Annual Report 2001 - Landesbank Berlin

Outlook
further risk provisioning for this lending volume, which would have been
required without the protection from substantial risks from this business by the
State of Berlin. At the same time, the provision amounting to €249 million, set up
the previous year for portfolio real estate in Real Estate Services, was written back
and reflected in the profit and loss account. Both effects – the omission of additional
provisions and the write-back of provisions – are decisive for the business
area’s positive result of €39 million. The discharge of liability for the credit risks
in Real Estate Services also significantly eased the pressure on the equity formation
of the business area. As loans to the protected Real Estate Services are now
treated as publicly guaranteed loans, the key income ratios for the business area
in relation to tied-up capital will be visibly better in future.
Even if no fundamental trend reversal is seen in the German real
estate market for the time being, we are targeting an approximate
break-even result in 2002, in particular by improving the cost situation and
reduced risk provisioning. Additional measures to improve risk management
should also mean that this business area is once again able to make a substantial
contribution to consolidated earnings in the medium term.
32 REAL ESTATE FINANCING