The FINANCIAL SERVICES Corporate Division comprises Postbank and the Pension Service. The latter handles pension payments for the statutory pension and accident insurance funds as well as for various occupational pension providers. The retail outlets are included in this corporate division's organizational structure.

Consolidation pressure is growing
The pressure on markets for financial services has continued to grow. As Germany's financial sector has experienced relatively little consolidation in comparison with the rest of the world, shakeouts were particularly evident on the German market. Small financial service providers have merged to form larger units. A growing number of bancassurance providers are emerging, offering insurance services in addition to traditional banking products.Competition among online brokers was particularly tough due to the global economic downturn. Some providers have now disappeared from the market.

We are well prepared for the stiffer competitive environment. Today, Postbank is already offering its customers the full range of banking products: from payments through loans and investments to leasing. Postbank's offering also includes insurance. As a multi-channel bank, our customers can reach us in different ways: in person in our retail outlets or on the telephone, in writing by letter and electronically via the Internet.

Falling interest rates cut revenue
The corporate division's revenue results predominantly from interest, commission and trading income. This fell by 4.8% over the previous year to 7,604 million due to the drop in interest rates on the money market in 2001.

Earnings rise again
During the year under review, the corporate division again succeeded in increasing its profit from operating activities (EBITA) which rose from 505 million in 2000 to 522 million. Other expenditure fell by 5.5%; this included provisions for credit risks, staff costs and material expense, and net other income and expenses. Higher provisions for credit risks were offset by improvements in all other areas. Income from the banking business rose in total by 2.5%: although net interest income fell by 12 million, net commission and investment income and the trading profit were 65 million above the previous year's figure of 462 million.

Continued growth in key product groups
Developments in the checking accounts business throughout 2001 were positive overall. The number of private checking accounts continued to grow, from 3.63 million in the previous year to 3.75 million in the year under review,with the rate of growth rising to 3.2% from 1.9% in the previous year. In the corporate customer segment, we succeeded in breaking the long-standing trend toward consolidation: the number of checking accounts rose again in the final quarter of the year under review for the first time since 1993. In addition, new customers are making much more active use of their accounts and are more open to other products. At 367,000, the number of corporate checking accounts is just slightly lower than the previous year's figure of 375,000. Direct banking has continued to expand,with a 25.5% increase in accounts managed online. The number of phone banking accounts also increased by 20.4%. In this segment, we continue to hold a leading position on the German market.

Overall development of the deposit and investment business was satisfactory. Despite the slump on the international capital markets, we were able to increase the number of customer investment fund accounts by 21.2% from 510,000 to 618,000. At the same time, the number of direct brokerage accounts rose by 12.0% from 250,000 to 280,000. Nevertheless, the downward trend on the capital markets was noticable: although the number of investment account holders rose, the value of the securities and investment fund shares held by our customers - including direct brokerage - remained stable at 4.3 billion. Despite a poor performance in the previous year, growth in deposit banking was positive in 2001; at 32.4 billion, savings deposits exceeded the level in 2000.

Developments in the lending business were also positive. The volume of private loans granted by us has risen again. In an overall restrained market, we recorded growth of 24.5% to 741 million. Despite the poor state of the building industry, the private building loans business also recorded positive developments. Our private building loans portfolio rose by 7.3% from 12.4 billion to 13.3 billion. There has also been considerable growth in commercial financing, where our position rose by 16.9% on the previous year to 19.0 billion. Of this, 12.1 billion was attributable to loans for bank refinancing and 2.5 billion to the international public-sector lending business. Developments in commercial real estate finance were also particularly buoyant, with new business in this segment amounting to more than 1.3 billion.

The insurance business, which only began in 1999, was also encouraging. PB Versicherung was able to increase the number of policies in its accident segment by 99.3% to 59,600 and the number of life insurance policies by 70.9% to 80,500.

Investing in the technology of the future
Investments in information technology also increased in 2001. Working together with SAP, we continued to develop the standard software for banks, concentrated our information technology resources on a central data center and improved our online offering. In addition to new, high-performance banking computers, we can now provide the account details for all savings, loan and building loan accounts online. Our online private loans, which can be approved on screen if the customer has sufficient creditworthiness, have been particularly successful.

In a joint venture with Siemens Business Services,we are also developing a new system for domestic and international payments. This alliance will provide us with a second major IT systems component that will supplement the standard banking software to create the banking transaction technology of the future.

Move into logistics finance
With retroactive effect from January 1, 2001, Postbank acquired the New Yorkbased company BHF (USA) Holdings Inc. The company's core businesses are corporate finance and commercial real estate loans. At December 31, 2001, its total assets amounted to 3.6 billion. With this move, Deutsche Post World Net has created a strategic platform to develop global logistics finance, providing DHL and Danzas with effective support on the attractive US market.

The high-growth cards market
The guaranteed cover for eurocheques was abolished at the end of 2001, boosting the importance of card-based payments. Today, we are already a full-service provider in this area and a major card issuer, with more than five million credit, EC and customer cards in circulation. We also offer our approximately 400,000 corporate customers settlement of card-based payments for all card systems from a single source. To help us do this, we established a joint venture with US company First Data Merchant Services, the world's largest credit card processor, in September 2001.

Retail outlets - a unique customer access channel and a broad product offering
Around three-quarters of Postbank's business transactions take place at its almost 13,000 retail outlets. This comprehensive outlet network provides two to three million customers across Germany with access to the Group's extensive product offering every day.

We want to continue improving the efficiency of the outlet network by using it increasingly as a sales channel for third-party products and services. Today, our retail outlets already provide telecommunication services and products and electricity supply contracts. In future, the range will include additional services - particularly those associated with a change of address. Other services currently being planned include municipal registration facilities, vehicle registration or Pay-TV. This means that our customers will be able to do more than just apply to have their mail forwarded or find information on moving house. In future they will be able to buy a wide range of products for many areas of everyday life in the comfort of one of our retail outlets which will thus become a one-stop-shopping address.

In order to intensify our sales activities, around 20,000 sales staff and 3,300 consultants have received extensive training on 44,000 training days.

Outlook
We intend to intensify the corporate customer business in particular.

Through our new acquisition BHF (USA) Holdings Inc. we will be breaking into the international market segment for logistics finance.

We will streamline costs by refocusing our sales efforts on new channels. During the year under review,we already reduced the number of our call centers from eleven to three. We will further reduce the number of our business locations from thirteen to ten. The staff cuts that this entails will be socially responsible, and undertaken in concert with our social partners.

Deutsche Post World Net's Pension Service has won a European tendering process, and in future will also be responsible for the international pension payments of Pensionsversicherungsanstalt der Arbeiter in Austria.