Bankgesellschaft is focussing on core business - Landesbank Berlin

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MANAGEMENT BUSINESS AREAS SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS
Real Estate Financing
In the year under review, the Real Estate Financing business area successfully implemented
the restructuring in the most important div<strong>is</strong>ions. Following the organ<strong>is</strong>ational and strategic
reorientation, the focus for 2003 was on re-establ<strong>is</strong>hing sales and market activities.
Pleasing momentum in new
loan commitments
The new start in the market with a different sales
strategy was largely successful. Th<strong>is</strong> shows new
business with a volume of a 813 million concluded in
2003. Although th<strong>is</strong> result does not meet the targets,
th<strong>is</strong> development <strong>is</strong> sat<strong>is</strong>factory for the Real Estate
Financing business area in view of the extended
absence from the market and the still difficult market
environment. Furthermore, the stricter r<strong>is</strong>k and
profitability criteria are to be taken into account. New
business <strong>is</strong> oriented towards a clearly defined target
portfolio with a weighting that <strong>is</strong> character<strong>is</strong>ed by
the financing of properties in Berlin and the West
German conurbations. It <strong>is</strong> centred on business with
private and commercial investors, real estate companies
as well as property developers.
Adjustment of the real estate portfolio
The real estate portfolio was further consolidated
as scheduled in the year under review. Business not
in line with the strategy was d<strong>is</strong>continued where
possible. The strained economic environment
allowed new r<strong>is</strong>ks to ar<strong>is</strong>e for a few individual commitments
in the portfolio, meaning that adequate
prov<strong>is</strong>ioning was required in the period under
review. However, overall, r<strong>is</strong>k prov<strong>is</strong>ioning was
again scaled back yoy.
Decline in the portfolio volume
lowers operating result
Due to the decline in volume as a result of the portfolio
adjustment and scheduled repayments, the
development of income was inevitably negatively
impacted. The reduced net interest income could not
be completely compensated by new business, which
only gained momentum in the second half-year after
an initial start-up phase. The decrease in admin<strong>is</strong>trative
expenditure has now almost reached its limit.
The internal operating processes have been optim<strong>is</strong>ed
and are proving successful in practice. Our activities
continue to be oriented towards the recovery of new
business and the consolidation of earnings power.