Annual Report 2001 - Landesbank Berlin

Following a loss in the previous year, Regional Corporate Banking generated a
slightly positive result. Drops on the income side were over-compensated by significantly
lower risk provisioning (€ –129 million).
The development of earnings in the Public Sector business area was impacted by
the write-backs in credit risk provisioning.
Despite increased income and reduced administration expenditure. Corporate/
International Banking was in deficit in 2001. Earnings were negatively impacted
by risk provisioning in the lending business being higher compared with the previous
year (€ +38 million) and a participation loss (€ –12 million).
In 2001, Capital Markets suffered a significant drop in earnings. The drop is predominantly
due to declining income (€ –124 million). At € –103 million, the net
results from financial transactions were responsible for the largest share of this
drop and thereof mainly shares and share derivatives trading. As a result of
increased IT costs, administration expenditure impacted earnings (€ +27 million).
The link between declining earnings and rising expenditure led to a sharp drop in
profitability.
The positive earnings from the Real Estate business area were only achieved
because provisions set up the previous year were written back and reported as
income, thus increasing earnings by €249 million. Reduced credit risk provisioning
also improved earnings. However, with a share of 68% in total credit risk provisioning
for all business areas, this is a substantial negative impact both for the
business area and the Group as a whole, as it was in the previous year.
14 PERFORMANCE IN THE STRATEGIC BUSINESS AREAS