPITAL
The Bank’s share capital amounts to € 80.64
million, divided into 1,344,000 unit shares.
··· 55 ···

··· 56 ···
·· 18. AUTHORISED CAPITAL
Pursuant to a resolution adopted at the Annual
General Meeting of 12 May 2004, the Board of
Managing Directors is authorised, until 16 May
2009 and with the approval of the Supervisory
Board, to increase the Bank’s share capital once or
on several occasions but by no more than a total
·· 19. CAPITAL HELD BY UNDISCLOSED
PARTNERS
At the Bank’s Extraordinary General Meeting held
on 20 January 2000, it was decided to conclude
agreements for setting up undisclosed partner-
ships. By 31 January 2000, cash contributions
totalling € 44 million had been made. These con-
tributions are subject to interest at the following
rates: 8.10%/8.16% or the 12-month EURIBOR+
·· 20. RESERVES
Reserves in the financial year rose by
€ 16.7 million to € 332.5 million.
of € 30.0 million by issuing up to 500,000 new
bearer shares in exchange for cash deposits in
accordance with Section 202 et seq. of the Joint
Stock Companies Act. This right was not exercised
during the year under review.
2.6 percentage points. The term ends on 31 De-
cember 2011.
In accordance with Section 10, paragraph 4 of the
German Banking Act (KWG), the contributions of
the undisclosed partners are allocated to the
Bank’s liable equity.
Capital reserves (in € thousands) Revenue reserves (in € thousands)
2005 2004 2005 2004
As at 1.1. 131,314 131,314 184,494 166,178
Allocation from capital increase - - -
Allocation based on resolution of the
Annual General Meeting of May 2005 (2004) - - 5,716 8,316
Allocation from net income for the
year 2005 (2004) - - 11,000 10,000
As at 31.12. 131,314 131,314 201,210 184,494

·· 21. CONTINGENT LIABILITIES
The items posted are guarantee commitments.
·· 22. OTHER COMMITMENTS
Irrevocable credit commitments totalling € 307.5
million can be attributed to mortgage loans
(previous year: € 260.1 million), with € 0 million
attributable to public sector loans (previous year:
€ 1.0 million).
·· 23. FOREIGN-CURRENCY POSITIONS
(IN T MILLIONS)
The amounts posted in the balance sheet and
denominated in foreign currencies can be broken
down as follows:
·· 24. SECURITIES REPURCHASE
TRANSACTIONS
As at the balance sheet date, a repo transaction
involved a third-party security in the amount of
€ 75 million (previous year: € 10 million).
·· 25. OPEN MARKET TRANSACTIONS
2005 2004
Fixed assets 2,508.4 2,031.5
Liabilities 1,925.1 715.2
Other commitments 95.4 78.4
As at 31 December 2005, securities with a nominal
value of € 1,028.8 million (previous year:
€ 857.5 million) were blocked with the German
Bundesbank for overdraft facilities and open
market transactions. As at the balance sheet date,
open-market credits in the total amount of € 306.1
million (previous year: € 624.4 million) have been
utilised. As in the previous year, own bonds were
not pledged as collateral for transactions on
EUREX.
·· 26. INFORMATION REQUIRED UNDER
SECTION 28 OF THE PFANDBRIEF ACT
Disclosure in accordance with Section 28, para-
graph 2, point 1a of the Pfandbrief Act
Claims used to cover mortgage Pfandbriefe, broken
down by size
Mortage loans serving as cover
Disclosure in accordance with Section 28, para-
graphs 2 and 3 of the Pfandbrief Act
Overdue payments relating to mortage claims
Mortage loans serving as cover
··· ANNUAL ACCOUNTS ···
2005 2005
€ millions units
up to and including € 300,000 924 12,253
over € 300,000 up to and
including € 5 million 1,616 1,369
more than € 5 million 2,918 276
5,458 13,898
Germany Others
2005 2005 2005 2005
€ millions units € millions units
Total amount of
payments overdue
by at least 90 days 8 95 0 0
8 95 0 0
··· 57 ···

··· 58 ···
Disclosure in accordance with Section 28, paragraph 2, points 1b and c of the Pfandbrief Act
Claims used to cover mortgage Pfandbriefe, by geographical area in which
the mortgaged property is located and by type of use
Mortage loans serving as cover
Germany United Kingdom Netherlands France Spain Belgium Austria
2005 2005 2005 2005 2005 2005 2005
€ millions € millions € millions € millions € millions € millions € millions
Apartments 681 0 13 0 0 0 0
Detached family homes 218 0 22 0 0 0 0
Multifamily homes 932 0 11 16 0 0 0
Office buildings 679 278 205 83 20 19 0
Commercial buildings 1,335 177 84 0 6 0 0
Industrial buildings 46 0 1 0 0 0 0
Buildings for other
commercial use 412 97 88 28 0 0 6
Building sites 0 0 0 0 0 0 0
4,303 552 424 127 26 19 6
Disclosure in accordance with Section 28, paragraph 3, points 1 and 2 of the Pfandbrief Act
Claims used to cover public Pfandbriefe
Cover assets
Germany Belgium European France Greece United Ireland Iceland Italy
Union Kingdom
2005 2005 2005 2005 2005 2005 2005 2005 2005
€ millions € millions € millions € millions € millions € millions € millions € millions € millions
Central state 592 93 90 0 198 0 0 0 497
Regional
authority 6,801 105 0 30 0 0 0 0 484
Local
authority 96 0 0 0 0 0 0 0 0
Other 8,494 140 57 29 0 16 20 20 0
15,983 338 147 59 198 16 20 20 981

Cover assets
Disclosure in accordance with Section 28, paragraph 3, point 2 of the Pfandbrief Act
Total amount of payments overdue by at least 90 days for public claims
Cover assets
··· ANNUAL ACCOUNTS ···
Japan Canada Luxembourg Netherlands Austria Portugal Sweden Switzerland Spain USA
2005 2005 2005 2005 2005 2005 2005 2005 2005 2005
€ millions € millions € millions € millions € millions € millions € millions € millions € millions € millions
Central state 211 0 0 0 500 47 56 0 0 0
Regional
authority 75 125 0 9 0 0 0 98 760 147
Local
authority 0 0 0 0 0 0 0 0 0 0
Others 143 23 110 89 628 0 0 12 478 0
429 148 110 98 1,128 47 56 110 1,238 147
2005 2005
€ millions € millions
Total amount of payments overdue by at least 90 days 0 0
Disclosure in accordance with Section 28,
paragraph 1, points 1 to 3 of the Pfandbrief Act
Outstanding Pfandbriefe and related cover assets:
a) Total amount Nominal Net pre- Risk net preof
outstanding sent value sent value
2005 2005 2005
€ millions € millions € millions
Mortgage Pfandbriefe 4,861 5,125 4,981
Cover pool 5,600 6,008 5,773
of which derivatives 0 0 0
Surplus cover 739 883 792
re a) maturity structure (residual maturity)
0 0
up to and over 1 year over 5 years
incl. up to and up to and longer than
1 year incl. 5 years incl. 10 years 10 years
2005 2005 2005 2005
€ millions € millions € millions € millions
Mortgage
Pfandbriefe 1,435 1,628 1,763 35
Cover
pool 1,516 2,006 1,962 116
··· 59 ···

··· 60 ···
b) Total amount of outstanding
Nominal Cash Risk cash
value value
2005 2005 2005
€ millions € millions € millions
Public Pfandbriefe 20,400 21,695 22,963
Cover pool 21,285 23,341 24,371
of which derivatives 0 0 0
Surplus cover 885 1,646 1,408
Portfolio changes and new loans (in € millions)
(excluding interest and cost claims)
re b) maturity structure (residual maturity)
up to and over 1 year over 5 years
incl. up to and up to and- longer than
1 year incl. 5 years incl. 10 years 10 years
2005 2005 2005 2005
€ millions € millions € millions € millions
Public
Pfandbriefe 3,206 7,943 5,971 3,280
Cover
pool 2,706 10,517 5,636 2,426
Mortgage loans Public-sector loans
Portfolio as at 31.12.04 8,534.1 14,416.4
Additions
New loans + 1,200.9 + 2,412.7
Regroupings and valuation adjustments + 2.8 + 12.6
Disposals
Scheduled redemptions – 269.0 – 2,930.0
of which: Used for residential purposes – 63.7
Commercial – 205.3
Non-scheduled redemptions – 1,494.6 – 315.3
of which: Used for residential purposes – 256.4
Commercial – 1,238.2
Portfolio as at 31.12.05 7,974.2 13,596.4
Foreclosures/
sequestrations
As at 31 December Executed
Foreclosures Sequestrations Foreclosures
pending pending- executed
2005 2004 2005 2004 2005 2004
Land used for
residential purposes 45 52 40 42 22 10
Land used for
commercial purposes 33 35 39 30 8 2
total 78 87 79 72 30 12

·· PROPERTIES TAKEN OVER
No property was taken over in 2005 to protect our
mortgage charges (previous year: - )
·· REVALUED INTEREST ARREARS
The interest arrears totalling € 3.7 million accumu-
lated from 01.10.04 – 30.09.05 were fully revalued.
·· OTHER INFORMATION
·· 27. TRANSFERRED COLLATERAL
In 2001 Deutsche Hypo set up the Stichting
Deutsche Hypothekenbank (Actien-Gesellschaft),
Amsterdam to secure the rights of its Pfandbrief
creditors to Dutch assets held as cover. This
Foundation has taken on the payment obligations
from the Pfandbriefe in the capacity of trustee to
the extent that its claims from Dutch cover loans
have been pledged. As at the balance sheet date,
claims in the amount of € 457.7 million were pled-
ged for collateral purposes.
With regard to the English and Welsh cover, a tru-
stee agreement was concluded with The Law
Debenture Trust Corporation p.l.c., which holds the
loan claims and securities on a trust basis for the
Pfandbrief creditors.
€ millions € millions
2005 2004
of which:
Land used for residential purposes 1.4 2.1
Land used for commercial purposes 2.3 3.6
To this extent, Deutsche Hypo has pledged these
claims and collateral. As at the balance sheet date,
€ 534.9 million related to England and Wales.
·· 28. FORWARD TRANSACTIONS IN ACCOR
DANCE WITH SECTION 36 OF THE
ORDINANCE ON THE PRESENTATION OF
ACCOUNTS OF GERMAN BANKS (RECHKREDV)
(IN T MILLIONS)
Forward translations include 61 forward exchange
transactions used to hedge against positions in
GBP, USD and CHF and due to expire on 2 October
2006 at the latest.
The remaining positions shown are all OTC pro-
ducts used as components of micro-hedges and
macro-hedges to hedge against interest rate and
currency risks and to improve and/or safeguard
margins in loan business and investments in
foreign securities.
Market values represent the value date-based
value of the derivatives based on market condi-
tions (interest rates, exchange rates etc.) including
accrued interest.
The values calculated using the mark-to-market
method are summarised by product groups and
rating classes in the table below. This presentation
meets the requirements of Section 285 of the
German Commercial Code. The market values cal-
culated in this way are required to calculate the
credit equivalence amount according to Principle I,
taking into account the netting recognised under
supervisory law.
··· ANNUAL ACCOUNTS ···
··· 61 ···

··· 62 ···
2004 Nominal amount
Term to maturity
< = 1 year 1– 5 years > 5 years Total Market values
Currency-related transactionse
Forward exchange 1,546.0 0 0 1,546.0 16.4
Cross-currency swaps 198.6 546.8 570.9 1,316.3 – 18.3
Interest rate-related transactions
Interest rate swaps 6,028.0 16,061.0 14,111.1 36,200.1 –744.6
F.R.A. - - - - -
Interest rate options (sales) 51.1 0 103.7 154.8 – 19.2
Interest rate options (purchases) 51.1 204.5 0 255.6 0.8
Transactions involving other price risks
Equity-linked swaps 0 100.0 7.5 107.5 – 10.6
Credit derivatives
Total return swaps - - - - -
2005 Nominal amount
Term to maturity
< = 1 year 1– 5 years > 5 years Total Market values
Currency-related transactionse
Forward exchange 1,348.86 0.00 0.00 1,348.86 0.93
Cross-currency-swaps 54.80 868.76 1,125.86 2,049.42 – 44.57
Interest rate-related transactione
Interest rate swaps 6,601.64 14,878.88 16,776.22 38,256.76 –684.11
F.R.A. 400.00 0.00 0.00 400.00 1.26
Interest rate options (sales) 0.00 0.00 105.03 105.03 – 27.04
Interest rate options (purchases) 204.52 0.00 0.00 204.52 0.00
Transactions involving other price risks
Equity-linked swaps 0.00 80.00 7.50 87.50 – 6.73
Credit derivatives
Total return swaps 0.00 0.00 282.19 282.19 42.90
The transactions are not included in the balance sheet.

The aggregate counterparty risks per rating class are as follows:
··· ANNUAL ACCOUNTS ···
Rating Volume Volume Market values Market values
€ millions € millions € millions € millions
2005 2004 2005 2004
AAA 581.48 907.1 – 11.91 – 83.8
AA+ 2,405.29 3,641.5 – 71.76 – 52.2
AA 7,922.98 5,304.5 –178.87 –137.0
AA- 15,298.85 12,824.9 –440.20 –197.5
A+ 2,350.72 8,188.9 – 97.36 –207.3
A 10,051.21 1,231.5 38.54 – 35.7
A- 3,914.22 7,355.2 55.19 – 51.5
BBB+ 209.52 126.7 – 10.99 – 10.5
Total 42,734.27 39,580.3 – 717.36 –775.5
·· 29. NUMBER OF EMPLOYEES
(YEARLY AVERAGE)
(in accordance with Section 285, point
7/Section 267, paragraph 5 of the German
Commercial Code)
2005 2004
Female employees 80 79
Male employees 121 116
Total: 201 195
··· 63 ···

··· 64 ···
·· 30. SUPERVISORY BOARD
(including information on positions on
supervisory boards and other corporate
bodies in accordance with Section 285,
point 10 of the German Commercial Code)
Louis Graf von Zech to 12 May 2005
Member of the Board of Managing Directors of
BHF-BANK AG, Frankfurt am Main
– Chairman –
Frankfurt-Trust Investment-Gesellschaft mbH,
Frankfurt am Main Vice-Chairman of the Supervisory Board
Zertus GmbH, Hamburg Vice-Chairman of the Supervisory Board
BHF-BANK Schweiz (Schweiz) AG, Zürich Chairman of the Advisory Board
BHF-BANK International S.A., Luxembourg Vice-Chairman of the Advisory Board
Sto AG, Stühlingen Member of the Supervisory Board
Cocomore AG, Frankfurt am Main Member of the Supervisory Board
ING-DiBa AG, Member of the Supervisory Board
Frankfurt am Main (to 14.03.2005)
BHF-BANK (Jersey) Ltd., St. Hélier Member of the Board of Directors
BHF Immobilien GmbH, Frankfurt am Main Member of the Advisory Board
GEA Group AG Member of the Supervisory Board
Wolfgang Hollender since 12 May 2005
Member (retired) of the Board of
Managing Directors of
Deutsche Hypothekenbank
(Actien-Gesellschaft)
Hanover/Berlin
– Chairman –
Roland Scharff to 12 May 2005
Member of the Board of Managing
Directors of BHF-BANK AG,
Frankfurt am Main
– Vice-Chairman –
BHF-BANK International S.A., Luxembourg Chairman of the Advisory Board
BHF-BANK (Jersey) Ltd., St. Hélier Chairman of the Board of Directors
Financière Atlas S.A., Paris Chairman of the Supervisory Board
Frankfurt-Trust Investment-Gesellschaft mbH, Member of the Supervisory Board
Frankfurt am Main

Sytse Adriaan Andringa
Speaker (retired) of the Board of
Managing Directors of
ING Bank Deutschland AG,
AP Sloten (FR), Netherlands
– Vice-Chairman –
ING Bank Deutschland AG, Frankfurt am Main
Reinhard Drexler* 1)
Hanover
Bank employee
Ralf Hinrichs* 1)
Hanover
Bank employee
Paul Koopmans
Speaker of the Board of Managing
Directors of ING Bank Deutschland AG,
Frankfurt am Main
Managing Director of ING Holding
Deutschland GmbH, Frankfurt amMain
Klaus Maier
Managing Director of ING Holding
Deutschland GmbH, Frankfurt am Main
Member of the Board of Managing Directors of
ING Bank Deutschland AG, Frankfurt am Main
HP-Pelzer Beteiligungsholding GmbH & Co
Systeme KG, Witten/Ruhr
Capital Management-Partners GmbH, Berlin
Andreas Peter* 1)
Hanover
Bank employee
Horst Podella* 1)
Hanover
Bank employee
since 12 May 2005
Member of the Supervisory Board
since 12 May 2005
since 12 May 2005
since 12 May 2005
since 12 May 2005
Vice-Chairman of the Advisory Board
(to 31.07.05)
Member of the Advisory Board
(from 01.04.05 to 07.10.05)
to 12 May 2005
to 12 May 2005
··· ANNUAL ACCOUNTS ···
··· 65 ···

··· 66 ···
Dietmar Schmid
Member of the Board of Managing Directors of
BHF-BANK AG, Frankfurt am Main
Frankfurt-Trust Investment-Gesellschaft mbH,
Frankfurt am Main
Frankfurter Fondsbank GmbH, Frankfurt am Main
BHW-Invest GmbH, Frankfurt am Main
WALTER-BAU GmbH, Augsburg
efiport (Educational Financial Portal) AG,
Frankfurt am Main
KMS AG, Frankfurt am Main
Ben Tellings
Chairman of the Board of ING-DiBa AG,
Frankfurt am Main
Speaker of the Management of ING Holding
Deutschland GmbH, Frankfurt am Main
Degussa Bank GmbH, Frankfurt am Main
ING-DiBa AG, Luxembourg
Igno van Waesberghe
Executive Vice President
CEO Central and Eastern Europe
of ING Bank N.V., Amsterdam
ING Bank (Eurasia) ZAO, Moscow
ING Bank (Hungary) Rt., Budapest
ING Bank Deutschland AG, Frankfurt am Main
JSB ING Bank Ukraine, Kiev
ING Bank Slaski S. A., Warsaw
ING (London) (No. 12) Limited (BBL), London
ING Services Limited, London
Frank Wolff * 1)
Hanover
Bank employee
to 12 May 2005
Chairman of the Supervisory Board
Chairman of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board (to 18.03.05)
Chairman of the Supervisory Board
Member of the Supervisory Board
since 12 May 2005
Chairman of the Supervisory Board
Chairman of the Supervisory Board (to 05.08.05)
since 12 May 2005
Chairman of the Supervisory Board
(Board of Directors)
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Director (to 05.04.2005)
Director (to 05.04.2005)

Wilhelm Zeller
Chairman of the Board of
Hannover Rückversicherung AG
Hannover Life Re of Australasia Ltd.,
Sydney, Australia
Hannover Re (Bermuda) Ltd., Hamilton, Bermuda
Talanx AG, Hanover, Germany
Hannover Rückversicherung AG,
Hanover, Germany
E+S Rückversicherung AG, Hanover, Germany
Protection Reinsurance Intermediaries AG,
Hanover, Germany
Allgemeine Kredit Coface Holding AG,
Mainz* 2) ,Germany
Allgemeine Kredit Versicherung Coface AG,
Mainz* 2) , Germany
Hannover Life Reassurance (UK) Limited,
Virginia Water/Great Britain
International Insurance Company
of Hannover Ltd.,
Hannover Reinsurance (Ireland) Ltd.,
Dublin, Ireland
E+S Reinsurance (Ireland) Ltd., Dublin, Ireland
Hannover Life Reassurance (Ireland) Ltd.,
Dublin, Ireland
Hannover Reinsurance (Dublin) Ltd.,
Dublin, Ireland
Hannover Finance (Luxembourg) S.A.,
Luxembourg
Euro International Reinsurance S.A.
(EIR) Luxembourg, Luxembourg
Hannover Reinsurance Group Africa (Pty) Limited,
Johannesburg, South Africa
Hannover Reinsurance Africa Limited,
Johannesburg, South Africa
Hannover Life Reassurance Africa Limited,
Johannesburg, South Africa
Clarendon Insurance Group, Inc.,
Wilmington, USA
Clarendon National Insurance Company,
Trenton, USA
Hannover Life Reassurance Company of America,
Orlando, USA
to 12 May 2005
Deputy Chairman of the Board of Directors
Chairman of the Board of Directors
Member of the Executive Board
Chairman of the Executive Board
Chairman of the Executive Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Chairman of the Board of Directors
Member of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
Chairman of the Board of Directors
*1) elected by the employees
*2) membership of supervisory boards and comparable organs of other domestic and foreign economic enterprises
··· ANNUAL ACCOUNTS ···
··· 67 ···

··· 68 ···
·· 31. BOARD OF MANAGING DIRECTORS
(including information on positions on super-
visory boards and other corporate bodies in
accordance with Section 285, point 10 of the
German Commercial Code)
Jürgen Grieger
Jürgen Morr
GfA-Gesellschaft für Anwendungssoftware mbH,
Stuttgart
Thomas Frhr. v. Tucher
Dr. Lorenz Tucher’sche Stiftung (von 1503),
Nuremberg
·· 32. CORPORATE GOVERNANCE
In accordance with Section 161 of the Joint Stock
Companies Act, Deutsche Hypo has submitted
therequired declaration, which has been made
available to the shareholders.
·· 33. EMOLUMENTS OF THE BOARD OF MANA
GING DIRECTORS AND SUPERVISORY BOARD
The emoluments paid to the members of the
Board of Managing Directors amounted to
€ 1,336.1 k in the 2005 financial year. Fixed
emoluments totalled € 676.1 k with the variable
component amounting to € 660.0 k.
The variable salary component is calculated using
the following formula based on the dividend for
the financial year: Dividend in cents x multiplier =
variable salary component in euros. The total
multiplier for the remuneration paid to the Board
Chairman of the Supervisory Board (to 04.05.05)
Member of the Supervisory Board (since 4.05.05)
Member of the Advisory Board and
authorised agent
amounted to 600 whilst the dividend (€ 11.00) in
cents = 1,100.
Former members of the Board and their surviving
dependants received € 463.2 k. The pension provi-
sions made for this group of persons totalled
€ 4,115.6 k.
The Supervisory Board received € 269 k, of which
€ 110 k was paid as a fixed component (excluding
turnover tax).

·· 34. LOANS GRANTED TO THE BOARD OF
MANAGING DIRECTORS AND SUPERVISORY
BOARD (IN T THOUSANDS)
As at the balance sheet date, the following loans
and advances had been granted to the members
of the corporate bodies:
·· 35. OTHER OPERATING INCOME
This predominantly includes income from land and
property in the amount of € 2.3 million, from the
writing back of other provisions in the amount of
€ 0.3 million, and income from the capitalisation of
the buyback value of the reinsurance cover in the
amount of € 0.8 million.
·· 36. OTHER OPERATING EXPENSES
This item primarily includes an increase in reinsu-
rance cover amounting to € 0.6 million and expen-
ses for buildings managed by third parties in the
amount of € 0.5 million.
Price gains of € 126.5 million and price losses of
€126.6 million, from currency transactions, have
been netted.
2005 2004
a) Members of the Supervisory Board - 520
b) Members of the Board
of Managing Directors - 3,032
·· 37. BREAKDOWN OF TAXES ON INCOME
The income taxes reported in the amount of
€ 15.8 million can be attributed to ordinary busi-
ness activity.
·· 38. INCOME FROM HOLDINGS, SHARES IN
AFFILIATED COMPANIES AND SECURITIES
TREATED AS FIXED ASSETS
The sale of a security treated as a fixed asset
generated revenue of € 0.1 million during the
financial year under review (previous year: 0).
·· 39. FEE FOR AUDITING AND CONSULTANCY
SERVICES OF AUDITOR
a) € 524,000.00 for auditing the annual accounts
(including IFRS group package)
b) € 222,024.00 for other attestation services
·· INVESTMENTS AND
MEMBERSHIP OF ING GROUP
·· 40. HOLDINGS SUBJECT TO DISCLOSURE
REQUIREMENTS
As formally stated, ING Bank Deutschland AG,
Frankfurt am Main, has a majority holding in our
company as defined in Section 16, paragraph 1 of
the Joint Stock Companies Act.
··· ANNUAL ACCOUNTS ···
··· 69 ···

··· 70 ···
·· 41. MEMBERSHIP OF ING GROUP
ING Groep N.V., Amsterdam, has been the majority
shareholder of ING Bank Deutschland AG,
Frankfurt am Main, since 21 September 1999.
ING Bank Deutschland AG holds the majority
share (83.76%) of our share capital. Consequently,
in accordance with Section 17 of the Joint Stock
Companies Act, we and ING Groep N.V. are in a
relationship of dependence. We maintain business
relations with affiliated companies, particularly
·· 43. OTHER FINANCIAL COMMITMENTS
Deutsche Hypo has submitted a letter of comfort
to the lessor of Deutsche Hypo B.V., Amsterdam,
undertaking to pay the rent due until 2010.
ING Bank Deutschland AG, on which a separate
report has been submitted pursuant to Section
312 of the Joint Stock Companies Act.
Our company’s Annual Accounts are consolidated
in the Group Annual Accounts of ING Groep N.V.,
a copy of which is available from the latter upon
request.
·· 42. EQUITY HOLDINGS IN OTHER COMPANIES (IN T THOUSANDS)
The following list details holdings in other companies in accordance with Section 285, point 11 of the
Commercial Code:
Share Result Result
holding % Equity 2005 2004
Deutsche Hypo B.V., Amsterdam 100.0 815 141 27
Terra Grundbesitzgesellschaft am Aegi mbH, Hanover 1) 100.0 57 0 0
Deutsche Hypo Immobilien GmbH, Hanover 100.0 90 0 955
GfA Gesellschaft für Anwendungs-Software mbH, Stuttgart 33.3 1,703 2) 962
Deutsche Hypo Consulting GmbH, Hanover 100.0 10 0 0
Terra Grundbesitzgesellschaft am Aegi mbH & Co.
Grundbesitzerwerbs KG, Hanover 100.0 –69 –67 –28
Ostseeklinik Poel GmbH & Co. KG, Kirchdorf 100.0 789 2) 39
Ostseeklinik Poel GmbH, Kirchdorf 40.0 26 2) 1
1) Profit transfer agreement 2) Details not yet available
Hanover, 27 February 2006
The Board of Managing Directors
Grieger Morr v. Tucher

AUDITOR’S REPORT
We have audited the annual financial statements,
comprising the balance sheet, the income statement
and the notes to the financial statements, together
with the bookkeeping system, and the management
report of the Deutsche Hypothekenbank (Actien-
Gesellschaft), Hannover/Berlin, for the business year
from January 1 to December 31, 2005. The mainte-
nance of the books and records and the preparation
of the annual financial statements and management
report in accordance with German commercial law
are the responsibility of the Company's manage-
ment. Our responsibility is to express an opinion on
the annual financial statements, together with the
bookkeeping system, and the management report
based on our audit.
We conducted our audit of the annual financial
statements in accordance with § 317 HGB „German
Commercial Code“ and German generally accepted
standards for the audit of financial statements pro-
mulgated by the Institut der Wirtschaftsprüfer (IDW).
Those standards require that we plan and perform
the audit such that misstatements materially affec-
ting the presentation of the net assets, financial posi-
tion and results of operations in the annual financial
statements in accordance with German principles of
proper accounting and in the management report are
detected with reasonable assurance. Knowledge of
the business activities and the economic and legal
environment of the Company and expectations as to
possible misstatements are taken into account in the
determination of audit procedures. The effectiveness
of the accounting-related internal control system and
the evidence supporting the disclosures in the books
and records, the annual financial statements and the
management report are examined primarily on a test
basis within the framework of the audit. The audit
includes assessing the accounting principles used
and significant estimates made by management, as
well as evaluating the overall presentation of the
annual financial statements and management report.
We believe that our audit provides a reasonable basis
for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
annual financial statements comply with the legal
requirements and give a true and fair view of the net
assets, financial position and results of operations of
the Deutsche Hypothekenbank (Actien-Gesellschaft)
in accordance with German principles of proper
accounting. The management report is consistent
with the annual financial statements and as a whole
provides a suitable view of the Company's position
and suitably presents the opportunities and risks of
future development.
Hamburg, March 1, 2006
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Dielehner Schröder
Wirtschaftsprüfer Wirtschaftsprüferin
··· 71 ···

··· 72 ···
REPORT OF THE
SUPERVISORY BOARD
The Supervisory Board fulfilled its duties in 2005 in
accordance with the statutory requirements, the
articles of association and the Bank’s corporate
governance principles. Two meetings were held
prior to the appointment of a majority of new
members at the Bank’s Annual General Meeting on
12 May 2005, following which a constitutive meeting
was held, as well as three further meetings
including the balance sheet meeting for the 2005
financial year. At the constitutive meeting,
Wolfgang Hollender was elected Chairman, Sytse
A. Andringa was elected Vice-Chairman and the
new committee members were also elected. In
advance of the first meeting of the Supervisory
Board during the second half of the year, those
newly elected members of the Supervisory Board
took advantage of the Board of Managing
Directors’ offer of in-depth briefings as means
of becoming familiar with the Bank. In addition
to the information shared at its meetings, the
Supervisory Board received comprehensive information
on the situation and development of the
Bank in the form of up-to-date written and verbal
reports and through frequent discussions between
the Chairman and the Bank’s Board of Managing
Directors covering fundamental aspects of business
policy, the overall risk situation and income
situation of the Bank and other essential activities.
Particular focuses of the Supervisory Board’s work
included the moderate expansion of Deutsche
Hypo's business model following the abolition of
the Mortgage Bank Act and medium-term planning
through to 2008. The Supervisory Board was also
briefed on the implementation and handling of the
Minimum Requirements for the Credit Business of
Credit Institutions (MaK) and the Minimum
Requirements for the Trading Business of Credit
Institutions (MaH) adopted by the supervisory
authority. The Bank’s interest rate and lending policy
as well as its management of assets and liabilities
are standard items on the agenda of the Supervisory
Board, in terms of both the monthly written
report submitted to it and each ordinary Supervisory
Board meeting. The internal control and early
warning systems for risk management and their
ongoing further development were further key
areas reviewed during the year. None of these
areas, nor the comprehensive report prepared by
the internal auditors, gave any cause for objection
on the part of the Supervisory Board.
Through its committees, and in particular the
Lending Committee composed of Supervisory
Board members, the Supervisory Board also took
decisions outside of its meetings on all processes
on which its decision is required by law, in accordance
with the articles of association or on the
basis of the rules of procedure.
The Lending Committee assessed all major loans
and lending involving an elevated degree of risk.
The Committee considered credit and sovereign
risks as well as issues relating to risk management,
risk controlling and the structure of the
entire lending portfolio.
The Audit Committee met once during the year
under review, with representatives of the auditor
also attending this meeting. The meeting was
devoted to a preliminary review of the Annual
Accounts and in-depth discussion of the audit

eport with the auditor present. Further items dealt
with included the relationship between the Bank
and the auditor in light of the required independence
and the nomination for the election of the auditor.
The Personnel Committee met on one occasion
during the 2005 financial year to consider matters
relating to the Board of Managing Directors.
KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, the
auditors elected by the Annual General Meeting
and commissioned by the Supervisory Board, has
audited the bookkeeping method, the Management
Report and the Annual Accounts for the
period from 1 January to 31 December 2005 and
has issued an unqualified audit certificate. This confirms
that the bookkeeping, Management Report
and Annual Accounts comply with the statutory
requirements and that, overall, no objections were
raised during the audit.
The auditor was available to the Chairman of the
Supervisory and to the entire Supervisory Board at
its balance sheet meeting to answer questions and
provide any supplementary information required.
The Supervisory Board has approved the Annual
Accounts drawn up by the Board of Managing
Directors, with the result that these are duly adopted.
The Supervisory Board also endorses the proposal
submitted by the Board of Managing
Directors regarding the appropriation of profit.
In accordance with Section 312 of the Joint Stock
Companies Act, the Board of Managing Directors
has prepared a report on relations with affiliated
companies. This has been audited by the Bank’s auditors
and also awarded an unqualified audit certificate.
The Supervisory Board endorses this dependence
report and the related audit report. There were no
objections to the statement of the Board of
Managing Directors at the end of this report.
With effect from the close of the ordinary General
Meeting on 12 May 2005, Mr Louis Graf von
Zech, Mr Roland Scharff, Mr Dietmar Schmid,
Mr Wilhelm Zeller, Mr Andreas Peter and Mr Horst
Podella ceased to be members of the Supervisory
Board. Graf von Zech had been a member of the
Supervisory Board for thirteen years and, in the
capacity of Chairman since 1999, was always sovereign
in his leadership. Mr Roland Scharff was a
member and Vice-Chairman of the Supervisory
Board of Deutsche Hypo since 1 August 1999. He
was also a member of the Personnel Committee.
Mr Dietmar Schmid had been a member of the
Supervisory Board since 16 May 2001, during which
time he was also a member of the Lending Committee
and of the Personnel Committee. Mr Zeller
became a member of the Supervisory Board in 16
May 2001. Mr Andreas Peter and Mr Horst Podella
were elected by the employees, taking up their
positions as members of the Supervisor Board on
1 January 2000 and 1 April 2002 respectively.
The Supervisory Board thanks the members who
are now leaving for their contribution, which has
always been constructive and marked by a high
level of expertise.
Appointed as new members of the Supervisory
Board with effect from the close of the Annual
General Meeting on 12 May 2005 are Mr Paul
Koopmans, Mr Klaus Maier, Mr Ben Tellings, Mr
Igno van Waesberghe, Mr Reinhard Drexler and Mr
Ralf Hinrichs.
Hanover, 16 March, 2006
The Supervisory Board
Chairman
··· 73 ···

··· 74 ···
ORGANISATIONAL STRUCTURE OF
DEUTSCHE HYPO
Jürgen Grieger Jürgen Morr Thomas Frhr. v. Tucher
Real estate valuation
and Consulting
Jörg Quentin
Head of Department
Personnel/Administration
Paul Weber
Senior Manager
Law
Albrecht Mayer
Senior Manager
Audit
Markus Heinzel
Head of Department
Treasury
Hauke Finger
Senior Manager
Info/IT
Dr. Wulfgar Wagener
Head of Department
Foreign Lending
Thomas Staats
Senior Manager
Domestic Lending
Volker Basler
Senior Manager
Credit Risk Monitoring
Uwe Menninger
Head of Department
Risk Management
Dr. Jörg Schröder
Executive Manager
Treasury Operations
Gunter Bierwisch
Head of Department
Marketing and Sales
Markus Nitsche
Prokurist
Accounts
Joachim Bloß
Senior Manager
Controlling
Andreas Rehfus
Executive Manager
Foreign Sales
Domestic Sales

ADDRESSES IN GERMANY
AND ABROAD
·· MANAGEMENT BOARD
30159 Hanover
·· REGISTERED BRANCH
10719 Berlin
·· BRANCHES
40213 Düsseldorf
30159 Hanover
85774 Munich-Unterföhring
·· REPRESENTATIVE OFFICES
London EC2V 5DE
75002 Paris
28006 Madrid
60313 Frankfurt
·· SUBSIDIARIES
1071 AB Amsterdam
·· STATE SUPERVISORY BODY
Georgsplatz 8
Telefon +49 511 3045-0
Fax: +49 511 3045-459
www.Deutsche-Hypo.de
Uhlandstraße 165/166
Tel.: +49 30 8827331
Fax: +49 30 8832648
Rathausufer 12
Tel.: +49 211 86792-0
Fax: +49 211 86792-29
Georgsplatz 8
Tel.: +49 511 3045-591
Fax: +49 511 3045-599
Münchner Straße 16
Tel.: +49 89 992908-0
Fax: +49 89 9576201
40 Basinghall Street
City Tower - Level 19
Tel.: +44 207 9200100
Fax: +44 207 9200110
23, rue de la Paix
Tel.: +33 1 550484-85
Fax: +33 1 550484-89
Maria de Molina 40
1° planta
Tel.: +34 91 7452642
Fax: +34 91 4116183
Pallasky KSF GmbH
Goethestr. 31-33
Tel.: +49 69 900294-10
Fax: +49 69 900294-20
Deutsche Hypo B.V.
Vossiusstraat 3
Tel.: +31 20 6914551
Fax: +31 20 6919811
Bundesanstalt für Finanzdienstleistungsaufsicht
Graurheindorfer Straße 108
53117 Bonn
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ING GROUP
ING Group is a Dutch financial institution with
worldwide operations employing around 115,000
people. It offers banking, insurance and asset
management services to over 60 million custo-
mers in more than 50 countries. ING's aim is to be
a global, client-focused and innovative financial
service provider, and it operates in markets in
which it is able to create added value. Its clients
include individuals and families, small businesses
and large corporations, as well as institutional
clients and public authorities.
ING Group ranks among the 20 largest financial
service providers worldwide, figures in the
European top ten, and is the market leader in the
Benelux countries.
The Group encompasses a broad range of renow-
ned companies from the financial services sector,
most of which operate under the ING brand. Since
2004 these have been divided into the following
six business lines: Insurance Americas, Insurance
Europe, Insurance Asia/Pacific, Wholesale Banking,
Retail Banking and ING Direct.
In the USA, ING is one of the top five service pro-
viders in life and pension insurance, whilst it is the
market leader in accident and property insurance
in Canada.
ING Direct in its capacity as a direct bank has over
15 million customers and is represented in nine
countries.
Key European Group companies and holdings
include Nationale-Nederlanden, ING Bank and the
Postbank in the Netherlands, ING Belgium, and
ING Bank Slaski in Poland. In Germany, ING is
represented in the field of wholesale banking by
ING Bank Deutschland AG, and in direct banking
by ING-DiBa AG, which has been a wholly-owned
subsidiary of ING since 2003.
ING’s strategy is to realise sustainable income
growth whilst retaining adequate profitability. In
addition to its financial strength, its comprehensive
range of products and services, the diverse
sources of income and the balanced risk diversifi-
cation form the basis of the Group’s ongoing
success and growth potential.
In all of its activities, ING strives to strike a balance
between the varying interests of its stakeholders,
namely its clients, employees, shareholders, busi-
ness partners and society as a whole. It expects
all of its employees to adhere to the Group’s
business principles, which are based on the core
values of ING Group: customer-friendliness,
responsiveness to customer needs, entrepre-
neurship, professionalism, teamwork and integrity.
ING Group ratings Standard Moody’s
& Poor’s
ING Group AA- Aa3
ING insurance operations AA- Aa3
ING Bank AA Aa2

KEY FIGURES
ING Group key figures
2005 2004 Change
IFRS IFRS in %
Balance sheet figures (in € billions)
Total assets 1,159 964 20.2
Shareholders’ equity 37 28 32.1
Assets under management (in € billions) 547 492 11.2
Market capitalisation (in € billions) 65 49 32.7
Operating income (in € millions)
Insurance operations 57,424 55,602 3.3
Banking operations 13,848 12,678 9.2
Administrative expenses (in € millions)
Insurance operations 5,195 4,746 9.5
Banking operations 8,844 8,795 0.6
Risk provisioning for loan
losses/financial investments (in € millions) 119 475 – 75.0
Profit figures (in € millions)
Insurance operations 3,978 4,322 – 8.0
Banking operations 4,916 3,418 43.8
Operating result before tax 8,894 7,740 14.9
Operating net profit 6,196 4,959 24.9
Net realised capital gains/losses 1,014 796 27.4
Non-operating result - -
Net profit 7,210 5,755 25.3
Distributable net profit 7,210 5,755 25.3
Key figures per ordinary share with a par value of € 0.24
Net profit 3.32 2.71 22.5
Distributable net profit 3.32 2.71 22.5
Dividend 1.18 1.07 10.3
Shareholders’ equity 16.96 12.95 31.0
Key figures (in %)
ING Group
Return on equity (ROE) 26.6 25.4
Operating net profit growth 25 n/a
Dividend pay-out ratio 35.5 39.5
Insurance operations
Combined claims/cost ratio 95 94
Capital coverage ratio 259 200
Banking operations
BIS ratio ING Bank 10.86 10.46
Tier-1 ratio ING Bank 7.32 6.92
Efficiency ratio 63.9 69.4
Employees (average) 115,300 113,000 2.0
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GLOSSARY
·· Backtesting
Process used to verify the forecasting accuracy of ➞ VaR. This involves comparing the daily changes in
net present value with the forecast values.
·· Basis-point-value-method (100 bp)
In addition to ➞ VaR, another process used to measure interest rate risk by simulating an interest rate
rise of 100 bp by means of a parallel shift in the yield curve. The total resulting change in the present value
of all balance sheet and off-balance sheet positions indicates the level of interest rate risk.
·· Debt Issuance Programme (DIP)
A DIP provides the contractual framework and the template documentation for the international place-
ment of security issues. Deutsche Hypo uses this programme as a flexible refinancing tool on the euro
market, thereby supplementing traditional refinancing through Pfandbriefe. With the framework of the DIP,
Deutsche Hypo can issue bonds and Pfandbriefe in the common currencies and in a variety of different
structures. Given that only brief standardised documentation is required for the individual issues, the Bank
can react quickly and flexibly to investor wishes, which, in particular, is also of significance to foreign
investors.
·· Cost/income-ratio
Ratio of administrative expenses to net interest and commission income. The cost-income ratio provides
a quantitative indicator of the efficiency level achieved in banking operations. Essentially, the lower the
cost/income ratio, the more efficient the Bank.
·· PfandBarwertV
Pfandbrief Net Present Value Ordinance: Ordinance relating to securing the availability of cover at all times
for mortgage Pfandbriefe, public Pfandbriefe and ship Pfandbriefe based on net present value, and to the
calculation of this value by the Pfandbrief banks.
·· Probability of Default (PD)
Key figure used to determine the likelihood of a loan not being repaid. Scoring model Deutsche Hypo’s
internal rating method to determine debtor quality in capital market business.
·· Hedging
Transactions used to offset the risk of unfavourable price developments (e.g. interest rate hedges). An indivi-
dual risk position is secured by taking another risk position in the opposite direction.

·· Mark-to-market
Valuation method describing the revaluation of financial instruments on the basis of the market prices
applicable on the revaluation date, rather than on the basis of historical costs.
·· Macro-hedge
A macro-hedge is the term used when as part of a ➞ edging strategy, a bank secures/immunises a
portfolio or several individual transactions against future price losses.
·· Micro-hedge
A micro-hedge is the term used when as part of a ➞ edging strategy, a single position is secured/
immunised against future price losses by means of a futures transaction.
·· Mortgage-Backed Securities (MBS)
Mortgage Backed Securities securitise a section of a pool of mortgage loans, issued for example by
Pfandbrief banks for the purposes of property financing, in the form of bonds. Mortgage Backed Securities
are a special type of Asset Backed Security, i.e. tradable bonds covered by claims.
·· Scoring model
Internal rating procedure of Deutsche Hypo to evaluate the debtor’s creditworthiness in capital market
business.
·· Spread
The difference between the yields on different forms of investments, e.g. the yield differential between
Pfandbriefe and federal loans.
·· Swap
Generally a swap involves the exchange of payment flows. In particular, it refers to a financial technique
whereby two partners swap interest payments and/or currency positions. If these operations affect the
assets side of a balance sheet, they are referred to as asset swaps, whilst liability swaps relate to the
liabilities side of the balance sheet.
·· Value-at-Risk (VaR)
Concept used to quantify market price risks (interest rate risks) and a key component of modern risk
management. It involves determining the potential (net present value) loss that will not be exceeded
subject to a given level of probability and within a stipulated period.
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DEUTSCHE HYPO
Deutsche Hypothekenbank
(Actien-Gesellschaft)
30159 Hannover
Georgsplatz 8
Telefon +49 511 3045-0
Telefax +49 511 3045-459
Mail@Deutsche-Hypo.de
www.Deutsche-Hypo.de
10719 Berlin
Uhlandstraße 165/166
Telefon +49 30 8814036
Telefax +49 30 8832648