Bankgesellschaft is focussing on core business - Landesbank Berlin

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MANAGEMENT BUSINESS AREAS SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS
Management
Letter to Shareholders
Dear Shareholders,
In 2003 and the first few months of 2004, <strong>Bankgesellschaft</strong> Berlin overcame major obstacles to ensure success
in the ongoing implementation of reconstruction and reorientation, begun in 2001. Th<strong>is</strong> positive summary <strong>is</strong>
founded on two developments. Firstly, the <strong>Bankgesellschaft</strong> Berlin Group has returned to profitability in the
operating business. Due to an improvement in the consolidated operating result of a 243 million, a consolidated
operating profit was reported in 2003 for the first time since 1999. Th<strong>is</strong> emphas<strong>is</strong>es that our concept of
a customer-oriented bank with an excellent position in the retail banking and regional corporate banking
business, with strong capital markets business and real estate financing throughout Germany <strong>is</strong> both attractive
and feasible. Secondly, on February 18, 2004, the European Comm<strong>is</strong>sion reached a completely positive
dec<strong>is</strong>ion in favour of <strong>Bankgesellschaft</strong> Berlin in relation to the financial ass<strong>is</strong>tance proceedings, albeit under
certain conditions. Th<strong>is</strong> means that we now have reliable bases for planning for the next few years.
As a result of the conditions of the EU Comm<strong>is</strong>sion, prov<strong>is</strong>ioning and value adjustments in the amount of
a 340 million had to be made. These charges have been incorporated into the consolidated financial statements
for the 2003 financial year. While the consolidated operating result remained virtually unaffected by th<strong>is</strong>,
“Other items, net” was the item most affected. Th<strong>is</strong> subsequently led to a substantial loss in earnings after
tax. Excluding th<strong>is</strong> non-recurring effect, the Group reported positive earnings after tax.
In 2003, <strong>Bankgesellschaft</strong> Berlin took a dec<strong>is</strong>ive step towards sustained stabil<strong>is</strong>ation in the market. The
upward trend recorded in the development of earnings resulted from further cost savings and intensification
of the focus on our ex<strong>is</strong>ting markets. The announcement that we would be concentrating more intensively
on our customers was put into practice. In the second half-year in particular, sales activities were increased
and almost all business areas significantly improved their consolidated operating result compared with
the figure of the previous year. As a result of the strategic merger of business activities, Capital Markets did
not quite maintain the level of the previous year but contributed considerably to the positive consolidated
operating result. In the second half-year in particular, new business in Retail Banking and in Real Estate
Financing was pleasing.