In touch with life by pengxiuhui

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                           In touch with life
                           > Annual Report 2007
> Key figures of comdirect bank group
                                                                                                            2007                    2006                   Change in %
Customer figures as of 31.12.
Total customers                                                                                      1,000,722                   804,690                          24.4
Customers in the business line comdirect online                                                        996,599                   802,102                          24.2
Customers in the business line comdirect offline                                                        32,469                    20,024                          62.2


Business line comdirect online
Placed orders                                                                                       12,581,115               11,017,780                           14.2
Executed orders                                                                                      9,950,097                8,572,255                           16.1
Average order activity per custody account                                                                15.9                     14.7                             8.2
Share of fund transactions in executed orders                                    in %                     30.6                     28.4                               –
Order volume per executed order                                                   in €                   5,273                    5,465                           – 3.5
Total assets under custody as of 31.12.                                   in € million                  20,373                   16,387                           24.3
  of which: portfolio volume (excluding funds)                            in € million                   8,666                    8,056                             7.6
  of which: funds volume                                                  in € million                   4,022                    3,703                             8.6
  of which: deposit volume                                                in € million                   7,686                    4,627                           66.1
Credit volume as of 31.12.                                                in € million                     216                      208                             4.1
Number of custody accounts as of 31.12.                                                                645,893                  606,110                             6.6
Number of securities savings plans as of 31.12.                                                        150,196                  120,723                           24.4
Number of current accounts as of 31.12.                                                                337,578                  260,334                           29.7
Number of Tagesgeld PLUS (“call money plus”)
accounts as of 31.12.                                                                                  400,414                    66,840                         499.1


Business line comdirect offline
Advisers as of 31.12.                                                                                       202                      158                          27.8
Offices as of 31.12.                                                                                         27                       19                          42.1
Commission income                                                      in € thousand                     22,997                   16,530                          39.1


Earnings ratios
Net commission income                                                  in € thousand                   152,724                   136,565                          11.8
Net interest income before provisions                                  in € thousand                   127,164                    88,733                          43.3
Administrative expenses                                                in € thousand                   187,437                   135,626                          38.2
Pre-tax profit                                                         in € thousand                    90,480                    85,600                           5.7
Net profit                                                             in € thousand                    57,697                    57,002                           1.2
Earnings per share                                                               in €                     0.41                      0.40                           2.5


Balance sheet key figures as of 31.12.
Balance sheet total                                                       in € million                    8,233                     5,301                          55.3
Equity                                                                    in € million                      478                       620                        – 22.9
Equity ratio1)                                                                   in %                        5.9                     11.8                             –
Risk weighted assets according to BIS2)                                   in € million                    1,963                     1,378                          42.5
BIS core capital2)                                                        in € million                      420                       563                        – 25.4
BIS own funds2)                                                           in € million                      420                       563                        – 25.4
BIS own funds ratio2)                                                            in %                      21.4                      40.9                             –


Relative ratios
Return on equity before tax 3)                                                    in %                     16.3                      14.0                            –
Cost/income ratio                                                                 in %                     67.0                      60.4                            –
Earnings per customer                                                              in €                   307.9                     294.1                          4.7


Employees’ figures as of 31.12.
Employees                                                                                                  824                       732                          12.6
 of which: in the business line comdirect online                                                           786                       705                          11.5
 of which: in the business line comdirect offline                                                           38                        27                          40.7
Employees full-time basis                                                                                 721.5                     648.0                         11.3

1) Equity ratio = equity (excluding revaluation reserve) / balance sheet total
2) BIS: these indicators were determined on the basis of internal calculations; publication is optional and there is no obligation for submission to the
   regulatory authorities.
3) Return on equity = pre-tax profit / average equity (excluding revaluation reserve) in the reporting period
> Contents

01    Figures 2007

02    Foreword by the Board of Managing Directors
02    Foreword
04    Interview: “Always attractive – without any ifs and buts”

08    In touch with life

24    The share

28    Corporate Governance
29    Report of the Supervisory Board
32    Corporate Governance report
36    Compensation report

40    Group management report
41    Business activities and framework parameters
45    Value-driven strategy and management system
48    Business development
63    Earnings situation
67    Financial situation and assets
70    Personnel report
73    Risk report
82    Opportunity report
84    Outlook
88    Supplementary report
88    Details in accordance with Section 315 (4)
      of the German Commercial Code (HGB)
89    Explanations of the Board of Managing Directors
      on the details in accordance with Section 315 (4)
      of the German Commercial Code (HGB)
90    Declaration of the Board of Managing Directors on Section 312,
      German Stock Corporation Act (AktG)

91    Consolidated financial statements
92    Income statement
93    Balance sheet
94    Statement of changes in equity
95    Cash flow statement
96    Notes

139   Declaration of the Board of Managing Directors
140   Auditor’s certificate
141   Glossary
148   Six-year overview
150   Financial calendar 2008
150   Contacts
> Figures 2007
comdirect customers

                                                                                             1,000,722
                                                        804,690
                     656,064




                       2005                                  2006                                2007

Breaking through the barrier: comdirect welcomed its 1,000,000th customer at the end of 2007. A great starting point for
further growth.



Tagesgeld PLUS                                                      Current accounts




>400,000 +29.7%
A six-fold increase in the number of accounts in just one           The significant increase in the number of current accounts
year: our Tagesgeld PLUS account is the first choice for a          to 337,578 shows that ease of use and good terms and
flexible, high interest call money account.                         conditions are a winning combination in this competitive
                                                                    market.



Custody accounts                                                Nationwide offering

in thousand

                                           646




                                                                                     27
                           606


              551




                                                                comdirect private finance already has 27 offices in Ger-
                                                                many. By the end of 2007, its 202 advisers were servicing
          2005            2006            2007                  more than 32,000 customers.
                                                                                                         Figures 2007 •




Orders executed                                                 Deposit volume at record level

in million                                                      in € billion
                                                 10.0
                                                                                                         7.7
                                8.6

              6.7
                                                                                          4.6


                                                                               2.7




             2005             2006               2007                          2005      2006            2007



Website                                                         Investing in growth




       99.7%
Customer satisfaction figures at a record high: this is the
                                                                          >50m
                                                                Worthwhile investment in propelled growth: comdirect
result of further improvements in customer service, consist-    has further intensified its market and product offensive
ent product presentation on our website and last but not        as part of the comvalue programme. Administrative ex-
least, our sustained high system availability level of 99.7%.   penses increased as a result by over €50 million.



Net commission and net interest income                          Pre-tax consolidated profit

       Net commission income in € million                       in € million
       Net interest income before provisions in € million


                                                                                                         90.5

                                                        152.7                             85.6

                                      136.6

                    99.0                                                       52.8

                                                        127.2
                                      88.7
                    64.0


             2005             2006              2007                           2005      2006           2007

                                                                                                                       1
    “More than ever comdirect is in touch with its customers
     as a direct bank offering a full service, permanently attractive
     prices, comprehensive advisory services and first class
     customer services.”




Dr. Andre Carls
CEO of comdirect bank




> Foreword

Leveraged growth opportunities, a broader earnings base and record results: 2007 has been the
best year to date for comdirect bank. Pre-tax profit increased for the fifth time in a row to €90.5m.
With the number of customers reaching the 1 million mark and assets under custody of over €20bn,
we set even more new records. We are therefore superbly positioned to continue our successful
growth.




2
                                                                                                                    Foreword •




Dear shareholders,                                                model functions in varied market situations.

After a year of propelled growth, comdirect is clearly on the     Our market has certainly not been made any easier by
right track. Our investment in the further intensified market     the dislocations in the money and capital markets since
and product offensive has more than paid off and we closed        mid-2007, and predicting future trends is more difficult
financial year 2007 as a significantly bigger bank with a broa-   than ever. This is precisely why we are pleased to have
der and even more profitable earnings base. We have made          a growth strategy that puts our earnings base on an even
major advances towards our targets for the end of 2009 in         broader footing, making us less dependent on stock mar-
all areas of the bank without exception. These include record     ket fluctuations. As the top provider in brokerage, however,
expansion in the number of customers to 1 million, a six-fold     we know how to take further advantage of the earnings
increase in Tagesgeld PLUS (“call money plus”) accounts to        opportunities provided by a favourable stock exchange
400,000, a 30% rise in current accounts as well as pleasing       environment.
growth in custody accounts and securities savings plans and
last but not least, a 62% increase in the number of advisory      The long-term trends remain positive. The number of bank
customers to over 32,000.                                         customers wanting to independently manage their finan-
                                                                  ces online is growing, as is their demand for attractive
More than ever, the comdirect brand is in touch with its cus-     interest-rate related products, securities investments for
tomers as a direct bank offering intelligent product solutions,   asset accumulation and provisioning as well as flexible fi-
permanently attractive prices, innovative functionalities,        nancing and guidance in the complex world of finance. We
comprehensive advisory services and first class customer ser-     identify such trends at an early stage and translate them
vices. The “Ihr Geld kann mehr” (“More for your money”)           into products with a high degree of usefulness for custo-
claim sums up the message perfectly: modern, demanding            mers. Examples of these are the innovative Next Order tra-
bank customers can use our extensive range of products and        ding function and the extension of the securities savings
services to perfectly tailor their personal investment and risk   plan offering to include ETF index funds. There is also the
strategies and utilise any yield opportunities that arise.        recently launched building finance range with attractive
                                                                  terms and conditions, as well as the second run of the n-tv
In 2007, our top products and services for modern investors       custody account check based on our continuously quality-
generated a considerable rise in customer assets, customer        assured FondsDiamanten offering. More examples will fol-
activity and customer satisfaction. More and more customers       low. They all have to live up to our claim that comdirect does
are pooling their banking activities with comdirect and per-      not only offer a range of products, but competent solutions
ceive us as a fair and forward-thinking banking partner that      from under one roof.
they continually recommend to others.
                                                                  Through the integration of our quality products, services and
Through our stable and increasingly active customer-bank          advice, we will continue along the track of propelled growth:
relationships, comdirect has further broadened its earnings       by the end of 2009, we intend to be the banking partner for
base. With pre-tax profit of €90.5m in 2007, we exceeded          at least 1.3 million customers, maintain more than 650,000
the previous year’s record results, whilst also investing ex-     custody accounts and 650,000 Tagesgeld PLUS accounts
tensively in growth. The main factor here is the sharp rise       as well as 450,000 current accounts – and also assist 40,000
in net interest income before provisions of 43% to over           customers in advice.
€127m, which was driven by more attractive interest rates in
the money market. At €153m, net commission income was             Sincerely yours,
slightly up on the already high level achieved in the previous
year. This results not just from the development in the capital
market but also the expansion of our funds and certificates
business as well as growing income from comdirect private         Dr. Andre Carls,
finance. With the three fast-growing fields of competence of      CEO
brokerage, banking and advice, comdirect bank’s business


                                                                                                                              3
> Interview: “Always attractive – without any ifs and buts”


The past financial year has been the best in
comdirect bank’s history. The bank’s propelled
growth, boosted by the success of the Tages-
geld PLUS (“call money plus”) account and
current account, is reflected both in the sharp
rise in the number of customers and record
deposit volume as well as the all-time high
in earnings. Will growth continue at this fast
pace? How will the market develop? What
will be the focus of the market and product
offensive in future? CEO Dr. Andre Carls and
members of the Board of Managing Directors
Karin Katerbau and Torsten Daenert explain
more below.




4
                                                                                                                  Interview •




        “Customers want to work together with a fair
         banking partner that always offers attractive terms
         and conditions.”                           Torsten Daenert



Ms. Katerbau, Dr. Carls, Mr. Daenert – comdirect bank has        Daenert: We certainly couldn’t complain about a lack of
set many new records in the past financial year. Which of         competition in 2007 either. Nevertheless, we were still able
these, in your opinion, are particularly striking?               to make the leap to a new dimension. Naturally, we are
                                                                 aware there is currently a range of attractive call money
Carls: In principle all of them are, as these records show       and other interest-based offerings out there as well as many
that comdirect bank and our shareholders are reaping the         more fee-free current accounts than at the start of our com-
benefits of our investment in growth. However, if I had to        value programme. But there can only really be one reason
highlight one product, then it would be the Tagesgeld PLUS       why we have achieved such strong growth with our two
account, which along with the current account is our other       anchor products – customers want to work together with a
anchor product in banking. We were aware of the advan-           fair banking partner that always offers attractive terms and
tages offered by our investment account offering both at-        conditions. Our Tagesgeld PLUS account is a success because
tractive interest rates and high levels of flexibility compared   it offers permanently attractive rates on investments up to
to its competitors, but the fact that it has already attracted   €30,000 and our customers can rely on the fact that it al-
400,000 customers in a little over a year has far outstripped    ways will. Our current account has maintained its position in
our expectations. But these new record achievements do           a fiercely competitive market because it is extremely easy
not mean that we intend to become complacent: two more           to use and is not only fee-free but pays one euro a month.
demanding years of propelled growth lie ahead.
                                                                 Are there still enough potential customers out there for
Katerbau: A key point is that this expansion still applies to    you and your competitors or is the market saturated?
all of the bank’s fields of competence without exception. In
2007, in addition to the Tagesgeld PLUS account, our current     Carls: There are around 90 million current accounts in Ger-
account continued to report strong growth; in brokerage, the     many and €1.3tn in deposits by private households. Natu-
number of custody accounts and securities savings plans in-      rally not all customers will end up at a direct bank, but
creased and in advice, the number of customers rose by a         the proportion of people wanting to independently manage
good 60%. We actively set targets for all three fields of com-    their finances online continues to grow. The development
petence under comvalue and comdirect bank is well on the         of the internet adds to this, meaning that banking transac-
way to meet these in every area.                                 tions have become much more individual, faster and easier
                                                                 to carry out and direct banking is reaching an increasingly
Daenert: Another notable aspect is that our growth does not      broader range of the population. If like we do, you add
stem from new customers alone, but also from increasingly        highly professional, tailored advisory services on request
more active use of our products by existing customers. 44%       to this offering, the service package is just right for the
of our customers already use at least two of the bank’s pro-     modern investor. We will not be having to talk about growth
ducts. For instance, a large number of new customers open-       limits in the coming years.
ing current accounts or Tagesgeld PLUS accounts also opened
a custody account at the same time in order to benefit from       Talking of the internet – much has been done in this regard
the advantages offered by comdirect for securities invest-       at comdirect in 2007. Don’t users get irritated when they
ments. Conversely this means that we are becoming more           are constantly faced with new features and different
and more firmly anchored at customer level and many are           navigation?
using us not just as their main bank, but as their only bank.
                                                                 Katerbau: Quite the opposite in fact. Our recently con-
After such success in 2007, the question now is whether          ducted customer survey shows that overall satisfaction has
the bank can sustain this tempo in the future. Looking at        reached its highest level in the history of the bank. Under
the many offerings from the bank’s competitors, it would         the motto Simplexity we have been able to present com-
appear that the market has become fiercer overall.                direct’s extensive range of products and services as simply



                                                                                                                            5
                                                                Carls: There are also various cross-overs with our advisory
                                                                services. The FondsDiamanten offering was used to opti-
                                                                mise portfolios as part of our highly successful second n-tv
                                                                custody account check campaign, with thoroughly con-
                                                                vincing results. Nevertheless, we will further intensify the
as possible. Here it was particularly important to target the   integration of our online and offline range. Take the final
various customer motives more directly and to take cus-         withholding tax, for example: here an investor wishing to
tomers straight to the appropriate product or service. Natu-    protect his custody account against this tax in good time
rally the expansion of our online functions was not limited     will not only need the appropriate products, such as funds
to product presentation. Similarly important to us was the      of funds, but also independent expert advice.
development of online processes which were previously
paper-based, such as indemnification forms and subscrip-        You have invested a great deal in financial year 2007,
tion rights trading.                                            especially in the market offensive. Wouldn’t it have been
                                                                possible to spend less in favour of achieving a further in-
While the market offensive under comvalue primarily             crease in pre-tax profit and an even higher dividend?
focused on banking, the product offensive centred on
brokerage. Why was that?                                        Katerbau: For us it is important to extensively leverage the
                                                                favourable market situation for direct banks and to broaden
Carls: Despite all the growth in banking and advice, our        our earnings on a sustained basis through increasingly im-
strongest market position is still in online brokerage. We      proved deposit business and advisory services. We want to
don’t just want to defend this position but to expand it.       generate high earnings, even when the stock markets are
As the number of awards the bank has won show time              not faring well. We have already achieved a great deal in
and time again, our customers quite clearly appreciate the      this regard as the 43% rise in net interest income shows,
technological advantages that comdirect offers. With inno-      for example. We are already beginning to reap the benefits
vative order functions, such as Next Order, we are extend-      of this approach while we are still investing.
ing our lead and enabling our customers to execute their
individual trading strategies on an even more professional      How have you invested customer monies profitably –
basis. Moreover, through LiveTrading, we offer a high per-      and how have you managed to escape the market
formance and efficient OTC trading platform now featuring       dislocations?
28 trading partners – almost all key traders active in the
German market.                                                  Daenert: In principle, our Treasury strategy is conservative.
                                                                We invest most of the monies entrusted to us by customers
Daenert: We also see great potential in long-term securi-       in short-term investments in the money market. It’s clear
ties investments. Investors here are not just looking for       that there were temporary liquidity shortages in the market
an extensive choice but they also want to receive advice.       because the banks were no longer prepared to lend suf-
They can find both at comdirect. On the one hand, we have       ficient money to each other. However, as a liquidity pro-
doubled the range of certificates eligible for use in savings   vider, this development was an advantage for us overall
plans to over 100, we offer savings plans for 24 ETF index      as it pushed up the money market rate in the short term
funds and are one of the few providers in Germany to en-        and therefore the interest rate margin. By comparison, the
able investors to freely combine these different savings        changes in value of securities backed by financial assets
plan types. On the other, we are providing guidance in the      were minor, as we have only negligible exposure here.
world of investment. For example, our continuously quality-
assessed FondsDiamanten offering comprising 15 funds pro-       Katerbau: Our risk position was very stable for the whole
vides everything investors need for a basic investment – and    year and our risk-taking capacity was ensured at all times
there’s no front-end load either.                               through a sound risk buffer. Even in terms of market and



6
                                                                                                                  Interview •




       “It is important to extensively leverage the favourable market
       situation for direct banks. We want to generate high earnings,
       even when the stock markets are not faring well.”       Karin Katerbau




credit default risks, there were no notable incidences, limit
overruns or defaults.

At €90.5m, you’ve already far exceeded the raised profit
target of €80m. Where did the bank perform particularly
well?

Carls: First of all, we aim for our profit target to be as close
to the subsequent actual figure as possible. Commission in-
come from trading, however, is hard to forecast exactly. In
2007, the highly volatile market phase lasted longer than
expected and trading activities were correspondingly higher.
Our net interest income benefited from two developments:
better-than-expected growth in customer deposits and the
significant rise in money market rates and risk premiums in
the credit markets resulting from the unrest in the financial
markets.

What are you planning for 2008?

Daenert: First and foremost, to continue our propelled
growth. As before, we will manage our market and product
offensive on a flexible basis in line with market develop-
ment. At the beginning of the year in banking, we have
highlighted the new placement activities for private build-
ing finance as a convincing overall package, which links a
wide product range, first rate conditions and efficient online     And investment in growth under comvalue?
tools with tailored advisory services from building finance
specialists.                                                       Carls: We will continue our comvalue growth programme at
                                                                   the same pace whilst continually optimising the programme
Katerbau: At the moment, forecasting developments in the           and we will again make around €100m out of current cash
capital market is like reading a crystal ball. Order figures and   flow available up until the end of 2009. We are confident
portfolio volume can only be forecast to a limited extent. It is   that we will reach the targets we set for the end of 2009,
clear, however, that we intend to further improve the number       if not exceed them. By the end of 2008, I am certain that
of trades independent of short-term market fluctuations. In        comdirect bank will have made another major step forward
banking, we anticipate another significant market increase in      in this direction and with an even bigger customer base and
the deposit volume. As in previous years, we will announce         more active product use, we will be the first choice direct
our profit target for 2008 when the half-year results are          bank for significantly more modern investors.
published.
                                                                   Thank you very much.




                                                                                                                            7
        6:58                               7:23                              7:39                               8:02                               8:32                            8:45
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                            9:07                                       9:02                               9:18                              9:32                              9:41
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                                                                                                          Let’s be honest. Would you
                                                                                                          really change the supermar-
                                                                                                          ket you shop at because of
                                                                                                          a fantastic special offer on
                                                                                                          yogurt, or would you stay
                                                                                                          where the prices are perma-
                                                                                                          nently low and the service is
                                                                                                          also good?




                                                                                                          We are convinced that investors are looking
                                                                                                          to accumulate and secure wealth on a long-
                                                                                                          term basis. In addition to short-term special
                                                                                                          offers, above all they want permanently fair
                                                                                                          and attractive products and services. This
                                                                                                          is just what they will find at comdirect. Take
                                                                                                          building finance for example: our first-rate
                                                                                                          offering with more than 40 property finance
                                                                                                          providers allows customers to secure excel-
                                                                                                          lent terms and conditions and also access
                                                                                                          specialist advisory services from experts.

                                                                                                          For more information, see pages 42 to 43.
            9:48                                                     10:09
                                                                                                10:24                                                                         10:37
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                  10:52                               11:02                               11:28                               11:42                               11:57
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                                                                                                          85 e-mails in your inbox,
                                                                                                          almost time for the second
                                                                                                          conference call of the day
                                                                                                          and a meeting at 11 o’clock.
                                                                                                          And then there are the news
                                                                                                          portals to check every hour.
                                                                                                          So much information – but
                                                                                                          is any of it useful? Is there
                                                                                                          something that will be of use
                                                                                                          tomorrow that we should
                                                                                                          know about today?




                                                                                                          A bank should help its customers act with
                                                                                                          foresight. This is why comdirect identifies
                                                                                                          developments at an early stage and turns
                                                                                                          them into product solutions. Take the Tages-
                                                                                                          geld PLUS for example – our response to the
                                                                                                          changed interest rate environment. To en-
                                                                                                          sure no-one drowns in this sea of informa-
                                                                                                          tion, we present tomorrow’s trends based on
                                                                                                          in-depth analysis in seminars for traders as
                                                                                                          well as in articles in our award-winning cus-
                                                                                                          tomer magazine “compass” and our equally
                                                                                                          excellent newsletter “compact”. Customers
                                                                                                          can sit back and relax and still miss nothing:
                                                                                                          a reassuring prospect.

                                                                                                          For more information, see pages 53 to 57.
     11:59
                         12:08                                                                    12:19                               12:32                               12:47
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              12:58                               13:15                               13:27                               13:41                               13:55
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                                                                                                          Sometimes you have to make
                                                                                                          a quick decision, especially
                                                                                                          when things are moving
                                                                                                          quickly. Wouldn’t it be good
                                                                                                          if you knew the best route to
                                                                                                          take beforehand?




                                                                                                          Steady climbs, hectic sideways movement
                                                                                                          and then free fall – the stock markets have
                                                                                                          shown in recent months in particular just
                                                                                                          how hard they can be to predict. As the first
                                                                                                          choice online broker, we support our cus-
                                                                                                          tomers with innovative tools and functio-
                                                                                                          nalities, enabling them to implement their
                                                                                                          investment strategies with controlled risks in
                                                                                                          all stock exchange scenarios. Take for exam-
                                                                                                          ple, our Next Order function, which links two
                                                                                                          orders and acts as a superb tool for risk limi-
                                                                                                          tation. The combination order One Cancels
                                                                                                          Other and online subscription rights trading
                                                                                                          also allow comdirect customers to take fast
                                                                                                          and direct action.

                                                                                                          For more information, see pages 53 to 57.
                              14:00
                                                          14:12                                                                        14:19                               14:22
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               14:32                               14:54                               15:02                               15:18                               15:27
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                                                                                                          She isn’t wishing for a prince.
                                                                                                          Her wish list goes more like
                                                                                                          this: that Leonie can come to
                                                                                                          her birthday party, a bigger
                                                                                                          bedroom, to go to Legoland
                                                                                                          again, that great pink jumper,
                                                                                                          a mountain bike etc.




                                                                                                          And when she’s bigger, she’ll want even
                                                                                                          more. To make as many of these wishes
                                                                                                          come true, our product and service spectrum
                                                                                                          covers all life phases and we can offer our
                                                                                                          customers comprehensive, expert and low
                                                                                                          key advice. Whether customers are looking
                                                                                                          to invest for systematic asset accumulation
                                                                                                          or are interested in old-age provisioning
                                                                                                          and insurance, our financial advisers in com-
                                                                                                          direct private finance’s 27 offices are there
                                                                                                          to help.

                                                                                                          For more information, see pages 61 to 62.
             15:28
                                  15:34                                                                  15:50                               16:07                               16:19
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                     16:35                               16:44                               16:55                               17:09                                17:21
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                                                                                                          On the beach in the afternoon
                                                                                                          – you’ve got enough cash.
                                                                                                          Shopping in the evening –
                                                                                                          you’ve got enough cash.
                                                                                                          Later on in the hotel bar,
                                                                                                          you’ve still got enough... Ok,
                                                                                                          so what’s new about that?
                                                                                                          The fact that you can now
                                                                                                          access your money at no
                                                                                                          charge worldwide.




                                                                                                          Cash withdrawals free of charge have long
                                                                                                          been available to comdirect customers at
                                                                                                          7,000 ATMs in Germany. And this service is
                                                                                                          now available at a further 900,000 ATMs
                                                                                                          in over 100 countries. With our fee-free
                                                                                                          ec/Maestro and VISA cards, investors on
                                                                                                          the go can access their money at any time
                                                                                                          and anywhere in the world. It’s just as quick
                                                                                                          and easy when it comes to travel money:
                                                                                                          order it online today and your money is de-
                                                                                                          livered by courier within two working days
                                                                                                          – a service available for 47 currencies.

                                                                                                          For more information, see pages 53 to 57.
             17:32
                                  17:45                                                                   17:59                               18:07                               18:19
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                      18:35                               18:44                               18:55                               19:12                               19:21
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                                                                                                          So why have we made it
                                                                                                          possible for you to do more
                                                                                                          and more of your banking
                                                                                                          with us online? Because
                                                                                                          we think that you’ve better
                                                                                                          things to do with your time
                                                                                                          than fill in forms.




                                                                                                          If you want your ideas to be on target, you
                                                                                                          don’t just need to know what products your
                                                                                                          customers want, you also have to know what
                                                                                                          irritates them: excessive paperwork for ex-
                                                                                                          ample. This is why we have made our direct
                                                                                                          banking even easier to use. Customers want-
                                                                                                          ing to check their bank balances 24 hours
                                                                                                          a day, issue indemnification orders online or
                                                                                                          conduct money transfers using mainly auto-
                                                                                                          mated systems and who still expect quick
                                                                                                          service rather than having to wait around are
                                                                                                          likely to get in touch with us sooner or later.
                                                                                                          We’d put money on it.


                                                                                                          For more information, see pages 53 to 57.
       19:23                               19:31                               19:37                               19:46
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            20:02                               20:15                               20:27                               20:38                               20:46
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                                                                                                          Aggressive? Defensive? A
                                                                                                          mixture of the two? What-
                                                                                                          ever strategy you pursue,
                                                                                                          it’s essential to maintain an
                                                                                                          overview so you can imme-
                                                                                                          diately spot the best move to
                                                                                                          make.




                                                                                                          To ensure our customers don’t have a hard-
                                                                                                          er time than necessary when making their
                                                                                                          investment decisions, comdirect presents
                                                                                                          its complex product spectrum as concisely
                                                                                                          as possible. This is because it’s not just the
                                                                                                          varied range that counts, but being able to
                                                                                                          find the right choice straight away. This is
                                                                                                          where our website excels – taking all inves-
                                                                                                          tor types, from conservative to risk-tolerant,
                                                                                                          from newbie to stock market professional,
                                                                                                          quickly and directly to the desired product.
                                                                                                          Our range includes leading offerings such as
                                                                                                          our FondsDiamanten selection: a considered
                                                                                                          and continually optimised choice of 15 top
                                                                                                          funds covering every investment focus re-
                                                                                                          quired for a start-up investment – all avail-
                                                                                                          able with no front-end load.

                                                                                                          For more information, see pages 53 to 57.
           20:59                               21:05
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                     21:43                               22:12                               22:48                               23:11                               23:19
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                                                                                                          Why is it that some people
                                                                                                          aren’t happy to sit back and
                                                                                                          relax at the end of a success-
                                                                                                          ful day? Because they know
                                                                                                          that great efforts lead to great
                                                                                                          rewards.




                                                                                                          Being a top performer all the time is a mat-
                                                                                                          ter of course for comdirect bank. So how do
                                                                                                          we achieve this? Using customer surveys,
                                                                                                          market monitoring and our own innovative
                                                                                                          forums for example, we identify trends at
                                                                                                          an early stage and turn these into products
                                                                                                          and services that offer maximum customer
                                                                                                          benefit. The number of renowned awards
                                                                                                          and high rankings we have achieved in com-
                                                                                                          parative tests confirm that we are making
                                                                                                          very good progress here, as do our overall
                                                                                                          customer satisfaction figures, which are the
                                                                                                          highest ever in the bank’s history.

                                                                                                          For more information, see pages 53 to 57.
> The share
Overall, comdirect bank performed well in 2007, a year marked by turbulence in the stock
markets which pushed some banking and secondary stocks into negative territory. Taking into
account the record dividend, the shareholder value rose by 5.7%.


The development trend in German equities varied signifi-
                                                                                  > Outperformance due to record dividend
cantly in 2007. After reaching an all-time high in July, the
DAX gained 22.3% over the course of the year to stand at
                                                                                  comdirect bank’s shares performed very well in the first
8,067.32 points. Volatility was notably greater than in the
                                                                                  quarter, outstripping the comparable indices. In the second
previous year as a result of the high level of nervousness
                                                                                  quarter, the share price reached its highest value for approxi-
in the market. While TecDAX stocks overtook the DAX with
                                                                                  mately six years at €13.28. Following the annual general
a rise of 30.2%, secondary stocks in the traditional sectors
                                                                                  meeting, there was a significant correction in the share price
were unable to keep pace. At the end of the year, the MDAX
                                                                                  which was essentially due to the technical effect of the ex-
was only up 4.9% year-on-year, while the SDAX lost as
                                                                                  dividend markdown. With a presence of 85.72% in terms of
much as 6.8%. Activity in the subprime segment in the US
                                                                                  the shares issued, the shareholders approved the record dis-
mortgage market and the resulting market dislocations also
                                                                                  tribution of €1.40 per share, including the special dividend
affected financial stocks and the Prime Banks Performance
Index fell by 8.7%.




Development of share price of comdirect share 29.12.2006 to 28.12.2007 (in €)


 14                                          H 13.28



12



10


       9.23
  8
                                                                                             L 7.95                                      8.36

  6
              Jan        Feb        March        April       May           June    July      Aug       Sept       Oct       Nov       Dec

      comdirect share                                                                                                                Source: Bloomberg

      SDAX (normalised to the comdirect share price as of year-end 2006)



24
                                                                                                                           The share •




of €1.00. Consequently, a total of €197.2m was paid out to               XETRA and 12.3% on the Frankfurt stock exchange. This con-
shareholders in comdirect bank in the second quarter.                    siderably livelier trading reflects the sustained high level of
                                                                         interest in comdirect shares on the part of institutional and
In the third and fourth quarters, bank stocks came under                 private investors.
pressure because of the turmoil in the credit and finance
markets. This development also affected comdirect shares,
although growth in money market interest rates and wider                 > Investor Relations: timeliness,
credit spreads as well as the increased trading activity re-               transparency and intensive contact
sulting from greater volatility impacted very positively on
earnings at comdirect bank. The share closed the year at                 We continued our intensive contact with investors and ana-
€8.36, down 9.4% on the previous year. Nevertheless, tak-                lysts in financial year 2007. The Board of Managing Direc-
ing account of the record dividend, comdirect shareholders               tors outlined comdirect bank’s growth strategy and business
achieved a total shareholder return (TSR) of 5.7%, or €0.53              development at a large number of roadshows and inves-
per share. Consequently comdirect shares outperformed the                tors’ and analysts’ conferences in Germany and abroad.
trend in the SDAX Performance Index.                                     Highlights included a roadshow and participation in the well
                                                                         attended ESN European MidCap Conference in New York,
                                                                         two roadshows in London, our presentation at the Cheu-
> Significantly higher trading volumes                                   vreux German Corporate Conference and participation in the
  signal interest among investors                                        German Mid & Small Cap Financial Seminar held by Dresdner
                                                                         Kleinwort. We gave a presentation to a very large audience
At the end of 2007, the market value of comdirect bank                   at the German Equity Forum in Frankfurt in November 2007.
stood at €1.18bn. Of this, €241m was attributable to free                In addition, we held many individual meetings alongside
float. This market capitalisation puts comdirect bank in the             these conferences.
middle of the SDAX. The trading volume increased signifi-
cantly compared to 2006. On average, 233,239 units were                  We also stepped up our contact with private investors.
traded a day, a rise of 40.5% compared to the 23.0% in-                  Around 800 shareholders attended the annual general
crease in the SDAX. Of this turnover, 83.6% were traded on               meeting in Hamburg on 3 May 2007. With a presence of




comdirect share – daily turnover 2007 (in 1,000 units)




                                                                                   451.8


                                            347.1

                     261.0                               252.5                                242.2
                                 197.6                                                                  209.6
                                                                         167.2                                    181.9
           156.1                                                 162.2                                                      160.7




            Jan       Feb        March       April       May     June     July      Aug       Sept       Oct       Nov       Dec

   XETRA                   Average 2006                                                                                     Source: Bloomberg

   Frankfurt
   Other stock exchanges

                                                                                                                                         25
85.72% in terms of the shares issued, the proposals of the     magazin’s “Best Annual Report” contest, comdirect bank’s
management were adopted with majorities of between             report ranked second out of the listed German banks and
99.97% and 99.99% in each case. The speeches by the CEO        third in the European comparison of financial services provid-
and the Chairman of the Supervisory Board were broad-          ers. In January 2008, comdirect bank came third in the SDAX
cast live on our website. Shareholders were able to exercise   in a reader survey by investor magazine Börse Online on
their voting rights by granting a proxy electronically ahead   the “Best Investor Relations in Germany” (BIRD) and second
of the annual general meeting.                                 among the financial services providers.

The analysts’ conference on 13 February 2007 for the presen-
tation of the annual figures for 2006 was broadcast live on
the internet. The conference resulted in a large number of     > Data and key figures of the share
updates by analysts monitoring the stock. comdirect bank
also conducted a conference call when each interim report         German Securities code no.          542 800
                                                                  ISIN code                           DE0005428007
was published. All the presentations and conference record-
                                                                  Stock-exchange code                 COM
ings are available on our website as on-demand versions.
                                                                                                      Reuters: CDBG.DE
                                                                                                      Bloomberg: COM GR
In financial year 2007, we were again well within the pub-        Stock-exchange segment              SDAX
lication deadlines recommended by the German Corporate            Number of shares issued             141,220,815 no-par-value shares
Governance Code. The full annual report for 2006 was pub-         Designated sponsor                  Commerzbank AG
                                                                  Shareholder structure               79.59% Commerzbank AG 1)
lished on 14 March 2007 and each of the interim reports
                                                                                                      20.41% Free float
around three weeks after the reporting date. The extended
reporting requirements under the Transparency Direc-              Performance 2007
tive Implementation Act have been complied with on the            Average daily turnover in units
basis of the German Accounting Standards. In addition to                                              XETRA                        194,888
the financial reports, comdirect bank also published its key                                          Frankfurt                     28,655
                                                                                                      Other stock exchanges          9,696
operating figures – customer numbers, trades, development
                                                                                                                                   233,239
of major products and assets under custody – every month.
These reports provided investors with information on these        Opening quotation XETRA (2.1.2007)                                 €9.40
main value drivers just five banking days after the start of      Highest price XETRA (10.4.2007) 2)                                €13.28
each month.                                                       Lowest price XETRA (16.8.2007) 2)                                  €7.95
                                                                  Closing quotation XETRA (28.12.2007)                               €8.36
                                                                  Market cap (28.12.2007)                                       €1,180.6m
In financial year 2007 we again received very good marks
for our active Investor Relations and timely and transpar-
                                                                  Key figures per share in 2007
ent capital market communications. comdirect bank came            Earnings per share            in €                                   0.41
fourth among the SDAX companies in the Investor Relations         Dividend per share            in €                                   0.413)
Awards run by financial magazine Capital. We were one of          Dividend yield 4)                   in %                              4.9
the few companies whose Investor Relations was rated as           P/E ratio 5)                                                         20.4

“very good”. Less than one fifth of the total of 194 compa-       1) Indirectly
                                                                  2) Daily closing quotation
nies from the main selection indices reviewed achieved this       3) Dividend proposal
                                                                  4) Based on dividend proposal and closing quotation at year-end
result. The quality of the financial communications carried       5) Price/earnings ratio, based on closing quotation at year-end and net
out by the main German and European companies was rated              profit

by more than 450 analysts and fund managers. In manager




26
                                                                                                                                                    The share •




Key figures of comdirect bank share

                                                                          2007                   2006                  2005                 2004          2003
Earnings per share                            €                            0.41                   0.40                  0.24                0.24           0.17
Dividend per share                            €                            0.41    1)
                                                                                                  1.40   2)
                                                                                                                        0.24                0.24           0.16


Opening quotation                             €                            9.40                   8.10                  7.20                7.35           2.79
Highest price 3)                              €                          13.28                  10.75                   8.13                9.50           8.48
Lowest price 3)                               €                            7.95                   7.45                  5.57                5.04           2.63
Closing quotation                             €                            8.36                   9.23                  7.96                7.16           7.33


Number of shares                                                 141,220,815            140,824,172           140,761,088            140,507,750    140,503,350
Market capitalisation 31.12.                  € million                1,180.6                1,299.8               1,120.5               1,006.0       1,029.9


Performance                                   %                            – 9.4                  16.0                  11.2                – 2.3         181.9
TSR 4)                                        %                              5.7                  19.0                  14.5                – 0.1         181.9
Dividend yield     5)
                                              %                              4.9                  15.2                    3.0                 3.4           2.2
P/E ratio   6)
                                                                           20.4                   23.1                  33.2                29.8           43.1


XETRA trading volume 7)                                               194,888                140,120               122,394                99,382        80,369
Frankfurt trading volume     7)
                                                                        28,655                19,113                 20,890               26,007        28,683

1) Dividend proposal
2) Including special dividend
3) Daily closing quotation
4) Total shareholder return: Sum of the share price gain and dividend in relation to the share price as of the end of the previous year
5) Based on the dividend proposal and closing quotation at year-end
6) Price/earnings ratio, based on closing quotation at year-end and net profit
7) Average daily turnover in units




                                                                                                                                                             27
> Corporate Governance
                                                              We implement the recommendations of the German Cor-
> Responsible company management
                                                              porate Governance Code (GCGC), last amended on 14 June
                                                              2007, with only two exceptions. We also largely comply
Management and control of comdirect bank comply with in-
                                                              with the suggestions of the Code, which has established
ternationally accepted high standards. The key features are
                                                              itself as the benchmark for assessment of good corporate
                                                              governance at German listed companies.
•	 cooperation based on trust between the Board of Manag-
   ing Directors and the Supervisory Board which exercises
                                                              In the report of the Supervisory Board (see page 29), the
   its control function efficiently and independently,
                                                              bank’s supervisory body renders account of its activities
•	 focus on shareholder interests at all times,
                                                              during the financial year and reports on the results of its
•	 responsible and effective risk management,
                                                              examination of the annual financial statements and the au-
•	 monitoring of and compliance with legal requirements
                                                              dit reports. In the joint Corporate Governance Report (see
   and supervisory regulations as well as
                                                              page 32), the Supervisory Board and the Board of Manag-
•	 timely and transparent communication both internally
                                                              ing Directors explain the measures taken to implement the
   and outside the company.
                                                              GCGC in financial year 2007 as well as any deviations from
                                                              the recommendations and suggestions. In addition, the re-
These principles are enshrined in all areas of the bank and
                                                              port also deals with the implementation of new statutory
determine the framework parameters for strategic decisions
                                                              requirements. In the Compensation Report (see page 36),
and business policy.
                                                              the Board of Managing Directors and the Supervisory Board
                                                              outline the compensation system and give a breakdown of
                                                              the overall compensation received by the Board of Manag-
                                                              ing Directors and the Supervisory Board in the financial year.
                                                              The compensation report was reviewed by the auditor and
                                                              is part of the group management report.




28
                                                                                                    Corporate Governance •




> Report of the Supervisory Board


> Cooperation between the Board                                 > Main focus in 2007
  of Managing Directors and the
  Supervisory Board                                             As in the previous year, the Supervisory Board met at four
                                                                regularly convened meetings in financial year 2007 on
                                                                2 March, 3 May, 13 August and 9 November 2007.
The Supervisory Board worked in close partnership with the
Board of Managing Directors of comdirect bank AG during
                                                                The central topic was the progress of the comvalue growth
financial year 2007, providing regular advice and monitor-
                                                                programme. After in-depth discussions, we agreed to fur-
ing the management of the company. We have compre-
                                                                ther measures to propel customer growth utilising the fa-
hensively carried out all the duties incumbent upon the Su-
                                                                vourable market situation. The Board of Managing Directors
pervisory Board under the legal framework conditions, the
                                                                updated us on the programme’s implementation at regular
bank’s Articles of Association and the GCGC.
                                                                intervals. We were also informed of the status of comdirect’s
                                                                IT strategy and the conclusion of the transaction to acquire
The Board of Managing Directors provided us with regular
                                                                the customer portfolio from American Express Bank.
written and oral reports on the situation and development
of comdirect bank AG and its subsidiary, comdirect private
                                                                In addition, we were informed by the Board of Managing
finance AG. We requested full and timely reports on all
                                                                Directors of comdirect bank AG on the performance of key
major business transactions, fundamental issues of business
                                                                indicators and their impact on the bank’s earnings situation,
policy, management and corporate planning. We discussed
                                                                financial situation and assets. We also monitored the gen-
the status of their implementation with the Board of Man-
                                                                eral competitive environment.
aging Directors at regular intervals.

                                                                As part of the debate on the medium-term strategy, we
We were directly involved in all company decisions of vi-
                                                                examined the assumption of intermediary activities in prop-
tal importance, including all measures which may signifi-
                                                                erty finance in detail which we noted with approval.
cantly affect comdirect bank’s earnings situation, financial
situation and assets. As part of our monitoring and control
                                                                The Supervisory Board discussed the risk management and
function, all documents submitted or presented to us have
                                                                risk situation of the bank in depth at several meetings. The
been checked for plausibility and questions on material
                                                                main areas were the current credit risk situation and the
issues have been followed up with the relevant comdirect
                                                                credit risk strategy in line with the minimum requirements
bank contact persons, particularly the Board of Managing
                                                                for risk management (MaRisk). In light of the dislocations
Directors.
                                                                in the capital markets, the Board of Managing Directors in-
                                                                formed us in particular about the current market risk and
In addition, the Chairman of the Supervisory Board was con-
                                                                credit risk position in the Treasury portfolio. We also looked
tinuously given detailed information on all events that were
                                                                at the further development of the bank’s risk manage-
of significant importance for the assessment of the situation
                                                                ment.
and development as well as for the management of the
company. He maintained frequent contact with the CEO and
                                                                Furthermore, the Supervisory Board resolved by means of a
conferred with him on the strategy, business development
                                                                written ballot the amendment of the Articles of Association
and risk management of comdirect bank. He has had sight
                                                                as a result of the change in share capital and conditional
of all minutes of the meetings of the Board of Managing
                                                                capital following the exercise of stock options in 2006. The
Directors and arranged for important matters to be ad-
                                                                Supervisory Board also took note of the Corporate Govern-
dressed by the Supervisory Board committees.
                                                                ance Report 2006 using this written circulation procedure.




                                                                                                                           29
                                                                The Audit Committee of the Supervisory Board held one
> Efficiency of Supervisory Board
                                                                meeting during the reporting year on 2 March 2007. At this
  activities
                                                                meeting, the Audit Committee dealt with the preliminary ex-
                                                                amination of the financial statements and dependency report
As we review the efficiency of the Supervisory Board’s
                                                                as well as the independence of the commissioned auditors
activities on an annual basis, following the extensive ef-
                                                                for the company and group accounts. The Audit Committee
ficiency review in the previous year, we examined the cur-
                                                                also requested reports on the main findings in the overall
rent status in the Supervisory Board meeting in March 2007.
                                                                review report by Internal Audit for financial year 2006.
In the Supervisory Board activities were again judged by
the members to be efficient. To prepare the comprehen-
                                                                By means of a written ballot procedure, the Audit Com-
sive efficiency review on 6 March 2008, we decided in the
                                                                mittee approved the commissioning of Pricewaterhouse-
meeting on 9 November 2007 to carry this out by means of
                                                                Coopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
a questionnaire.
                                                                Frankfurt/Main, Hamburg branch with tax advisory services
                                                                for financial years 2007 and 2008.
The Corporate Governance Officer provided a comprehen-
sive report to the Supervisory Board and prepared the Dec-
                                                                The Presiding Committee adopted resolutions exclusively
laration of Compliance from the Board of Managing Direc-
                                                                by means of a written ballot in the reporting year. These
tors and the Supervisory Board in accordance with Section
                                                                included setting the variable compensation for the Board
161 of the German Stock Corporation Act (AktG). This was
                                                                of Managing Directors, which was also discussed in a con-
approved at our meeting on 6 March 2008.
                                                                ference call, as well as the approval of an intended loan
                                                                granted to Commerzbank AG.
There were no conflicts of interest among Supervisory Board
members as defined by Section 5.5 GCGC in financial year
                                                                A detailed report of activities of the committees was provid-
2007. At the recommendation of the Audit Committee, the
                                                                ed at the full Supervisory Board meeting. The Supervisory
Supervisory Board commissioned the auditors elected by the
                                                                Board has not formed any committees other than the Pre-
annual general meeting on 3 May 2007, Pricewaterhouse-
                                                                siding Committee and Audit Committee.
Coopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
Frankfurt/Main, Hamburg branch, to conduct the audit for
financial year 2007. We have obtained a certificate of inde-
                                                                > Approval of the financial statements
pendence from the auditors. There are no business, financial,
personal or other relations between the auditors and their
                                                                  and dependency report
executive bodies on the one hand and comdirect bank and
its Board members on the other, which could give rise to        The financial statements of comdirect bank AG (according
doubts with regard to their independence.                       to the German Commercial Code, HGB), the management
                                                                report of comdirect bank AG (according to the German Com-
                                                                mercial Code, HGB) and the consolidated financial state-
> Activities of the committees                                  ments and group management report (according to IFRS/
                                                                IAS), including the underlying book-keeping for financial
As in the previous year, we referred some matters to be dealt   year 2007, have been examined by the auditors and issued
with to the Presiding Committee and Audit Committee for         with an unqualified certification. The above documentation,
a final decision in order to improve the efficiency of Super-   the audit reports and the proposal of the Board of Managing
visory Board activities and to deal with complex matters.       Directors for appropriation of the distributable profit were
                                                                made available to the members of the Supervisory Board in
                                                                good time. The auditors who signed the financial statements
                                                                took part in the meeting of the Audit Committee on 6 March




30
                                                                                                      Corporate Governance •




2008 and the subsequent meeting of the Supervisory Board         sented accurately and that the measures taken by the Board
dealing with the approval of the annual accounts. They re-       of Managing Directors according to Section 91 (2) of the
ported on the key findings of the audit and answered ques-       German Stock Corporation Act (AktG) are conducive to the
tions. The result of the audit was discussed thoroughly with     early detection of developments that are likely to threaten
the Audit Committee. The Audit Committee then proposed           the continued existence of the company.
to the Supervisory Board that the financial statements be
approved. The Supervisory Board has acknowledged the
results of the audit. Within the scope of the legal provi-       > Changes in the Board of
sions, it has examined the financial statements and man-           Managing Directors
agement report, the consolidated financial statements and
group management report and the proposal of the Board            The Supervisory Board appointed Torsten Daenert to the Board
of Managing Directors for the appropriation of the distri-       of Managing Directors with effect from 1 January 2007. He
butable profit and raised no objections. In its meeting on       is responsible for Product Management, Treasury and Insti-
6 March 2008, the Supervisory Board approved the financial       tutional Business. Previously he was the Business & Product
statements and the consolidated statements prepared by           Development divisional manager in charge of Corporate De-
the Board of Managing Directors. Accordingly, the financial      velopment, Product Management and Treasury at comdirect
statements are to be regarded as adopted. The Supervisory        bank AG. Following the appointment of the third member to
Board endorses the proposal for appropriation of the dis-        the Board, the Managing Directors have reallocated respon-
tributable profit. Furthermore, the report of the Board of       sibilities. The CEO, Dr. Andre Carls is responsible for Business
Managing Directors on the bank’s relationship with affili-       Development, Sales & Marketing, Customer Services and
ated companies was submitted to the Supervisory Board to-        Corporate Communications, while Karin Katerbau heads up
gether with the associated auditors’ report. The Supervisory     Finance, Controlling & Organisation, IT, HR & Risk Manage-
Board examined and approved the report of the Board of           ment and Internal Audit as well as comdirect private finance
Managing Directors and also agreed with the findings of the      AG as the Chairman of its Supervisory Board.
auditors’ examination.

After completing the examination, the auditors raised no         > Thanks for excellent performance
objections to the report of the Board of Managing Direc-
tors and gave it the following unqualified certificate: “After   We would like to thank the members of the Board of Man-
conducting our audit in accordance with the professional         aging Directors and all employees of comdirect bank for
standards, we confirm that the actual details of the report      their commitment and performance in financial year 2007.
are accurate and the fees paid by the company for the legal      We would like to thank the staff council for their construc-
transactions detailed in the report were not disproportion-      tive cooperation at all times.
ately high.”
                                                                 Frankfurt, 6 March 2008
After completing the examination, the Supervisory Board          The Supervisory Board
finds no cause for objection to the concluding statement by
the Board of Managing Directors in the report concerning
the relationship with affiliated companies.

As part of the audit, the auditors also assess whether the
Board of Managing Directors has implemented a monitoring
system and has fulfilled the legal requirements concern-
ing the early detection of risks that are likely to threaten
the existence of the company. The auditors have confirmed
that the risks described in the management report are pre-



                                                                                                                              31
> Corporate Governance at comdirect bank AG

Joint report by the Supervisory Board and Board of Managing Directors of comdirect bank AG
pursuant to Section 3.10 of the German Corporate Governance Code.

At comdirect bank, corporate governance and control con-        In Section 4.2.2, the Code recommends that, at the pro-
form to the prevailing legal framework conditions and, unless   posal of the committee in charge of contracts for the mem-
expressly noted otherwise in the Declaration of Compliance,     bers of the Board of Managing Directors, the Supervisory
the requirements of the GCGC. In our opinion, the catalogue     Board should discuss and regularly review the structure of
of recommendations and suggestions that has been amend-         the compensation system for the Board of Managing Direc-
ed and extended several times over the past years also sets     tors. comdirect bank, however, regards the regular informa-
a high standard by international comparison.                    tion provided to the full Supervisory Board by the Presiding
                                                                Committee as sufficient. For reasons, including our will to
                                                                increase efficiency, we are of the opinion that the stipu-
> Explanations to the new version                               lation and regular review of the compensation structure
  of the Code                                                   should continue to be a task of the Presiding Committee,
                                                                which is generally responsible for contracts for members of
                                                                the Board of Managing Directors.
With effect from 14 June 2007, several sections of the code
have been extended and amended in line with the prevail-
                                                                We do not comply with the new recommendation in Section
ing legal framework conditions, for example the new trans-
                                                                5.3.3, regarding the formation of a Nomination Committee.
parency regulations under the Transparency Directive Imple-
                                                                As the Supervisory Board of comdirect bank comprises only six
mentation Act.
                                                                members in total, four of whom are shareholder representa-
                                                                tives, we consider it unnecessary to form a separate commit-
Section 5.3.3 includes a new recommendation that the
                                                                tee from this small group. Moreover, in our opinion the desired
Supervisory Board should form a Nomination Committee
                                                                improvement in transparency for the election procedure can
comprised solely of representatives of the shareholders and
                                                                be achieved through the full Supervisory Board.
proposes suitable candidates to the Supervisory Board for
their proposals to the annual general meeting.
                                                                We comply with the non-obligatory suggestions of the GCGC
                                                                (“should” and “can” provisions) with only a few exceptions.
With regard to the compensation of the Board of Manag-
                                                                The deviations arise where implementation of the corre-
ing Directors, the Code suggests that the payments in the
                                                                sponding suggestions does not appear reasonable in comdi-
event of premature termination of the activity of individual
                                                                rect bank’s specific situation or where the additional benefit
members of the Board of Management without good cause
                                                                to shareholders appears doubtful.
should not exceed the value of two years’ annual compen-
sation or cover more than the remaining term of the contract
                                                                Section 2.3.3: The Code suggests that the representative
(settlement cap). It is also suggested that the corresponding
                                                                to exercise shareholders’ voting rights appointed by the
payment commitment in the event of a change in control
                                                                company should be contactable during the annual gener-
amount to a maximum of 150% of the settlement cap.
                                                                al meeting. The main reason for this is that because the
                                                                discussion is broadcast on the internet, shareholders could
                                                                change their voting behaviour at short notice. As a result of
> Implementation of the Code
                                                                the limitation of the broadcast as described in the following
  recommendations and suggestions                               (Section 2.3.4), comdirect bank does not comply with this
                                                                suggestion.
comdirect bank complies with the recommendations of the
GCGC in its current version with two exceptions, which re-      Section 2.3.4: The broadcast of the annual general meeting
late to the Supervisory Board and its committees.               via the internet suggested by the Code is limited by com-
                                                                direct bank to the speeches by the CEO and the Chairman
                                                                of the Supervisory Board. We are of the opinion that the

32
                                                                                                        Corporate Governance •




internet does not currently represent a suitable medium for
                                                                   > Compliance
broadcasting a discussion that generally lasts several hours.

                                                                   In October 2007, the Board of Managing Directors of com-
Section 3.6: The Code suggests that in supervisory boards
                                                                   direct bank adopted a Compliance Policy, thereby docu-
with codetermination, representatives of the sharehold-
                                                                   menting the permanence, effectiveness and independence
ers and of the employees should prepare the supervisory
                                                                   of the Compliance function at comdirect bank (Compliance
board meetings separately. In–depth exchanges take place
                                                                   Office) as well as the responsibilities, rights and obligations.
in the Supervisory Board of comdirect bank, we consider
                                                                   In this regard, the head of the Legal/Compliance division as
such preparations to be unnecessary. Meetings will only be
                                                                   well as the Money Laundering/Corporate Governance Of-
prepared separately when required.
                                                                   ficer for comdirect bank, Dietmar Gabor, was also appointed
                                                                   the Compliance Officer for the bank.
Section 5.4.6: The Code suggests that the election or re-
election of members of the Supervisory Board is to be car-
                                                                   The duties of the Compliance Office headed by the Compli-
ried out at different times and for different periods of office.
                                                                   ance Officer include the prevention of money laundering,
The usefulness of such a provision is debatable; we are of
                                                                   insider and market manipulation as well as bribery and cor-
the opinion that the efficiency of the Supervisory Board’s
                                                                   ruption. Moreover, the Compliance Office ensures compli-
function is increased if the same members work together
                                                                   ance with securities trading regulations and data protection
for several years. Members of the Supervisory Board are
                                                                   legislation. The Compliance Officer reports to the Board of
therefore newly elected at one date and for a matching
                                                                   Managing Directors and the Supervisory Board at least once
period of time.
                                                                   a year and is also the contact point for regulatory authorities
                                                                   and other official bodies.
Section 5.4.7: Contrary to the suggestion in the Code, per-
formance-related compensation of the Supervisory Board
                                                                   In financial year 2007, comdirect bank complied with all the
does not contain a component that relates to the long-term
                                                                   material Compliance regulations.
success of the company, but is tied to the possible payment
of a dividend. In line with trends in jurisprudence, we con-
sider the differing calculation basis for performance-related
                                                                   > Shareholders and the
components for the compensation of the Board of Manag-
                                                                     annual general meeting
ing Directors and the Supervisory Board to be appropriate.

                                                                   The annual general meeting was held on 3 May 2007 at
The current Declaration of Compliance adopted on 6 March
                                                                   the Chamber of Commerce in Hamburg and 85.72% of the
2008 at the accounts meeting of the Supervisory Board is
                                                                   share capital was represented. comdirect bank had made all
available on the company website at www.comdirect.de/ir.
                                                                   the necessary reports and documentation available in ad-
Previous versions of the Declaration of Compliance as well
                                                                   vance, including on its website. All the items on the agenda
as the Corporate Governance Report and Compensation Re-
                                                                   for resolution were largely passed by majorities of consider-
port for financial year 2007 and previous years, the Articles
                                                                   ably over 99.9%. The results of the votes can be viewed on
of Association and the full German Corporate Governance
                                                                   our website.
Code can be viewed here. In addition, the website includes
information on the latest changes to our Corporate Govern-
                                                                   The Chairman of the Supervisory Board outlined the com-
ance standards.
                                                                   pensation system of the Board of Managing Directors to the
                                                                   annual general meeting. The speeches by the Chairman of
In financial year 2007, there were no deviations from the
                                                                   the Supervisory Board and the CEO were broadcast on the
Declaration of Compliance applicable for this period. There
                                                                   internet. It was also possible to exercise votes via electronic
were no conflicts of interest.
                                                                   proxy voting ahead of the general meeting.

The current version of the Articles of Association and the
Rules of Procedure for the Boards correspond to all require-
ments of the Code.

                                                                                                                                33
                                                                tions for both the consolidated financial statements and the
> Transparency and timeliness
                                                                quarterly reports once again. In addition, comdirect publish-
                                                                es the key indicators for its operating business on a monthly
We complied with all the recommendations of the GCGC on
                                                                basis, making it a pioneer in the financial services industry.
transparency in financial year 2007 and with regard to the
publication deadlines, clearly exceeded the recommenda-



> Directors’ dealings

In financial year 2007, the following notifiable acquisition and disposal transactions were carried out by Board members and
other executives of comdirect bank AG:

Date         Name                     Position               Type of transaction            Price €       No.      Amount €
14.02.2007   Lutz Brunke              Other executive        Sale under stock option
                                                             programme                       10.80      1,250       13,500.00
15.02.2007   Richard Welge            Other executive        Sale under stock option
                                                             programme                       11.25         40         450.00
15.02.2007   Richard Welge            Other executive        Sale under stock option
                                                             programme                       11.22        454        5,093.88
15.02.2007   Richard Welge            Other executive        Sale under stock option
                                                             programme                       11.20        519        5,812.80
15.02.2007   Richard Welge            Other executive        Sale under stock option
                                                             programme                       11.21        237        2,656.77
21.02.2007   Dr. Olaf Jäger-Roschko   Other executive        Sale under stock option
                                                             programme                       11.47      1,000       11,470.00
04.05.2007   Stefan Homp              Other executive        Sale under stock option
                                                             programme                       11.85      1,548       18,343.80
04.05.2007   Dr. Olaf Jäger-Roschko   Other executive        Sale under stock option
                                                             programme                       11.87      1,000       11,870.00
07.05.2007   Carsten Strauß           Other executive        Sale under stock option
                                                             programme                       11.72        800        9,376.00
07.05.2007   Carsten Strauß           Other executive        Sale under stock option
                                                             programme                       11.70      1,050       12,285.00
15.05.2007   Lutz Brunke              Other executive        Sale under stock option
                                                             programme                       11.30      1,000       11,300.00
24.05.2007   Lutz Brunke              Other executive        Acquisition through exercise
                                                             of stock options                6.048      6,500       39,312.00
24.05.2007   Dr. Andre Carls          CEO                    Acquisition through exercise
                                                             of stock options                5.815     27,500     159,912.50
24.05.2007   Dr. Andre Carls          CEO                    Acquisition through exercise
                                                             of stock options                6.048      7,500       45,360.00
24.05.2007   Stefan Homp              Other executive        Acquisition through exercise
                                                             of stock options                5.815      6,500       37,797.50
24.05.2007   Stefan Homp              Other executive        Acquisition through exercise
                                                             of stock options                6.048      6,500       39,312.00
24.05.2007   Dr. Olaf Jäger-Roschko   Other executive        Acquisition through exercise
                                                             of stock options                5.815      6,500       37,797.50
24.05.2007   Dr. Olaf Jäger-Roschko   Other executive        Acquisition through exercise
                                                             of stock options                6.048      6,500       39,312.00




34
                                                                                                       Corporate Governance •




Date         Name                     Position                Type of transaction            Price €        No.     Amount €
24.05.2007   Karin Katerbau           Member of the Board     Acquisition through exercise
                                      of Managing Directors   of stock options                5.815      17,500    101,762.50
24.05.2007   Karin Katerbau           Member of the Board     Acquisition through exercise
                                      of Managing Directors   of stock options                6.048       5,000     30,240.00
24.05.2007   Carsten Strauß           Other executive         Acquisition through exercise
                                                              of stock options                5.815       6,500     37,797.50
24.05.2007   Carsten Strauß           Other executive         Acquisition through exercise
                                                              of stock options                6.048       5,500     33,264.00
24.05.2007   Richard Welge            Other executive         Acquisition through exercise
                                                              of stock options                5.815       6,500     37,797.50
24.05.2007   Richard Welge            Other executive         Acquisition through exercise
                                                              of stock options                6.048       5,000     30,240.00
24.05.2007   Richard Welge            Other executive         Sale under stock option
                                                              programme                       11.63       1,000     11,630.00
25.05.2007   Lutz Brunke              Other executive         Sale under stock option
                                                              programme                       11.33       3,250     36,822.50
25.05.2007   Richard Welge            Other executive         Sale under stock option
                                                              programme                       11.33       5,600     63,448.00
11.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.31       1,000     10,310.00
11.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.32       1,000     10,320.00
11.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.33       1,000     10,330.00
11.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.34       1,000     10,340.00
11.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.35       1,000     10,350.00
12.06.2007   Dr. Olaf Jäger-Roschko   Other executive         Sale under stock option
                                                              programme                       10.48       1,200     12,576.00
13.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.57       1,000     10,570.00
13.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.56       2,000     21,120.00
13.06.2007   Dr. Andre Carls          CEO                     Sale under stock option
                                                              programme                       10.55       2,000     21,100.00
13.06.2007   Dr. Olaf Jäger-Roschko   Other executive         Sale under stock option
                                                              programme                       10.36       1,350     13,986.00
13.06.2007   Dr. Olaf Jäger-Roschko   Other executive         Sale under stock option
                                                              programme                       10.30         150      1,545.00
15.10.2007   Dr. Olaf Jäger-Roschko   Other executive         Sale under stock option
                                                              programme                        9.60         324      3,110.40
15.10.2007   Dr. Olaf Jäger-Roschko   Other executive         Sale under stock option
                                                              programme                        9.61       1,176     11,301.36
06.12.2007   Richard Welge            Other executive         Sale under stock option
                                                              programme                       8.578         900      7,720.20




                                                                                                                           35
> Compensation of the Board of Managing Directors
  and the Supervisory Board
Explanations regarding the structure of the compensation system and compensation of the
Board members as part of the Corporate Governance report.



                                                                  The variable component (bonus) is based on the business
> Compensation of the Board of
                                                                  performance of the company and the attainment of indi-
  Managing Directors
                                                                  vidual targets in the previous financial year. The key fac-
                                                                  tors governing the performance-related component are the
The compensation of the Board of Managing Directors of
                                                                  development of earnings before tax (EBT) as well as the
comdirect bank AG is specified by the Supervisory Board.
                                                                  attainment of defined growth targets. The individual tar-
                                                                  gets are agreed annually between members of the Board
The compensation comprises the following components:
                                                                  of Managing Directors and the Supervisory Board Presiding
a non-performance related fixed compensation, a vari-
                                                                  Committee. At the end of the financial year, the Presiding
able compensation component linked to the profit of the
                                                                  Committee examines the extent to which the targets have
company and personal performance and a component with
                                                                  been achieved and sets the level for the performance-
long-term incentive effect and risk elements. Furthermore,
                                                                  related component.
the members of the Board of Managing Directors receive a
company pension in respect of their activities for comdirect
                                                                  The components with long-term incentive effect and risk
bank AG. All compensation components are appropriate
                                                                  elements in financial year 2007 are based on the Long Term
both individually and as a whole.
                                                                  Incentive Programme (LTIP), the model replacing the stock
                                                                  option programme (see note 26 on page 102).
The non-performance related fixed compensation comprises
an annual fixed salary plus benefits. The annual fixed sal-
                                                                  As beneficiaries under the LTIP, members of the Board of
ary for members of the Board of Managing Directors is set
                                                                  Managing Directors have received an allocation of virtual,
for the entire term of their respective contract of employ-
                                                                  non-tradable shares (performance shares) in yearly tranches
ment and is paid in twelve monthly instalments. The sal-
                                                                  since 2005. These comprise the conditional right to a cash
ary is based on the current economic position and future
                                                                  payout after a three-year waiting period. The amount of cash
prospects of the bank as well as on the level of compensa-
                                                                  payment per performance share depends on the extent to
tion paid in a comparable environment. In addition to the
                                                                  which the original performance targets were achieved and
fixed salary, the members of the Board of Managing Direc-
                                                                  the share price at the end of the waiting period.
tors receive fringe benefits in the form of payments in kind
which essentially comprise the use of a company car and
                                                                  The performance targets defined at the start of the plan are
the payment of insurance premiums as well as taxes and
                                                                  based on the total shareholder return (TSR), a key indicator
social security contributions attributable to these. The actual
                                                                  which, in addition to share price performance, also takes
amount varies according to the individual situation of the
                                                                  account of the dividends paid during the waiting period.
respective member of the Board of Managing Directors. Fur-
thermore, the Commerzbank Group maintains a D&O policy
                                                                  The number of performance shares paid out depends in
with deductible. The insurance premium for the Managing
                                                                  equal measure on the TSR outperformance targets com-
Directors and the Supervisory Board members of comdirect
                                                                  pared to the Prime Financial Services Performance Index
amounted to €8 thousand in the reporting year and was paid
                                                                  and the absolute increase in TSR for comdirect shares.
by the company.

No loans or advances were granted in the reporting year.




36
                                                                                                        Corporate Governance •




The hurdles for both performance targets are high. With re-        The volume of LTI components, the LTI target value, for each
gard to TSR outperformance (subset A), the performance             member of the Board of Managing Directors amounts to
shares are only valuable if comdirect shares have performed        25% of the individual basic salary. The individual number of
at least as well as the reference index over the three-year        performance shares is calculated by dividing the LTI target
waiting period. If the comdirect share price including divi-       value and fair value of a performance share as of the date
dends paid has increased in absolute terms in the same             of issue. The fair value of a performance share is determined
period (subset B) by at least 25% compared to the price on         by an outside expert using an option valuation model prior
issue, this subset also becomes valuable.                          to setting up each tranche.

The total payout from the Performance Share Plan is capped.        The overall compensation paid for activities during financial
Should the performance targets set at the start of the plan        year 2007 for the active members of the Board of Manag-
not be achieved, the performance shares lapse at the end           ing Directors amounted to €1,886 thousand (previous year:
of the waiting period. Both subsets comply with the re-            €1,165 thousand). Details on the composition of the overall
quirements of the GCGC.                                            compensation as well as the pensions of the members of
                                                                   the Board of Managing Directors are shown on an individual
The terms and conditions for allocating performance shares,        basis in the following table:
the exercise hurdles and time parameters are listed in the
notes starting on page 103.


€ thousand                          Annual income                 Performance shares        Overall              Pensions
                                                                           granted in     compen-
                                                                        financial year       sation
                            Non-     Value of       Bonus      Number        Value at                  Pension com-          Claims
                         variable    benefits                                 time of                 mitment (DBO)            as of
                                                                                issue                     under IFRS         31.12.
                                                                                                         as of 31.12.
Dr. Andre Carls   2007       263          22         550        9,129              65         900                962        118 p.a.
                  2006       222          25         400         7,048             55         702              1,029         96 p.a.
Karin Katerbau    2007       193          15         300        6,676              47         555                307         68 p.a.
                  2006       157          12         255         4,992             39         463                286         50 p.a.
Torsten Daenert
(from 1.1.2007)   2007       145          11         240        4,983              35         431                 24             18
Total             2007       601          48        1,090      20,788             147       1,886              1,293               –
                  2006       379          37         655        12,040             94       1,165              1,315               –




                                                                                                                                  37
For their work at comdirect bank, the members of the Board       cash benefit of €27 thousand accrued to Karin Katerbau
of Managing Directors receive a pension entitlement. Dr.         from exercising 5,000 options received as head of division.
Andre Carls and Karin Katerbau will receive ongoing pension      The remaining options can still be exercised under certain
payments with the occurrence of the event giving rise to         preconditions up until 2009. The terms and conditions of
benefits, while Torsten Daenert will be eligible for a claim     the stock option programme are explained in detail in the
on a capital payment. The company has recognised pension         notes to the consolidated accounts on page 102. A detailed
provisions for these future claims on the basis of IFRS, the     presentation of the long-term incentive components can be
level of which depends on the number of service years, the       found in the notes on page 103.
pensionable salary and the current calculatory interest rate.
These are calculated as present values of vested rights on       Members carrying out board functions at subsidiaries only
the basis of actuarial surveys by an independent actuary         received expenses.
(see note 19 on page 100). In the reporting year, pension
obligations to active members of the Board of Managing Di-       In financial year 2007, the overall remuneration for former
rectors pursuant to IFRS fell by €22 thousand, primarily due     members of the Board of Managing Directors amounted
to the increase in the calculatory interest rate employed.       to €159 thousand (previous year: €156 thousand). As of
                                                                 31 December 2007, the pension obligations to former
The contract of employment of the CEO includes an agree-         members of the Board of Managing Directors pursuant to
ment for the payment of a temporary allowance amount-            IFRS totalled €3,134 thousand (previous year: €3,609 thou-
ing to the monthly fixed compensation for a further twelve       sand). No stock options were exercised by former members
months upon expiration of the appointment. In the event          of the Board of Managing Directors in the reporting year.
that the appointment to the Board of a member of the             Former members of the Board of Managing Directors hold
Board of Managing Directors is terminated prematurely by         27,500 options.
the company, the member of the Board of Managing Direc-
tors is released from his duties while the respective contract
of employment of the relevant member of the Board of             > Compensation of the Supervisory Board
Managing Directors is in principle continued until the end
of the original term of office and the fixed compensation        The compensation of the Supervisory Board is stipulated in
is paid for the remaining term of the contract of employ-        the Articles of Association. In addition to reimbursement of
ment. The CEO additionally receives 100% of the last target      expenses at the end of the financial year, the individual
bonus as a one-off payment for each year until expiry of his     members of the Supervisory Board receive a fixed compen-
contract of employment. There is no entitlement to further       sation of €10,000, with the Chairman of the Supervisory
remuneration where the termination takes place for good          Board receiving triple that amount and his Deputy one and
cause. There may be a settlement in the event of premature       a half times that amount. If a member of the Supervisory
termination of employment resulting from an individually         Board is also a member of a Supervisory Board committee,
agreed rescission agreement. In the past financial year, no      then the member will additionally receive a quarter of the
member of the Board of Managing Directors has received           relevant fixed compensation and the Committee Chairman
payments or corresponding commitments from a third party         will receive a further quarter. A member of the Supervisory
in relation to their activities as a member of the Board of      Board may receive a maximum of two and a half times the
Managing Directors.                                              fixed compensation, i.e. a maximum of €25,000. The maxi-
                                                                 mum for the Chairman of the Supervisory Board is €75,000
Performance-related subscription shares were last issued         and €37,500 for his Deputy.
under the company’s stock option programme in financial
year 2004. The total number of options issued to the ac-         In line with the GCGC, the members of the Supervisory
tive members of the Board of Managing Directors amounts          Board also receive a variable compensation payment.
to 163,500. Of these, 52,500 stock options were exercised        This component is dependent on the dividend distributed
in the reporting year. Exercising the options produced a         to shareholders. No variable component is paid for a divi-
non-cash benefit of €289 thousand. In addition, a non-           dend of up to 4% of the share capital, which equates to


38
                                                                                                      Corporate Governance •




€0.04 per share. The Supervisory Board as a whole receives       on any committees. The special dividend of €1.00 per share
€1,500 for each half a percentage point that the dividend        distributed in the reporting year does not affect the variable
exceeds the basic return on the share capital of 4%. For         compensation of the Supervisory Board as the Supervisory
financial year 2007, a dividend of €0.41 per share, or 41%       Board has waived the payment due to it under the Articles
of the share capital, will be proposed to the annual general     of Association.
meeting. If approved by the annual general meeting, the
variable compensation component paid to the Supervisory          The compensation paid to individual members of the Su-
Board will amount to €132,090. Pursuant to a resolution by       pervisory Board, including the reimbursement of VAT pay-
the Supervisory Board, this sum will be divided among the        able on Supervisory Board compensation, is shown in the
members of the Supervisory Board in accordance with the          following table.
ratio for non-variable compensation, regardless of activities


€ thousand                    Non-variable                 Variable             Remuneration for               Total
                              components                 components            committee activities
                          2007          2006          2007        2006         2007          2006          2007          2006
Dr. Achim Kassow            36               36         47            47         27             27          110           110
Klaus Müller-Gebel          18               18         23            23           9             9           50            50
Angelika Kierstein          12               12         16            15           3             3           31            30
Mitja Sack                  12               12         16            15           0             0           28            27
Dr. Eric Strutz             12               12         16            15           6             6           34            33
Frank Annuscheit
(from 20.3.2006)            12                9         16            12           0             0           28            21




                                                                                                                            39
> Group management report
2007 was an outstanding financial year for comdirect bank. With profit of €90.5m before tax,
we achieved our fifth record result in a row, whilst at the same time investing extensively in
the future of the bank. We had already revised our target for pre-tax profit upwards to more
than €80m and we again outperformed our target. With the clear increase in our central value
drivers, the bank is well on the way to meeting the ambitious objectives linked to the comvalue
growth programme.



                                                                 more independent of trades. In financial year 2007, net
> At a glance
                                                                 interest income before provisions increased by 43.3% to
                                                                 €127.2m. At the same time, net commission income rose
We are reaping the benefits of our strategy of propelled
                                                                 again to €152.7m, which shows that the bank is continuing
growth through the ongoing and further intensified market
                                                                 to benefit unreservedly from favourable stock market con-
and product offensive. The number of customers climbed
                                                                 ditions. The intermittent distortions in the market resulting
to 1 million, primarily as a result of the huge success of our
                                                                 from the correction in the US mortgage market have not sig-
anchor products, the Tagesgeld PLUS (“call money plus”) ac-
                                                                 nificantly affected comdirect bank. On the whole, the higher
count and the online current account. The number of Tages-
                                                                 interest rates were advantageous to our Treasury strategy.
geld PLUS accounts increased six-fold to 400,000, while the
                                                                 The bank’s financial situation and assets were stable in 2007
number of current accounts rose by around 30%. We also
                                                                 as was the risk situation.
recorded gains in brokerage and our offering here includes
products with great potential in the growth market of se-
                                                                 In the next two financial years, comdirect bank will continue
curities trading and investment. In addition, we are already
                                                                 on its course of propelled growth. By the end of 2009, we
providing all-round advisory services to over 32,000 cus-
                                                                 intend to service more than 1.3 million customers as well as
tomers on provisioning and asset planning. With this unique
                                                                 maintaining more than 650,000 custody accounts, 650,000
product and service spectrum we are the first choice direct
                                                                 Tagesgeld PLUS accounts and 450,000 current accounts. We
bank for more and more modern investors.
                                                                 have made substantial progress towards these objectives in
                                                                 2007.
Through strong growth in banking and advice as well as
in long-term securities investments in brokerage, we have
further broadened the bank’s earnings base and made this




40
                                                                                                Group management report •




> Business activities and framework parameters

comdirect bank, offers investors all the key products and         In our banking field of competence, we offer a current ac-
services for trading, securities and financial investment, pay-   count, which is not only free of charge but also pays one
ments, provisioning and risk hedging from under one roof.         euro a month, as well as the Tagesgeld PLUS and fixed-term
With our multi-award winning, high quality online offering in     deposit, time deposit and foreign currency accounts with
brokerage and banking, we are already the partner for 1 mil-      attractive interest rates. We also place consumer loans and
lion customers who want access to both top quality products       since the first quarter of 2008, we have extended our offer-
and professional support and expect the terms and conditions      ing to include building finance.
for these to be permanently fair. Through our innovative bank
format, we are able to extensively leverage all the opportu-      In our advice field of competence, we provide support to
nities offered by the growing direct banking market for the       our customers for asset accumulation, provisioning, risk
benefit of our customers and shareholders.                        hedging, portfolio optimisation and financing. The personal,
                                                                  independent and all-round advisory services also extend to
                                                                  the placement of insurance, investment and financial in-
> Inclusion in the                                                vestment products.
  Commerzbank Group
                                                                  In our segment reporting, the brokerage and banking fields
                                                                  of competence are pooled in comdirect online. Our advice
comdirect bank is listed on the Prime Standard (Regulated
                                                                  field of competence is identical in terms of coverage to com-
Market) and in terms of market capitalisation is one of the
                                                                  direct offline. Brokerage and banking activities are pooled in
mid-size joint stock corporations on the SDAX. 79.59% of
                                                                  comdirect bank AG. Advisory services are provided by our
the shares are held indirectly by Commerzbank AG, which
                                                                  independent subsidiary, comdirect private finance AG, with
provides a range of services for comdirect bank, such as
                                                                  which comdirect bank AG has concluded a profit and loss
processing securities trading transactions, payment trans-
                                                                  transfer agreement. The consolidated financial statements
actions and risk management. In addition, as part of its
                                                                  also include special purpose entities in the form of special
money and capital market transactions, comdirect bank has
                                                                  funds, which are part of the Treasury investments. These are
investments with Commerzbank AG which generate inter-
                                                                  attributable to the comdirect online business line.
est income. A detailed overview of the current contractual
regulations can be found in the group notes on pages 104
and 105. Further service agreements are in place with other
                                                                  > Major locations
subsidiaries of Commerzbank AG, such as Commerz Service
Gesellschaft für Kundenbetreuung mbH.
                                                                  The registered offices of comdirect bank AG and comdirect
                                                                  private finance AG are in Quickborn near Hamburg. com-
                                                                  direct bank AG does not have any other locations. Online
> Fields of competence and
                                                                  business is carried out primarily via its website, but also
  group legal structure                                           via other access channels such as mobile banking and HBCI
                                                                  banking software. The bank offers a high-performing Cus-
We have pooled our range of products and services in the          tomer Services centre for direct contact with customers by
brokerage, banking and advice fields of competence.               telephone, e-mail, fax or letter. comdirect private finance
                                                                  provides personal advisory services across Germany via a
In the brokerage field of competence, comdirect bank fa-          total of 27 offices (as of year-end 2007).
cilitates speedy, secure and cost-effective securities trading
through professional functionalities and provides a continu-
ally expanding and optimised choice of products for short,
medium and long-term securities investments.




                                                                                                                             41
                                                                 The main product is our custody account, which facilitates
> Management and control
                                                                 a detailed portfolio overview, transparent order book and
                                                                 custody account manager, making it an easy-to-use basis
comdirect bank is managed by the Board of Managing Di-
                                                                 for successful trading and investment strategies. For trading,
rectors, which has comprised three members since the start
                                                                 we offer a range of professional tools. This includes com-
of financial year 2007. In line with the dual board structure,
                                                                 direct Informer, a customisable instrument, which provides
these members are appointed and monitored by the Super-
                                                                 market and share price information, as well as comdirect
visory Board, which also provides advice on a regular basis.
                                                                 ProTrader, which is characterised by particularly fast page
The Supervisory Board is composed of six members, four of
                                                                 downloads, as well as the realtime price information sys-
whom are elected by the annual general meeting and two
                                                                 tem, comdirect TraderMatrix. With the aid of innovative or-
by the employees. To increase its efficiency, the Supervisory
                                                                 der functionalities such as the One Cancels Other and Next
Board has formed two committees: the Presiding Commit-
                                                                 Order functions, customers can act swiftly in varying market
tee which deals primarily with personnel matters relating
                                                                 scenarios in line with their personal investment strategy.
to the Board of Managing Directors and its compensation,
while the Audit Committee’s responsibilities include the
                                                                 With regard to systematic asset accumulation by means
pre-examination of the annual financial statements, the de-
                                                                 of securities, customers have access to a wide range of
pendency report and the independence of the auditors for
                                                                 funds and certificates at favourable terms and conditions. At
the company and group financial statements.
                                                                 present more than 6,500 funds from 110 fund companies
                                                                 (as of 31 December 2007) are available. Securities savings
                                                                 plans can be taken out for over 200 funds and more than
> Compensation of Board members
                                                                 100 certificates. Since December 2007, comdirect bank’s of-
                                                                 fering has also included 24 ETF index funds which are eli-
The compensation of the Board of Managing Directors and
                                                                 gible for inclusion in the savings plans. For children, there
the Supervisory Board of comdirect bank AG is presented to-
                                                                 is the JuniorDepot custody account which can be combined
gether with the main features of the compensation system
                                                                 with a savings plan for medium to long-term asset accu-
in a detailed compensation report on pages 36 to 39. The
                                                                 mulation. Furthermore, comdirect bank acts as a partner
compensation report forms an integral part of the present
                                                                 to wealth managers and other financial services providers
group management report.
                                                                 who maintain custody accounts with us and benefit from
                                                                 our high-performance internet platform and its comprehen-
                                                                 sive order functions.
> Key products, services and
  business processes                                             Banking
                                                                 In its banking field of competence, comdirect bank offers at-
Brokerage                                                        tractive products for short through to long-term investment
In brokerage, we execute buy and sell orders for securi-         as well as for daily money transactions. Interest income is
ties listed on the German stock exchanges (spot and futures      generated by reinvesting customer deposits in the money
markets), including futures contracts, in addition to offer-     and capital markets via the Treasury department.
ing access to 46 stock exchanges outside Germany (as of
31 December 2007). With comdirect LiveTrading, we ad-            The comdirect current account is not only free of charge for
ditionaly operate a highly efficient platform for OTC trad-      customers who pay in a minimum of €1,250 a month, it
ing of equities, warrants, certificates, bonds and funds. Here   also pays them €1 a month. In addition, the account offers
we are currently working with 28 trading partners (as of         an ec/Maestro card and a VISA card at no cost which can
31 December 2007). In brokerage, comdirect bank primarily        be used to withdraw cash free of charge both in Germany
generates commission income from securities trading and          and abroad. The other benefits of the current account in-
associated services on the one hand and from front-end           clude the money transfer assistant, transaction search and
loads and sales follow-up commission in its funds business       account switching services. Customers can also easily set
on the other.                                                    individual limits for online transfers.


42
                                                                                                Group management report •




With our Tagesgeld PLUS account, we offer highly attractive
                                                                  > Key sales markets and
interest rates with daily access to customer deposits up to
an investment sum of €30,000. The comdirect fixed-term
                                                                    competitive position
deposit account provides a secure short-term investment for
periods of one to three months. comdirect time deposit ac-        comdirect bank focuses on modern private investors who
counts offer attractive interest rates for terms of six months    prefer to manage their financial transactions themselves
to five years and through our currency investment accounts,       and who will seek any advice they require to optimise asset
investors can invest in 11 different foreign currencies. com-     accumulation and private provisioning. As before, the long-
direct’s fest & fonds offering combines a high interest six       term market trends remain positive:
month fixed-term deposit account with a fund investment.
                                                                  •	 The number of internet users is continuing to increase
In addition, comdirect bank places consumer loans in co-            and the improved quality and speed of internet connec-
operation with Süd-West-Kreditbank. In the first quarter of         tions make it even easier to use the online offering. At
2008, we have extended our credit offering to include the           the same time, the cost of using the internet is falling as
placement of private building finance. The product and serv-        a result of flat-rate offers.
ice offering includes a direct bank-type intermediary solu-
tion for tailored building finance at attractive terms and con-   •	 The number of online banking users has been rising stead-
ditions. Via our platform, comdirect customers have access          ily for several years. Direct banks account for a growing
to the product ranges of more than 40 financing partners.           share of the overall online banking market.
To provide this service, we use the infrastructure of our
cooperation partner, Interhyp, the leading independent pro-       •	 The number of investors trading securities on the stock
vider of private property finance in Germany.                       markets or OTC via a direct bank is also rising steadily.

Advice                                                            •	 More and more private customers are choosing near-
In our advice field of competence, we offer personal fi-            money market interest-bearing call money accounts for
nancial advisory services based on an all-round approach.           short-term savings.
The advisory services cover financial investment and asset
accumulation, old-age provisioning and personal financial         •	 The trend towards greater personal financial provision-
provisioning, participations in closed-end funds as well as         ing using life assurance and pension insurance products,
property finance. The focus is on private old-age provision-        some of which are state subsidised, and through fund-
ing, especially using Riester and Rürup pension products.           based savings, continues undiminished.

The advice is provided by self-employed commercial agents,        Over the past few years, we have continually expanded our
primarily at the offices of comdirect private finance. The        position in the direct banking market and accelerated the
commission income in advice is based essentially on plac-         pace of this expansion. comdirect bank is in competition
ing insurance, provisioning and investment products.              with other direct banks and online brokers, as well as tra-
                                                                  ditional retail banks which are increasingly adding online
                                                                  banking to their offering, and financial advisory companies.
                                                                  The size of the relevant market offers extensive growth op-
                                                                  portunities in all fields of competence. For instance, there
                                                                  are around 90 million current accounts in Germany. The
                                                                  financial assets of all private households total €1.3tn.




                                                                                                                                43
                                                                 The economic influences differ for each of the fields of com-
> Legal and economic influences
                                                                 petence:

We operate in highly regulated markets with our range
                                                                 In brokerage, the level of commission income is influenced
of products and services. The Federal Supervisory Author-
                                                                 by trading activity on the stock markets and OTC trading,
ity (BAFin) and the Deutsche Bundesbank are responsible
                                                                 which in turn are partly dependent on price movements
for the regulation of the banking industry in Germany. The
                                                                 and volatilities. Share and bond prices react to varying de-
main focal areas for the supervisory regulations are sol-
                                                                 grees to the developments in corporate profits, to macro-
vency, liquidity and lending operations by banks. The Mar-
                                                                 economic trends such as unemployment figures, energy
kets in Financial Instruments Directive Implementation Act
                                                                 and commodities prices and economic data, to interest rate
(Finanzmarktrichtlinie-Umsetzungsgesetz) came into force
                                                                 decisions by central banks and external events such as po-
on 1 November 2007. The regulations set new requirements
                                                                 litical crises. General trends in asset accumulation for private
for investment advice, fund placement and the execution
                                                                 households are of major importance for long-term invest-
of securities transactions (see page 52). The advice field
                                                                 ments in securities.
of competence is affected by the Insurance Provision Act
which was reregulated in May 2007, making the previously
                                                                 In banking, the terms and conditions in deposit and lend-
freely accessible professions of insurance intermediary and
                                                                 ing business as well as the interest margin achievable are
adviser subject to a permit and registration obligation (see
                                                                 primarily influenced by developments in the money mar-
page 52).
                                                                 ket interest rates and interest premiums (especially credit
                                                                 spreads) in the bond markets as well as the competitive
Extensive legal parameters apply primarily to the regulation
                                                                 situation in the direct banking market. Changes in the rat-
of the financial markets and the tax treatment of corpo-
                                                                 ings of banks and companies and their bond issues are an-
rate profits and capital gains. comdirect bank’s tax rate will
                                                                 other important economic influence for the activities of the
reduce under the corporate tax reform from financial year
                                                                 Treasury department.
2008 onwards. The final withholding tax introduced as part
of the corporate tax reform, which is to be levied on invest-
                                                                 In advice, the trends in asset accumulation and old-age
ment income and private capital gains from 2009 onwards,
                                                                 provision are particularly important and are also affected
is likely to impact heavily on the types of financial asset
                                                                 by state subsidies for provisioning and asset accumulation
accumulation favoured by investors. This is reported on in
                                                                 products.
detail in the Outlook section starting on page 84.




44
                                                                                               Group management report •




> Value-driven strategy and management system

                                                                increase, thereby providing additional incentive for custom-
> Value-driven strategy
                                                                ers to use comdirect as their main bank and concentrate
                                                                their banking activities with us. In addition to the market
The overarching aim of comdirect bank is to generate a sus-
                                                                and product offensive, as part of comvalue we are invest-
tained attractive return on equity with managed risks at all
                                                                ing in an even more flexible and powerful IT infrastructure
times, in order to increase shareholder value. This aim is in
                                                                and in further enhancing the quality and efficiency of our
line with the interests of the bank’s other stakeholders.
                                                                Customer Services.

The most important driver for the creation of this added
                                                                Overall, the comvalue growth programme is accelerating the
value is the bank’s propelled growth in all fields of compe-
                                                                anchoring of comdirect bank as the first choice direct bank for
tence. Here we focus in particular on products and services
                                                                more and more modern investors.
with which we can generate income that is largely inde-
pendent of the volatilities in the securities markets and
                                                                For this propelled growth, in financial years 2007 to 2009
the number of trades executed. This not only significantly
                                                                we intend to invest an additional sum of up to €150m from
broadens our earnings base but at the same time consider-
                                                                the current cash flow for operating activities – a large por-
ably increases overall income.
                                                                tion of which is set to be invested in the market offensive.
                                                                In financial year 2007, we already invested around one third
As part of our comvalue growth programme, we are in-
                                                                of this sum as a result of the very good earnings perform-
tensifying the expansion of our banking and advice fields
                                                                ance.
of competence, as well as the securities business designed
for asset accumulation within the brokerage field of com-
                                                                At the end of the first year of propelled growth, we have
petence. In addition, we are further extending our market
                                                                made very good progress towards our targets for the end
lead in trading and are always in a position to leverage the
                                                                of 2009.
earnings opportunities offered by favourable stock market
conditions for the benefit of our shareholders.
                                                                Targets under comvalue

Growth comes on the one hand from acquiring new cus-                                    Target end    As of end      As of end
                                                                                             2009         2007           2006
tomers and on the other from increasing the level of cus-
                                                                Number of customers     >1,300,000    1,000,722       804,690
tomer activity and assets under custody, as well as con-
tinually improving customer satisfaction. The first aim is      Number of custody
                                                                accounts                   >650,000     645,893       606,110
addressed through our comprehensive market offensive
                                                                Number of current
which focuses on our two anchor products in the banking
                                                                accounts                    450,000     337,578       260,334
field of competence – the Tagesgeld PLUS account and the
                                                                Number of Tagesgeld PLUS
free current account. The second aim is primarily achieved      (“call money plus”)
through an extensive product offensive, during which our        accounts                    650,000     400,414        66,840
product and service spectrum is continually extended and        Number of advisory
integrated throughout the fields of competence. We offer        customers                    40,000      32,469        20,024

our customers permanently attractive terms and conditions
as well as innovative functionalities and intelligent prod-
uct combinations. We thereby fulfil the comdirect brand
promise, creating a stable basis for a sustainable customer-
bank relationship. Our pricing model is structured so that on
average lower fees are charged as the customer’s activities




                                                                                                                            45
                                                                of executives and teams. We are extensively involved in
> Intangible assets of comdirect bank
                                                                training and continued professional development and offer
                                                                performance-related and profit-oriented compensation (see
comdirect bank’s internal management system is based on
                                                                page 72).
the bank’s core competences and intangible assets. In ad-
dition to the assets reported in the balance sheet, these
intangibles determine the value of the company and as
such form the basis for successful business development
                                                                > Internal management system
and earnings performance. The quality of our customer re-
lationships and expertise of our employees as well as the       To systematically expand our core competences and in-
effectiveness and efficiency of the processes we use are all    tangible assets for the benefit of our stakeholders and to
decisive. As part of our value-oriented overall bank man-       achieve our overarching goal of a permanently attractive re-
agement system, we aim to further enhance these non-            turn on equity, we manage the entire bank on an all-round
financial assets.                                               basis taking account of all material risks and opportunities.
                                                                Here we focus our attention not only on the development
The most important intangible asset is the quality of our       of financial performance indicators but also on non-financial
customer relationships. We intend to continually improve        performance indicators, which impact on the earnings situ-
this through the market and product offensive, as well as       ation and company value of the bank. The monthly overall
by professionally targeting customers via our website, Cus-     bank management reporting shows whether the bank’s fi-
tomer Services and advice offices. This means making our        nancial and non-financial performance indicators are within
customer relationship even more stable and increasing cus-      the target range or whether unexpected variances have oc-
tomer activity.                                                 curred. Selected performance indicators are monitored and
                                                                managed at shorter intervals.
The high level of awareness of comdirect bank and the val-
ues associated with our brand by both customers and inves-      With regard to the non-financial performance indicators,
tors is a key competitive factor in existing and new custom-    we distinguish between customer, market and product-re-
er business as well as in the capital market. In conjunction    lated indicators, efficiency, risk and process-related indica-
with the market and product offensive, we are therefore         tors as well as employee-related indicators. Selected indica-
seeking to further enhance our brand values.                    tors are used in external reporting.

Operating excellence in our largely automated yet still indi-   The financial situation is primarily illustrated by the re-
vidual customer contact approach is also one of comdirect       turn on equity and the cost/income ratio. In addition, in line
bank’s strengths, which impacts positively on the value of      with our goal of broadening our earnings base, important
the company. This refers to the ongoing servicing of custom-    financial performance indicators are the development of net
ers as well as to the efficient execution of campaigns.         interest and net commission income.

The management quality, service expertise, process intelli-
gence and innovative power of the bank depend essentially
on the competence of its employees. We enhance these
skills through a range of personnel and executive devel-
opment training measures. We promote expertise and cre-
ate framework parameters for the positive development




46
                                                                                                             Group management report •




Selected non-financial performance indicators

Performance indicator                    Definition                                                              2007            2006
Customer, market and product-related performance indicators
Brand awareness                          Various performance indicators from
                                         aided and unaided recall surveys                                         n.a.*           n.a.*
Current account – product penetration    Number of current accounts/total number of customers (31.12.)           33.7%          32.4%
Tagesgeld PLUS (“call money plus”)       Number of Tagesgeld PLUS (“call money plus”)
account – product penetration            accounts/total number of customers (31.12.)                             40.0%           8.3%
Custody account – product penetration    Number of custody accounts/total number of customers (31.12.)           64.5%          75.3%
Product use                              Proportion of total number of customers using a minimum
                                         of two products (31.12.)                                                 44%             38%
Customer satisfaction                    Various performance indicators                                           n.a.*           n.a.*
Efficiency, risk and process-related performance indicators
System availability                      Availability of functionalities on the comdirect website                99.7%          99.8%
Service level (telephone)                Proportion of incoming telephone calls
                                         answered within 30 seconds                                               81%             80%
IT efficiency                            Aggregated indicator for IT projects which measures
                                         compliance with deadlines and budget, error rates and
                                         client satisfaction                                                      n.a.*           n.a.*
Marketing efficiency                     Various performance indicators                                           n.a.*           n.a.*
Utilisation of risk-taking capability    Economic risk capital/risk cover assets (31.12.)                        14.3%          12.8%
Employee-related indicators
Continued professional development       Continued professional development budget used                           n.a.*           n.a.*
Employee satisfaction                    Various performance indicators                                           n.a.*           n.a.*
* Not used in external reporting.




Selected financial performance indicators

Performance indicator                    Definition                                                              2007            2006
Return on equity before tax              Pre-tax profit/average equity
                                         excluding revaluation reserve (in %)                                     16.3            14.0
Cost/income ratio                        Administrative expenses/(Net interest income
                                         before provisions + net commission income +
                                         result from investments and securities portfolio +
                                         other operating income + results from hedge
                                         accounting + trading result) (in %)                                      67.0            60.4
Net interest income per customer         Net interest income after provisions/
                                         number of customers on average for the year (in €)                        139            113
Net commission income per customer       Net commission income/number of customers
                                         on average for the year (in €)                                            169            182
Profit per customer                      Pre-tax profit/number of customers on average for the year (in €)         100            114




                                                                                                                                     47
> Business development

                                                                 broadened the earnings base. Earnings that are independ-
> Overall assessment of the business,
                                                                 ent of trades, especially net interest income, have risen
  earnings and financial situation                               significantly. Once again, we have financed our ambitious
  and assets by the management                                   comvalue growth programme in full from cash flow from
                                                                 operating activities. The increase in administrative expens-
comdirect bank was highly successful in all of its fields of     es, especially in the marketing segment, highlights how
competence in financial year 2007. With market conditions        significantly comdirect has invested in growth in 2007.
favourable overall, through our product and service spectrum,
we were able to use growing customer demand, especially          From today’s perspective, the financial basis for propelled
for interest rate and provisioning products, for the benefit     growth in the following years is also sound. The bank’s fi-
of the bank. The development of our most important value         nancial situation and assets are stable and the risk-taking
drivers, such as the number of customers and product use,        capacity is guaranteed at all times.
completely fulfilled our expectations as did our earnings per-
formance.

The bank’s propelled growth and its particular focus on se-
curities investments, banking and advice have also further


Target/actual comparison of selected key performance indicators in financial year 2007

                                                 As of 2006              Target 2007       Actual 2007           Target met?
Net interest income
before provisions         € million                    88.7                  Increase           127.2                    Yes
Net commission income     € million                   136.6            Stable/decline           152.7              Exceeded
Administrative expenses   € million                   135.6                 180 – 190           187.4                    Yes
Pre-tax profit            € million                    85.6                      > 80             90.5             Exceeded
Deposit volume            € million   31.12.          4,627                  Increase           7,686                    Yes
Number of customers                   31.12.        804,690            Strong growth         1,000,722                   Yes
Multi-product use                     31.12.           38%           Increase (future)           44%                     Yes
Number of employees                   31.12.            732                  Increase             824                    Yes




48
                                                                                                               Group management report •




                                                                     Economic environment
> Market environment                                                 After economic expansion had accelerated in the previous
                                                                     year, the global economy maintained its dynamic growth in
At a glance                                                          2007. The pace of the upturn slowed slightly in the second
The economic framework parameters for the business ac-               half of year, partly as a result of higher energy prices. Accord-
tivities of comdirect bank were favourable in all fields of          ing to preliminary figures, the gross domestic product within
competence in 2007. The general trends for the industry              the European Union (EU 27) increased by 2.9% after inflation
remain intact: investors are increasingly using online bank-         (previous year: 3.0%).
ing for their financial transactions and frequently making
the choice in favour of direct banks. As before, insurance           With real growth in the gross domestic product of 2.5%,
and fund products play an important role in the long-term            the German economy almost matched the level achieved
asset accumulation of private households. More people are            in the previous year (2.9%). In addition to a further strong
realising the need for additional personal provisioning and          upswing in exports (+8.3%), expansion was also driven by
old-age provisioning and this is leading to increased use of         domestic demand which rose by 1.1%. Consequently, the
the appropriate products.                                            effect of the VAT increase on consumption propensity was
                                                                     less severe than anticipated by some experts. The inflation
The trend in framework parameters in 2007, especially in             rate stood at 2.2% on average for the year.
the second half of the year, was affected by the dislocations
in the subprime segment of the US mortgage market. Here              The positive trend in the labour market that started in the
a large volume of building financings had been granted to            previous year continued in 2007. The number of unem-
borrowers with low credit ratings during the period of low           ployed dropped below 3.5 million for the first time since
interest rates. The correction in the US mortgage market             1995. On average for financial year 2007, the figure stood
meant that extensive write-downs were required on the                at 3.6 million, 15% lower than in the previous year. In con-
exposure in these credit ratings. The resultant uncertainty in       trast, the number of people in employment rose by 1.7%
the market led to considerable risk aversion on the part of          year-on-year. As a result of the growth in the employment
the banks and temporary liquidity bottlenecks in the money           rate, disposable income increased by 1.6%. The savings ra-
market, necessitating several interventions by the European          tio climbed from 10.5% to 10.8%. The main forms of invest-
Central Bank. In the capital markets, spreads between cor-           ment were savings accounts, securities and life assurance.
porate and public sector bonds (credit spreads and liquidity
premiums) widened significantly. The effects of these de-
velopments on comdirect bank were minor as the bank only
acts in the money and capital markets as an investor.
                                                                     Growth in GDP
                                                                     (adjusted for inflation in %)
To date our activities in brokerage have also not been ad-
versely affected by the market dislocations. Growing nerv-
                                                                                             3.0
ousness in the markets led to sharp price swings, especially                           2.9                      2.9
in the third quarter. As a result of the high level of volatility,                                       2.5
the summer months were dominated by unusually strong
trading activity, which positively influenced our order fig-
ures. The average order activity per custody account for the                   1.5

year exceeded the level in the previous year by 8.2%.
                                                                         0.8

The ongoing growth in demand for provisioning products
such as Riester and Rürup pensions as well as the growing
desire on the part of customers for portfolio diversification             2005          2006               2007
impacted positively on our business in advice.
                                                                        Germany
                                                                                              Source: Statistisches Bundesamt
                                                                        EU 27*                                   * 2005: EU 25




                                                                                                                                      49
The economic situation for companies further improved                            floated on the stock market in the Prime and General Stand-
compared to the previous year. In Germany, as in other                           ard segments. There were 43 IPOs in the Entry Standard
European countries, company earnings and profit forecasts                        compared to 59 in the previous year. In total, 21 IPOs could
rose again. This was a key precondition for the positive de-                     be subscribed via comdirect bank.
velopment in the equity markets.
                                                                                 The trading volume also rose sharply on the futures mar-
Securities investment                                                            kets. The number of contracts traded on the Eurex futures
Despite intermittent share price corrections as a result of                      exchange was up compared to 2006 by 24.4%, with growth
dislocations in the US subprime segment, the equity mar-                         once again stronger than in the previous year. Equity and
kets developed very positively in 2007. The DAX closed the                       index futures recorded the highest growth, as a result of
year at 8,067.32 points, gaining 22.3% over the course of                        partly extraordinarily strong market volatility. The retail de-
the year. Consequently, the German leading index exceeded                        rivatives exchanges also continued their growth course.
the consensus estimates of equities strategists at German
banks, who forecasted an average rise of 6% to around                            The number of shareholders and equity fund unitholders
7,000 points, and also outperformed the Dow Jones Indus-                         dropped in 2007. In the second half of the year, the Deut-
trial Average Index (+6.4%). Technology and secondary                            sches Aktieninstitut (DAI) counted only 10.1 million share-
stocks also performed well. By year-end 2007, the TecDAX                         holders and unitholders, down from 10.5 million in the first
was up 30.2% and the MDAX 4.9%.                                                  half of the year. The number of of those investing directly
                                                                                 in equities fell considerably over the same period, falling
As a result of the general upward trend and additional op-                       from 4.3 million to 3.8 million, the lowest level since 1996.
portunities created by the high level of volatility, investors                   In contrast, the number of people investing exclusively in
again traded more actively than in the previous year. The                        equity funds climbed from 6.2 million to 6.4 million. Ac-
number of orders in the German spot market, driven by                            cording to the DAI, this development also already reflected
strong growth in XETRA trading, outstripped the previous                         the imminent application of the final withholding tax (see
year’s figure by 30.8% and the trading volume was up by                          page 85), which favours a switch from direct investments to
41.2%.                                                                           other forms of investment.

In contrast, the significant temporary nervousness in the                        Retail investment funds recorded inflows of €24.2bn in
market adversely affected IPO activities in the German fi-                       2007. Despite outflows in the meantime as a result of li-
nancial market. A total of 37 companies (previous year: 49)                      quidity bottlenecks in the money market, the winners were
                                                                                 the money market funds, followed by other investment
                                                                                 funds and mixed funds. In contrast, investors extensively
                       Number of orders on German
                       stock exchanges (in million)                              withdrew monies from equity funds. The fund outflows
                                                                                 here totalled €14.2bn after €8.2bn in the previous year.
                                                                                 A considerable volume of fund units in fixed-income funds
                                                                                 was also redeemed.
                                                                  57.4
                                                                                 Investment and borrowing
                                                    51.6        103.1            The framework conditions for deposits and loans were sig-
                                      38.7                                       nificantly affected by the interest rate decisions of the cen-
                                                    98.2
                                                                                 tral banks and the impact of liquidity bottlenecks in the in-
                                      79.8
                                                                                 terbank market. The European Central Bank (ECB) increased
                                                                176.3
                                                 107.7
                                                                                 the key lending rate in two steps in March and June 2007
                                      81.3
                                                                                 from 3.5% to 4.0%. The reason for this move was cited as
                             2005            2006          2007                  the unexpectedly strong economic upturn in the 13 coun-
                                                                                 tries in the eurozone as well as the risk of inflation posed
                          XETRA              Other stock exchanges
                          Frankfurt                  Source: Deutsche Börse AG




50
                                                                                                 Group management report •




by ongoing wage increases and rising oil prices. Despite the       The credit volume extended to private households fell by
persistent inflationary risk, the central bank left the interest   1.0% in the first three quarters of 2007. This slight drop af-
unchanged in the second half of the year to avoid deep-            fected long, medium and short-term loans equally.
ening the crisis in the financial market. The same reason
prompted the US central bank to cut the US key lending             Bank conditions in the credit sector changed as a result of
rate by a whole percentage point in three steps. In January        the movement in interest rates. The interest rate on five
2008, there was another cut in the US key lending rate in          to ten-year fixed rate residential property finance increased
two steps of a a further 125 basis points in total.                from 4.60% in December 2006 to 5.08% in November
                                                                   2007. The effective interest rates for overdrafts rose in the
Three month Euribor, the main money market rate, is gener-         same period from 11.27% to 11.76%.
ally 10 to 20 basis points above the European key lending
rate, but rose sharply as a result of the dislocations in the      The yield calculated by the Bundesbank for fixed-income
market. Although the rate fell in the fourth quarter, at the       securities rose from 3.9% to 4.3%. The yield curve still
year-end it stood at 4.68%, 68 basis points above the key          remains very flat. By the year-end, the yield on ten-year
lending rate. comdirect bank was able to profit from this          bonds was around 40 basis points higher than on one-year
trend when investing customer deposits.                            bonds.

The rise in interest rates also affected the savings behaviour     Financial planning and provision
of private households. As in the previous year, savers turned      In life assurance, the trend towards long-term provisioning
in particular to fixed-term deposits. Up to November 2007,         contracts continued in 2007. According to an extrapolation
the volume of fixed-term deposits rose by around 16.6%             by the Association of German Insurers (Gesamtverband der
and therefore significantly faster than demand deposits,           deutschen Versicherungswirtschaft), provisioning contracts
which recorded growth of just 4.2%. The effective inter-           with pension-like payouts had already accounted for a share
est rate for deposits due on demand by private households          of around 54% of new business by life assurance compa-
increased between December 2006 and November 2007                  nies. Riester pensions were able to build on the success of
from 1.49% to 1.84%.                                               the previous year, rising from 400,000 to 2.4 million new
                                                                   contracts, while new business in basic pension contracts
                                                                   (Rürup pensions) doubled.




European key lending rate and Euribor 2005 – 2007 (in %)




                                                                                                                                        4.69



                                                                                                                                         4.00




       2.15
2.00
                      2005                                  2006                                   2007

        Euribor1)                                                                                 1) Three-month money
                                                                                                  2) For main financing transactions
        ECB interest rate2)                                                                       Source: Deutsche Bundesbank, Euribor FBE




                                                                                                                                                51
As a result of the growing need for additional private provi-   Our “Customer Motives 2007” study conducted in conjunc-
sioning and old-age provision, the framework conditions for     tion with the Cologne-based market research organisation,
financial advisers were positive. This was also true because    rheingold, shows that emotional ties and trust in a bank are
of the ongoing need for advice on the different products and    more important than frequently assumed. The bank format
their treatment under tax regulations. A survey published in    of the future must therefore combine ready availability, a
November 2007 by the market research organisation, psy-         sensible product range and good terms and conditions with
chonomics, showed that only one quarter of respondents          an individual and customer-oriented approach.
in the core target group of freelancers and self-employed
people were aware of the Rürup pension.                         Regulatory environment
                                                                The legal framework parameters for our business, especially
Industry trend                                                  the provision of services for securities, changed as a result of
The number of internet users increased again in 2007. Ac-       the Markets in Financial Instruments Directive Implementa-
cording to the Bundesverband Informationswirtschaft, Tel-       tion Act (Finanzmarktrichtlinie-Umsetzungsgesetz). The Act
ekommunikation und neue Medien e.V. (BITCOM), 63% of            implements the EU directive on financial instruments (Mar-
the German population go online at least occasionally. The      kets in Financial Instruments Directive or MiFID for short) in
rise in the number of users was also influenced by the fall     national law. The regulations that came into force on 1 No-
in the cost of using the internet. On average, prices in 2007   vember 2007 focused here on implementing the amended
were 5.3% lower than in 2006.                                   conduct and information obligations. One new obligation
                                                                is the duty to assess the suitability of the securities orders
According to a study published in May 2007 by news maga-        issued by customers based on their known knowledge and
zine Focus, 33.5% of banking customers already buy financial    experience with such securities transactions. In addition,
products over the internet. Using online current accounts for   when opening a custody account customers are now to be
private payment transactions is by far the most frequently      informed in detail about the bank, its services, how it man-
used online banking function, followed some way behind          ages conflicts of interest as well as inducements received
by equity and fund trading. 23% of online banking customer      by the bank from third parties in connection with customer
respondents preferred savings plans or savings contracts for    transactions. In financial year 2007, comdirect bank initiated
their financial investment, while 15% favoured time depos-      various measures to implement the new requirements.
it, fixed-term or call money accounts.
                                                                The reregulation of the Insurance Provision Act, which came
In 2007, competition in online banking intensified even fur-    into force in May 2007, requires separate training and cer-
ther. More providers than before are offering investors fee-    tification for financial advisers who act as intermediaries
free current accounts or high interest call money accounts,     for insurance products. Record-keeping obligations were
although with restrictions in terms of investment sum and       also increased. As most of comdirect private finance’s advis-
duration. Competition in financial advisory services is also    ers already met the new requirements, only a very small
fiercer following the entry of new providers in the market.     number needed to obtain the special qualifications and at-
                                                                tended part-time courses (see page 62). comdirect private
Through its combination of online business and office-based     finance already has a high standard of record-keeping and
advisory services, comdirect is well positioned in this com-    only minor adjustments were required to meet the new
petitive environment. As a study published in November          record-keeping obligations.
2007 by the Ipos Institute on behalf of the Association of
German Banks shows, 59% of direct bank customers con-
sider personal advice to be important or very important.




52
                                                                                                Group management report •




                                                                  Market offensive
> Market and product offensive
                                                                  As announced, we significantly intensified our market offen-
                                                                  sive carried out as part of comvalue in financial year 2007.
Brand
                                                                  Building on the bank’s successful growth in the first half of
Renewed intensification of our market and product offen-
                                                                  the year, additional funds were made available for further
sive in financial year 2007 measurably raised our brand pro-
                                                                  marketing campaigns in the third and fourth quarters.
file and increased awareness of the bank’s brand. Aware-
ness of the brand increased on both an aided and unaided
                                                                  The advertising measures centred on the two anchor prod-
basis. The willingness of our customers to recommend us
                                                                  ucts in the banking field of competence, the fee-free cur-
to others again exceeded the previous year’s level. In the
                                                                  rent account that pays €1 a month as well as the Tagesgeld
third quarter, we added a sound logo to our “Ihr Geld kann
                                                                  PLUS account launched in November 2006. The call money
mehr” (“More for your money”) claim for use in the elec-
                                                                  account was primarily advertised in general interest maga-
tronic media, with the aim of boosting awareness values
                                                                  zines as well as using TV spots, while a greater proportion of
even further. Using this claim, our campaigns and adver-
                                                                  the budget for the current account was allocated to highly
tising convey the overarching brand values of comdirect
                                                                  frequented online media, with a particular focus here on
bank. We positively surprise and inspire our customers with
                                                                  keyword marketing via internet search engines.
top-performing products and services – high product quality,
first-rate customer service as well as pioneering individual
                                                                  The Tagesgeld PLUS account “Two Worlds Campaign”
solutions – which make the complex financial world easy to
                                                                  achieved a particularly high level of awareness. The advert
understand.
                                                                  features a slow-moving dinghy, representing low interest
                                                                  savings products, which changes into a fast speedboat. In-
The prestigious awards received by comdirect bank in 2007
                                                                  creasingly we have used special formats such as ten second
again confirmed the high level of appreciation on the part
                                                                  TV spots and print inserts. Through advertising efficiency and
of our customers and the general public.
                                                                  creation tests and subsequently several motif variations, we
                                                                  have maintained our advertising efficiency at a very high
In brokerage, we won several major awards. In February
                                                                  level. We also responded flexibly to current market devel-
2007, comdirect bank was the winner in the Online Broker
                                                                  opments, for instance, we promptly changed the interest
2006 readers’ survey carried out by investment magazine
                                                                  rates on Tagesgeld PLUS deposits following the rise in the
Börse Online. comdirect came first in five out of the six cat-
                                                                  key lending rates.
egories covering availability, order execution, customer focus,
product offering as well as website and information. Readers
                                                                  Furthermore, we have continued our cooperations with
of investment magazine, Der Aktionär, voted comdirect bank
                                                                  internet portals and product providers and expanded the
Online Broker of the Year and also ranked us first in terms of
                                                                  number of partners through our cooperation with AOL and
service quality. With regard to brokerwahl.de, we defended
                                                                  GMX. These cooperations enable us to reach additional cus-
our title of Fund Broker of the Year and Certificate Broker of
                                                                  tomer groups and make them aware of the product spec-
the Year. In the Online Banking Award granted for the first
                                                                  trum offered by the bank.
time by the PASS Consulting Group, comdirect bank came first
in the brokerage category. At the same time, our website was
                                                                  Particularly notable here is the sales cooperation launched
selected by a respected jury as the best online offering for
                                                                  with Tchibo GmbH in the fourth quarter. The financial prod-
securities transactions.
                                                                  uct section of its online shop at www.tchibo.de now offers
                                                                  a call money account with attractive interest rates as well
Two further accolades confirm the excellent market position-
                                                                  as an equally attractive 12-month fixed-term deposit and a
ing of our two anchor products in banking. Our Tagesgeld
                                                                  fund-based savings plan incorporating five top funds with
PLUS account came first among the classic call money ac-
                                                                  no front-end load. www.tchibo.de is one of the most highly
counts in a product comparison carried out by Börse Online.
                                                                  frequented eCommerce websites in Germany and enjoys an
We also emerged the test winner in an online current account
                                                                  extraordinarily high level of brand awareness and is backed
test conducted by investment magazine EuroFinanzen.
                                                                  by the nationwide network of Tchibo branches.


                                                                                                                             53
In addition to the marketing campaigns focusing on the            Direct contact with customers provides us with important
Tagesgeld PLUS account and current account, we also car-          information about their needs, which we can use to even
ried out time-limited campaigns for special products and          better tailor our product and service spectrum to the respec-
services. One particular highlight here was a further com-        tive types of bank customer. We also use ongoing market
direct special through which 30,000 investors secured inter-      research to enhance our knowledge of target groups and
est of 6% p.a. on fixed-term deposits up to a sum of €5,000       product expertise and use this information to further im-
for a term of six months. Any customer also opening a cus-        prove how we approach customers and modify the design
tody account received a fund unit worth €50 as a start-up         of our future campaigns.
deposit.
                                                                  Our campaigns and direct customer contact events were
The period from the start of October to mid-November 2007         supported by tailored publications such as the “Verdient
saw the second run of the custody account check carried           Ihr Geld genug?” (“Is your money working hard enough?”)
out in partnership between comdirect and n-tv. This year’s        special issued in conjunction with investment magazine,
campaign met with an even better response than the simi-          FOCUS-MONEY, which looks at the various bank customer
lar campaign in 2006. Investors were able to easily enter         typologies as well as customised investment strategies.
the assets in their custody account via the internet. The de-     In addition, we provided our customers with prompt and
tailed report that participants received free of charge as part   detailed information via our customer magazine, compass,
of the custody account check is based on the Nobel Prize-         and our newsletter, compact. Our e-mail newsletter, com-
winning portfolio theory developed by Harry M. Markowitz.         pact, won the silver medal in this year’s “Best of Corporate
The report provides recommendations for optimising the            Publishing” competition.
portfolio from a yield and risk perspective, which include
the continually quality-checked FondsDiamanten offering           Product offensive
(see page 55). Consequently, participants could even opti-        While the market offensive concentrated to a great extent
mise their portfolios without paying any front-end load. On       on the banking field of competence, in our product offen-
request, this report can be followed by a personal meeting        sive, the emphasis was on brokerage – both trading and our
with an expert adviser from comdirect private finance. The        product range for systematic asset accumulation through
campaign was advertised on n-tv during various timeslots.         securities.

In order to target customers as individually as possible, the     After the successful launch of our One Cancels Other com-
campaigns and cooperations have been accompanied by               bination order in 2006, we extended our order functionali-
a comdirect presence at trade fairs as well as events for         ties with the Next Order function in 2007. This innovative
customers and potential investors. Under the motto, “Ihr          combination order allows traders to link two stock exchange
Geld kann mehr” (“More for your money”) we presented              orders so that the second order is automatically placed after
our offering to a very large and interested audience at           the first is executed. Next Order is suitable for example for
the leading investor trade fair, Invest 2007. Moreover, we        risk hedging in volatile markets or for generating automatic
were the sponsor of the popular trader2007 competition.           profit gains in intraday trading and supports traders in the
With formats such as the Investors Tour, Trader Tour, Com-        implementation of their trading strategies.
modities Tour and Eastern Europe Tour, we presented our
portfolio and trading strategies as well as the associated        We gained six new trading partners for our OTC platform
trading functionalities offered on comdirect’s website. The       (LiveTrading) in June 2007, bringing the total number to
events were carried out in cooperation with stock exchange        28. Our platform for carrying out cost-effective securities
operators, banks and publishing houses. A series of events        transactions quickly and independently of stock exchange
in cooperation with BNP Paribas also offered experienced          sessions now covers nearly all the issuers active in the
investors the opportunity to find out more about technical        OTC market. As a result, our customers have access to an
analysis.                                                         even more extensive product spectrum of leveraged and
                                                                  investment products including equities, interest rate linked



54
                                                                                              Group management report •




products, credits and commodities. The enhanced range           Securities savings plans are playing an increasingly impor-
comprises, for example, additional guarantee and value          tant role in long-term asset accumulation for our custom-
certificates from the new partner issuers.                      ers. Consequently we also set great store by improving and
                                                                extending the range of underlying securities we use. In the
A total of 16 no-fee campaigns were carried out, enabling       reporting year, we increased the number of investment cer-
our customers in LiveTrading to trade fee-free in selected      tificates eligible for savings plans to more than 100. The
leveraged and investment products, including reverse con-       focus here was on investment strategies, which are not cov-
vertible bonds and index-linked products.                       ered in full by funds. During a six-month no-fee campaign
                                                                launched in mid-October 2007, investors have been able
One new central product for fund investors was the              to set up new certificate savings plans from all the issuers
FondsDiamanten offering launched in the second quarter          with no fee. In addition to doubling the number of certifi-
of 2007. 15 top funds, which rate among the best in their       cates eligible for savings plans, another major step was the
respective peer groups and cover all the major investment       introduction of savings plans for 24 ETF index funds in De-
regions and fund categories for a basic investment respec-      cember 2007. A particular feature is that funds, certificates
tively, are permanently available without any front-end         and ETF index funds can be combined in one savings plan.
load from a minimum one-off investment of €1,000. The           This enables our customers to systematically accumulate
selection is reviewed quarterly in line with the funds’ per-    assets using the currently popular and cost-effective ETFs.
formance in their peer groups and the valuations by the
leading rating agencies. This quarterly review ensures that     In banking, we made our current account even more at-
customers are always able to benefit from an attractive se-     tractive with the addition of a new service. Since Novem-
lection. The FondsDiamanten selection is one of the leading     ber 2007, customers have been able to use their VISA card
offerings in the market and strengthens comdirect bank’s        to withdraw cash free of charge from more than 900,000
position as “Fund Broker of the Year” in renowned provider      ATMs in over 100 countries. The ec/Maestro card also of-
comparisons.                                                    fers fee-free cash withdrawal from around 7,000 ATMs in
                                                                Germany.
We updated the selection of the top-ten funds for our fest
& fonds offering, where the sum invested is split equally       “Online convenience” was a particular focus of the product
between fund investments and a fixed-term deposit. These        offensive. The aim here is to make our offering as easy to
funds are available at half the normal front-end load. Cus-     use as possible and to offer customers the highest possible
tomers who invested by mid-February 2008 also secured           level of transparency as well as to automate manual proc-
themselves an attractive 7% interest on their fixed-term        esses using online functions.
deposits.
                                                                Examples in 2007 include
comdirect bank again offered a choice of varied fund
categories from major issuers at considerably reduced front-    •	 continuous account updating, which meets a requirement
end loads through the successful “fund of the month” of-          frequently expressed by customers. Deposits, transfers
fering. Since May 2007, the campaign has also been linked         and direct debits are posted and displayed immediately
on the website to a video outlining the profile and invest-       24 hours a day.
ment strategy of the respective fund. These videos are
produced by n-tv exclusively for comdirect. As part of the      •	 the new option allowing customers to individually config-
“certificate trend of the month” series launched at the start     ure limits for transfers in Germany and abroad.
of the year, investors were able to acquire certificates from
Barclays, DWS, HSBC, HypoVereinsbank, Merrill Lynch, Sal.       •	 the new money transfer assistant, which makes paying
Oppenheim and Vontobel at particularly favourable terms           for online shopping even easier and less error-prone. Data
and conditions.                                                   relating to the request for payment is copied automati-
                                                                  cally from the vendor’s e-mail into the domestic transfer
                                                                  mask.


                                                                                                                          55
•	 a bundle offering, which combines the fee-free current        Through the consistent digitisation of all business process-
     account with attractive credit balance interest on the      es in Customer Services, comdirect bank has made major
     Tagesgeld PLUS account, and enables investors to simulta-   progress towards processing customer enquiries even more
     neously open both accounts in one and the same process.     efficiently. Letters and faxes have also been available in dig-
     To do this, customers are required to enter their details   ital form since November 2007 and are sent electronically
     only once.                                                  to the employees’ workstations in Customer Services in or-
                                                                 der of priority. In line with this, all of the existing documen-
In addition, in February 2007 we added a facility allow-         tation has been converted into digital customer files, whilst
ing customers to issue indemnification orders online. This       maintaining a high level of data protection. All documents
saves comdirect bank and its customers from completing,          are filed automatically on a continuous basis. The main
evaluating and sending paper forms and at the same time          benefit here is that customer enquiries can be answered
simplifies the account opening process. Similar advantages       more quickly.
are offered by the online subscription right trading function
introduced at the end of 2007. This considerably simplifies      The performance indicators for Customer Services in finan-
the execution of capital increases. All the required informa-    cial year 2007 confirm the high level of efficiency. Despite
tion is sent to customers’ electronic post-boxes and they        a 11.1% rise in the number of customer enquiries to 2.47
can issue instructions online.                                   million, the department improved on its good service level
                                                                 in the previous year. Around 81% (previous year: 80%) of
One product innovation that is tangible for all our custom-      all incoming calls were answered by Customer Services
ers was the optimisation of our website under the heading        within 30 seconds. E-mail enquiry response times were cut
“simplexity” (combination of simplicity and complexity).         by around one third.
The aim was to present the complex product and service
spectrum of comdirect bank as simply as possible, struc-         As in the previous year, comdirect bank achieved a very
ture the fields of competence in a transparent manner and        high standard of service for its top customers (comdirect
navigate customers directly to the right offerings in line       first). Here over 90% of all incoming calls were again an-
with their respective requirements. With the aid of usability    swered within 15 seconds. comdirect first is available to
tests and online surveys, the website has been optimised so      all customers carrying out a minimum of 125 trades per
that its modern design and clear product presentation now        half year, with assets under custody of €500,000 or mak-
address the different customer motives even more directly.       ing a monthly deposit into their current account of at least
comdirect received the “Best Session Award” at the “Man          €10,000.
and Computer” industry conference in Weimar for the in-
novative procedure used to further develop the navigation        As in financial year 2006, the availability, friendliness, solu-
structure.                                                       tion-oriented approach and competence of the employees
                                                                 in Customer Services were judged on average to be good
With around 170 million page impressions a month, com-           or better by customers surveyed by telephone and e-mail.
direct’s website remains by far the most frequently visited      2,800 customers were included in the survey.
financial website in Germany.
                                                                 At 8.9%, growth in the number of employees in Customers
Service and infrastructure                                       Services was lower than in the number of customer enquir-
Sustained top quality Customer Services and a high per-          ies the department manages. The further increase in ef-
formance infrastructure are just as important to the suc-        ficiency in Customer Services helped to limit administrative
cess of the bank as the breadth and quality of the product       expenses (see page 65).
spectrum. We intend to provide our customers with expert
and comprehensive assistance as well as the best possible        Efficiency improvements in Customer Services require a par-
technology. A high level of customer satisfaction means that     ticularly high performance infrastructure. Major infrastruc-
fewer customers are willing to switch banks, and secures         ture projects during the reporting year included the digitisa-
long-term customer relationships.


56
                                                                                               Group management report •




tion of business processes as well as the installation and
                                                                 > Customers
system integration of a new telecommunications system,
including voice computer and speech recording, which was
                                                                 Customer base and structure
completed at the start of 2008. The technology base for
                                                                 comdirect bank exceeded the 1 million customer mark in
media integration in Customer Services has therefore been
                                                                 financial year 2007. At the end of the year, we were the
considerably further advanced.
                                                                 financial partner for a total of 1,000,722 modern investors,
                                                                 24.4% more than in the previous year (804,690 custom-
We continued the comIT strategy programme intensified
                                                                 ers). comdirect bank outstripped the rise in 2006 by 47,406.
under comvalue. The programme aims to redevelop and
                                                                 Here it should also be taken into account that the previous
standardise the IT architecture and improve internal proc-
                                                                 year’s figure includes more than 43,000 customers acquired
esses. Advances included the further development of daily
                                                                 from American Express Bank. Net of this effect, the upturn
end processing and online functions on a uniform Java tech-
                                                                 in customer numbers represents growth of more than 85%
nology basis as well as the rapid incorporation of new ap-
                                                                 compared with that of the previous year.
plications in the existing website offering. We achieved our
first milestone with the launch of online subscription rights
                                                                 The major portion of growth in the number of new custom-
trading. With regard to process optimisation, we are guided
                                                                 ers was attributable to the marketing campaigns centred
by the international CMMI (Capability Maturity Model Inte-
                                                                 on the Tagesgeld PLUS account and current account. Our
gration) standards to assess the degree of maturity of the
                                                                 cooperations with internet portals and product providers
application development, as well as ITIL (IT Infrastructure
                                                                 also developed successful. In addition, the willingness of
Library) to standardise core processes in IT Service Manage-
                                                                 our customers to recommend the bank to others is gaining
ment.
                                                                 in importance and in 2007, we gained twice as many new
                                                                 customers through the “Customers attract customers” pro-
To ensure our system performance is even more stable, we
                                                                 gramme as in the previous year. Other growth drivers were
expanded the IT infrastructure, including upgrading the web-
                                                                 time-limited product campaigns such as comdirect special,
servers. Using a new planning tool, we were able to forecast
                                                                 which enabled up to 30,000 new customers to secure 6%
the required server capacity for the relevant following year
                                                                 interest p.a. on fixed-term accounts.
with greater precision.

                                                                 At the same time, through its convincing product and service
Special infrastructure projects in financial year 2007 related
                                                                 offering and increasingly strong positioning as a main bank,
to the technical implementation of the regulatory require-
                                                                 comdirect bank succeeded in retaining the loyalty of an in-
ments resulting from the Market in Financial Instruments
                                                                 creasingly large proportion of its customers on a long-term
Directive Implementation Act (Finanzmarktrichtlinie-Umset-
                                                                 basis. Despite fiercer competition in the current account and
zungsgesetz), the continual updating of current accounts as
                                                                 interest-rate related product segments, the cancellation ratio
well as the introduction of the Next Order trading function.
                                                                 fell again compared to the previous year. This development
In addition, the IT team started to structurally improve proc-
                                                                 was boosted by measures such as the prompt adjustment of
esses within the virtual business intelligence organisation
                                                                 interest rates on deposits following the rise in key lending
relating to the data warehouse in order to support the in-
                                                                 rates.
creasingly target group-oriented product campaigns.

                                                                 By the year-end, the comdirect online business line (broker-
The aggregated indicator developed in line with CMMI
                                                                 age and banking) had 996,599 customers (previous year:
standards to measure IT project success remained within
                                                                 802,102 customers). In the comdirect offline business line
its target range of around 90% during the financial year.
                                                                 (advice), the number of customers increased by 62.2%
This success ratio encompasses deadline and budget com-
                                                                 to 32,469 (previous year: 20,024). With over 12,000 new
pliance, the error rate on conclusion of the project as well
                                                                 customers, our advisory subsidiary again outperformed its
as the level of client satisfaction.
                                                                 target.




                                                                                                                            57
Customer activity                                                       At the end of 2007, we maintained 337,578 current ac-
In addition to increasing the total number of customers,                counts for customers, 77,244 accounts or 29.7% more than
comdirect bank succeeded in extending the loyalty of its                the year before (260,334 current accounts). As a result of
customers to the bank and its product spectrum. The pro-                fiercer competition in online current accounts and increased
portion of customers using at least two products rose signifi-          advertising for Tagesgeld PLUS, the growth rate came in
cantly compared to the previous year, climbing from 38%                 below the previous year as expected. In addition to the
to 44%. Of this figure, around 19% use at least three of the            marketing campaigns, growth is due to a great extent to
bank’s products.                                                        cooperations and cross-selling effects.

Strong growth in Tagesgeld PLUS accounts considerably ex-               The number of custody accounts has risen faster than ex-
ceeded the bank’s forecasts. As of the end of 2007, our an-             pected and at the end of the year totalled 645,893. This
chor product for flexible and short to medium-term invest-              corresponds to a rise of 6.6% on the previous year (606,110
ments with attractive interest rates had already attracted              custody accounts). A major part of this growth is based on
400,414 customers (previous year: 66,840). This reflected               custody account openings in relation to setting up a current
the impact of the marketing campaign as well as favourable              account or Tagesgeld PLUS account. With regard to securities
interest rate conditions. A significant proportion of Tages-            savings plans, we built seamlessly on the pleasing growth
geld PLUS accounts stems from cross-selling effects in the              in the previous year. The number of plans rose by 24.4% to
portfolio, especially among current account and custody ac-             150,196 (previous year: 120,723). Of this, 95.9% (previous
count customers.                                                        year: 94.7%) was attributable to fund-based savings plans.
                                                                        Measures taken at the end of the previous year – namely
The large number of existing customers using our Tages-                 the doubling of the fund offering and halving of the savings
geld PLUS account did not adversely affect our fixed-term or            rate to €25 – further enhanced the appeal of our savings
time deposits. Although the number of fixed-term and time               plans. In the current year, we also doubled the offering for
deposit accounts fell from 163,881 in the previous year to              certificates eligible for savings plans and launched savings
currently total 132,455, the deposit volume increased. We               plans for ETF index funds. This makes our savings plan offer-
are reaping the benefit of our strategy of offering perma-              ing one of the leaders in the market and we are benefiting
nently attractive terms and promptly adjusting interest rates           on an above-average basis from the trend towards system-
on our products following interest rate hikes by the ECB (see           atic asset accumulation.
page 60).




Number of customers as of 31.12.             Number of Tagesgeld PLUS accounts                Number of current accounts as of 31.12.
(in thousand)                                as of 31.12. (in thousand)                       (in thousand)


                          1,000.7                                           400.4                                         337.6

                804.7                                                                                          260.3
     656.1

                                                                                                    156.0



                                                                 66.8

                                                     0
      2005      2006       2007                    2005          2006        2007                   2005       2006       2007




58
                                                                                                       Group management report •




Product penetration, that is the use of individual products
                                                                        > Business performance in brokerage
in relation to the total number of customers, increased for
our key financial products in financial year 2007. The excep-
                                                                        Given the lively stock market environment, our customers
tion is our custody account which increased moderately but
                                                                        placed considerably more orders as part of their trading
steadily by comparison with the very sharp upturn in the
                                                                        strategies than in 2006. Up 14.2%, to 12.58 million, the
anchor products in banking.
                                                                        number outstripped the already good level of the previous
                                                                        year (11.02 million). Of these, we executed 9.95 million
Customer satisfaction
                                                                        orders, which corresponds to an increase of 16.1%. The ex-
We maintained the high customer satisfaction values of the
                                                                        ecution rate stood at 79.1% (previous year: 77.8%). The
previous year. The loyalty levels determined by external
                                                                        average number of orders per custody account amounted
market research organisations were particularly high for our
                                                                        to 15.9 (previous year: 14.7 orders).
current account and Tagesgeld PLUS account. This confirms
our assessment that these two products play a major role
                                                                        The consistently high level of trades throughout the year
in a long-term customer-bank relationship. The willingness
                                                                        was striking and the otherwise customary downturn in the
of customers to recommend the bank to others has also
                                                                        summer months did not occur. This was partly because of
stabilised at a high level. Moreover, the customer satis-
                                                                        the extraordinarily strong volatility in the wake of the dislo-
faction survey showed that a major portion of customers
                                                                        cations in the US mortgage market.
recognised the specific advantage of using comdirect bank
compared to the competition.
                                                                        With regard to the types of securities traded, the weight-
                                                                        ing shifted further towards certificates and funds. This is in
Customer assets
                                                                        line with the growing importance of asset accumulation
Assets under custody, that is the total portfolio, funds and
                                                                        and provisioning via securities in brokerage. Monthly securi-
deposit volumes, reached a new record in 2007. At the
                                                                        ties savings accounted for 22.4% of trades (previous year:
year-end, the total stood at €20.37bn, up 24.3% on the
                                                                        20.6%). 33.5% (previous year: 38.0%) was attributable to
previous year (€16.39bn). The average assets under cus-
                                                                        equities, 21.8% (previous year: 20.9%) to certificates and
tody per customer amounted to €20,358 and were virtually
                                                                        12.4% (previous year: 10.5%) to warrants.
unchanged on the previous year (€20,364).




Number of custody accounts as of 31.12.      Number of securities savings plans                Volume of total assets under custody
(in thousand)                                as of 31.12. (in thousand)                        as of 31.12. (in € billion)


                           645.9                                             150.2
                606.1
     550.9
                                                                120.7
                                                                                                                                      7.69
                                                   92.4                                                                 4.63
                                                                                                          2.72
                                                                                                                                      4.02
                                                                                                                        3.70
                                                                                                          3.02


                                                                                                                        8.06          8.67
                                                                                                          7.14


      2005       2006       2007                   2005         2006         2007                    2005            2006        2007

                                                                                                  Portfolio volume          Deposit volume
                                                                                                  Funds volume



                                                                                                                                             59
Trades by type of securities (in %)
                                                                            > Business performance in banking
                                                  2007               2006
Equities                                              33.5           38.0   comdirect bank has moved into a whole new dimension
Warrants                                              12.4           10.5   in its banking field of competence. The deposit volume
Certificates*                                         21.8           20.9   climbed 66.1% to €7.69bn (previous year: € 4.63bn). De-
                                                                            posits therefore already represented 37.7% of the assets
Funds*                                                 9.1            9.0
                                                                            under custody. The higher deposit volume enabled us to
Securities savings plans                              22.4           20.6
                                                                            generate increased net interest income and improve our
Bonds and other                                        0.7            1.1
                                                                            earnings that are independent of trades.
* Excluding securities savings plans

                                                                            By far the main factor driving this development was the
As a result of the higher order figures, securities turnover
                                                                            Tagesgeld PLUS account, which accounted for around 42.5%
rose to €52.47bn (previous year: €46.85bn), an increase of
                                                                            of customer deposits at the end of 2007. The volume of
12.0%. In contrast, the average order volume per executed
                                                                            fixed-term and time deposit accounts also rose. This suc-
order fell slightly from €5,465 to €5,273. The main reason
                                                                            cess is due to the permanently attractive interest rate offers
for this was the higher proportion of securities savings as
                                                                            from comdirect bank. Following the two interest rate hikes
the average volume per individual trade here is lower.
                                                                            by the ECB in March and June 2007, we promptly adjusted
                                                                            our terms and conditions so that our customers were able
At € 8.67bn, the portfolio volume (excluding funds) again
                                                                            to benefit quickly from the changes in the framework pa-
outstripped the previous year’s figure (€8.06bn). Around
                                                                            rameters. Despite key lending rates remaining unchanged
69.5% (previous year: 35.0%) of the rise in the portfolio
                                                                            in the eurozone, we further improved the terms and con-
volume is attributable to net fund inflows. Another reason
                                                                            ditions for customers on our time deposit accounts in the
for this development was the overall higher share prive
                                                                            third quarter, thereby taking advantage of the favourable
level.
                                                                            situation in the money market. For our fest & fonds offering,
                                                                            which combines a fixed-term investment with a choice of
The trend in the funds volume was also positive. At the
                                                                            ten top funds, we even raised the fixed-term interest rates
year-end, the funds volume was up 8.6% on the previous
                                                                            with a term of six months in October by a whole percentage
year (€3.70bn) to €4.02bn. As in the previous years, regular
                                                                            point to 7%.
payments into fund-based savings plans had a stabilising
effect.
                                                                            The volume of loans to private customers increased year-
                                                                            on-year from €208.2m to €216.5m. There was a moderate
                             Orders placed and executed (in million)        rise in both overdraft facilities on current accounts and loans
                                                                            to purchase securities. As of the reporting date, loans to
                                                                            purchase securities accounted for around 86.6% (previous
                                                             12.58          year: 88.7%) of the lending volume. The consumer loan
                                              11.02                         offering has no impact on the lending volume of the bank
                                                                 9.95       as comdirect bank acts exclusively as an intermediary here.
                                 8.46             8.57                      This also applies to the new building finance range (see
                                       6.69                                 page 43).




                                   2005        2006           2007

                                  Placed
                                  Executed



60
                                                                                                 Group management report •




                                                                 New comdirect private finance offices
> Business performance in advice
                                                                 January 2007           Münster

The advice field of competence continued to gain impor-          February 2007          Karlsruhe
tance for the development of the bank as a whole in finan-       April 2007             Bremen, Dresden
cial year 2007. Through campaigns such as the n-tv custody       June 2007              Chemnitz
account check in conjunction with the FondsDiamanten             July 2007              Kassel
offering, as well as better access to the bank’s advisory        September 2007         Heidelberg
services via comdirect’s website, the services of comdirect      December 2007          Aachen, Saarbrücken
private finance were integrated even more closely with the
bank’s online offering.
                                                                 As of the 2007 year-end, our advisory services were being
                                                                 used by 32,469 customers (previous year: 20,024 custom-
The main operating targets for 2007 were exceeded. We
                                                                 ers), which corresponds to a rise of 62.2%. The number of
opened nine new offices (see table), increasing the number
                                                                 advisers increased during the course of the year from 158
of offices to 27. Through these new offices, comdirect pri-
                                                                 to 202. In terms of figures, each adviser was responsible for
vate finance expanded its presence in medium-sized cit-
                                                                 161 (previous year: 127) customers.
ies in particular. Around three quarters of comdirect bank
customers are reached via the 27 offices. The fact that it is
                                                                 Business volume also rose considerably. Commission in-
less than 50 kilometres to the nearest office plays a decisive
                                                                 come amounted to €23.0m, exceeding the previous year’s
role here.
                                                                 figure (€16.5m) by 39.1%.

                                                                 Around 55% of the income was generated by comdirect pri-
                                                                 vate finance through the placement of old-age provisioning
                                                                 products. As in the insurance industry in general, the share
                                                                 attributable to state-subsidised Riester and Rürup pensions
                                                                 notably increased. With regard to Riester pensions, there
                                                                 was an increase in the share attributable to fund unit-linked
                                                                 products. Private pension insurance also gained in impor-
                                                                 tance for the intermediary business. Overall, around 76%
                                                                 was attributable to the three policy types. Traditional life
                                                                 assurance lost further market share.

                       Customers of comdirect private finance
                       as of 31.12.                              The placement of capital investment products, especially in-
                                                                 vestment funds, and investments in yield-oriented closed-
                                                                 end funds was again important in financial year 2007. Both
                                                   32,469
                                                                 product areas contributed a total of 31% to commission
                                                                 income, whereby the weighting shifted slightly towards
                                                                 financial investment products. The n–tv custody account
                                        20,024                   check campaign in 2006 was followed by a large number
                                                                 of advisory meetings, which resulted in new customer re-
                                                                 lationships and shifts in portfolio investments. More than
                             8,240                               24,000 investors took part in the second run of the n-tv
                                                                 custody account check in the fourth quarter of 2007. Experi-
                                                                 ence shows that here too, some of these customers will
                              2005       2006       2007         take advantage of further advice in order to optimise their




                                                                                                                           61
portfolios in line with their personal risk profile and respec-
tive personal situation.

9% of commission income generated by comdirect private
finance stemmed from the placement of comdirect bank
products in the banking field of competence. The current
account and Tagesgeld PLUS account are particularly impor-
tant here.

Many more advisers qualified as certified custody account
advisers by the end of 2007. comdirect private finance car-
ried out this high quality training in cooperation with the
Institute for Asset Accumulation (Institut für Vermögensauf-
bau). Moreover, a small number of advisers attended part-
time courses to meet the increased requirements of the
Insurance Provision Act in full. comdirect private finance also
made preparations for the imminent reregulation of the In-
surance Contract Act (see page 85).




62
                                                                                                                   Group management report •




> Earnings situation


                                                                                     a special dividend (see page 68) also impacted positively
> Result for the group
                                                                                     on the return on equity.

comdirect bank again achieved a record result in financial
                                                                                     Consolidated net profit increased by 1.2% to €57.7m (previ-
year 2007. With pre-tax profit of €90.5m, the result exceed-
                                                                                     ous year: €57.0m), producing earnings per share of €0.41,
ed the previous high recorded in 2006 (€85.6m) by 5.7%.
                                                                                     up from €0.40 in the previous year. The tax rate increased
The bank therefore also surpassed its profit target, which it
                                                                                     from 33.4% in 2006 to 36.2%. This reflects the impact of
had already revised upwards to more than €80m after pub-
                                                                                     the revaluation of deferred taxes in light of the corporate
lication of the nine-month figures. We achieved this new
                                                                                     tax reform. Moreover, the tax charge in 2006 was reduced
record despite the fact that financial year 2007 also saw
                                                                                     through capitalisation of a corporation tax credit.
extensive investment in growth. The rise in administrative
expenses of more than €50m is largely due to the comvalue
growth programme.
                                                                                     > Proposal for appropriation of profits
The bank’s earnings totalled €277.9m in 2007 (previous
                                                                                     The Board of Managing Directors and the Supervisory Board
year: €221.2m). Growth was driven essentially by the sig-
                                                                                     will propose to the annual general meeting in Hamburg
nificant rise in net interest income before provisions. In con-
                                                                                     on 9 May 2008 that the distributable profit of comdirect
trast, net commission income edged up only slightly com-
                                                                                     bank AG of €57.9m again be paid out in full. This equates to
pared to the previous year’s very high level. Administrative
                                                                                     a dividend of €0.41 per share (previous year: €1.40 includ-
expenses rose considerably as a result of the intensified
                                                                                     ing €1.00 special dividend).
market and product offensive. The cost/income ratio there-
fore increased to 67.0% from 60.4% in the previous year.
The return on equity improved from 14.0% to 16.3%. This
ratio is calculated on the basis of pre-tax profit and average
equity (excluding revaluation reserve) during the reporting
period. The fall in equity resulting from the distribution of




Consolidated profit before and after tax      Dividend                                                     Net interest income before provisions
(in € million)                                (in € per share)                                             (in € million)


                             90.5                                         0.401)         0.412)                                        127.2
                85.6


                                                                                                                             88.7
                    57.0         57.7
   52.8                                                  0.24
                                                                                                                  64.0
       34.2




    2005         2006         2007                      2005                  2006        2007                   2005        2006       2007

   before tax                                 1) excluding special dividend
                                              2) Dividend proposal
   after tax



                                                                                                                                                   63
> Net interest income                                            > Net commission income

Net interest income before provisions exceeded the €100m         Net commission income reached €152.7m, again exceed-
for the first time – and notably. At €127.2m, this is 43.3%      ing the extraordinarily high figure of the previous year of
higher than the previous year’s figure (€88.7m). The sharp       €136.6m. Commission income of €185.6m (previous year:
improvement is both volume and margin related. On the            €164.3m) was countered by expenses of €32.9m (previous
one hand, the higher deposit volume played its part as did       year: €27.7m).
favourable conditions for the reinvestment of customer de-
posits in the money and capital markets on the other.            92.5% (previous year: 94.0%) of net commission income
                                                                 was generated in the securities business. Order commis-
Interest income doubled to €287.7m (previous year:               sions rose year-on-year by 12.7% and again contributed the
€143.1m). Conversely, the increased deposit volume and           major portion of net commission income. Commission in-
interest rates led to considerably higher interest expenses of   come from front-end loads and sales follow-up commission
€160.6m (previous year: €54.3m). As in the previous year,        rose by 3.4%. As we have considerably cut the front-end
this includes the costs of the provision for above-average in-   load on an ever increasing number of the funds we offer,
terest on fixed-term deposits as part of comdirect special.      or in the case of FondsDiamanten dispensed with them
                                                                 completely, sales follow-up commission accounts for an in-
Provisions for possible loan losses fell compared to the         creasingly large share of commission income from funds
previous year (€3.4m) to €1.9m. This was primarily due to        business.
write-backs totalling €2.1m as well as income received on
written-down claims (see note 30 on page 106).                   comdirect private finance increased its net commission
                                                                 income to €9.2m (previous year: €6.2m). Its share of the
                                                                 group’s net commission income consequently rose from
                                                                 4.5% to 6.0%. This also highlights the growing importance
                                                                 of advice for comdirect bank.




                       Net commission income                     Net commission income and net interest
                       (in € million)                            income on a quarterly comparison 2007
                                                                 (in € million)

                                                    143.6         39.1       38.0       38.4       37.2 36.5
                                        130.4
                                                                                            32.7
                                                                      28.6       29.4
                          96.6




                                              6.2       9.2
                                 2.4

                            2005          2006       2007           Q1         Q2           Q3        Q4

                          comdirect online                          Net commission income
                          comdirect offline                         Net interest income before provisions



64
                                                                                                                 Group management report •




> Result from investments                                                > Trading result
  and securities portfolio
                                                                         The trading result of €–0.5m (previous year: €–0.3m) reflects
                                                                         the fair value measurement of interest rate swap transac-
comdirect’s Treasury department utilised the favourable
                                                                         tions used to manage the interest book of deposit positions
trend in interest rates in the money and capital markets in
                                                                         since the fourth quarter of 2006, which are not allocated to
its active portfolio management. We sold securities with a
                                                                         hedge accounting.
relatively low interest rate in the current market environ-
ment early and replaced them with higher income paper.
The early sale generated losses in 2007 which were re-
                                                                         > Result from hedge accounting
flected in negative income from investments and securities
portfolio of €– 9.6m (previous year: €– 6.3m).
                                                                         The result from hedge accounting of €0.06m (previous year:
                                                                         €–0.05m) includes the results from valuations as part of
The total from net interest income before provisions and
                                                                         hedge accounting. Underlying transactions and the deriva-
income from investments and securities portfolio amounted
                                                                         tive financial instruments used to hedge them are recog-
to €117.5m (previous year: €82.4m).
                                                                         nised in the income statement and measured at fair value.
                                                                         The counter effects are netted off against each other within
                                                                         the item.
> Other operating result

The other operating result of €10.1m (previous year: €6.0m)
                                                                         > Administrative expenses
includes income from administrative services carried out by
comdirect bank AG for Commerz Service Gesellschaft für
                                                                         As expected, there was a significant increase in administra-
Kundenbetreuung mbH of €2.3m (previous year: €1.6m).
                                                                         tive expenses to €187.4m (previous year: €135.6m). The
An additional €2.5m (previous year: €2.0m) is based upon
                                                                         rise on the cost-side stems primarily from the propelled
the income of charging on costs to advisers in the comdirect
                                                                         comvalue growth programme, as a result of which other
private finance offices. By recognising write-backs of provi-
                                                                         administrative expenses increased. The rise in order-related
sions and accruals in the income statement, we achieved
                                                                         costs generated by the positive trend in trades had a far less
a result of €4.7m (previous year: €2.8m).




                      Administrative expenses                            Structure of other administrative
                      (in € million)                                     expenses (in € million)




                                                                10.1                                               5.3
                                                                                                                  22.7

                                                   9.7                                                            22.6
                                                                                                    2.1
                                    9.4                                                            18.7           12.8
                                                             137.6                   1.9
                                                                                    16.4
                                                 92.8                                              21.3
                                  80.3                                              19.8
                                                                                                   10.4
                                                                                        8.5                       74.3

                                                                                    33.7           40.3
                                  29.6           33.1             39.7

                             2005           2006         2007                  2005             2006        2007

                          Personnel costs          Depreciation             Marketing                  Sundry administrative
                          Other administrative                              Consulting                 expenses
                          expenses                                          External services          Communications

                                                                                                                                        65
significant effect. In the propelled growth phase too, com-
                                                                  > Earnings situation in comdirect
direct bank implements cost discipline and continually real-
ises efficiency potential. For example, postal costs decreased
                                                                    online business line
through the launch of online indemnification orders.
                                                                  comdirect’s online business line (brokerage and banking)
At €137.6m, other administrative expenses were up 48.3%           reported pre-tax profit of €89.3m for financial year 2007
on the previous year (€92.8m). This corresponded to 73.4%         (previous year: €85.4m). The cost/income ratio in the busi-
of administrative expenses (previous year: 68.4%). This was       ness line amounted to 66.3% (previous year: 59.4%).
essentially due to marketing costs, which totalled €74.3m
(previous year: €40.3m). Other administrative expenses
for external services amounted to €22.6m (previous year:          > Earnings situation in comdirect
€21.3m). The item includes expenses for services procured           offline business line
from Commerzbank AG for IT projects.

                                                                  In comdirect’s offline business line (advice), with pre-tax
Personnel costs rose by 20.0% to €39.7m (previous year:
                                                                  profit of €1.2m we clearly remained in the profit zone after
€33.1m). The increase is one the one hand due to the ex-
                                                                  having reached break-even in 2006 (€0.2m). In addition to
pansion in the number of employees on average for the
                                                                  net commission income, the item includes the other operat-
year. On the other hand the increase in the provisions for
                                                                  ing result of €2.5m (previous year: €2.0m), which is based
anticipated bonus payments also affected the total. Per-
                                                                  on the income from charging on costs to advisers or offices.
formance-related compensation components increased as
                                                                  The cost/income ratio in the comdirect offline business line
a result of the bank’s outstanding earnings performance.
                                                                  improved from 97.9% to 89.8%.

At €10.1m, depreciation on office furniture and equipment
and intangible assets was virtually unchanged on the previ-
ous year (€9.7m).




                       Pre-tax profit by business line
                       (in € million)



                                        85.4         89.3



                          56.3




                              – 3.5            0.2          1.2


                            2005          2006           2007

                          comdirect online
                          comdirect offline



66
                                                                                                               Group management report •




> Financial situation and assets


The financial situation and assets of the bank in financial             In contrast, at €5.3m additions to fixed assets were mark-
year 2007 were again characterised by a comfortable level               edly higher than in the previous year (€4.4m). A consider-
of equity and sufficient liquidity at all times. The expenses           able investment was made in comdirect bank’s new tele-
for the comvalue growth programme were again financed                   communications. The addition also includes expenses for
in full out of current cash flow.                                       the ongoing expansion of the bank’s IT infrastructure and
                                                                        architecture.

> Investments                                                           There are no material subsequent financial obligations
                                                                        under current investment projects for financial years 2008
As in the previous year, the comvalue growth programme                  and 2009.
only moderately affected the bank’s investment volume, as
the costs were again largely charged directly as expenses.
                                                                        > Assets and financing
At €11.7m, the balance sheet additions to fixed assets were
considerably down on the previous year’s figure of €20.7m.              Balance sheet structure
€11.5m (previous year: €20.2m) was attributable to the                  As a result of the higher deposit volume, the consoli-
comdirect online business line and €0.3m (previous year:                dated balance sheet total rose to €8.23bn (previous year:
€0.5m) to the comdirect offline business line. Investments              €5.30bn). Of this, €7.69bn (previous year: €4.63bn) is at-
were countered by depreciation of €10.1m (previous year:                tributable to liabilities to customers. This equates to 93.5%
€9.7m).                                                                 of the balance sheet total (previous year: 87.3%).

Additions to intangible assets amounted to €6.4m. Among                 As a result of the large number of Tagesgeld PLUS accounts,
other items, this figure includes expenses for the relaunch of          the deposit structure by remaining lifetimes (see note 58
comdirect’s website and the extension of the internet func-             on page 121) shifted towards shorter maturities. As of the
tionalities. The previous year’s figure of €16.2m was affected          2007 reporting date, 76.2% (previous year: 67.1%) of cus-
to a great extent by the acquisition of the customer base from          tomer deposits were due on demand. 18.9% (previous year:
American Express Bank.                                                  26.7%) have a remaining lifetime of up to three months
                                                                        and 4.9% (previous year: 6.2%) have longer lifetimes.




                       Investments                                      Structure of customer deposits
                       (in € million)                                   (by remaining lifetimes in %)




                                                                                     6.5             6.2           4.9
                                                     4.4
                                                                                   21.9                           18.9
                                                                                                 26.7




                                                                  5.3
                                     2.4         16.2                                                             76.2
                                                                                   71.6          67.1

                                     6.7                          6.5


                              2005            2006         2007               2005            2006         2007

                          Intangible assets                                Due on demand             Up to three months
                           Fixed assets                                    and unlimited in          More than three
                                                                           time                      months


                                                                                                                                      67
The customer deposits are matched on the assets side by              tomer deposits on Tagesgeld PLUS accounts. The nominal
claims on banks and investments and securities portfolio.            volume of these transactions amounted to €600.0m as of
As a result of the movement in interest rates and the high           31 December 2007 (previous year: €400.0m).
proportion of Tagesgeld PLUS deposits, we invested some
of the deposit volume in short-term investments in the               The slight rise in claims on customers of 4.0% to €216.5m
money market. Claims on banks rose accordingly by 64.5%              (previous year: €208.2m) reflects the increased volume of
to €4.81bn (previous year: €2.92bn). Of these, 85.1% (pre-           overdraft facilities and loans to purchase securities.
vious year: 73.8%) had maximum remaining lifetimes of
three months. The investments and securities portfolio,              Equity
which essentially comprises Pfandbriefe, bank bonds and              As of the 2007 reporting date, the equity of the comdirect
bank bearer bonds from financial institutions, increased by          bank group amounted to €478.2m compared to €620.3m in
44.4% to €2.95bn (previous year: €2.04bn).                           the previous year. The downturn is essentially due to dis-
                                                                     tribution of the 2006 dividend in financial year 2007. This
comdirect bank concluded interest rate swaps to hedge                included the special dividend of €140.8m withdrawn from
against market value fluctuations on individual underly-             the capital reserve.
ing transactions. Including accrued interest, the derivative
hedging instruments produced positive fair values of €1.8m           In addition, the movement in the revaluation reserve af-
(previous year: €3.2m) and as in the previous year, nega-            fected the level of equity. After €– 2.9m as of 31 December
tive fair values of €0.7m. As of 31 December 2007, the               2006, the reserve amounted to €– 7.9m. The main reason
nominal volume of the underlying and hedging transac-                for this is the negative change in the value of bonds as a
tions amounted in each case to €173.0m (previous year:               result of interest rate changes and the widening of credit
€233.0m).                                                            spreads and liquidity premiums, which are recognised in the
                                                                     revaluation reserve with an income-neutral effect. Through
comdirect bank reported a positive fair value from trading           one of its special funds, comdirect bank also invested to a
derivatives of €13.0m (previous year: €0.3m negative mar-            minor extent in securities backed by financial assets. These
ket value). This relates to the interest rate swaps used for         exclusively comprise European loans. In light of the corpo-
interest rate management purposes in connection with cus-            rate tax reform, we carried out a revaluation of the deferred




                      Structure of consolidated balance sheet –      Structure of consolidated balance sheet –
                      ASSETS (in € million)                          LIABILITIES (in € million)



                                                               260
                                                               216                                                 61


                                                           2,946
                                                  129
                                                  208                                                 54

                                                2,040                                                          7,694
                                     39
                                    198                                                  50
                                                                                                 4,627
                                  1,780                    4,810
                                                                                  2,718
                                                2,924
                                  1,350
                                                                                    599              620          478
                            2005           2006         2007                2005              2006         2007

                         Claims on banks          Claims on             Equity                       Other liabilities
                                                  customers
                         Investments and                                Liabilities to
                         securities portfolio     Other assets          customers


68
                                                                                                Group management report •




taxes on the credit side resulting from our portfolio of avail-
                                                                  > Cash flow statement
able-for-sale securities, which also impacted adversely on
the revaluation reserve.
                                                                  As in the previous year, the cash flow from operating activi-
                                                                  ties totalling €322.0m (previous year: €124.2m) was deter-
Own funds calculated according to BIS amounted to €420m
                                                                  mined especially by growing customer deposits and their
as of 31 December 2007 (previous year: €563m). Risk
                                                                  reinvestment in the capital market. The capital inflow from
weighted assets according to BIS increased to €1,963m
                                                                  customer deposits of €3.05bn (previous year: €1.90bn) is
(previous year: €1,378m).
                                                                  matched by a rise in claims on banks as well as the securi-
                                                                  ties portfolio of a comparable amount.
Under the expiring stock option programme, comdirect bank
issued a total of 3,104,580 subscription rights to employees,
                                                                  As in the previous year (€–11.3m), the cash flow from in-
of which the last were issued in 2004. By the 2007 report-
                                                                  vestment activities remained slightly negative at €–11.7m.
ing date, 1,609,992 subscription rights had lapsed. To date,
720,815 options have been exercised, 396,643 of these in
                                                                  The cash flow from financing activities of €–194.8m (pre-
financial year 2007. The subscribed capital increased as a
                                                                  vious year: €–33.4m) results from payment of the record
result in the reporting year by €396,643 to €141,220,815.
                                                                  dividend in the second quarter of 2007.
In accordance with the stipulations of the stock option pro-
gramme, any amount exceeding the calculated nominal
                                                                  Partly to meet the higher minimum reserve requirements
value of the subscription price was posted to the capital
                                                                  as a result of growth in deposits, comdirect bank’s cash re-
reserve.
                                                                  serve stood at €198.4m as of the reporting date (previous
                                                                  year: €82.9m).
Provisions
The volume of provisions amounted to €18.2m (previous
year: €20.2m) as of 31 December 2007. A detailed break-
                                                                  > Deposit insurance
down of provisions can be found in note 53 on pages 116
to 118.
                                                                  comdirect bank AG is a member of the deposit insurance
                                                                  scheme of the Bundesverband deutscher Banken e.V.,
                                                                  through which each customer was insured up to a deposit
                                                                  amount of €162.6m as of the 2007 reporting date. com-
                                                                  direct bank AG also belongs to the German banks’ compen-
                                                                  sation fund (Entschädigungseinrichtung deutscher Banken
                                                                  GmbH).



                                                                  > Multi-year overview

                                                                  The main key indicators of comdirect bank are shown in a
                                                                  multi-year overview on pages 148 and 149.




                                                                                                                            69
> Personnel report


> Number of employees                                               > Executive and team development

The growth of comdirect bank is also reflected in the number        We continued our comfly training programme for the sys-
of employees. In financial year 2007, the bank again recruit-       tematic development of executives and teams at comdirect
ed a large number of employees to meet the increasing re-           bank in financial year 2007. Through comfly we are enhanc-
quirements associated with a larger customer base, broader          ing managerial expertise on the one hand, and through ad-
product spectrum and expanded technical infrastructure. As          ditional team workshops improving processes both within
in the previous year, the focus was on new staff in Customer        and across teams on the other. The programme kicked off in
Services, which faces particular challenges as a result of the      2007 with executive training on the topics “Target-oriented
considerable rise in the number of customer enquiries. New          cooperation” and “Managing change processes”. 54 execu-
talent was also recruited for our IT specialist teams with a        tives from the bank attended these courses. Team work-
particular focus on application development.                        shops will follow in 2008 with a focus on management and
                                                                    team feedback.
At the year-end, comdirect bank had a total of 824 employ-
ees (previous year: 732): 786 (previous year: 705) were
active in the comdirect online business line and 38 (previ-         > Culture of innovation
ous year: 27) in the comdirect offline business line. Advisers
at comdirect private finance are self-employed commercial           Through the close integration of brokerage, banking and
agents and are not included in the employee statistics.             advice, comdirect bank represents an innovative banking
On average for the year, the increase amounted to 14.1%             format. A particular aim therefore is to promote a culture
group-wide and 13.1% on a full-time basis. Compared to              of innovation and anchor the core values of the brand in all
the growth reported by the bank in terms of customers and           areas of the bank. In financial year 2007, two new formats
products, the rise in the number of employees was again             were introduced here. The first Innovation Forum was held
very moderate. As in the previous year, this was primarily          in March and the workshop participants discussed the latest
due to efficiency improvements in Customer Services, which          trends and over 200 innovative ideas for customers and the
relate largely to the digitisation of manual processes.             bank were developed. Another Innovation Forum is set to
                                                                    be held in 2008. In the new comdirect academy lecture




                       Number of employees at comdirect bank        Number of advisers at comdirect
                       as of 31.12.                                 private finance as of 31.12.


                                                                                                202
                                                              38
                                                  27                                  158
                                    20

                                                                           109
                                                              786
                                                 705
                                   618




                            2005          2006         2007               2005       2006       2007

                          comdirect online
                          comdirect offline



70
                                                                                              Group management report •




series, external experts talk about various topic trends in
                                                                > Training and continued professional
the direct banking market, for example the latest trends in
                                                                  development
customer-bank relationships.

                                                                The comahead training programme for Customer Services
The culture of innovation at the bank is also evident in the
                                                                continued in 2007. The programme focused on the digi-
large number of suggestions submitted by the employees.
                                                                tisation of new business processes and the resulting new
The ongoing process of improvement in Customer Services,
                                                                requirements in the multi-channel business. The need for
the department with the greatest number of employees,
                                                                further training was assessed in close cooperation with
led this year to 118 measures aimed largely at improving
                                                                Customer Services executives. The key elements of com-
internal processes and systems. As part of our staff sug-
                                                                ahead comprise communications, specialist and technology
gestion scheme, awards were presented for 61 suggestions
                                                                training, predominantly by in-house speakers. Individual
(previous year: 59).
                                                                development measures are also implemented. The training
                                                                is offered as basic and further training according to require-
                                                                ments, and after successful participation, employees can
> Responsible employer
                                                                elect to obtain a certificate.

comdirect bank is a responsible employer. We promote the
                                                                We are also performing a key function as a training or-
professional and personal development of our employees
                                                                ganisation. In 2007, ten trainee bankers commenced their
as well as work/life balance, for example by implement-
                                                                training with us, bringing the total number to 25. comdirect
ing flexible working time models. We also operate an Em-
                                                                bank received a certificate for promoting young talent from
ployee Assistance Programme (EAP), which is very popular.
                                                                the Bundesagentur für Arbeit (German Federal Employment
The basis of the EAP is a telephone advisory service which is
                                                                Agency) in acknowledgement of the bank’s outstanding
available round the clock and can be used by all employees
                                                                commitment to professional training.
and direct members of their family on an anonymous and
completely confidential basis.
                                                                The bank successfully completed its specialist trainee pro-
                                                                gramme comdirect graduates in the reporting year. The
At the request of the employees, comdirect bank also
                                                                graduates are now employed as specialists in various de-
launched the comfit health initiative. The first event was a
                                                                partments. The next programme starts at the beginning of
health awareness day. In addition, flu immunisations were
                                                                2008.
offered to all employees on a voluntary basis. Other meas-
ures included the launch of fitness programmes.
                                                                The start of financial year 2008 also saw the successful con-
                                                                clusion of the second Senior Professionals programme. Ten
                                                                employees demonstrating above-average performance and
                                                                a great deal of development potential gained qualifications
                                                                for future specialist and managerial roles.

                                                                As in the previous year, the training budget totalled around
                                                                €0.5m. In addition to the special internal continued pro-
                                                                fessional development programmes, this includes a large
                                                                number of specialist training courses such as IT application
                                                                seminars. On average, the participation for each employee
                                                                in 2007 was 3.5 seminar days.




                                                                                                                           71
                                                                How many performance shares are paid out depends in
> Compensation system
                                                                equal part on the performance targets TSR outperformance
                                                                compared to the Prime Financial Services Performance In-
There was no need for adjustments to our performance-
                                                                dex (subset A) and the rise in TSR of comdirect shares in
related compensation system based on our competence
                                                                absolute terms (subset B).
model in financial year 2007. The system offers sufficient
scope for performance-related differentiation within the
                                                                The exercise hurdles for both performance targets are high.
salary bands defined under the competence model.
                                                                With regard to TSR outperformance, the performance shares
                                                                are only valuable if comdirect bank shares perform at least
The number of employees covered by the Long Term Incen-
                                                                as well as the reference index over the three-year waiting
tive Programme (LTIP) increased by 5 to 55 as a result of
                                                                period. If comdirect bank’s share price, including dividends
growth. The aim of the programme is to further strengthen
                                                                paid, increases over the same period by at least 25% in ab-
the loyalty towards the bank of employees in positions of
                                                                solute terms against the share price on issue, this subset also
particular responsibility and further embed the goal of max-
                                                                becomes valuable. A cap has been defined for the payment.
imising value for shareholders. Each year, the beneficiar-
                                                                Should the performance targets set at the start of the plan
ies are awarded a specific number of virtual, non-tradable
                                                                not be met, the performance shares lapse at the end of the
shares (performance shares) according to their position
                                                                waiting period.
within the company and their basic salary. These encom-
pass the conditional right to a payment in cash upon ex-
piry of a three-year waiting period. The amount of this cash
payment depends on the extent to which the performance
targets set at the beginning of the period are achieved and
how high the share price is at the end of the waiting period.
The performance targets defined at the outset of the plan
are based on the total shareholder return (TSR), a key indi-
cator, which takes into account the dividend paid over the
waiting period as well as the movement in the share price.




72
                                                                                                  Group management report •




> Risk report


                                                                  The Board of Managing Directors of comdirect bank AG is
> Risk-oriented overall bank management
                                                                  responsible for the risk management and controlling system
                                                                  within the group. The Board specifies the permissible total
The general aim of comdirect bank is to generate a sustain-
                                                                  level of risk within the group and its allocation across the
able attractive return on equity with a controllable level of
                                                                  individual risk types and fields of competence. At comdirect
risk at all times. Consequently, we do not assess risks on an
                                                                  bank, the CFO is responsible for implementing and monitor-
isolated basis but as an integral part of overall bank man-
                                                                  ing the risk strategy.
agement. In the current phase of propelled growth, the aim
again is to secure a balanced and at all times controllable
                                                                  The strategy is implemented through risk management on
risk/return ratio – taking account of comdirect bank’s risk-
                                                                  the one hand and risk controlling on the other.
taking capability as well as regulatory requirements.

                                                                  The task of risk management at comdirect bank is to pro-
The risk strategy is determined by the Board of Managing
                                                                  actively and consciously manage all risks in the relevant
Directors of comdirect bank. This strategy specifies the ex-
                                                                  business lines. For effective, value-oriented overall bank
tent to which the bank is prepared to take on risk in order
                                                                  management, risk management is carried out on a decen-
to leverage opportunities. Special risk strategies are drawn
                                                                  tralised basis in the individual divisions.
up for all material individual risks and these form an integral
part of the bank’s overall strategy.
                                                                  Risk controlling is carried out centrally by the Risk Monitor-
                                                                  ing department, which aggregates, evaluates and monitors
comdirect bank pursues a risk-aware business model which
                                                                  risk for the bank as a whole and reports regularly to the
is based on generating net commission income and net in-
                                                                  Board of Managing Directors on the respective risk position.
terest income in brokerage, banking and advice. The bank’s
                                                                  In addition, risk controlling implements statutory require-
own positions relate to the investment of customer deposits
                                                                  ments and monitors compliance with such regulations.
in the money and capital markets with an emphasis on in-
vestment grade counterparties. In financial year 2007, only
                                                                  The continually updated risk management and controlling
a comparatively small proportion of the disposable risk cov-
                                                                  system also forms the basis for comprehensive and up-to-
er assets was utilised by group risk. Limits are set for risks
                                                                  date risk reporting. Major risk indicators are included in
which can be quantified and compliance with these limits is
                                                                  the overall management of comdirect bank. In addition to
monitored on a continual basis.
                                                                  detailed quarterly risk reports, monthly risk status reports
                                                                  provide information on the current development of major
                                                                  risk fields and are therefore integral to our early risk identifi-
> Risk management, controlling
                                                                  cation and monitoring system. With the aid of the risk radar
  and reporting                                                   included in the status reports, we identify developments re-
                                                                  quiring countermeasures at an early stage.
Our effective risk management and controlling system forms
the basis for implementation of the risk strategies. The sys-     Internal Audit regularly checks the functionality and suit-
tem enables us to identify risks at an early stage and to         ability of risk management activities pursuant to the mini-
assess them under various assumptions and scenarios and           mum requirements for risk management.
carefully manage them. We are therefore in a position to
take measures quickly to counter risks in the event of any
unwanted developments. The procedure with which we
measure, aggregate and manage risks is updated continually
on a best practice basis and adapted to the management
systems of the bank as a whole. Here we also take account
of group-wide considerations within Commerzbank.




                                                                                                                                 73
Further development of risk management
                                                                    > Overall risk position
in the reporting year
In financial year 2007 we made the final preparations for the
                                                                    Risk fields
introduction of Basel II at the beginning of 2008.
                                                                    We classify risks in line with the German Accounting Stand-
                                                                    ard DRS 5-10 and distinguish between market price risk,
The first pillar of Basel II relates to the approaches for meas-
                                                                    credit default risk, liquidity risk and operational risk. In addi-
uring credit default, market and operational risks, which are
                                                                    tion there is business risk, which is included in the risk-taking
used to calculate the minimum capital requirements of a
                                                                    capability calculation as a key specific risk.
bank. With regard to credit default risks, comdirect bank has
applied for certification as an AIRB institution. The certifica-
                                                                    A market risk describes the potential loss on positions in
tion review took place in autumn 2007; as of the reporting
                                                                    the bank’s own portfolio caused by future market price fluc-
date the review report was not yet available. As a result of
                                                                    tuations. A distinction is made between general changes in
the high level of bank loans in the risk weighted assets in
                                                                    market prices and a specific market risk relating to individual
lending operations, the first step in the certification proc-
                                                                    financial instruments. With regard to risk types, we distin-
ess concentrated on the bank portfolio. The Advanced In-
                                                                    guish between interest rate, currency and share price risks.
ternal Ratings Based Approach (AIRB) permits a more exact
                                                                    The main market risk for comdirect bank is the interest rate
assessment of the risk position, which is better tailored to
                                                                    risk in the banking book. This arises, in particular, from matu-
the specific situation of the bank, and hence the necessary
                                                                    rity transformation, that is the mismatching of fixed interest
capital requirement than the standard method. The latter
                                                                    rates on the assets and liabilities side. Trading transactions
method is used by comdirect bank for market risks as these
                                                                    essentially comprise the acquisition and sale of bonds and
play only a minor role overall. With regard to operational
                                                                    promissory notes as well as deposits with other financial
risks, comdirect bank will use the Advanced Measurement
                                                                    institutions, which are used for the investment of customer
Approach (AMA).
                                                                    deposits in the money and capital markets. Interest rate
                                                                    swaps are concluded for the purposes of hedging and gen-
The second pillar of Basel II is implemented through the
                                                                    eral interest book management.
minimum requirements for risk management (MaRisk).
These relate to the implementation of internal procedures,
                                                                    The credit default risk describes the risk of a financial loss
which are to be checked by the regulatory authorities and
                                                                    as a result of a borrower being unable to pay or to pay on
are used to assess the equity and specify equity guidelines
                                                                    time the contractually agreed consideration. Primarily this
which are tailored to the respective risk profile of the bank.
                                                                    includes counterparty and issuer risks arising from transac-
comdirect bank implemented MaRisk in financial year 2006
                                                                    tions in the money and capital markets which are mainly
and introduced a value-at-risk based system to determine
                                                                    concluded with other banks, as well as credit risks in busi-
the risk-taking capability. For financial year 2007, we are
                                                                    ness involving customers. Shareholder risks, that is threat-
reporting group risk as part of a risk-taking capability analysis
                                                                    ened losses from making equity available to third parties,
for the first time.
                                                                    are also included as credit default risks.




74
                                                                                                    Group management report •




Liquidity risk in the narrower sense is understood as the            We determine the unexpected loss for all material risk
risk that the bank will be unable to meet or to meet on              types on a monthly basis and aggregate this to form the
time its current and future payment obligations. This risk cur-      group risk. The group risk is measured uniformly using the
rently plays a minor role at comdirect bank as the bank has          economic risk capital, that is the amount of equity required
a clear liquidity surplus. The wider definition of liquidity risk    to cover unexpected losses from positions involving risk at a
also encompasses refinancing risk, that is the risk that the         given probability within a year. This calculation also includes
liquidity will not be sufficient if required or that it can only     risk categories which do not require equity backing under
be acquired in the market at terms that are significantly less       banking regulations, but which from any economic view-
favourable than expected – as well as market liquidity risk.         point could represent material risk potential.
The latter describes the risk of being unable to close out po-
sitions to the desired extent or only at a loss as a result of in-   comdirect bank adopts a very conservative approach when
adequate market depth or market disturbances. The liquidity          calculating the economic risk capital using the value-at-risk
risk is not included in the risk-taking capability calculation as    (VaR) concept. On the one hand, we use a confidence level
it currently does not represent a material risk for the bank.        of 99.95% with a holding period of one year. On the other,
                                                                     for the aggregation of the individual risks to form the group
Operational risks are understood as possible losses result-          risk, we do not take into account any correlations that could
ing from the use of operating processes and systems that             otherwise reduce the risk.
are inappropriate or susceptible to failure as well as human
error and external events such as natural disasters or ter-          The group risk is matched by the risk cover assets. These
rorist attacks. Often such incidents bring with them other           comprise the (forecast) pre-tax profit, open reserves (capital
secondary risks, especially reputation risks, which describe         reserve and retained earnings) and the revaluation reserve.
the risk of the public or customers losing confidence in our         In contrast, the subscribed capital is not included – further
bank. Operational risks also comprise the legal risks resulting      evidence of the conservative approach to calculating the
from contractual agreements or a change to legal param-              risk-taking capability. This is guaranteed when utilisation of
eters. Personnel risks are also included in operational risks.       the risk cover assets by group risk stands at less than 100%.
These essentially comprise the possible loss of personnel in         Countermeasures are initiated as soon as the utilisation level
key positions, who play a decisive role in the success of the        reaches the early warning threshold of 75%. Early warning
bank or its subsidiaries.                                            thresholds are also defined for each individual risk.

Business risk encompasses possible losses from nega-                 The value-at-risk model indicates the potential loss under
tive deviations from the forecasts as a result of a change           predominantly normal market conditions. In order to assess
in customer behaviour and competitive situation, incorrect           extreme market developments as well, we carry out ad-
planning or from past and future decisions relating to the           ditional stress tests for our interest rate risk positions (see
business model.                                                      page 77).

Risk measurement concepts
The expected loss describes the loss that can be expected
within a year based on empirical values, for example past
losses. We calculate this figure for credit risks and opera-
tional risks.




                                                                                                                                 75
Overall risk position in financial year 2007                             The market and credit default risks were affected to a neg-
Group risk at comdirect bank was extraordinarily stable                  ligible extent by developments in the international money
during the reporting year. Over the course of the year, it               and capital markets, which followed a revaluation of the
remained in a comparatively narrow band of €52.9m to                     subprime segment in the US mortgage market. This is ex-
€58.6m. The median of group risk amounted to €55.6m                      plained in detail in the overview of individual risks (see
compared to €86.1m in the previous year. At the year-end,                pages 77 to 79).
comdirect bank reported a group risk of €52.9m (previous
year: €64.6m).                                                           At the year-end, the risk cover assets totalled €369.8m. The
                                                                         decline compared to the previous year (€504.0m) is due to
The most significant individual risk in group risk is opera-             the distribution of the special dividend in May 2007 (see
tional risk with a share of 52.4% (as of 31 December 2007),              page 68). The group risk utilised only 15.6% of the risk cover
followed by business risk. Both individual risks have changed            assets on average during the year and 14.3% at the year-
only minimally over the course of the year. The credit default           end.
risk was below the average for the previous year. In con-
trast, the market risk declined over the course of the year,             Overall, it can be noted that even under the volatile mar-
amounting to only 16.9% of group risk by the 2007 year-end               ket conditions of financial year 2007, comdirect bank’s risk
(end 2006: 22.4%).                                                       position was extraordinarily stable. There are currently no
                                                                         risks that could jeopardise the continued existence of the
                                                                         bank or the planned continuation of the comvalue growth
                                                                         programme.




Breakdown of economic risk capital 2007 (in € million)

                                               As of          As of            Year low       Year high   Median 2007    Median 2006
                                         31.12.2006     31.12.2007
Market risk                                   14.48               8.96             6.53           10.28           7.45           15.68
Credit default risk                           17.28               3.91             3.91           12.48          10.76           35.41
Operational risk                              21.51              27.74            21.51           27.74          24.42           23.51
Business risk                                 11.30              12.28            11.79           14.41          12.74           11.34
Economic risk capital/
group risk                                    64.56              52.89            52.85           58.62          55.58           86.12




76
                                                                                                            Group management report •




                                                                           dition to interest rate, credit spread and currency scenarios,
> Market risks
                                                                           daily stress test calculations are also carried out for share
                                                                           price risks in the special funds held by comdirect bank.
Risk management, quantification and reporting
All trading transactions of comdirect bank have to comply with
                                                                           Current risk position
the requirements of the market risk strategy. When investing
                                                                           On the whole, comdirect bank has benefited from the rise
customer deposits in the capital market, we focus on securi-
                                                                           in interest rates in the second half of the year in the Euro-
ties with sufficient market depth and liquidity. The interest on
                                                                           pean money market, as higher margins were achieved on
the portfolio in the banking book is linked to a major extent
                                                                           reinvested customer deposits. The shortage of liquidity in
to movement in the European money market rate (Euribor).
                                                                           the money market following developments in the subprime
We also use interest rate swaps to manage market risks (see
                                                                           segment of the US money market also positively influenced
note 42 on page 111 and note 51 on page 116).
                                                                           interest earnings. In contrast, the change in value of some of
                                                                           the bank’s own investments due to the widening spreads in
We monitor the market risks of our trading transactions – es-
                                                                           the capital market had only a minor impact.
pecially the interest rate risk in the banking book – on a daily
basis. A VaR model based on a holding period of one day
                                                                           Against the backdrop of the changed interest rate environ-
and a confidence level of 97.5% is used for operative man-
                                                                           ment, comdirect bank invested a major portion of customer
agement purposes. The VaR forecast is regularly subjected to
                                                                           deposits, which stemmed primarily from the Tagesgeld PLUS
backtesting to verify its informative value. To do this we use
                                                                           accounts, on a short-term basis in the money market at a
the systems of Commerzbank AG.
                                                                           rate linked to EURIBOR. Consequently, the mismatching of
                                                                           fixed interest rates reduced by comparison with financial
In addition to VaR calculations, comdirect bank uses stress
                                                                           year 2006.
tests to monitor extreme market movements. Independent
of fixed confidence levels, the stress tests are carried out on a
                                                                           The volume of risk weighted assets increased considerably
daily basis to measure the scale of the portfolio losses under
                                                                           following strong growth in deposit business. However, the
worst case conditions, with the main emphasis on changes
                                                                           market risks quantified using the VaR model (interest, share
in the yield curve. All theoretical possible scenarios, such as
                                                                           price, currency and credit spread risks) were overall below
reversals, parallel shifts and flattening are simulated. In ad-
                                                                           the range in the previous year.

Market risks (in € million)

                                            As of start         As of            Year low       Year high         Median         Median
                                               of year       year-end                                              2007           2006
Total VaR 97.5%,
1 day holding period *                             1.3               0.9               1.6            0.7            0.8             1.0
Stress test – overall result                      14.2              10.4             16.9             9.6           11.0             9.4

* Model see note 60 on pages 122 to 125.




                                                                                                                                      77
                                                                   In its retail lending, comdirect bank makes a distinction
> Credit default risks
                                                                   between loans to purchase securities which fall due on
                                                                   demand and the overdraft facility on the current account.
Risk management, quantification and reporting
                                                                   Loans to purchase securities are secured by pledged securi-
Credit default risks at comdirect bank primarily exist in the
                                                                   ties. Potential losses may arise due to the pledged securities
form of counterparty and issuer risks as a result of trading
                                                                   falling significantly below their collateral value as a result of
transactions conducted by Treasury. In addition, retail lending
                                                                   the general market development or specific market risks of
involves risks; however, it contributes a significantly lower
                                                                   individual securities; they may then no longer be sufficient
proportion to the credit default risk position. Corporate cus-
                                                                   to secure the claims on customers. The decision to provide
tomer lending is also of minor importance. It is limited to
                                                                   the overdraft facilities is made with the aid of our scoring
the bank’s subsidiary, comdirect private finance AG. This re-
                                                                   model.
lates to the holding in comdirect private finance as well as to
working capital loans and guarantees for the offices.
                                                                   comdirect bank maintains an early warning system for the
                                                                   credit risks associated with the overdraft facility and loans to
Treasury acts as the front office for counterparty and issuer
                                                                   purchase securities. The necessary adjustments or cancella-
risks and Customer Services fulfils this function for retail
                                                                   tions of credit lines are carried out immediately.
lending. In accordance with MaRisk, other tasks are to be
carried out outside by departments other than front office
                                                                   Credit default risks are quantified by calculating the credit
departments. The back office tasks are carried out by the
                                                                   value at risk (CVaR) for trading transactions and retail lending
Credit Risk Management department. The function of risk
                                                                   and corporate customer lending on a monthly basis.
controlling is the responsibility of the Risk Monitoring depart-
ment. Trading transactions and their handling are monitored
                                                                   Individual valuation allowances are recognised separately for
by the Finance department.
                                                                   each product type where the exposure is in default or has
                                                                   been called in. Portfolio valuation allowances are recognised
Trading transactions in Treasury are conducted within the
                                                                   for the following credit risks:
limits approved by the Board of Managing Directors of com-
direct bank AG. The limits are defined for both counterparties
                                                                   •	 exposures identified as part of the early risk identification
and issuers as well as the underlying transactions. In the
                                                                      process,
capital market, in principle, comdirect bank does not enter
                                                                   •	 exposures on loans to purchase securities which are col-
into any risks below investment grade. Trades are conducted
                                                                      lateralised by bonds with poor ratings or illiquid securities
with European counterparties with an impeccable credit rat-
                                                                      as well as
ing. In this regard, we entered into negligible and highly
                                                                   •	 very small claims.
diversified securitised loans relating exclusively to European
counterparties. comdirect bank has no positions in the US
                                                                   Called in claims, which we hand over to collection agen-
mortgage market.
                                                                   cies for recovery, are written down immediately. Amounts
                                                                   received on these claims appear in the income statement.
When assessing the credit rating, comdirect bank uses both
the internal ratings of Commerzbank AG as well as those of
                                                                   Once a year, we determine global valuation allowances for
the external rating agencies.
                                                                   latent credit risks on the basis of credit defaults in the past.




78
                                                                                                        Group management report •




Current risk position                                                  income statement in the financial year, provisions for pos-
On the whole, the credit default risk measured using the               sible loan losses totalled €1.9m after €3.4m in the previous
CVaR remained below the previous year’s figures in finan-              year (see note 30, page 106).
cial year 2007. The CVaR resulted mainly from retail lending
(€3.0m) and trading transactions (€0.9m).                              At the end of 2007, the credit facility for loans to purchase
                                                                       securities amounted in total to €2.8bn (previous year:
As a result of the high credit-rating requirements over the            €2.8bn). In actual fact, potential utilisation of the credit facil-
whole of the year, the counterparty and issuer risk was                ity is restricted through the collateral value of the respective
largely stable and low. The money and capital market trans-            securities portfolios, which totalled €864m. In the reporting
actions were attributable in full to an investment grade rat-          year, an average of 20% of the securities credit facility pro-
ing of BBB- or better. As in the previous year, there were no          vided by the bank was utilised. As of the reporting date, the
valuation allowances in trading. At no point was the upper             volume of loans to purchase securities amounted to €187m
limit for major individual loans (25% of liable equity in ac-          (previous year: €185m). The overdraft volume in securities
cordance with Section 13 of the German Banking Act (KWG))              declined.
exceeded.
                                                                       The total overdraft facilities granted increased as a result
Compared to the previous year, the total use of loans to pur-          of the growing number of accounts during the year from
chase securities and overdraft facilities fell. As a result of the     €306m to €372m. At the year-end, the volume of overdrafts
overall rise in share prices, fewer valuation allowances were          utilised at €19.1m was also higher than in the previous year
required on loans to purchase securities, which resulted in            (€14.3m).
a favourable development in provisions. As of 31 Decem-
ber 2007, provisions for possible loan losses amounted to              In retail lending, the number of credit defaults and card
€4.6m (previous year: €4.3m). Allocations of €2.4m were                abuse cases reduced considerably compared to the previous
countered by reversals of €2.1m. Individual valuation allow-           year. The measures taken in 2006, including optimisation of
ances averaged at €0.5m (previous year: €0.8m). Portfolio              early risk identification during account opening, had a posi-
valuation allowances rose from €3.6m in the previous year              tive impact.
to €4.2m. The allocations amounted to €2.0m, while the
reduction of €1.4m is attributable to reversals. Overall,              In financial year 2007, corporate customer lending at com-
taking account of allocations and reversals recognised in the          direct bank AG again played a minor role.




                         Utilisation of loans to purchase securities
                         and overdraft facilities (in € million)



                         186.0                                187.4




                          24.4                                 19.1

                           J     F M A M J            J A S O N D

                               Loans to purchase securities
                               Overdraft facilities



                                                                                                                                       79
> Liquidity risks                                                  > Operational risks

Risk management, quantification and reporting                      Risk management, quantification and reporting
At comdirect bank, Treasury is responsible for managing li-        Operational risks vary in line with the underlying business
quidity. In order to cover a possible removal of liquidity by      activities and are generally function-dependent. They are
customers, the bank maintains an appropriately large volume        therefore managed on a decentralised basis. The self as-
of funds due at call. The securities in the liquidity reserve      sessments carried out annually are another instrument used
are items which can be sold at short notice. The refinancing       to manage operational risk. In principle, all operational risks
risks are limited as comdirect bank is primarily funded via        are to be reported and continually monitored. The risks are
customer deposits. Moreover, it can take up direct funds via       valued and aggregated centrally by Risk Controlling to form
Deutsche Bundesbank. When selecting new trading instru-            the OpVaR indicator.
ments, comdirect sets particular store by the credit rating of
the issuers, the respective fungibility of the products and the    Apart from the physical infrastructure (especially hardware),
risk/return ratio.                                                 the system architecture (e.g. multi-tier server structure and
                                                                   software) is of special importance for comdirect bank. In
To limit the liquidity risk we are also guided by the require-     general, both have built-in redundancy or are of a modular
ments of Principle II.                                             construction in order to guarantee a constantly high level of
                                                                   availability for all the required systems or components. As
Current risk position                                              part of business contingency planning for IT, external pro-
In the financial year, the regulatory key indicator, Principle     viders and their business contingency plans are also taken
II (liquidity principle) stood on average at 3.23 and was          into consideration. In this connection, comdirect bank has
considerably higher at all times than the minimum value of         formulated requirements with regard to availability and used
1 required under supervisory regulations. The liquidity indi-      them to check the business contingency measures of key
cator is calculated through a comparison of short-term cash        service providers.
and cash equivalents and payment obligations with a matu-
rity of up to one year.                                            Organisational and technical measures serve to prevent or
                                                                   limit loss for all areas of operational risk. Organisational in-
In addition to the required regulatory indicators, the liquidity   structions, staff training, IT project and quality management
risk is also managed using a limit system based on the avail-      and business continuity management should all be men-
able net liquidity concept. The future funding requirement         tioned in this context. These risk mitigation measures are
is calculated using the available net liquidity in the future      documented in detail in the risk manual of comdirect bank.
– supplemented by the expected liquidity impact of busi-
ness policy and customer conduct oriented decisions. The           Personnel risks are countered by implementing suitable
available net liquidity is determined and monitored for both       measures to strengthen employee loyalty and provide pro-
a basic scenario taking account of current market conditions       fessional development programmes (see personnel report).
as well as for stress scenarios.
                                                                   The Legal & Compliance department at comdirect bank is
                                                                   responsible for preparing the company in advance of any le-
                                                                   gal changes. The department follows relevant developments
                                                                   carefully and if necessary, identifies any impact these may
                                                                   have, as well as promptly informing the divisions concerned.
                                                                   comdirect bank AG’s membership of the Association of Ger-
                                                                   man Banks (Bundesverband deutscher Banken e.V.) provides
                                                                   the main source of information through general circulars and
                                                                   the membership of the working group for direct banks. The
                                                                   department also monitors trade magazines and works close-
                                                                   ly with the Legal department of Commerzbank AG.

80
                                                                                                  Group management report •




Possible liability risks in financial advisory services are mini-
                                                                    > Business risks
mised through the documentation of advisory meetings and
contractual regulations. Adequate insurance is in place for
                                                                    Risk management, quantification and reporting
any claims arising from customer complaints.
                                                                    To manage business risks we primarily assess aspects of cor-
                                                                    porate planning, the intensity of competition, product devel-
Current risk position
                                                                    opment and – as material influences on the core business of
There was no material change in the operational risk
                                                                    comdirect bank – the volatility of securities transactions as
assessed as part of the risk-taking capability analysis in fi-
                                                                    well as interest rates. Here we use the findings from devia-
nancial year 2007. The expected loss amounted to €0.75m
                                                                    tions from income and costs forecasts in previous periods.
as of 31 December 2007. The OpVaR amounted to €24.3m
                                                                    The VaR of the business risk is determined using a model
on average for 2007.
                                                                    which illustrates the discrepancies in planned and generated
                                                                    income and costs. Decisions regarding the business model
The systems and technical processes used by comdirect bank
                                                                    are made on the basis of extensive analysis by the Board of
were largely stable. comdirect bank responded immediately
                                                                    Managing Directors with approval of the Supervisory Board.
to the short-term overloading of the brokerage webserv-
                                                                    The processing and preparation of such issues is carried out
er as a result of extraordinarily high stock market activity
                                                                    by the competent divisions depending on the topic in ques-
(28 February) by upgrading the webserver to guarantee
                                                                    tion.
even more stable system performance. On average for the
year, the availability of our IT systems stood at 99.7% (previ-
                                                                    Current risk position
ous year: 99.8%).
                                                                    The business risk is largely unchanged on the previous year.
                                                                    comdirect bank succeeded in further increasing its earn-
No material personnel or legal risks arose in financial year
                                                                    ings that are independent of trades. Moreover, assets under
2007.
                                                                    custody rose significantly amidst fiercer competition in the
                                                                    direct banking market; despite the difficult market environ-
The measures outlined comprehensively in the previous
                                                                    ment for equity funds, we also achieved net fund inflows in
year’s annual report regarding implementation of the EU
                                                                    our funds business. Newly launched central products, such
Markets in Financial Instruments Directive or MiFID were
                                                                    as the Tagesgeld PLUS account in banking and the FondsDia-
promptly and successfully completed in time for the Mar-
                                                                    manten offering for securities investments, were extremely
ket in Financial Instruments Directive Implementation Act
                                                                    well received by customers.
when it came into force on 1 November 2007. In addition,
all measures were completed for implementation of the Act
reregulating the Insurance Provision Act in line with the in-
tended schedule.




                                                                                                                              81
> Opportunity report


                                                                 On the whole, through the processes in place, comdirect
> Overall bank strategy and
                                                                 bank is in a position to identify opportunities at an early
  opportunity management                                         stage and to assess and consistently exploit such opportuni-
                                                                 ties.
In addition to risks, we also regularly monitor opportunities
as part of the overall bank strategy. These are managed on
an integrated basis that is closely linked to the risk strate-   > Categorisation of opportunities
gies in the group and takes account of the available risk
capital.                                                         We distinguish between three types of opportunity.

When drawing up the overall bank strategy, the Board of          Opportunities offered by developments in framework
Managing Directors of comdirect bank decides the extent to       parameters describe value added potential stemming from
which the bank is prepared to take risks in order to leverage    favourable market developments, amendments to legisla-
opportunities for growth and profit.                             tion and the regulatory environment as well as industry and
                                                                 customer behaviour trends.
Information on market and product opportunities is prima-
rily gained through                                              Strategic opportunities arise from implementing over-
                                                                 arching group strategies such as the comvalue growth pro-
•	 in-depth and regular analysis of economic framework pa-       gramme.
   rameters with an emphasis on competition in the Euro-
   pean direct banking market as well as regulatory require-     Performance opportunities are closely linked to the busi-
   ments                                                         ness activities of comdirect bank. These include efficiency
•	 systematic analysis of customer behaviour and customer        improvements as well as value added potential within the
   satisfaction – on the one hand through regular customer       customer-bank relationship.
   surveys and customer satisfaction studies via independent
   market research organisations, and on the other through
   the continual evaluation of customer feedback provided        > Current opportunities
   to Customer Services or in forum discussions
•	 continual evaluation of studies, trend reports, research      With its focus on modern, online private investors, com-
   material and the trade press.                                 direct bank’s positioning offers a promising outlook for the
                                                                 coming financial years. Following strong growth in financial
In addition, the development of individual performance in-       year 2007, there are attractive opportunities to expand and
dicators included in overall bank management reporting can       add value in the coming years.
provide insight into the future structure of the product and
market offensive.                                                As of the 2007 year-end, the main opportunities arising from
                                                                 developments in framework parameters are as good as
Further scope for value added potential is provided by effi-     in the previous year. In particular these refer to
ciency improvements. As part of comvalue, comdirect bank
is also investing in the ongoing modernisation of its tech-      •	 a further rise in the number of internet users in general,
nical systems as well as in a more efficient and flexible           and users of direct banking products and services in par-
infrastructure. Here we work in line with international best        ticular,
practice. Other opportunities arise from initiatives suggested   •	 favourable development of the stock markets, which im-
by employees taking part in our continual improvement pro-          pacts positively on our order figures and consequently our
gramme and as part of the company suggestion scheme.                net commission income,




82
                                                                                               Group management report •




•	 the increased shift in customer assets into investment        Performance opportunities relate amongst others to
   products which can be used to reduce the potential loss
   of yield resulting from the final withholding tax levied as   •	 the further increase in customer satisfaction through at-
   of 2009,                                                         tractive products and high quality customer services
•	 sustained strong demand for private provisioning prod-        •	 even greater acceptance of our offering in new customer
   ucts and old-age provisioning as well as related financial       segments as a result of a continually expanded product
   advisory services,                                               and service offering, optimised website presentation and
•	 the growing importance of technically sophisticated and          greater presence of comdirect private finance
   target group specific internet offerings in direct banking,   •	 the continued automation of previously manual processes
   which take account of the latest ideas regarding usability       – to make our offering even easier to use as well as to
   and convenience                                                  improve efficiency in Customer Services and reduce costs
•	 continued favourable market conditions in the money              as a result
   market which enable comdirect bank to generate profit-        •	 the consistent expansion of our multi-channel teams in
   able margins in its deposit business, as well as                 the Customer Centre in conjunction with a focus on serv-
•	 faster consolidation in the market for financial advisory        ices with a higher value added
   services as a result of stricter regulatory requirements.     •	 the enhanced flexibility of our IT architecture, including
                                                                    with the aim of being able to offer our customers even
However, these developments cannot be forecast, nor can             more innovative one-to-one technologies.
they be influenced by comdirect bank.

The main strategic opportunities for comdirect bank arise
from implementation of the comvalue growth programme
as planned. We are confident that our unique combination of
brokerage, banking and advice is the right solution to meet
the central needs of modern investors and this will enable
us to expand our position in the direct banking market. This
is supported by the growing awareness of our brand. After
the highly successful development in financial year 2007,
it is now even more likely that the bank will meet the tar-
gets it set for the end of 2009 (see page 84). Through the
particularly sharp rise in securities investments in banking
and advice, comdirect bank will significantly increase the
earnings that are independent of trades and broaden the
earnings base.




                                                                                                                           83
> Outlook


                                                                  Market development
> Overall bank strategy
                                                                  In its annual economic report for 2008, the German gov-
                                                                  ernment assumes that the global economy will grow by
The comvalue growth programme will dominate the de-
                                                                  around 4% in real terms in 2008, and therefore somewhat
velopment of comdirect bank again in financial years 2008
                                                                  slower than in previous years. The upswing in Germany is
and 2009. Our overall bank strategy will continue to focus
                                                                  also forecast to continue, although at a slower growth rate
on propelled growth with controlled risks. The funds made
                                                                  of 1.7%. The potential risks include an economic slowdown
available for the market and product offensive will be man-
                                                                  in the USA, further strengthening of the euro and move-
aged flexibly in line with the respective market develop-
                                                                  ments in oil prices.
ment. From today’s viewpoint, we plan to maintain the
pace of the growth programme, while continually optimis-
                                                                  Over the past two years, the European Central Bank has
ing the programme and will make around €100m available
                                                                  increased the key lending rate in seven rate hikes to its
for this from current cash flow up to the end of 2009. We
                                                                  current level of 4%. As a result of the dislocations in the
intend to be the banking partner for more than 1.3 million
                                                                  market in the wake of the correction in the US mortgage
customers in 2009, to maintain more than 650,000 custody
                                                                  market and associated fears of recession, the US central
accounts and 650,000 Tagesgeld PLUS accounts as well as
                                                                  bank has reduced the key lending rate in two rate cuts in
450,000 current accounts and in addition, to increase the
                                                                  January 2008 from 4.25% to 3%. In contrast, the European
number of customers in advice to 40,000.
                                                                  Central Bank has confirmed that it will leave the rate for the
                                                                  eurozone unchanged at 4% for the time being because of
                                                                  inflation fears. Some market observers, e.g. economists at
> Forward-looking statements
                                                                  major banks as well as market players expect rate cuts this
                                                                  year. In both scenarios we assume fundamentally favour-
comdirect bank has consistently achieved its profit targets
                                                                  able framework parameters for banking.
in the past financial years, in some cases significantly ex-
ceeding them. We forecast future developments in the
                                                                  The framework parameters for brokerage are currently hard
economy based on assumptions that are most likely from
                                                                  to forecast. At the year-end, many equity strategists were
today’s viewpoint. However, the bank’s planning and all
                                                                  still expecting a rise in the relevant indices, although follow-
statements regarding future development are of course as-
                                                                  ing the negative movements in prices in January 2008, some
sociated with uncertainties. The actual development of the
                                                                  market players have made corrections to their forecasts.
market environment or the bank can vary considerably from
                                                                  One of the factors affecting the trading volume is market
the assumed trends. Given the strong impact of develop-
                                                                  volatility. The final withholding tax that comes into effect in
ment in the securities markets on net commission income,
                                                                  2009 is expected to positively impact on trading activities,
as in previous years we will not be announcing the 2008
                                                                  as many holders of securities are likely to restructure their
profit target for comdirect bank until publication of our half-
                                                                  portfolios ahead of the introduction of the new tax.
year report for 2008.



> Expected economic
  framework parameters

Assumptions regarding economic framework parameters in
financial year 2008 and beyond currently involve compara-
tively extensive uncertainty.




84
                                                                                              Group management report •




In advice, we expect market conditions to remain favoura-
                                                                > Market and product offensive
ble. German life assurance companies are assuming growth
in premiums of 2% as well as sustained strong demand for
                                                                We are continuing our marketing campaigns with an em-
Riester and Rürup pension products and pension insurance.
                                                                phasis on TV, general interest magazines and the internet.
                                                                The focus will remain on our Tagesgeld PLUS account and
Industry trend
                                                                current account. We intend to link the product messages
We estimate that the favourable trends will continue in
                                                                even more closely with our core brand values to further
2008: the number of users in online banking is likely to rise
                                                                raise our brand awareness. In corporate communications,
further and a greater proportion of this growing overall mar-
                                                                the emphasis will be on the broad range of products and
ket will be attributable to direct banks. As a result of high
                                                                services we offer as a full-service bank. We will also of-
demand for advisory services, also in view of the new final
                                                                fer extensive information and solutions relating to the final
withholding tax, we see particularly good opportunities for
                                                                withholding tax.
our business model which integrates brokerage, banking
and advice under one roof.
                                                                As part of the product offensive, we intend to extend our
                                                                product and service spectrum for longer-term securities in-
Development of regulatory framework parameters
                                                                vestments, partly as a result of the further expansion of
As of 2009, a final withholding tax of 25% will be levied on
                                                                our range of securities savings plans. Through products
income from capital assets and private capital gains. This
                                                                such as our FondsDiamanten offering, we aim to reach a
tax applies to interest, dividends, capital gains and income
                                                                broader customer group and increase the assets under cus-
from investment funds and certificates. There is no trad-
                                                                tody. There are plans for a series of new functionalities in
ing period any more. We believe that this future tax will
                                                                trading. In banking, we extended our product spectrum at
also significantly change investor behaviour in 2008. For
                                                                the start of 2008 with the launch of our building finance
example, we expect that tax-optimised fund investments
                                                                products. Developed in conjunction with Interhyp, this offer-
will win out over investments in individual assets. We are
                                                                ing comprises a direct bank type intermediary solution. This
preparing our product range for this change.
                                                                gives comdirect bank customers quick and easy access to
                                                                independent advice on building finance. In total, more than
The amended Insurance Contract Act came into force at
                                                                40 financing partners are available. The tailored property fi-
the start of 2008, improving transparency for policyhold-
                                                                nance solutions round off our product and service spectrum
ers. Intermediaries are obliged to provide their customers
                                                                for loans.
with comprehensive advice, together with full disclosure of
all the contract provisions as well as the contract fees and
                                                                With a focus on banking and brokerage, we will continue to
administration costs included. The reregulation could accel-
                                                                concentrate on the issue of online convenience and simplify
erate consolidation in the financial advice sector. However,
                                                                additional processes using our website. We will continually
we do not anticipate any serious impact on the behaviour of
                                                                update the website itself from a usability point of view and
policyholders or the acceptance of insurance placement.
                                                                will add, for example, a desktop alerting tool and voice-
                                                                supported opening processes will be added to the existing
                                                                functions.

                                                                We are continuing our architecture programme in com-
                                                                direct IT and will complete the switchover of customers
                                                                to indexed transaction numbers (iTAN) for online banking
                                                                transactions. Other security measures are being prepared.
                                                                In Customer Services, we will further improve efficiency,
                                                                including through the consistent expansion of our multi-
                                                                channel team.




                                                                                                                           85
                                                                  Following the considerable rise in administrative expenses
> Expected business performance
                                                                  in financial year 2007 as a result of comvalue, we plan to
                                                                  continue our propelled growth in 2008. We have provided a
Over the next two financial years we expect the number of
                                                                  budget of around €100m for additional growth expenses in
customers to rise to over 1.3 million as well as a further in-
                                                                  2008 and 2009, which is managed on a flexible basis in line
crease in the level of customer activity. At the end of 2007,
                                                                  with market and earnings development and can therefore
around 44% of customers were using at least two com-
                                                                  be higher or lower than in the reporting year.
direct products and we intend to increase this percentage
by the end of 2009.
                                                                  As a result of the corporate tax reform, the tax charge for
                                                                  comdirect bank will significantly reduce as of financial year
The number of trades and the portfolio volume can only be
                                                                  2008. We currently anticipate a tax rate of between 26%
forecast to a limited extent because of unforeseeable devel-
                                                                  and 28% compared to a tax rate of 36.2% in financial year
opments in the stock markets. We aim to further increase
                                                                  2007.
the number of trades that are not dependent on short-term
volatilities such as fund-based savings plan trades and sav-
ings plan trades. As a result of securities investments in
                                                                  > Expected financial situation and assets
brokerage, we also expect the funds volume to rise.

                                                                  The main expenses for comvalue are to be financed out of
In banking, we expect a further significant rise in the de-
                                                                  current cash flow as before. As a result of the likely growth
posit volume for 2008 and 2009 as a result of the growing
                                                                  in the deposit volume, the balance sheet total will further
use of Tagesgeld PLUS and current accounts as well as fixed-
                                                                  increase in 2008 and 2009. We expect few changes in the
term and time deposit accounts.
                                                                  balance sheet structure: increasing liabilities to customers
                                                                  will be countered on the assets side by a higher overall
In advice, we plan to further expand our office network with
                                                                  volume of claims on banks and investments and securi-
a focus on smaller offices in mid-sized cities. The number
                                                                  ties portfolio. The level of lending business will remain low
of advisory customers should rise to 40,000 by the end of
                                                                  and consequently we anticipate only a moderate change in
2009.
                                                                  claims on customers.


> Expected earnings
                                                                  > Legal corporate structure
Based on the assumptions made, we are expecting net
                                                                  There are currently no plans to change the legal corporate
commission income to come in below the level of 2007.
                                                                  structure of comdirect bank.
However, the actual level of trading activity in financial year
2008 could considerably exceed or fall short of our forecast
values.

We expect net interest income before provisions to be posi-
tively influenced by further growth in customer deposits.
We anticipate that this will be countered by falling interest
margins.




86
                                                                 Group management report •




> Personnel

To meet the challenges of our expansionary course, we will
recruit additional employees in the next two years. The fo-
cus will again be on growth in Customer Services. We will
also play an active role in training and continued profes-
sional development in the future. At the same time, we
intend to develop a new “employer branding”, which we
will use to sharpen our profile in the recruitment market.
In this context, the recruitment process is to be revised and
particular emphasis placed on gaining and retaining talent.



> Risk management

As a result of the bank’s growth, we anticipate a rise in risk
weighted assets and moderately higher utilisation of the
risk cover assets. Following conclusion of the parallel phase,
the regulations of Basel II have been implemented since
the start of 2008.




                                                                                        87
> Supplementary report


No major events or developments of special significance
have occured since the reporting date.




> Details in accordance with Section 315 (4)
  of the German Commercial Code (HGB)
As of the end of the financial year, the subscribed capital of     Any change to the Articles of Association requires a resolu-
the company amounts to €141,220,815.00. It is divided into         tion by the annual general meeting in line with Section 179
141,220,815 no-par value shares. The rights and obligations        (1) of the German Stock Corporation Act (AktG). Unless a
associated with these ordinary shares arise in particular          greater majority is required by law, a simple majority of
from Sections 12, 53a ff, 118 ff, 186 of the German Stock          the capital represented is sufficient (Art. 20 clause 2 of the
Corporation Act (AktG). The shares are bearer shares. There        Articles of Association). The authority to amend the ver-
are no known restrictions relating to voting rights or the         sion of the Articles of Association has been assigned to the
transfer of shares. However, if stock options under the stock      Supervisory Board according to Art. 8 (2) of the Articles of
option programme of comdirect bank AG are exercised (for           Association in compliance with Section 179 (1) clause 2 of
details see notes, page 102), half of the shares acquired by       the German Stock Corporation Act (AktG). Furthermore the
exercising the subscription rights are subject to a six-month      Supervisory Board is authorised to redraft the text of Article
block on sales.                                                    4 of the Articles of Association (Share capital and shares)
                                                                   in accordance with the respective exercise of subscription
Commerzbank Inlandsbanken Holding GmbH, Frankfurt/                 rights and in accordance with the respective utilisation of
Main, which is a wholly-owned subsidiary of Commerzbank            conditional capital.
AG, Frankfurt/Main, in turn holds 79.59% of the capital of
comdirect bank AG. There are no other direct or indirect           In accordance with the further details of the resolution
shareholdings which exceed 10% of the voting rights.               adopted by the annual general meeting on 3 May 2007,
                                                                   the company is authorised to acquire its own shares pur-
There are no shareholders with special rights conferring con-      suant to Section 71 (1) Nos. 7 and 8 of the German Stock
trolling powers. In particular, there are no rights to appoint     Corporation Act (AktG). The company has not made any use
members of the Supervisory Board pursuant to Section 101           of this authorisation. New shares may be issued, particularly
(2) of the German Stock Corporation Act (AktG).                    as part of the authorisations pursuant to Art. 4 (3-5) of the
                                                                   Articles of Association (Authorised capital and conditional
Where employees of comdirect bank AG hold interests in             capital I and II). To date the company has only used condi-
the capital of the company, they exercise their controlling        tional capital I in accordance with Art. 4 (4) of the Articles
rights through their voting rights directly.                       of Association to redeem subscription rights under the stock
                                                                   option programme 2000.
The members of the Board of Managing Directors are ap-
pointed and removed by the Supervisory Board in line with          There are no material agreements between comdirect bank
the provisions of Section 84 of the German Stock Corporation       AG and third parties which would come into effect, change,
Act (AktG) and Art. 6 (2) of the Articles of Association. If the   or end in the event of a change of control as a result of a
Board of Managing Directors is missing a required member           takeover bid.
and the Supervisory Board has not made an appointment
accordingly, one is appointed in urgent cases by the court in      comdirect bank AG has not concluded any compensation
line with Section 85 of the German Stock Corporation Act.          agreements with members of the Board of Managing Direc-
                                                                   tors or employees in the event of a takeover bid.



88
                                                                                                   Group management report •




> Explanations of the Board of Managing Directors
  on the details in accordance with Section 315 (4) of the
  German Commercial Code (HGB)

The details in the group management report of comdirect            comdirect bank AG. There are no other direct or indirect
bank in accordance with Sections 315 (4) of the German             shareholdings which exceed 10% of the voting rights.
Commercial Code (HGB), should provide third parties poten-
tially interested in a takeover of comdirect bank AG with the      Appointment and removal of members of the Board
information on the company relevant for a takeover. This           of Managing Directors/amendments to the Articles of
refers to the following information                                Association
•	 Composition of the subscribed capital;                          The members of the Board of Managing Directors are ap-
•	 Restrictions affecting the transfer of shares;                  pointed and removed by the Supervisory Board in line with
•	 Direct or indirect holdings exceeding 10% of the voting         the provisions of Section 84 of the German Stock Corporation
   rights;                                                         Act (AktG) and Art. 6 (2) of the Articles of Association. If the
•	 Holders of shares with special rights, which grant control-     Board of Managing Directors is missing a required member
   ling powers;                                                    and the Supervisory Board has not made an appointment ac-
•	 Type of voting rights control if employees participate in the   cordingly, one is appointed in urgent cases by the court in line
   capital and do not exercise their controlling rights directly   with Section 85 of the German Stock Corporation Act (AktG).
•	 Legal regulations and provisions in the Articles of Asso-       Any change to the Articles of Association requires a resolution
   ciation on the appointment and removal of members of            by the annual general meeting in line with Section 179 (1)
   the Board of Managing Directors and amendment of the            of the German Stock Corporation Act (AktG). Unless a greater
   Articles of Association;                                        majority is required by law, a simple majority of the capital
•	 Powers of the Board of Managing Directors, especially re-       represented is sufficient (Art. 20 clause 2 of the Articles of As-
   garding the issue or buyback of shares                          sociation). The authority to amend the version of the Articles
•	 Material agreements which would come into effect in the         of Association has been assigned to the Supervisory Board
   event of a change of control as a result of a takeover bid;     according to Art. 8 (2) of the Articles of Association in com-
•	 Compensation agreements concluded with members of               pliance with Section 179 (1) clause 2 of the German Stock
   the Board of Managing Directors or employees in the             Corporation Act (AktG). Furthermore, the Supervisory Board
   event of a takeover bid                                         is authorised to redraft the text of Article 4 of the Articles of
                                                                   Association (Share capital and shares) in accordance with the
Composition of the subscribed capital                              respective exercise of subscription rights and in accordance
As of the end of the financial year, the subscribed capital of     with the respective utilisation of conditional capital.
the company amounts to €141,220,815.00. It is divided into
141,220,815 no-par value shares. The rights and obligations        Powers of Board of Managing Directors to issue or
associated with these ordinary shares arise in particular          buyback shares
from Sections 12, 53a ff, 118 ff, 186 of the German Stock          In accordance with the further details of the resolution adopted
Corporation Act (AktG). The shares are bearer shares.              by the annual general meeting on 3 May 2007, the company
                                                                   is authorised to acquire its own shares pursuant to Section 71
Restrictions on the transfer of shares                             (1) Nos. 7 and 8 of the German Stock Corporation Act (AktG).
Where comdirect bank AG issues shares to employees under           The company has not made any use of this authorisation. New
its stock option programme from 2000, half of the shares           shares may be issued, particularly as part of the authorisations
are subject to a six-month block on sales under private law.       pursuant to Art. 4 (3–5) of the Articles of Association (Author-
In principle, the shares concerned cannot be sold by the           ised capital and conditional capital I and II). To date the com-
beneficiaries before expiration of the blocking period.            pany has only used conditional capital I in accordance with
                                                                   Art. 4 (4) of the Articles of Association to redeem subscription
Direct or indirect holdings above 10% of the voting rights         rights under the stock option programme started in 2000.
Commerzbank Inlandsbanken Holding GmbH, Frankfurt/
Main, which is a wholly-owned subsidiary of Commerzbank            Other information required under Sections 315 (4) of the
AG, Frankfurt/Main, in turn holds 79.59% of the capital of         German Commercial Code (HGB) relates to circumstances
                                                                   which do not apply to comdirect bank.

                                                                                                                                  89
> Declaration of the Board of Managing Directors on
  Section 312 of the German Stock Corporation Act (AktG)
As a result of the integration of comdirect bank AG includ-
ing its subsidiaries in the Commerzbank Group, the Board
of Managing Directors is obliged to prepare a dependency
report in accordance with Section 312 of the German Stock
Corporation Act (AktG).

Under the circumstances known to us at the date on which
the company concluded legal transactions and carried out
or omitted measures, comdirect bank AG received adequate
consideration for each such transaction and suffered no dis-
advantage from measures either being carried out or not
carried out. No measures which must be reported were
carried out or not carried out.




90
> Consolidated financial
  statements
92   Income statement                 139   Declaration of the
93   Balance sheet                          Board of Managing Directors
94   Statement of changes in equity   140   Auditor’s certificate
95   Cash flow statement              141   Glossary
96   Notes                            148   Six-year overview
                                      150   Financial calendar 2008
                                      150   Contacts
> Income statement
Income statement of comdirect bank group according to IAS/IFRS

€ thousand                                                                           1.1. to 31.12.
                                                                     Notes           2007               2006
Interest income                                                                   287,744             143,057
Interest expenses                                                                 160,580              54,324
Net interest income before provisions                                  (29)       127,164              88,733
Provisions for possible loan losses                                (9), (30)       – 1,947            – 3,377
Net interest income after provisions                                              125,217              85,356
Commission income                                                                 185,595             164,291
Commission expenses                                                                32,871              27,726
Net commission income                                                  (31)       152,724             136,565
Result from hedge accounting                                       (5), (32)           56                – 45
Trading result                                                         (33)          – 519              – 317
Result from investments and securities portfolio                       (34)        – 9,624            – 6,327
Administrative expenses                                                (35)       187,437             135,626
Other operating result                                                 (36)        10,063               5,994
Pre-tax profit                                                                     90,480              85,600
Taxes on income                                                   (21), (37)       32,783              28,598
Net profit                                                                         57,697              57,002
Allocation to reserves                                                                   0               672
Transfer from reserves                                                                204                  0
Transfer from capital reserve                                                            0            140,824
Consolidated profit                                                    (24)        57,901             197,154
Profits to be assigned to shareholders of the parent company                       57,697              57,002




Earnings per share

                                                                                     1.1. to 31.12.
Undiluted earnings per share                                                         2007               2006
Net profit                                                       € thousand        57,697              57,002
Average number of ordinary shares                                    Shares    141,085,538    140,802,862
Undiluted earnings per share                                              €           0.41               0.40


Diluted earnings per share                                                           2007               2006
Net profit                                                       € thousand        57,697              57,002
Adjustment to the number of ordinary shares
issued due to outstanding option rights                              Shares       264,560             519,198
Weighted average shares outstanding (diluted)                        Shares    141,350,098    141,322,060
Diluted earnings per share                                                €           0.41               0.40




92
                                                                            Consolidated financial statements •




> Balance sheet
Balance sheet of comdirect bank group according to IAS/IFRS

Assets
€ thousand                                                                                 as of 31.12.
                                                                       Notes               2007              2006
Cash reserve                                                         (6), (38)          198,412             82,932
Claims on banks                                                      (7), (39)         4,810,441         2,923,517
Claims on customers                                                  (7), (40)          216,492           208,220
Provisions for possible loan losses                                  (9), (41)           – 4,622           – 4,311
Positive fair values from derivative hedging instruments       (5), (10), (42)            1,847              3,167
Trading assets                                                     (11), (43)            13,036                 0
Investments and securities portfolio                               (12), (44)          2,945,567         2,040,296
Intangible assets                                             (13), (45), (47)           18,869             19,763
Fixed assets                                                  (14), (46), (47)           15,474             12,999
Current income tax assets                                          (21), (48)             3,304                73
Deferred income tax assets                                         (21), (48)             5,145              5,502
Other assets                                                             (49)             8,846              8,705
Total assets                                                                          8,232,811          5,300,863




Liabilities and equity
€ thousand                                                                                as of 31.12.
                                                                       Notes               2007              2006
Liabilities to banks                                                                          0                 0
Liabilities to customers                                           (16), (50)          7,693,922         4,626,643
Negative fair values from derivative hedging instruments       (5), (17), (51)              730               716
Trading liabilities                                                (18), (52)                 0               317
Provisions                                                    (19), (20), (53)           18,219             20,189
Current tax liabilities                                            (21), (54)             5,958              6,668
Other liabilities                                                        (55)            35,793             26,034
Equity                                                                   (56)           478,189           620,296
  Subscribed capital                                                                    141,221           140,824
  Capital reserve                                                                       230,196           228,228
  Retained earnings                                                                      56,815             57,019
  Revaluation reserves                                                                   – 7,944           – 2,929
  Consolidated profit                                                                    57,901           197,154
Total liabilities and equity                                                          8,232,811          5,300,863




                                                                                                                 93
> Statement of changes in equity
€ thousand                                                          Subscribed          Capital     Retained        Revalu-        Consoli-           Total
                                                                       capital         reserve      earnings          ation          dated
                                                                                                                   reserve1)         profit
Equity as of 1.1.2006                                                  140,761        368,426         56,337           – 102        33,783        599,205
Net profit from 1.1. to 31.12.2006                                             –              –              –              –       57,002         57,002
Changes in revaluation reserve pursuant to IAS 39                              –              –              –       – 2,827               –       – 2,827
Total consolidated profit 2006                                                                                       – 2,827        57,002         54,175
Dividend payment comdirect bank AG                                             –              –              0              –      – 33,783       – 33,783
Issue of new shares                                                          63            363               –              –              –           426
Changes due to application of IFRS 2                                           –           263               0              –              –           263
Capital increase from company funds     2)
                                                                       373,494      – 373,494                                                               0
Ordinary reduction in capital   2)
                                                                     – 373,494        373,494                                                               0
Allocation to reserves/transfer from reserves                                  –    – 140,824             672               –      140,152                  0
Other                                                                          –              –            10               –              –               10


Equity as of 31.12.2006/1.1.2007                                       140,824        228,228         57,019         – 2,929       197,154        620,296
Net profit from 1.1. to 31.12.2007                                             –              –              –              –       57,697         57,697
Changes in revaluation reserve pursuant to IAS 39                              –              –              –       – 5,015               –       – 5,015
Total consolidated profit 2007                                                                                       – 5,015        57,697         52,682
Dividend payment comdirect bank AG                                             –              –              0              –    – 197,154      – 197,154
Issue of new shares                                                         397          1,968               –              –              –         2,365
Allocation to reserves/transfer from reserves                                  –              0         – 204               –           204                0


Equity as of 31.12.2007                                                141,221        230,196         56,815         – 7,944        57,901        478,189

1) Pursuant to IAS 39
2) Restructuring of equity amounts in accordance with the resolution adopted by the annual general meeting on 4 May 2006; the amounts shown are those
   provided at the time of the adoption of the resolution and are based on the equity of comdirect bank AG in accordance with the German Commercial Code
   (HGB).


In financial year 2007, dividend payments totalling €197,154 thousand were distributed to shareholders. This equates to a
payment of €1.40 per share.

In financial year 2007, comdirect bank AG did not make use of either the existing authorisations of the annual general meeting
to purchase own shares for the purpose of securities trading pursuant to Section 71 (1) No. 7 German Stock Corporation Act
(AktG) or of the resolutions of the annual general meeting authorising the purchase of own shares pursuant to Section 71 (1)
No. 8 German Stock Corporation Act (AktG) for purposes other than securities trading.

Resulting from the exercise of option rights, a total of 396,643 new no-par-value bearer shares of comdirect bank AG were
issued as part of our stock option programme. Each of these shares carries a proportion of the share capital in the sum of
one euro. The total number of no-par-value bearer shares of comdirect bank AG issued under the stock option programme
amounts to 720,815. Of this, 396,643 no-par-value bearer shares were issued in financial year 2007, 324,172 no-par-value
bearer shares were issued in previous years.




94
                                                                                    Consolidated financial statements •




> Cash flow statement
€ thousand                                                                                          1.1. to 31.12.
                                                                                                    2007                2006
Net profit                                                                                        57,697              57,002
Non-cash items and transfer to cash flow from operating activities
contained in net profit
   Depreciation, valuation allowance, additions to fixed assets and other assets,
   change in provisions and net changes due to hedge accounting and trading                        4,542              15,980
   Loss from the sale of assets                                                                    9,624               6,327
   Result from the sale of fixed assets                                                               17                  –2
   Other adjustments                                                                             – 62,539            – 37,412
Sub-total                                                                                          9,341              41,895
Changes in assets and liabilities from operating activities after
adjustment for non-cash items
  Claims
      on banks                                                                                – 1,852,860     – 1,563,126
      on customers                                                                                – 9,674            – 12,856
   Positive and negative fair values from derivative hedging instruments                           2,451                 457
   Securities                                                                                   – 928,296       – 274,693
   Other assets from operating activities                                                         – 1,711             – 8,867
   Liabilities to customers                                                                    3,054,568        1,902,838
   Other liabilities and equity from operating activities                                        – 15,284             – 7,130
Interest and dividends received                                                                  256,420             126,916
Interest paid                                                                                   – 158,157            – 47,448
Income tax payments                                                                              – 34,797            – 33,773
Cash flow from operating activities                                                              322,001             124,215
Cash inflows from the disposal of fixed assets and intangible assets                                    0                  5
Cash outflows for the acquisition of fixed assets and intangible assets                          – 11,732            – 11,271
Cash flow from investment activities                                                            – 11,732         – 11,266
Proceeds from capital increases                                                                    2,365                 426
Dividend payment                                                                                – 197,154            – 33,783
Cash flow from financing activities                                                            – 194,789         – 33,357
Cash and cash equivalents as of the end of the previous year                                      82,932               3,340
   Cash flow from operating activities                                                           322,001             124,215
   Cash flow from investment activities                                                          – 11,732            – 11,266
   Cash flow from financing activities                                                          – 194,789            – 33,357
Cash and cash equivalents as of the end of the period                                            198,412              82,932


Cash and cash equivalents correspond to the balance sheet item “cash reserve” and include cash on hand and balances held
at central banks.




                                                                                                                            95
> Notes

Basis of accounting principles                                   Accounting and measurement methods
The consolidated financial statements of comdirect bank as
of 31 December 2007 were prepared in accordance with             (1) Basic principles
Section 315a (1) of the German Commercial Code (HGB)             The consolidated financial statements are based on the go-
and Regulation (EC) 1606/2002 (IAS Regulation) of the Eu-        ing concern principle.
ropean Parliament and of the Council of 19 July 2002 as well
as further regulations on the adoption of certain internation-   The principle of profit or loss for the period is applied in our
al accounting standards on the basis of the International Ac-    consolidated financial statements. Income and expenses are
counting Standards (IAS) and International Financial Report-     recognised on a pro-rata basis; they are shown for the pe-
ing Standards (IFRS), which were approved and published          riod to which they may be assigned in economic terms.
by the International Accounting Standards Board (IASB) and
interpreted by the Standing Interpretations Committee (SIC)      Financial instruments are accounted for and measured us-
and International Financial Reporting Interpretations Com-       ing IAS 39 and the different classification and measurement
mittee (IFRIC).                                                  principles specified by this regulation. Derivative hedging
                                                                 instruments are subject to the provisions of hedge account-
The sub-group of comdirect bank Aktiengesellschaft, Pas-         ing.
calkehre 15, D-25451 Quickborn, Germany is included in
the consolidated financial statements of our ultimate parent     Where estimates and assessments are necessary in ac-
company, Commerzbank AG, Frankfurt/Main. The consoli-            counting for assets and liabilities, these are based on past
dated financial statements of Commerzbank AG as of 31 De-        experience and other factors such as forecasts and, from
cember 2006 were published in the online Federal Gazette         today’s viewpoint, the probable expectations and forecasts
on 22 June 2007.                                                 of future events. Where material uncertainties pertain to
                                                                 estimates, these have been indicated for the relevant line
In addition to the consolidated balance sheet and the con-       items on the balance sheet.
solidated income statement, the consolidated financial
statements include the statement of changes in equity, the       All the units included in the consolidation prepared their
cash flow statement and the notes. The group management          financial statements as of 31 December 2007.
report, including the risk report in accordance with Section
315 of the German Commercial Code (HGB) can be found on
pages 40 to 90 of the present annual report.




96
                                                                                                  Consolidated financial statements •


(2) IAS/IFRS and SIC/IFRIC rules applied and to be applied in future
In the consolidated financial statements of comdirect bank, all the standards and interpretations to be compulsorily applied in
financial year 2007 were taken into account.

The consolidated financial statements are based on the IASB framework and the following IASs/IFRSs relevant for comdirect bank:

IAS 1       Presentation of financial statements
IAS 7       Cash flow statements
IAS 8       Accounting and valuation methods, changes in estimates and errors
IAS 10      Events after the balance sheet date
IAS 12      Income taxes
IAS 14      Segment reporting
IAS 16      Property, plant and equipment
IAS 17      Leases
IAS 18      Revenue
IAS 19      Employee benefits
IAS 21      The effects of changes in exchange rates
IAS 24      Related party disclosures
IAS 27      Consolidated financial statements and separate financial statements in accordance with IFRS
IAS 32      Financial instruments: disclosure and presentation
IAS 33      Earnings per share
IAS 34      Interim financial reporting
IAS 36      Impairment of assets
IAS 37      Provisions, contingent liabilities and contingent assets
IAS 38      Intangible assets
IAS 39      Financial instruments: recognition and measurement
IFRS 2      Share-based payment
IFRS 7      Financial instruments: disclosures


We did not apply IFRS 1, 3, 4, 5 and 6 and IAS 2, 11, 20, 23, 26, 28, 29, 31, 40 and 41 as they are not relevant for us.

In addition to the Standards listed, we have taken into consideration the following SIC/IFRIC interpretations relevant to our
consolidated financial statements:

                                                                                                                           Relating to:
SIC-12      Consolidation – special purpose entities                                                                            IAS 27
SIC-15      Operating leases – incentive agreements                                                                             IAS 17
SIC-32      Intangible assets – website costs                                                                                   IAS 38
IFRIC 10    Interim financial reporting and impairment                                                                          IAS 34


In the present consolidated financial statements, we have taken into account for the first time IFRS 7 “Financial instruments:
disclosures” and the amendments to IAS 1 “Presentation of financial statements – capital disclosures”. These standards have
introduced new disclosures on financial instruments. This has not resulted in any impact on the accounting, valuation and
reporting of items in the consolidated financial statements or on the remaining disclosures.

IFRSs and IFRICs to be applied in future:



IAS 1 (revised 2007)        Presentation of financial statements
IFRS 8                      Segment reporting
IFRIC 14                    The limit on a defined-benefit asset, minimum funding requirements and their interaction




                                                                                                                                    97
However, we are not expecting any material impact on ac-            transactions resulting from the hedged risk are recognised
counting, measurement and reporting from the future ap-             in the income statement under result from hedge account-
plication of these regulations. The application of IFRS 8 will      ing. In an effective hedge, the changes in value of an un-
probably lead to changes in the segment reporting presen-           derlying transaction and the hedge recorded in the income
tation. The application of the revised IAS 1 will affect the        statement will largely offset one another.
presentation of the annual financial statements, in particular
through the introduction of the Statement of Comprehensive          (6) Cash reserve
Income.                                                             The reserve is reported at nominal value.

(3) Consolidated companies                                          (7) Claims
Apart from the parent company, comdirect bank AG, Quick-            All claims on banks and customers originated by the com-
born, the consolidated companies consist of one subsidiary,         direct bank group are shown at amortised costs. The valua-
comdirect private finance AG, Quickborn, and five special           tion allowances are openly deducted and reported as provi-
funds, special purpose entities (SPE) in accordance with IAS        sions for possible loan losses.
27 in conjunction with SIC-12.
                                                                    (8) Currency translation
One subsidiary of minor importance for the overview of              Assets and liabilities carried in the balance sheet which are
earnings situation, financial situation and assets of the group     held in foreign currency are translated at the spot rate on the
was not consolidated but accounted for as a holding under           balance sheet date (reporting date rate).
investments and securities portfolio.
                                                                    Income and expenses are translated at exchange rates as of
comdirect bank AG holds 100% of the shares of the subsi-            the time of transaction.
diary and the special purpose entities.
                                                                    (9) Provision for possible loan losses
(4) Principles of consolidation                                     We fully provide for the particular credit risks associated with
In the consolidation of the capital accounts, the historical cost   banking business by forming individual valuation allowances
of the holding in the subsidiary is set off against the propor-     and portfolio valuation allowances.
tion of the subsidiary’s equity as part of group equity as of
the date of acquisition.                                            Valuation allowances were formed for claims on customers in
                                                                    the 2007 consolidated financial statements.
Intra-group expenses and income, as well as claims and li-
abilities, are eliminated as part of the debt and income con-       Where there are objective indications of an impairment, we
solidation.                                                         have formed general valuation allowances for specific loans
                                                                    to cover the existing credit-standing risks relating to claims
Holdings in subsidiaries that are not included in the consoli-      on customers in the amount of the potential default. Such an
dation due to their minor importance are shown at historical        objective indication always exists if the loan is in the default
cost in the investments and securities portfolio.                   action process or has been called in. To determine the amount
                                                                    of the valuation allowance, the individual loans identified are
(5) Hedge Accounting                                                allocated to product-related portfolios. Depending on the
The rules under IAS 39 on hedge accounting apply to de-             portfolio, various valuation allowance rates are applied to the
rivatives demonstrably used to hedge risks arising from             unsecured portions of all credit exposure in the portfolio.
non-trading transactions. At comdirect bank AG, fair value
hedges were used exclusively to hedge the fair value risk           We have also formed a portfolio valuation allowance. Past
of individual securities using interest rate swaps (fair value      losses, the quality of securities accepted as collateral and the
hedge accounting). The application of the hedge accounting          allocation of loans to internal rating classes serve as a yard-
rules is contingent on the comprehensive documentation of           stick for the scale on which the new portfolio valuation allow-
the hedging relationship and evidence of the effectiveness          ance must be formed.
of the hedge.
                                                                    Unrecoverable accounts are written off immediately. Claims are
The fair values determined are reported in the balance sheet        deemed unrecoverable if they have been through the default
as positive fair values from derivative hedging instruments         action process and passed on to a collection agency for recov-
or negative fair values from derivative hedging instruments.        ery or have been waived in whole or in part. Income on such
The changes in fair value of the hedges and underlying              claims is recognised as income in the income statement.

98
                                                                                             Consolidated financial statements •


(10) Positive fair values from                                      (13) Intangible assets
      derivative hedging instruments                                Under intangible assets we include proprietary software, pur-
Derivative financial instruments used for hedging purposes,         chased software and acquired customer relationships (cus-
which qualify for hedge accounting and show a positive              tomer base).
fair value are reported under this item. The instruments are
measured at fair value in accordance with the net present           Proprietary software is recognised if all provisions of IAS 38
value method. The measurement results determined for fair           are met. Recognition is made at production cost. Recognition
value hedges under hedge accounting are recognised in the           of sundry intangible assets is made at historical cost.
income statement under result from hedge accounting.
                                                                    In principle, proprietary software and purchased individual
(11) Trading assets                                                 software is amortised using the straight-line method and ac-
Derivative financial instruments that are not used as hedging       cording to schedule against earnings over a period of five
instruments as part of hedge accounting and show a positive         years; standard software over three years. Customer relation-
fair value are reported as trading assets. The instruments are      ships are amortised using the straight-line method and ac-
measured at fair value. The changes in fair value are recorded      cording to schedule over a period of 10 years.
in the income statement under the trading result.
                                                                    Both the useful life and the amortisation method are re-
(12) Investments and securities portfolio                           viewed for significant changes each year at the end of the
Purchases and sales of financial assets are shown in the bal-       reporting period. In addition they are checked annually for
ance sheet in accordance with the trade date accounting             signs of impairment within the meaning of IAS 36 which
method.                                                             would necessitate unscheduled write-downs.

Under investments and securities portfolio, we report all the       (14) Fixed assets
securities which we have assigned solely to the “available-         The item fixed assets shows land and buildings as well as
for-sale” category as well as holdings in non-consolidated          office furniture and equipment.
subsidiaries.
                                                                    All the fixed assets are capitalised at historical cost. Office fur-
As of the balance sheet date, all bonds, other fixed-income         niture and equipment are depreciated using the straight-line
securities, equities and other variable-yield securities (invest-   method and according to schedule to reflect their probable
ment fund units) not held for trading purposes were assigned        useful economic lives.
to the “available-for-sale” category.
                                                                    In determining the useful life, their likely physical wear and
These financial instruments are accounted for and measured          tear, their technical obsolescence as well as legal and con-
at fair value. The measurement results are posted in the            tractual restrictions are taken into account.
revaluation reserve with an income-neutral effect and taking
deferred taxes into account. Realised gains and losses only         All fixed assets, with the exception of land and buildings, are
affect the income statement when the portfolios are sold or         depreciated over a period of 3 to 20 years.
subject to impairment. An impairment is carried out if the
fair value lies significantly or longer-term below the historical   Gains and losses arising from the sale of fixed assets are
cost.                                                               shown in the income statement under other operating result.

Where there is an effective hedging relationship between se-        Both the useful life and the amortisation method are re-
curities and a derivative financial instrument, the proportion      viewed for significant changes each year at the end of the
of the change in the fair value attributable to the hedged risk     reporting period. In addition, they are checked annually for
is reported in the income statement under result from hedge         signs of impairment within the meaning of IAS 36 which
accounting and affects the income result.                           would necessitate unscheduled write-downs.

All the interest income generated by securities of the “avail-      (15) Leases
able-for-sale” category is shown in the income statement            In accounting for leases, a distinction is made between op-
under interest income.                                              erating leases and finance leases. A lease is classified as a
                                                                    finance lease if it substantially transfers all of the risks and
                                                                    rewards pertaining to ownership to the lessee. The account-


                                                                                                                                     99
ing for the leased items is then carried out by the lessee. In    On the other hand, the members of the Board of Managing
contrast, where the risks and rewards pertaining to owner-        Directors acquire a vested right to benefits on the basis of a
ship are not substantially transferred to the lessee, the lease   direct benefit commitment, whereby the level of benefit is
constitutes an operating lease. In such cases, the accounting     fixed and depends on factors such as age, remuneration and
for the leased item is carried out by the lessor.                 length of service (defined benefit plan).

Essentially, the bank appears as a lessee in operating leases     The accounting regulations pursuant to IAS 19 for a defined
(bank building and offices, office furniture and equipment).      benefit plan are applied to this direct pension plan and pro-
                                                                  visions are formed accordingly. The pension obligations are
(16) Liabilities                                                  calculated annually by an independent actuary in accord-
Financial liabilities are shown at amortised historical cost.     ance with the projected unit credit method. This calculation
                                                                  is based on the current calculatory interest rate and the ex-
(17) Negative fair values from                                    pected future rates of increase for salaries and pensions.
      derivative hedging instruments
Derivative financial instruments used for hedging purposes        The commitments similar to those for a pension include de-
and which qualify for hedge accounting and show a negative        ferred compensation.
fair value are reported under this item. The instruments are
measured at fair value in accordance with the net present         These refer to an offer to the Board of Managing Directors
value method. The measurement results determined for fair         and a specific group of employees whereby they give up a
value hedges under hedge accounting are recognised in the         portion of their gross salary for pension benefits later on.
income statement under result from hedge accounting.
                                                                  The companies in the comdirect bank group insure by
(18) Trading liabilities                                          means of a contractual trust agreement old-age pension
Derivative financial instruments that are not used as hedg-       commitments which are not covered against insolvency by
ing instruments as part of hedge accounting and show a            Pensions-Sicherungs-Verein (PSV a.G.).
negative fair value are reported as trading liabilities.
                                                                  In this connection, the trustee required for a bilateral trust
The instruments are measured at fair value. The changes in        was established by Commerzbank AG in the form of the
fair value are recorded in the income statement under the         Commerzbank Pension-Trust e.V.
trading result.
                                                                  A large portion of the internally accumulated cover funds for
(19) Provisions for pensions                                      the pension commitments was transferred to the trustee in
     and similar commitments                                      the reporting year.
The Board of Managing Directors of comdirect bank AG
receive a company pension based on various pension                In accordance with IAS 19, the transferred assets (plan as-
schemes.                                                          sets) are to be set off against the pension provisions.

On the one hand, the members of the Board of Managing             The pension costs relating to the defined benefit old-age
Directors acquire a vested right to benefits on the basis of an   pension commitments for the members of the Board of
indirect benefit commitment for which comdirect bank AG           Managing Directors and for the deferred compensation to
pays a fixed premium to Versicherungsverein des Bankge-           be recognised in the income statement comprise the serv-
werbes a. G. (BVV), Berlin. The level of the pension benefit      ice cost and the interest cost. The net income expected from
is determined by the premiums paid and the resultant accu-        the trust assets reduces the pension costs.
mulated investment income (defined contribution plan).
                                                                  If the parameters taken into account in the calculation of
The accounting regulations pursuant to IAS 19 for a defined       the pension commitments and plan assets deviate from the
contribution plan are applied to this indirect pension plan       original expectations, this generates an actuarial gain or loss
i.e. the premiums to BVV are recorded as an ongoing ex-           which has to be recorded in accordance with the corridor
pense and no provision is therefore formed.                       method. Pursuant to this method, only the actuarial gains
                                                                  or losses that exceed 10% of the pension commitments or




100
                                                                                        Consolidated financial statements •


plan assets are recognised in the pension costs. The alloca-     (22) Conditional and authorised capital
tion of these previously unrecorded actuarial gains or losses    Through the resolution adopted on 28 April 2004 and its en-
outside this corridor takes place over three years.              try into the commercial register on 10 June 2004, authorised
                                                                 capital of €60,000 thousand was created. The authorisation
(20) Other provisions                                            for the capital increase expires on 27 April 2009.
Other provisions are formed on the scale deemed necessary
for liabilities of uncertain amount towards third parties and    The Board of Managing Directors is authorised, with the
for anticipated losses relating to pending transactions.         consent of the Supervisory Board, to increase the share
                                                                 capital of the company by issuing new shares against cash
(21) Income taxes                                                or non-cash contributions on one or more occasions up to a
Current tax assets and liabilities are calculated by applying    maximum amount of €60,000 thousand. The shareholders’
the valid tax rates at which a refund from or a payment to       subscription right may be partially excluded by the Board
the relevant tax authorities is expected.                        of Managing Directors, with the consent of the Supervisory
                                                                 Board.
Temporary differences are the result of the discrepancy be-
tween assigned value in accordance with IFRS/IAS and the         In addition, since the resolution adopted on 11 May 2000
valid tax regulations, measured using the German income          and entered into the commercial register on 31 May 2000,
tax rate which can be expected to apply for the period in        conditional capital of originally €3,600 thousand was cre-
which they are realised.                                         ated in order to service up to 3,600,000 subscription rights
                                                                 as part of the bank’s stock option programme (conditional
As a result of the 2008 corporate tax reform resolved on         capital I).
6 July 2007, the deferred tax assets and liabilities recog-
nised at comdirect bank AG have been measured using the          As of 31 December 2007, conditional capital I amounted to
lower tax rates valid as of 1 January 2008.                      €2,879,185 due to the issue of 720,815 new bearer shares
                                                                 of comdirect bank AG.
As comdirect bank AG has surplus deferred tax assets, the
revaluation at lower tax rates for 2007 as a whole, led to       Through the resolution adopted on 7 May 2003 and its entry
additional tax expenses of around €0.5m.                         into the commercial register on 17 July 2003, an additional
                                                                 conditional capital of €30,000 thousand was created (con-
Deferred tax assets are shown in the balance sheet only          ditional capital II).
if taxable profits are likely to occur in the same tax unit in
the future.                                                      The conditional capital II increase will only be effected to
                                                                 the extent that holders of any bonds with warrants and/or
Deferred tax assets and liabilities are formed and carried       convertible bonds may exercise their option or conversion
such that – depending on the treatment of the underlying         rights.
item – they are recognised either under taxes on income in
the income statement or they are set off against the rele-       The Board of Managing Directors is authorised to issue, with
vant equity items with no effect on the income statement.        the approval of the Supervisory Board, bearer bonds with
                                                                 warrants and/or convertible bonds as mentioned above
Current and deferred tax assets and liabilities are netted       on one or more occasions, up to a maximum amount of
against one another where they exist towards the same tax        €300,000 thousand. The term of these bonds is limited to
authority and the right of set-off can actually be enforced      a maximum of 20 years. This authorisation is limited until
vis à vis the tax authority.                                     6 May 2008.

                                                                 (23) Earnings
                                                                 In principle, earnings are accounted for at fair value of the
                                                                 consideration.




                                                                                                                          101
(24) Appropriation of profits                                    year, 773,773 subscription rights with an average remaining
The basis for the appropriation of profits is the national       term of 1.45 years were still to be exercised.
legislation, especially the German Commercial Code (HGB)
and the Stock Corporation Act (AktG).                            The subscription rights are equally divided into two subsets,
                                                                 which are different with regard to the exercise hurdles and
For financial year 2007, comdirect bank AG reported a dis-       the exercise price. Half of the subscription rights are thus
tributable profit according to the German Commercial Code        always granted as subset A, and the other half always as
(HGB) of €57,900,534.15.                                         subset B.

The Board of Managing Directors and the Supervisory Board        Eligible participants receive the right to purchase one bearer
of comdirect bank AG will propose to the annual general          share of comdirect bank AG, which carries a proportion of
meeting a dividend payment in the amount of €57.9m, that         the share capital in the sum of €1.00 per subscription right
is €0.41 per no-par value bearer share.                          under the stipulated conditions.

(25) Earnings per share                                          Subscription rights may only be exercised if stipulated tar-
Undiluted earnings per share are calculated in accordance        gets are attained.
with IAS 33 and based on the net profit for the year. Both the
undiluted earnings per share and the diluted earnings per        The following applies for subset A:
share are shown below the income statement.                      The comdirect bank share outperforms the Prime Financial
                                                                 Services Price Index by more than five percentage points.
In calculating the undiluted earnings per share, we have set
off the net profit for the year against the average number of    The following applies for subset B:
shares in the financial year.                                    The absolute rise in the price of the comdirect bank share
                                                                 for subscription rights granted in 2000 is at least 25% com-
The diluting effects result from a stock option programme        pared to the issuing price and for subscription rights granted
launched in July 2000 with a maximum of 3,600,000 sub-           beginning in 2001 or later a rise of at least 20% compared
scription rights, of which approximately 3.1 million subscrip-   to an average price determined prior to the time that they
tion rights had been issued in five tranches as of 31 Decem-     were granted.
ber 2007.
                                                                 The price that an eligible participant has to pay to comdirect
(26) Stock option programme                                      bank AG when exercising a subscription right corresponds
The stock option programme as approved by the annual             to:
general meeting resolution of 11 May 2000 allowed up to
3,600,000 subscription rights to be issued.                      For subset A
                                                                 The daily price at the time of exercise minus 1% for every
Eligible participants are members of the Board of Manag-         full percentage point of outperformance of the index over
ing Directors of comdirect bank AG, members of the boards        five percentage points, but at least 90% of the daily price
of affiliated companies, as well as executives and selected      for options granted between 2000 and 2002, or 70% of the
members of staff of comdirect bank AG and affiliated com-        daily price for options granted in 2003 and 2004.
panies.
                                                                 For subset B
The Board of Managing Directors of comdirect bank AG indi-       The daily price at the time of exercise minus 1% for every
vidually selects the eligible participants. Where members of     full percentage point by which the absolute rise in the price
the Board of Managing Directors are concerned, the Super-        of the comdirect share is higher than the XETRA closing price
visory Board of the company makes the decision.                  of the share at the time of granting, but at least 50% of the
                                                                 daily price on exercise.
The subscription rights could be granted at any time up to
and including 1 July 2005.                                       In total, 396,643 subscription rights were exercised in financial
                                                                 year 2007. The weighted average share price on the day of
A total of 3,104,580 subscription rights in five tranches were   execution was €11.53. All subscription rights were apportion-
issued by 31 December 2007. Of these subscription rights         able to subset B. For these exercised subscription rights, the
issued, a total of 1,609,992 have expired; 352,552 of these      same number of bearer shares of comdirect bank AG were
expired in financial year 2007. As of the end of the financial   issued.

102
                                                                                         Consolidated financial statements •


As a result, the subscribed capital of comdirect bank AG increased by €396,643. As described in detail in the stock option
programme, the amount exceeding the calculated nominal value was allocated to the capital reserve. The capital reserve
therefore rose by a total of €1,967,576.24 in the reporting year.

The value of the stock options as of the reporting date relevant for accounting purposes was determined by an external expert.
The model used is based on the arbitrage-free valuation according to Black/Scholes. A numerical solution option is necessary
because of the complexity of the option programme and the procedure used is the Monte Carlo simulation.

Of the five tranches issued, four have been valued as of the year-end date. Tranche 1 does not fall within the timeframe
covered by IFRS 2 and has therefore not been valued.

The following values were used as the basis:

Parameter                                                       Tranche 2        Tranche 3              Tranche 4     Tranche 5
Term                                                                                         5 years
Blocking period                                                                              2 years
Share price                                    €                                              7.15
Volatility of comdirect share                  %                                             36.04
Index volatility                               %                                             15.58
Volatility correlation                         %                                             66.00
Date granted                                                   25.07.2001       02.09.2002             05.11.2003    27.12.2004
Basis price                                    €                    10.96             3.96                   7.32          7.24
Interest rate                                  %                     2.29             2.39                   2.59          2.84
Determined option values
Subset A                                       €                  0.5883            1.0285                0.1600         0.4358
Subset B                                       €                  0.0649            2.5325                1.0626         1.2485


The values for volatility and correlation were determined on the basis of a standard period, which spanned from one year be-
fore the valuation date to the valuation date. The respective weekly closing prices were used as a basis.



(27) Performance share plan                                        The number of performance shares falling due for payment
A new long-term incentive plan (LTIP) was issued in 2005           depends equally on the TSR outperformance targets against
as a component with a long-term incentive effect and risk          the Prime Financial Services Performance Index and the ab-
elements.                                                          solute rise in TSR of the comdirect share.

As the beneficiaries of the new LTIP, the members of the           However, for both performance targets there are set hur-
Board of Managing Directors and selected managers and              dles that must be overcome before the performance shares
executives will receive a conditional allocation of virtual,       become valuable and due for payment. With regard to TSR
non-fungible shares (performance shares) in yearly tranch-         outperformance (subset A), the share price performance
es. The shares encompass the conditional right to a cash           during the three-year waiting period must be at least as
payment at the end of the three-year waiting period. The           good as the reference index. If the comdirect share price
level of the cash payment depends on achieving perform-            including dividends paid has increased in absolute terms
ance targets which are set at the beginning of the planning        over the same period (subset B) by at least 25% compared
period and the current share price at the end of the waiting       to the price on issue, this subset also becomes valuable. The
period.                                                            total payout from the performance share plan is capped.
                                                                   Should the performance targets set at the beginning of the
The performance targets set at the beginning of the plan-          planning period not be met, the performance shares lapse
ning period are based on total shareholder return (TSR), an        at the end of the waiting period.
indicator which takes both share price performance and the
dividends paid during the waiting period into account.             Both subsets comply with the requirements of the German
                                                                   Corporate Governance Code.


                                                                                                                            103
The volume of the LTI component, the LTI target value of       On the basis of the general agreement and the master
each eligible beneficiary, amounts to a percentage of the      agreement, the following services were agreed upon and
individual basic salary. The individual number of perform-     used during financial year 2007:
ance shares is derived by dividing the LTI target value and
the fair value of a performance share at the time of issue.    • Trading and processing services
The fair value of a performance share is determined us-        • Payments and cash dispenser service
ing an option measurement model before each tranche is         • Printing services
set up. The Supervisory Board’s Presiding Committee or the     • IT services
Board of Managing Directors decides on the allocation of       • Determining risk indicators
performance shares.                                            • Determining and preparing Basel II relevant parameters
                                                                 and results data
The value of the performance shares as of the reporting        • Handling of financial instruments in own trading
date is determined by an external expert. The model used       • Compliance and security
is based on the arbitrage-free valuation according to Black/   • Project services
Scholes. A numerical solution option is necessary because      • Other services
of the complexity of the option programme and the proce-
dure used is the three-dimensional binomial model.             Outside of the general agreement, there are also existing
                                                               business relations between comdirect bank AG and Com-
(28) Related party disclosures                                 merzbank AG:

Relations with affiliated companies                            A separate agreement was concluded with Commerzbank
The parent company of comdirect bank AG is Commerzbank         AG on 7 September 2000, covering the usage of the elec-
Inlandsbanken Holding GmbH. The ultimate parent compa-         tronic securities trading system “Intelligence Commerz-
ny is Commerzbank AG.                                          bank”.

comdirect bank AG uses services provided by Commerzbank        On 8 February 2000, comdirect bank AG concluded an-
AG through a general agreement effective as of 1 January       other general agreement with Commerzbank AG, in which
1999, as well as services agreed separately on this basis.     Commerzbank AG undertook to provide internal auditing
                                                               services on the basis of a plan to be agreed separately.
On 6 August 2007, a master agreement was concluded
with Commerzbank which supersedes the existing general         On 22 March 2000, comdirect bank AG concluded an agree-
agreement. The individual contracts concluded under the        ment with Commerzbank AG. Among other things, the
general agreement remain in place until expiry of their re-    agreement relates to support for PR activities, compliance
spective term. New individual contracts will be concluded      with stock exchange and other obligations resulting from
based on the master agreement.                                 admission to the stock exchange and advice on the holding
                                                               of the public annual general meeting of shareholders.

                                                               On 15 May 2005, comdirect bank AG concluded an agree-
                                                               ment with Commerzbank AG concerning the cash receiving
                                                               office and depository service for the shares of comdirect
                                                               bank.




104
                                                                                       Consolidated financial statements •


comdirect bank currently offers its customers approximately     As part of its money and capital market transactions, com-
6,500 funds from more than 110 investment companies, in-        direct bank invests money with Commerzbank AG and its
cluding investment companies of the Commerzbank group.          affiliated companies. As of the reporting date, the nomi-
In financial year 2007, comdirect bank received commis-         nal value of such transactions amounted to €4,843.9m. In
sions on portfolio holdings and sales at prevailing market      financial year 2007, comdirect bank achieved total inter-
rates from the investment companies of the Commerzbank          est income from these transactions with Commerzbank of
Group.                                                          €105.7m and of €29.2m with its affiliated companies.

In an agreement dated 27 August 2004, comdirect bank            With an agreement dated 9 January 2003, comdirect bank
AG entrusted Commerzbank AG with both the maintenance           AG acquired a holding in WST-Broker GmbH, Frankfurt/Main.
of trust portfolios and trust accounts as well as the sale of   WST-Broker GmbH routes customer orders to execution on
trust general agreements and provision of certain services      the trading floors on behalf of comdirect bank AG.
as part of these trust transactions (conclusion of transfer
agreements, transmission of statements, monthly monitor-        The Board of Managing Directors reports separately on the
ing of collateral of trust assets etc.) which comdirect bank    scope and appropriateness of the intra-group services of
AG has to provide as trustee.                                   comdirect bank AG with financial affiliated companies as
                                                                part of its dependency report (Section 312 AktG).
comdirect bank AG is party to an agreement of Commerz-
bank AG with Brown Brothers Harriman, enabling customers        Other related party disclosures
of comdirect bank to trade on US stock exchanges.               In the financial year, there were financial relations with re-
                                                                lated natural persons (members of the Board of Managing
Overall, commission expenses of €16.5m were offset with         Directors and the Supervisory Board and members of their
Commerzbank AG in the financial year.                           immediate family), including in the form of comdirect bank
                                                                product use as part of the normal product and service of-
On 12 November 2003, an agreement for the supply of             fering. All products and services were carried out at normal
services was concluded between Commerz Service Ge-              third party terms and conditions and are of secondary im-
sellschaft für Kundenbetreuung mbH (CSG), a wholly-owned        portance for the company. The related parties did not accrue
subsidiary of Commerzbank AG and comdirect bank AG. The         any unjustified advantage from their position with comdirect
two companies support each other in the areas of customer       bank, nor did comdirect bank suffer any financial losses.
service and technical support.
                                                                In addition to the financial relations as part of the product
In addition, comdirect bank AG makes available to CSG           and service offering of comdirect bank, related parties re-
personnel, technical and organisation resources. This provi-    ceived compensation on the basis of their position as mem-
sion of services was contractually documented in a service      bers of the boards (see note 72).
agreement signed on 25 March 2003. In financial year 2007,
comdirect bank received remuneration for these of €2.3m.        There were no other more extensive financial relations with
                                                                related natural persons in the financial year.
comdirect bank AG and its affiliated companies have in-
sured old-age pension commitments which are not covered
against insolvency by Pensions-Sicherungs-Verein (PSV a.G.)
by means of an allocation to trust assets with Commerzbank
Pension-Trust e.V.

As of 31 December 2007, the market value of trust assets
administered in the trust totalled €5.0m (2006: €1.1m).




                                                                                                                          105
Notes to the income statement

(29) Net interest income before provisions
€ thousand                                                                              2007              2006             Change
                                                                                                                             in %
Operating income from shares and other variable-yield securities
held in the available-for-sale portfolio                                               1,783              2,724             – 34.5
Interest income from fixed-income securities held
in the available-for-sale portfolio                                                  103,313             61,640               67.6
Other interest income including discount surplus                                     179,422             77,382              131.9
Operating income from investments and subsidiaries                                         0                243            – 100.0
Positive balance of interest from derivative hedging instruments                       3,226              1,068              202.1
Interest income                                                                      287,744           143,057              101.1
Interest expenses for deposits                                                       160,580             54,324              195.6
Interest expenses                                                                    160,580            54,324              195.6
Total                                                                                127,164            88,733                43.3


Interest income and interest expenses for financial instruments measured in accordance with IAS 39 “At fair value through profit
or loss sub-category: held for trading”, are reported under trading results (see note (33) Trading results).

Net results for financial assets in the “loans and receivables” category and for financial liabilities in the “liabilities measured
at amortised cost” category:

€ thousand                                                                             2007               2006             Change
                                                                                                                             in %
Loans and receivables
  Interest income                                                                    179,422             77,382              131.9
  Provisions                                                                          – 1,947           – 3,377             – 42.3
Net result                                                                          177,475             74,005              139.8
Liabilities measured at amortised cost
  Interest expenses                                                                  160,580             54,324              195.6
Net result                                                                          160,580             54,324              195.6




(30) Provisions for possible loan losses

The provisions of the comdirect bank group break down as follows:

€ thousand                                                                             2007               2006             Change
                                                                                                                             in %
Allocation to provisions                                                              – 2,398           – 3,318             – 27.7
Write-back of provisions                                                               2,087              1,830               14.0
Direct write-downs                                                                    – 2,453            –2,210               11.0
Income received on written-down claims                                                   817                321              154.5
Total                                                                                – 1,947            – 3,377             – 42.3




106
                                                                                          Consolidated financial statements •


(31) Net commission income

€ thousand                                                                           2007               2006            Change
                                                                                                                          in %
Securities transactions                                                            141,293           128,420               10.0
Payment transactions                                                                 5,561             4,637               19.9
Other commission                                                                     5,870             3,508               67.3
Total                                                                              152,724           136,565               11.8

Within the context of its trust activities, comdirect bank received commission income of €24 thousand (2006: €46 thousand)
during the financial year as trustee.


(32) Result from hedge accounting

The results shown from underlying and hedging transactions only include measurement effects from effective fair value
hedges.

€ thousand                                                                                              2007              2006


Results from hedging instruments                                                                      – 2,234             2,267
Results from hedge underlying transactions                                                             2,290            – 2,312
Total                                                                                                     56               – 45


comdirect bank reports these in line with the hedge accounting regulations under IAS 39. The individual bonds (underlying
transactions) in the investments and securities portfolio are hedged against fluctuations in fair value due to changes in market
rates using interest rate swaps.


(33) Trading result

€ thousand                                                                           2007               2006            Change
                                                                                                                          in %
Result from interest rate related transactions                                       – 519              – 317              63.7
Trading result                                                                       – 519             – 317               63.7

The trading result includes interest income and interest expenses for financial instruments measured in accordance with
IAS 39 in the category “At fair value through profit or loss – sub-category: held for trading”. All financial instruments in the
trading portfolio are measured at fair value.


(34) Result from investments and securities portfolio

The disposal proceeds and gains and losses on available-for-sale securities and holdings in subsidiaries which have not been
consolidated are shown under the net result for investments and securities portfolio.

€ thousand                                                                           2007               2006            Change
                                                                                                                          in %
Result from available-for-sale securities portfolio                                – 9,624            – 6,327              52.1


As of 31 December 2007, all investments were subject to an impairment test. Overall, there were no income-related adjust-
ment requirements.

As of the end of financial year 2007, the gains resulting from the sale or maturity of financial instruments amounted to €2,208
thousand (2006: €2,405 thousand). The corresponding losses amounted to €– 11,832 thousand (2006: €– 8,732 thousand).




                                                                                                                            107
The net result of the financial investments in the available-for-sale category breaks down as follows:

€ thousand                                                                          2007                 2006     Change
                                                                                                                    in %
Pre-tax gains and losses recorded in the revaluation reserve
  Fair value changes in securities in the AFS portfolio                          – 14,816           – 12,740         16.3
  Gains and losses on disposal, which are reclassified from the revaluation
  reserve into the income statement                                                 9,624                6,327       52.1
Total change in revaluation reserve before tax                                    – 5,192           – 6,413        – 19.0
Result of financial investments                                                    – 9,624           – 6,327         52.1
Net result of financial investments in the available-for-sale category           – 14,816          – 12,740          16.3




(35) Administrative expenses

The comdirect bank group’s administrative expenses consist of personnel costs, other administrative expenses and deprecia-
tion of office furniture and equipment as well as on other intangible assets.

Personnel costs
€ thousand                                                                          2007                 2006     Change
                                                                                                                    in %
Wages and salaries                                                                 34,013            27,919          21.8
Compulsory social security contributions                                            5,228                4,613       13.3
Expenses for pensions and other employee benefits                                     436                 537       – 18.8
Total                                                                              39,677            33,069          20.0


The item “wages and salaries” includes share-based payments (IFRS 2) totalling €214 thousand (previous year: €471 thou-
sand), of which €0 thousand (previous year: €263 thousand) result from an equity-settled plan (stock option programme).



Breakdown of expenses for pensions and other employee benefits
€ thousand                                                                          2007                 2006     Change
                                                                                                                    in %
Company pension scheme                                                                416                 520       – 20.0
Contributions to Versicherungsverein des Bankgewerbes a.G. (BVV)                       20                  17        17.6
Total                                                                                 436                 537      – 18.8




Other administrative expenses
€ thousand                                                                          2007                 2006     Change
                                                                                                                    in %
Marketing costs                                                                    74,268            40,320          84.2
Communication costs                                                                 5,277                2,104      150.8
Consulting expenses                                                                12,754            10,357          23.1
Expenses for external services                                                     22,629            21,323           6.1
Sundry administrative expenses                                                     22,698            18,724          21.2
Total                                                                             137,626            92,828          48.3




108
                                                                                            Consolidated financial statements •



Depreciation of office furniture and equipment and intangible assets
€ thousand                                                                              2007             2006           Change
                                                                                                                          in %
Office furniture and equipment                                                          2,874           2,898             – 0.8
Intangible assets                                                                       7,260           6,831              6.3
Total                                                                                  10,134           9,729              4.2




(36) Other operating result

The other operating result primarily comprises income from recoverable input taxes, income from the writing-back of provi-
sions, income from service level agreements and income relating to other periods.

€ thousand                                                                              2007             2006           Change
                                                                                                                          in %
Other operating expenses                                                                2,340           1,952             19.9
Expenses for VAT from previous years                                                      58                0                 –
Goodwill payments and price differences in securities transactions                       391              317             23.3
Interest on taxes from previous years                                                    410              440             – 6.8
Losses on the disposal of fixed assets                                                    16                0                 –
Valuation allowances on other assets                                                     627                0                 –
Sundry expense items                                                                     838            1,195            – 29.9
Other operating income                                                                 12,403           7,946             56.1
Income from writing-back of provisions and accruals                                     4,714           2,784             69.3
Income from service level agreements                                                    2,327           1,591             46.3
Income from recoverable input taxes                                                     1,359             898             51.3
Gains on the disposal of non-current assets                                                0                3           – 100.0
Sundry income items                                                                     4,003           2,670             49.9
Total                                                                                  10,063           5,994             67.9



(37) Taxes on income

€ thousand                                                                              2007             2006           Change
                                                                                                                          in %
Current taxes on income                                                                32,248          32,142              0.3
Deferred taxes                                                                           535           – 3,544          – 115.1
Total                                                                                  32,783          28,598             14.6



Transitional presentation of taxes on income
€ thousand                                                                                               2007             2006
Profit from ordinary activities                                                                        90,480           85,600
multiplied by the German income-tax rate of 35.7%
= Calculated income tax paid in financial year                                                         32,300           30,559
Effect of tax-free income from financial investments                                                     – 309           – 868
Effect of disposal of shares in affiliated companies in previous years                                      0              – 82
Effect of taxes from previous years recognised in the financial year                                     – 240          – 1,220
Permanent effects of application of IFRS 2                                                                  0               94
Effect of adjustment of deferred income tax assets to tax rates valid as of 1.1.2008                      507                0
Other effects                                                                                             525              115
Total                                                                                                  32,783           28,598


                                                                                                                            109
The income tax rate selected as a basis for the transitional presentation is made up of the corporation tax rate of 25.0%
applicable in Germany, plus a solidarity surcharge of 5.5%, and a rate of 14.5% for trade earnings tax. Taking into account the
deductibility of trade earnings tax, the German income tax rate is approximately 35.7%.


Notes to the balance sheet

(38) Cash reserve

The cash reserve includes the following items:

€ thousand                                                                     31.12.2007             31.12.2006              Change
                                                                                                                                in %
Cash on hand                                                                          176                   293                – 39.9
Balances held at central banks                                                    198,236                 82,639               139.9
Total                                                                             198,412                82,932                139.2


The minimum reserve requirement to be met at the end of December 2007 totalled €144,197 thousand (2006: €79,466
thousand).


(39) Claims on banks

€ thousand                                      Total                        Due on demand                     Other claims
                                 31.12.2007   31.12.2006     Change     31.12.2007     31.12.2006        31.12.2007    31.12.2006
                                                               in %
German banks                      4,729,002    2,791,779        69.4       630,308          759,361        4,098,694    2,032,418
Foreign banks                        81,439      131,738       – 38.2             0              0           81,439       131,738
Total                             4,810,441    2,923,517        64.5       630,308       759,361          4,180,133     2,164,156


The claims on banks include foreign currency amounts of €62,466 thousand (2006: €70,867 thousand).

Claims on banks primarily consist of overnight money and fixed-term deposits of €4,394,500 thousand (2006:
€2,458,200 thousand).


(40) Claims on customers

Claims on customers break down as follows:

€ thousand                                      Total                        Due on demand                     Other claims
                                 31.12.2007   31.12.2006     Change     31.12.2007     31.12.2006        31.12.2007    31.12.2006
                                                               in %
Claims on
German customers                   211,807      204,018          3.8       210,756       202,891              1,051            1,127
  Companies and
  financial institutions                 0              76    – 100.0             0             76                 0               0
  Private customers                 211,807      203,942          3.9      210,756          202,815           1,051            1,127
Claims on
international customers              4,685        4,202         11.5         4,685           4,202                 0               0
  Private customers                   4,685        4,202        11.5          4,685           4,202                0               0
Total                              216,492      208,220          4.0       215,441       207,093              1,051            1,127




110
                                                                                              Consolidated financial statements •


Claims on customers include €187,548 thousand (2006: €184,781 thousand) from loans to purchase securities. These claims
are secured by securities. The claims on customers include amounts in foreign currency totalling €11 thousand (2006: €0
thousand).


(41) Provisions for possible loan losses

As in the previous year, the total amount of loan loss provisions relates exclusively to claims on customers.

€ thousand                                          Total                          Individual                          Global
                                                                              valuation allowances              valuation allowances
                                     31.12.2007   31.12.2006      Change    31.12.2007      31.12.2006       31.12.2007     31.12.2006
                                                                    in %
Balance as of 1 January                 – 4,311      – 2,823        52.7         – 755            – 492          – 3,556        – 2,331
Allowances                              – 2,398      – 3,314       – 27.6        – 440            – 732          – 1,958        – 2,582
Reversals                                 2,087        1,826        14.3          732              469            1,355          1,357
Provisions for possible
loan losses
as of 31 December                       – 4,622      – 4,311         7.2         – 463            – 755          – 4,159        – 3,556




(42) Positive fair values from derivative hedging instruments

The table shows derivative financial instruments used for hedging purposes and hedge accounting which show a positive fair
value:

€ thousand                                                                        31.12.2007              31.12.2006            Change
                                                                                                                                  in %
Positive fair values from allocated effective fair value hedges                          1,847                3,167              – 41.7


Only interest rate swaps are used as hedging instruments. These are shown at fair value.

As of the reporting date, the nominal volume of underlying and hedging transactions each amounts to €123 million
(2006: €183 million).


(43) Trading assets

Trading assets comprise the positive fair values from derivative financial instruments not used for hedging purposes under
hedge accounting. As of the reporting date, these relate to interest rate swaps with a nominal value of €600 million (2006:
€0 million).

€ thousand                                                                        31.12.2007              31.12.2006            Change
                                                                                                                                  in %
Interest rate related transactions                                                       13,036                    0                    –




                                                                                                                                       111
(44) Investments and securities portfolio

The item investments and securities portfolio consists of the bonds and other fixed-income securities, equities and other
variable-yield securities not held for trading purposes, as well as investments and holdings in subsidiaries not included in the
consolidation.

The financial instruments shown in investments and securities portfolio are allocated to the category available-for-sale and,
with the exception of holdings in subsidiaries not included in the consolidation, are valued at fair value.

€ thousand                                                                      31.12.2007        31.12.2006            Change
                                                                                                                          in %
Bonds, notes and other fixed-income securities of the
available-for-sale portfolio                                                     2,896,645         1,976,898               46.5
  Money-market instruments                                                          20,877           100,552             – 79.2
        issued by other borrowers                                                   20,877           100,552             – 79.2
  Bonds and notes                                                                2,875,768         1,876,346               53.3
        issued by public-sector borrowers                                          163,521           135,006               21.2
        issued by other borrowers                                                2,712,247         1,741,340               55.8
Shares and other variable-yield securities
of the available-for-sale portfolio                                                 48,895            63,371             – 22.8
Holdings in subsidiaries                                                                27                27                0.0
Total                                                                            2,945,567         2,040,296               44.4


As part of its securities lending transactions, comdirect bank has transferred bonds and notes with a nominal value of
€645,839 thousand to a borrower of securities. The book values of the transferred bonds and notes as of the reporting date
amounted to €643,376 thousand (2006: €0 thousand).

In securities lending transactions, the risks and rewards of the securities loaned remain with the lender of securities. The
lender bears the credit and market price risks and is entitled to the current income and other rights accruing from this paper.


(45) Intangible assets

€ thousand                                                                      31.12.2007        31.12.2006            Change
                                                                                                                          in %
Proprietary software                                                                 7,907             6,853               15.4
Software purchased                                                                   1,574             2,359             – 33.3
Acquired customer relationships                                                      9,388            10,551             – 11.0
Total                                                                               18,869            19,763              – 4.5


Changes in intangible assets are shown in the schedule of assets (note 47).


(46) Fixed assets

€ thousand                                                                      31.12.2007        31.12.2006            Change
                                                                                                                          in %
Land and buildings                                                                   3,309             3,309                0.0
Office furniture and equipment                                                      12,165             9,690               25.5
Total                                                                               15,474            12,999               19.0


Changes in fixed assets are shown in the schedule of assets (note 47).




112
                                                                                            Consolidated financial statements •


(47) Schedule of assets

€ thousand                                                                   Intangible assets
                                                      Proprietary                Software                       Acquired customer
                                                       software                 purchased                         relationships
                                                     2007            2006     2007               2006             2007              2006
Book value as of 1 January                          6,853           7,510     2,359           2,861             10,551                 0
Cost of acquisition/manufacture
as of 1 January                                     50,771          46,999   19,835          18,964             11,580                 0
  Additions                                          5,680           4,629      675               871               11          10,723
  Disposals                                             0               0         0                 0                 0                0
  Reclassifications                                     0            – 857        0                 0                 0              857
Cost of acquisition/manufacture
as of 31 December                                   56,451          50,771   20,510          19,835             11,591          11,580
Cumulated write-downs as of 1 January               43,918          39,489   17,476          16,103               1,029                0
  Additions                                          4,626           4,429    1,460              1,373            1,174             1,029
  Disposals                                             0               0         0                 0                 0                0
Cumulated write-downs
as of 31 December                                   48,544          43,918   18,936          17,476               2,203             1,029
Book value as of 31 December                        7,907           6,853     1,574           2,359              9,388          10,551




€ thousand                                                                                       Fixed assets
                                                                                  Land                           Office furniture
                                                                                                                 and equipment
                                                                              2007               2006             2007              2006
Book value as of 1 January                                                    3,309           3,309              9,690              8,153
Cost of acquisition/manufacture as of 1 January                               3,309              3,309          54,165          53,469
  Additions                                                                       0                 0             5,364             4,438
  Disposals                                                                       0                 0           – 2,175         – 3,742
Cost of acquisition/manufacture as of 31 December                             3,309              3,309          57,354          54,165
Cumulated write-downs as of 1 January                                             0                 0           44,475          45,316
  Additions                                                                       0                 0             2,874             2,898
  Disposals                                                                       0                 0           – 2,160         – 3,739
Cumulated write-downs as of 31 December                                           0                 0           45,189          44,475
Book value as of 31 December                                                  3,309              3,309          12,165              9,690




                                                                                                                                      113
€ thousand                                                                    Investments                       Holdings
                                                                                                             in subsidiaries
                                                                              2007           2006             2007             2006
Book value as of 1 January                                                        0             0                 27             27
Cost of acquisition/manufacture as of 1 January                              10,500         10,500                27             27
  Additions                                                                       0             0                  0              0
  Disposals                                                                       0             0                  0              0
Cost of acquisition/manufacture as of 31 December                            10,500         10,500                27             27
Cumulated write-downs as of 1 January                                        10,500         10,500                 0              0
  Additions                                                                       0             0                  0              0
  Disposals                                                                       0             0                  0              0
Cumulated write-downs as of 31 December                                      10,500         10,500                 0              0
Book value as of 31 December                                                      0             0                 27             27




(48) Income tax assets

€ thousand                                                                                           31.12.2007        31.12.2006
Current income tax assets                                                                                 3,304                  73
Deferred income tax assets                                                                                5,145                5,502
Total                                                                                                     8,449                5,575


The corporation tax credit amounting to €1,629 thousand reported under current income tax assets was reported under other
assets at €1,570 thousand in the previous year.

The deferred income tax assets and liabilities are netted out as they relate to the same tax authorities.

Deferred income tax assets were recognised in conjunction with the following balance sheet items:

€ thousand                                                                                           31.12.2007        31.12.2006
Provisions for possible loan losses                                                                        899                 1,132
Trading assets/trading liabilities                                                                          32                  113
Financial investments                                                                                     5,505                5,764
  Investments and securities portfolio
        Recognised as income                                                                              2,312                3,758
        Not recognised as income                                                                          3,820                3,643
  Positive/negative fair values from derivative hedging instruments                                       – 290                – 875
  Claims on banks                                                                                         – 337                – 762
Intangible assets                                                                                       – 2,155            – 2,611
Fixed assets                                                                                                 0                  – 37
Provisions                                                                                                 864                 1,141
Total                                                                                                     5,145                5,502


As of 31 December 2007, the deferred tax assets were measured at the valid German tax rates resulting from the corporate
tax reform 2008 resolved on 6 July 2007.

The German income tax rate comprises the corporation tax rate in Germany valid as of 1 January 2008 (15.0%) plus the
solidarity surcharge (5.5%) and the trade tax rate (10.15%). This produces a German income tax rate of around 25.98%.




114
                                                                                         Consolidated financial statements •


In the previous year, the German income tax rate selected for the deferred taxes comprised the corporation tax rate valid in
Germany until 31 December 2007 (25.0%), plus the solidarity surcharge (5.5%) and the trade tax rate (14.5%).

Taking the deductibility of the trade earnings tax into account, the income tax rate stood at around 35.7%.


(49) Other assets

€ thousand                                                                    31.12.2007              31.12.2006           Change
                                                                                                                             in %
Deferred items                                                                        318                   294                8.2
Sundry assets                                                                        8,528                 8,411               1.4
Total                                                                                8,846                 8,705               1.6



Sundry assets break down as follows:

€ thousand                                                                                            31.12.2007        31.12.2006
Claims on advisers/offices of comdirect private finance AG                                                 6,033             4,157
Claims on product providers                                                                                1,394             1,445
Claims on group companies                                                                                   149               494
Other                                                                                                       952              2,315
Total                                                                                                      8,528             8,411




(50) Liabilities to customers

€ thousand                                          Total                   Due on demand                  With agreed maturity
                                                                                                           or withdrawal notice
                                 31.12.2007      31.12.2006    Change   31.12.2007     31.12.2006        31.12.2007     31.12.2006
                                                                 in %
Germany                           7,533,853       4,541,897      65.9    5,754,020      3,062,976         1,779,833      1,478,921
  Private customers               7,530,213       4,541,186      65.8    5,750,391      3,062,265          1,779,822     1,478,921
  Corporate customers
  and self-employed
  private individuals                  3,640             711    412.0        3,629             711                 11              0
International                       160,069          84,746      88.9     107,351            42,013          52,718        42,733
  Private customers                 159,765           84,454     89.2      107,047           41,721          52,718         42,733
  Corporate customers
  and self-employed
  private individuals                    304             292      4.1         304              292                 0               0
Total                             7,693,922       4,626,643      66.3    5,861,371      3,104,989         1,832,551      1,521,654


Liabilities to customers include foreign currency amounts of €62,270 thousand (2006: €70,567 thousand).

Through the depositor protection fund of the German banking association Bundesverband deutscher Banken e.V., each
customer is insured for deposits of up to €162.6 million. In addition, comdirect bank AG is a member of Entschädigungs-
einrichtung deutscher Banken GmbH.




                                                                                                                                  115
(51) Negative fair values from derivative hedging instruments

Derivative financial instruments used for hedging purposes and covered by hedge accounting and showing a negative fair
value are disclosed in this item:

€ thousand                                                                     31.12.2007        31.12.2006            Change
                                                                                                                         in %
Negative fair values from allocated effective fair value hedges                       730               716                2.0


Only interest rate swaps are used for hedging purposes. These are carried at fair value. The nominal volume of the financial
instruments amounts to €50 million (2006: €50 million).


(52) Trading liabilities

The negative fair values from derivative financial instruments not used as hedging instruments under hedge accounting are
reported under trading liabilities. In the previous year these related to interest rate swaps with a nominal value of €400 mil-
lion.

€ thousand                                                                     31.12.2007        31.12.2006            Change
                                                                                                                         in %
Interest rate transactions                                                              0               317            – 100.0



(53) Provisions

€ thousand                                                                     31.12.2007        31.12.2006            Change
                                                                                                                         in %
Provisions for pensions and similar commitments                                       378              3,950            – 90.4
Other provisions                                                                   17,841            16,239                9.7
Total                                                                              18,219            20,189              – 9.9


Provisions for pensions and similar commitments comprise pension commitments and deferred compensation (for details see
note 19).

Breakdown of pension commitments shown in the balance sheet:

€ thousand                                                                                       31.12.2007        31.12.2006
Present value of pension commitments                                                                   5,450             5,935
Market value of plan assets                                                                          – 5,003           – 1,091
Unrecognised actuarial gains and losses                                                                 – 46             – 827
Unrecognised additional service costs                                                                   – 49              – 98
Total                                                                                                   352             3,919




Allocation to balance sheet items:

€ thousand                                                                                       31.12.2007        31.12.2006
Provisions for pensions and similar commitments                                                         378              3,950
Other assets                                                                                             26                31


Other assets refer to a surplus in the plan assets compared to the pension commitments of comdirect finance AG.




116
                                                                                      Consolidated financial statements •


Breakdown of allocations to provisions for pensions as recognised in the income statement:

€ thousand                                                                                          2007             2006
Service costs                                                                                        127              121
Current service costs                                                                                263              243
Expected income from plan assets                                                                    – 131             – 40
Actuarial gains and losses                                                                            80              185
Additional service costs                                                                              49                49
Settlement                                                                                             0              – 45
Total allocations                                                                                    388              513


The expenses for old-age pensions (€436 thousand, see note 35, 2006: €537 thousand) differ in particular as a result of
the additional costs for pension insolvency insurance of €25 thousand (2006: €7 thousand) as well as the costs for the Ver-
sicherungsverein des Bankengewerbes a.G. (BVV) amounting to €19 thousand (2006: €17 thousand). The actual losses from
plan assets amounted to €38 thousand (2006: €6 thousand). A return of 4.5% (2006: 3.25%) p.a. was used to calculate the
expected income on plan assets.


Changes in the net present value of pension commitments during the financial year:

€ thousand                                                                                          2007             2006
Net present value of pension commitments as of 1 January                                           5,935             5,833
Allocations
Current service costs                                                                                127              121
Contributions from employees from salary sacrifice                                                   154                92
Interest costs                                                                                       263              243
Settlement                                                                                             0              – 45
Utilised
Pension benefits paid                                                                               – 159            – 156
Actuarial gains and losses                                                                         – 870             – 153
Net present value of pension commitments as of 31 December                                         5,450             5,935




Changes in the trust assets administered by Commerzbank Pension Trust e.V. which are to be set off against provisions for
pensions in accordance with IAS 19:

€ thousand                                                                                          2007             2006
Market value of plan assets as of 1 January                                                        1,091             1,229
Allocation to plan assets                                                                          4,106                 0
Refunds for pension benefits                                                                        – 156            – 144
Expected income from plan assets                                                                     131                40
Actuarial gains and losses                                                                          – 169             – 34
Market value of plan assets as of 31 December                                                      5,003             1,091




                                                                                                                       117
Overview of pension commitments and plan assets

€ thousand                                                                                      31.12.2007        31.12.2006
Net present value of pension commitments                                                              5,450             5,935
Plan assets                                                                                           5,003             1,091
Deficit                                                                                                447              4,844


Experience-based adjustments to pension commitments                                                   – 870             – 153
Experience-based adjustments to fair value of plan assets                                             – 169              – 34




The following parameters are included in the actuarial calculations:

in %                                                                                            31.12.2007        31.12.2006
Calculatory interest rate                                                                              5.50              4.50
Changes in salaries                                                                                    2.00              2.00
Changes in pensions                                                                                    1.60              1.60
Expected interest earned on plan assets                                                                4.50              3.25



Changes in other provisions:

€ thousand                                            as of      Utilised    Depreciation        Allocation             as of
                                                  1.1.2007                                                        31.12.2007
Provisions for
non-income-related taxes                              6,738            773             0                 0              5,965
Provisions for staff                                  4,093        3,662             164              5,957             6,224
Provisions for contingent losses                      2,832            582             0               721              2,971
Provisions for
interest from additional tax claims                   1,300              0             0               368              1,668
Provisions for restructuring                                34           2             0                 0                32
Other provisions                                      1,242            273           574               586               981
Total                                               16,239        5,292              738             7,632            17,841


Provisions for staff mainly relate to provisions for bonuses, which are scheduled to be used in financial year 2008. This item
also includes a provision for a performance share plan amounting €503 thousand (2006: €236 thousand).


Changes in provisions for contingent losses break down as follows:

€ thousand                                            as of      Utilised    Depreciation        Allocation             as of
                                                  1.1.2007                                                         31.12.007
Implementation of the com one
programme for the future                              1,250              0             0                 0              1,250
Products & advertising                                  582            582             0               721               721
Sale of comdirect ltd                                 1,000              0             0                 0              1,000
Provisions for contingent losses                     2,832             582             0               721             2,971


The extent of contingent losses was measured on the basis of the information about expected expenses available when the
financial statements were completed.




118
                                                                                             Consolidated financial statements •


(54) Tax liabilities

Tax liabilities break down as follows:

€ thousand                                                                         31.12.2007            31.12.2006       Change
                                                                                                                            in %
Current tax liabilities                                                                  5,958                6,668        – 10.6


Deferred tax claims and liabilities are netted out, since they are both due to the same tax authority.

In financial year 2007, the netting out of deferred tax assets and tax liabilities produced a capitalised income tax asset. This
figure is broken down in note (48).


(55) Other liabilities

€ thousand                                                                         31.12.2007            31.12.2006       Change
                                                                                                                            in %
Deferred items                                                                              75                 107         – 29.9
Sundry liabilities                                                                      35,718               25,927          37.8
Total                                                                                  35,793               26,034           37.5



Sundry liabilities break down as follows:

€ thousand                                                                         31.12.2007            31.12.2006       Change
                                                                                                                            in %
Liabilities from other taxes                                                             9,177                3,449         166.1
Trade liabilities                                                                       12,351                9,778          26.3
Liabilities to affiliated companies                                                      9,200                8,512           8.1
Other                                                                                    4,990                4,188          19.1
Total                                                                                  35,718               25,927           37.8



(56) Equity

€ thousand                                                                         31.12.2007            31.12.2006       Change
                                                                                                                            in %
Subscribed capital                                                                    141,221               140,824           0.3
Capital reserve                                                                       230,196               228,228           0.9
Retained earnings                                                                       56,815               57,019         – 0.4
Revaluation reserves                                                                   – 7,944              – 2,929         171.2
Consolidated profit                                                                     57,901              197,154        – 70.6
Equity                                                                                478,189              620,296         – 22.9


Subscribed capital
Subscribed capital comprises no-par-value shares.

                                                                                                                         Number
Number of shares held as of 1.1.2007                                                                                  140,824,172
Issue of new shares                                                                                                       396,643
Number of shares held as of 31.12.2007                                                                                141,220,815


The number of shares held corresponds to the number of shares issued. There are no privileges or restrictions related to
dividend distribution at comdirect bank AG. All shares issued are included in full.


                                                                                                                              119
Capital reserve
The capital reserve shows premiums from the issue of shares as well as the subscribed capital excess from the exercise of
stock options.

Retained earnings
Retained earnings show the net profit which has not been distributed.

Revaluation reserves
Gains or losses on remeasurement of the investments and securities portfolio, which is broken down into interest-bearing and
dividend-based instruments, are shown at fair value in the revaluation reserves, taking into account deferred taxes. Gains and
losses only affect the income statement when the asset is sold or written off.


(57) Equity management

Through equity management, comdirect bank aims to ensure it has adequate capital resources to implement the comvalue
growth programme and strategic development of comdirect bank resolved by the Board of Managing Directors, to achieve an
appropriate return on equity and meet regulatory capital requirements.

Risk-taking capability calculation
The risk-taking capability, i.e. economic group risk versus the risk cover assets, is a key element of capital management. The
economic group risk includes operational risks, business risks, market risks and credit default risks. The risk cover assets com-
prise the (planned) pre-tax profit, capital reserve and retained earnings as well as the revaluation reserve (before tax in the
previous year). The risk-taking capability is ensured as long as the risk cover assets exceed the measured group risk.

The economic group risk is measured using the economic risk capital with the aid of the value-at-risk approach (VaR) based
on a confidence level of 99.95% and a holding period of one year.

At the year-end, the economic group risk of comdirect bank amounted to €52.9 million (31.12.2006: €64.6 million). The risk
cover assets comprised the following:

€ million                                                                                          31.12.2007        31.12.2006
Pre-tax profit                                                                                           90.5               85.6
Revaluation reserve (2006: before tax)                                                                   – 7.9             – 6.6
General reserves                                                                                        287.2              425.0
Risk cover assets                                                                                       369.8             504.0


At the end of the financial year, the utilisation of the risk cover assets amounted to 14.3% (31.12.2006: 12.8%).

Please see the risk report on pages 74 to 76 for further explanations.




120
                                                                                            Consolidated financial statements •


Equity resources in accordance with Section 10, German Banking Act (KWG)
The regulatory equity resources of comdirect bank are determined in accordance with the provisions of the German Banking
Act (KWG). In accordance with Section 10, German Banking Act and Principle I decreed by the Federal Financial Supervisory
Authority (BaFin), comdirect bank must ensure it has appropriate equity resources to meet its obligations to its customers. To
this end, credit default risks are to be quantified and backed by liable equity. The regulatory minimum capital requirements
are deemed to be fulfilled as long as the equity ratio pursuant to Principle 1 amounts to a minimum of 8.0%.

The liable equity is determined on the basis of the monthly financial statements drawn up in accordance with the provisions
of the German Commercial Code. It comprises the core and supplementary capital.

Banking regulatory requirements were complied with at all times during the reporting year. At comdirect bank, the recognised
regulatory equity ratio as of 31 December 2007 stood at 20.8% (31.12.2006: 41.6%).

€ thousand                                                                                             31.12.2007        31.12.2006
Subscribed capital                                                                                        141,221           140,824
General reserves                                                                                          255,526           403,964
Deducted items                                                                                            – 2,378           – 2,750
Core capital                                                                                             394,369           542,038
Liable equity                                                                                            394,369           542,038




(58) Maturities, by remaining lifetime

€ thousand                                                         Remaining lifetimes as of 31 December 2007
                                                     Total       Due on         Up to          Three           One to    More than
                                                             demand and         three        months         five years   five years
                                                               unlimited       months    to one year
                                                                 in time
Claims on banks                                  4,810,441       630,308     3,462,633       464,000         253,500             0
Claims on customers                               216,492        215,441        1,051              0                0            0
Bonds, notes and other fixed-income
securities of the available-for-sale portfolio   2,896,645            0       166,888        405,083        2,167,990       156,684
Total                                            7,923,578      845,749     3,630,572       869,083        2,421,490       156,684
Liabilities to customers                         7,693,922     5,861,371     1,455,651       242,318         134,582             0
Total                                            7,693,922     5,861,371    1,455,651       242,318          134,582             0




€ thousand                                                         Remaining lifetimes as of 31 December 2006
                                                     Total       Due on         Up to          Three           One to    More than
                                                             demand and         three        months         five years   five years
                                                               unlimited       months    to one year
                                                                 in time
Claims on banks                                  2,923,517       759,361     1,398,906       467,250         298,000             0
Claims on customers                               208,220        207,093        1,127              0                0            0
Bonds, notes and other fixed-income
securities of the available-for-sale portfolio   1,976,898            0       177,955        181,670        1,436,428       180,845
Total                                            5,108,635      966,454     1,577,988       648,920        1,734,428       180,845
Liabilities to customers                         4,626,643     3,104,989     1,233,780       167,273         120,601             0
Total                                            4,626,643     3,104,989    1,233,780       167,273          120,601             0


Time remaining to maturity is considered as the period between the balance sheet date and the contractual maturity of the
claim or obligation.



                                                                                                                                121
(59) Claims on/liabilities to affiliated companies

€ thousand                                                                         31.12.2007          31.12.2006               Change
                                                                                                                                  in %
Assets
Claims on banks                                                                      4,399,910          1,213,861                 262.5
Positive fair values from derivative hedging instruments                                 1,847               3,167                – 41.7
Trading assets                                                                           5,768                     0                   –
Investments and securities portfolio                                                   630,225            377,714                  66.9
Other assets                                                                               149                   494              – 69.8
Total                                                                                5,037,899          1,595,236                 215.8


Liabilities
Negative fair values from derivative hedging instruments                                   730                   716                2.0
Other liabilities                                                                        9,200               8,512                  8.1
Total                                                                                    9,930               9,228                  7.6




(60) Risk reporting on financial instruments

Risk management
At comdirect bank, the CFO is responsible for implementing and monitoring the risk strategy. There are two sides to this im-
plementation, namely risk management and risk controlling. The task of risk management is to proactively and consciously
manage all risks in the relevant divisions. For effective value-oriented overall bank management, risk management is carried
out on a decentralised basis in the individual divisions. The task of risk controlling is to identify, evaluate, limit and continually
monitor risks and to report to the Board of Managing Directors regularly on the risk situation.

Credit risk
Credit risk is understood as the potential risk that a contracting partner will not be or will not fully be in a position to meet his
contractual obligations.

One of the methods used to monitor credit default risk is the monthly calculation of the CVaR for lending to customers and
companies as well as for trading transactions. Credit default risks are therefore part of overall bank management.



Maximum default risk

€ thousand                                                                                   Max. default risk         Max. default risk
                                                                                                  31.12.2007                31.12.2006
Assets
Cash reserve                                                                                         198,412                     82,932
Claims on banks                                                                                     4,810,441                 2,923,517
Claims on customers                                                                                  211,870                   203,909
Positive fair values from derivative hedging instruments                                                1,847                     3,167
Trading assets                                                                                         13,036                         0
Investments and securities portfolio
  Bonds                                                                                             2,896,645                 1,976,898
Total                                                                                              8,132,251                 5,190,423




122
                                                                                       Consolidated financial statements •


Credit quality of financial assets that are neither overdue nor impaired

€ thousand                                                                                 31.12.2007               31.12.2006
Banks
  Cash reserve                                                                                198,412                   82,932
  Claims on banks                                                                            4,810,441               2,923,517
  Positive fair values from derivative hedging instruments                                       1,847                   3,167
  Investments and securities portfolio
        Bonds                                                                                2,733,124               1,841,892
  Trading assets                                                                                13,036                      0
Total                                                                                       7,756,860                4,851,508
Retail customers
  Claims on customers                                                                         213,231                  205,078
Public-sector issuers
  Investments and securities portfolio
        Bonds                                                                                 163,521                  135,006
Corporates
  Claims on customers                                                                               0                      76
Total                                                                                       8,133,612                5,191,668




Overdue, but as yet unimpaired financial assets

€ thousand                                                                                    Claims on customers
                                                                                           31.12.2007               31.12.2006
Age structure
  30 to 90 days                                                                                  1,426                    694
  91 to 179 days                                                                                  420                     458
  180 days and over                                                                               469                     950
Total                                                                                           2,315                   2,102




Individually impaired financial assets

€ thousand                                                                                    Claims on customers
                                                                                           31.12.2007               31.12.2006
Volume of claims adjusted by individual valuation allowances                                      946                     964
Individual valuation allowances                                                                  – 463                   – 732
Book value                                                                                        483                     232


In its retail business (claims on customers), comdirect bank distinguishes between loans to purchase securities due on de-
mand and overdraft facilities on current accounts. Loans to purchase securities are collateralised by pledged securities. All
other financial assets are unsecured.

The risk report contains further details on the extent and causes of the credit default risk (page 74), on risk management,
quantification and reporting (page 78) as well as information on the current risk situation (page 79).




                                                                                                                           123
Liquidity risk

Payment obligations under financial liabilities in accordance with contractually agreed maturities

€ thousand                                                           Remaining lifetimes as of 31.12.2007
                                           Book value            Due on              Up to              1 to 5       More than
                                                                demand            one year              years          5 years
Non-derivative
financial liabilities
  Liabilities to customers                   7,693,922         5,861,371         1,469,990           251,497           134,668
Derivative financial liabilities
  Negative fair value from
  derivative hedging instruments                  730                  0               745                    0               0
Credit commitments                                   –         2,939,932                 0                    0               0
Total                                       7,694,652          8,801,303         1,470,735           251,497           134,668




€ thousand                                                           Remaining lifetimes as of 31.12.2006
                                           Book value            Due on              Up to              1 to 5       More than
                                                                demand            one year              years          5 years
Non-derivative
financial liabilities
  Liabilities to customers                   4,626,643         3,104,989         1,401,053           120,601                  0
Derivative financial liabilities
  Negative fair value from
  derivative hedging instruments                  716                  0               361                  415               0
  Trading liabilities                             317                  0             1,238                    0               0
Credit commitments                                   –         2,911,109                 0                    0               0
Total                                       4,627,676          6,016,098         1,402,652           121,016                  0


For further information please see the risk report: extent and causes of liquidity risk page 75, risk management, quantification
and reporting page 80, information on current risk position page 80.

Market risk
Market price risks encompass the risk of loss from changes in market parameters (interest rates, credit spreads, exchange
rates and share prices).

The statistical/mathematical approach of historic simulation to calculate value-at-risk values is used to quantify and moni-
tor general market price risks (interest rate, currency and share price risks) on a daily basis. The value-at-risk describes the
maximum loss under normal market conditions for a specific probability (confidence level) and specific holding period. The
underlying statistical parameters are based on an historic monitoring period of the past 255 trading days, a holding period of
one day and a confidence level of 97.5%.




124
                                                                                           Consolidated financial statements •


The model looks at the following risk factors: share price risks, interest rate risks and FX risk. The key feature of the historic
simulation is that it does not use a parametric model for the risk factors. Historic market data and its empirical distribution
function is used directly. A portfolio value is obtained for every day of the historic monitoring period. For a monitoring period
of 255 days, a confidence level of 97.5% and a holding period of one day, the value-at-risk is the seventh highest daily loss in
the historic monitoring period.

The variance/covariance approach, also with a confidence level of 97.5% and a holding period of one day, is used to quantify
and monitor the specific market price risks (credit spreads). The model parameters are credit spread sensitivities, market
values, volatilities and correlations. These are determined by historic market data.

The two value-at-risk figures from the general and specific market price risk are combined to form an overall value-at-risk by
assuming a correlation of zero between credit spreads and risk factors in the general market price risk.

Stress tests are carried out at comdirect bank AG to monitor extreme market movements. The stress figure shows the maxi-
mum portfolio loss under worst case conditions. The respective maximum losses in the scenarios for the share price, interest
rate and foreign currency risk factors are added together. This aggregate figure is combined with the maximum loss in the
credit spread scenarios on the assumption that these are uncorrelated to form the overall stress value.

€ thousand                                      As of         As of    Annual high     Annual low         Median          Median
                                        start of year   end of year                                        2007            2006
Total VaR 97.5%,
Holding period 1 day                           1,264           888           1,566             700            805            982
Stress test – overall result                 14,199          10,390         16,915           9,625         11,026           9,369


The risk report includes further details on the extent and causes of market risk (page 74), on risk management, quantification
and reporting (page 77) as well as information on the current risk situation (page 77).



(61) Fair Value of financial instruments

The table below shows the fair values of balance sheet items set off against their book values. The fair value is the amount for
which an asset can be exchanged or a liability settled between knowledgeable, willing partners in an arm’s length transac-
tion. Where stock market prices were available, these were used for the measurement of financial instruments. In the event
that no market price was available, measurements were carried out using internal measurement models with current market
price parameters. In this connection, the net present value method was used in particular.




                                                                                                                              125
€ thousand                                                                 Fair value                              Book value
                                                                  31.12.2007            31.12.2006           31.12.2007         31.12.2006
Loans and Receivables
  Cash reserve                                                       198,412                  82,932            198,412              82,932
  Claims on banks                                                  4,808,666             2,915,517            4,810,441           2,923,517
  Claims on customers after provisions                               211,870                 203,909            211,870            203,909
Total                                                              5,218,948             3,202,358            5,220,723          3,210,358


Available for Sale Financial Assets
  Investments and securities portfolio                             2,945,567             2,040,296            2,945,567           2,040,296
Total                                                              2,945,567             2,040,296            2,945,567          2,040,296


Liabilities measured at Amortised Cost
  Liabilities to customers                                         7,692,501             4,626,643            7,693,922           4,626,643
Total                                                              7,692,501             4,626,643            7,693,922          4,626,643


At Fair Value through Profit or Loss: Held for Trading
  Trading assets                                                      13,036                      0              13,036                   0
  Trading liabilities                                                        0                  317                  0                  317
Total                                                                13,036                     317             13,036                  317


Other
  Positive fair values from
  derivative hedging instruments                                       1,847                   3,167              1,847               3,167
  Negative fair values from
  derivative hedging instruments                                           730                  716                730                  716
Total                                                                 2,577                   3,883              2,577                3,883


For short-term claims on banks of €4,092,940 thousand (previous year: €2,158,267 thousand), short-term claims on cus-
tomers of €211,870 thousand (previous year: €203,909 thousand) and short-term liabilities of €7,559,340 thousand (2006:
€4,506,042 thousand), the fair value was equated with the book value for simplification purposes.


(62) Average number of employees during the reporting period

                                                         2007                                      2006                             Change
                                         Total           Female     Male           Total           Female           Male        (Total) in %
At comdirect bank AG                      765              405       360            676                355           321               13.2
        in the call centre                309              174       135            261                147           114               18.4
        in the back office                181              134        47            172                124                48            5.2
        in other areas                    275               97       178            243                84            159               13.2
At comdirect private finance AG            34               15        19                24               9                15           41.7
Average number of employees
during the reporting period               799              420       379            700                364           336               14.1


The employee details listed above include full-time and part-time staff. The number of employees does not include the aver-
age number of trainees in the group in financial year 2007.

                                                         2007                                      2006                             Change
                                         Total           Female     Male           Total           Female           Male        (Total) in %
Trainees                                   20               16         4                12              10                 2           66.7




126
                                                                               Consolidated financial statements •


(63) Income statement of comdirect bank group according to IAS/IFRS – year-to-year comparison

€ thousand                                  1.1. to       1.1. to        1.1. to          1.1. to          1.1. to
                                        31.12.2007    31.12.2006     31.12.2005       31.12.2004       31.12.2003
Interest income                            287,744       143,057         88,603           86,117           84,889
Interest expenses                          160,580        54,324         24,583           29,165           27,682
Net interest income before provisions      127,164        88,733         64,020           56,952           57,207
Provisions for possible loan losses         – 1,947       – 3,377        – 1,418            – 290              35
Net interest income after provisions       125,217        85,356         62,602           56,662           57,242
Commission income                          185,595       164,291        116,311          101,657           96,686
Commission expenses                         32,871        27,726         17,278           14,564           13,579
Net commission income                      152,724       136,565         99,033           87,093           83,107
Result from hedge accounting                    56           – 45           – 40                0               0
Trading result                               – 519         – 317              0                 0               0
Result from investments
and securities portfolio                    – 9,624       – 6,327         6,751            3,858            4,760
Administrative expenses                    187,437       135,626        119,330          103,559          112,494
  Personnel costs                           39,677        33,069         29,612           28,801           31,673
  Other administrative expenses            137,626        92,828         80,323           63,240           64,297
      Marketing costs                       74,268        40,320         33,662           16,460           12,364
      Communication costs                    5,277         2,104          1,909            2,045            4,042
      Consulting expenses                   12,754        10,357          8,507            9,550            9,396
      Expenses for external services        22,629        21,323         19,827           18,804           17,942
      Sundry administrative expenses        22,698        18,724         16,418           16,381           20,553
  Depreciation of office furniture
  and equipment and intangible assets       10,134         9,729          9,395           11,518           16,524
Other operating result                      10,063         5,994          3,764            7,036            6,487
Pre-tax profit                              90,480        85,600         52,780           51,090           39,102
Taxes on income                             32,783        28,598         18,593           17,121           15,741
Net profit                                  57,697        57,002         34,187           33,969           23,361




                                                                                                               127
(64) Income statement of comdirect bank group according to IAS/IFRS – quarterly comparison

€ thousand                                                                         2007
                                                             Q1              Q2                Q3        Q4
Interest income                                          54,600          64,919           80,010     88,215
Interest expenses                                        26,033          35,506           47,322     51,719
Net interest income before provisions                    28,567          29,413           32,688     36,496
Provisions for possible loan losses                       – 495            –231              – 149   – 1,072
Net interest income after provisions                     28,072          29,182           32,539     35,424
Commission income                                        48,160          45,276           45,727     46,432
Commission expenses                                       9,087           7,278              7,297    9,209
Net commission income                                    39,073          37,998           38,430     37,223
Result from hedge accounting                                 63              24              – 126       95
Trading result                                            – 235           – 400               693     – 577
Result from investments and securities portfolio          – 297          – 1,820          – 1,853    – 5,654
Administrative expenses                                  42,382          44,884           47,827     52,344
  Personnel costs                                         8,971          10,163           10,561      9,982
  Other administrative expenses                          31,206          32,337           34,730     39,353
      Marketing costs                                    14,768          17,655           17,543     24,302
      Communication costs                                 1,174           1,309              1,096    1,698
      Consulting expenses                                 3,675           2,151              3,839    3,089
      Expenses for external services                      4,952           6,153              7,165    4,359
      Sundry administrative expenses                      6,637           5,069              5,087    5,905
  Depreciation of office furniture and equipment
  and intangible assets                                   2,205           2,384              2,536    3,009
Other operating result                                    1,569           1,435              1,513    5,546
Pre-tax profit                                           25,863          21,535           23,369     19,713
Taxes on income                                           9,026           7,374              9,340    7,043
Net profit                                               16,837          14,161           14,029     12,670




128
                                                                  Consolidated financial statements •




€ thousand                                                            2006
                                                      Q1        Q2               Q3               Q4
Interest income                                    29,158   33,814           37,433           42,652
Interest expenses                                  10,141   11,904           13,603           18,676
Net interest income before provisions              19,017   21,910           23,830           23,976
Provisions for possible loan losses                 – 854    – 417           – 1,267           – 839
Net interest income after provisions               18,163   21,493           22,563           23,137
Commission income                                  46,493   44,927           32,373           40,498
Commission expenses                                 7,442    7,383            5,291            7,610
Net commission income                              39,051   37,544           27,082           32,888
Result from hedge accounting                         – 53      135             – 110             – 17
Trading result                                         0         0                0            – 317
Result from investments and securities portfolio    – 199   – 3,554          – 1,791           – 783
Administrative expenses                            33,324   34,628           31,564           36,110
  Personnel costs                                   7,550    8,552            8,572            8,395
  Other administrative expenses                    23,546   23,712           20,492           25,078
      Marketing costs                               8,492    9,939           10,531           11,358
      Communication costs                            570       571              460              503
      Consulting expenses                           2,809    1,930            2,210            3,408
      Expenses for external services                6,062    6,086            4,022            5,153
      Sundry administrative expenses                5,613    5,186            3,269            4,656
  Depreciation of office furniture and equipment
  and intangible assets                             2,228    2,364            2,500            2,637
Other operating result                              1,557      702            1,170            2,565
Pre-tax profit                                     25,195   21,692           17,350           21,363
Taxes on income                                     9,046    7,710            6,464            5,378
Net profit                                         16,149   13,982           10,886           15,985




                                                                                                  129
(65) Segment reporting by business line

€ thousand                                                                        1.1. to 31.12.2007
                                                            comdirect        comdirect             Group        comdirect
                                                               online           offline    management/              bank
                                                                                           consolidation/          group
                                                                                                   others           total
Net interest income before provisions                        127,122                42                 0          127,164
Provisions for possible loan losses                           – 1,947                0                 0           – 1,947
Net interest income after provisions                         125,175                42                 0          125,217
Net commission income                                        145,021             9,157            – 1,454         152,724
Result from hedge accounting                                      56                 0                 0               56
Trading result                                                  – 519                0                 0            – 519
Result from investments and securities portfolio              – 9,624                0                 0           – 9,624
Administrative expenses                                      179,680            10,493            – 2,736         187,437
Other operating result                                          8,860            2,485            – 1,282          10,063
Pre-tax profit                                                89,289             1,191                 0           90,480


Segment investments                                            11,471              259                  –          11,730
Segment depreciation                                            9,760              374                  –          10,134
Other non-cash expenses                                        29,632            1,558                  –          31,190


Cost/income ratio                                              66.3%            89.8%                   –          67.0%


Segment income                                               464,623            26,163            – 2,782         488,004
  of which external income                                   463,339            24,665                  –         488,004
  of which inter-segmental income                               1,284            1,498            – 2,782               0
Segment expenses                                             375,334            24,972            – 2,782         397,524
Segment assets                                              8,180,822            3,556             48,433       8,232,811
Segment debt                                                7,697,857                0             56,765       7,754,622


Allocation to the segments is based on the business lines of the comdirect bank Group. Determination of the business lines
was carried out in compliance with IAS 14 and its principle of materiality.

The comdirect online segment comprises the brokerage and banking fields of competence. The comdirect offline segment
comprises the advice field of competence.

The transfer prices between the segments are measured on a cost basis.




130
                                                                                      Consolidated financial statements •




€ thousand                                                                        1.1. to 31.12.2006
                                                            comdirect        comdirect             Group        comdirect
                                                               online           offline    management/              bank
                                                                                           consolidation/          group
                                                                                                   others           total
Net interest income before provisions                          88,788             – 55                 0           88,733
Provisions for possible loan losses                           – 3,377                0                 0           – 3,377
Net interest income after provisions                           85,411             – 55                 0           85,356
Net commission income                                        131,565             6,203            – 1,203         136,565
Result from hedge accounting                                     – 45                0                 0              – 45
Trading result                                                  – 317                0                 0            – 317
Result from investments and securities portfolio              – 6,327                0                 0           – 6,327
Administrative expenses                                      130,010             8,002            – 2,386         135,626
Other operating result                                          5,155            2,022            – 1,183           5,994
Pre-tax profit                                                85,432               168                 0           85,600


Segment investments                                            20,178              482                  –          20,660
Segment depreciation                                            9,391              338                  –           9,729
Other non-cash expenses                                        21,622            2,104                  –          23,726


Cost/income ratio                                              59.4%            97.9%                   –          60.4%


Segment income                                               301,088            19,081            – 2,470         317,699
  of which external income                                   299,832            17,867                  –         317,699
  of which inter-segmental income                               1,256            1,214            – 2,470               0
Segment expenses                                             215,656            18,913            – 2,470         232,099
Segment assets                                              5,253,606            1,486             45,771       5,300,863
Segment debt                                                4,628,947                0             51,620       4,680,567


Allocation to the segments is based on the business lines of the comdirect bank Group. Determination of the business lines
was carried out in compliance with IAS 14 and its principle of materiality.

The comdirect online segment comprises the brokerage and banking fields of competence. The comdirect offline segment
comprises the advice field of competence.

The transfer prices between the segments are measured on a cost basis.




                                                                                                                       131
(66) Other liabilities

€ thousand                   31.12.2007      31.12.2006       31.12.2007        31.12.2006         31.12.2007        31.12.2006
                                  Up to           Up to    More than one     More than one          More than         More than
                               one year        one year        year up to        year up to         five years        five years
                                                               five years        five years
Rental payments                    4,811           186                 0               140                  0                  0
Lease payments                       214          3,510              137             12,724                 0              2,053
Total                              5,025         3,696               137            12,864                  0             2,053


The above table contains minimum lease payments under none-cancellable operating leases.


(67) Trust activities

Within the context of its trust activities, assets were transferred to the comdirect bank group as trustee, which it holds in its
own name and on behalf of third parties.

As of 31 December 2007, the trust activities not carried in the balance sheet amounted to €225,069 thousand (2006:
€209,798 thousand).


(68) Auditing costs

The financial year saw overall expenses of €839 thousand (previous year: €694 thousand) for the services rendered by audi-
tors PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft.

€ thousand                                                                      31.12.2007         31.12.2006            Change
                                                                                                                           in %
Year-end audit                                                                         357                304               17.4
Other certification and valuation services                                               47                 0                  –
Tax advisory services                                                                  238                316             – 24.7
Other services                                                                         197                 74              166.2
Total                                                                                  839                694               20.9




(69) Corporate Governance Code

comdirect bank AG has submitted the Declaration of Compliance with the Corporate Governance Code pursuant to Section
161 of the German Stock Corporation Act (AktG) and has made it permanently available to shareholders on its website
www.comdirect.de.




132
                                                                                   Consolidated financial statements •


(70) The company’s Boards

Supervisory Board

Dr. Achim Kassow                                              Frank Annuscheit
Chairman                                                      Member of the Board of Managing Directors of
Member of the Board of Managing Directors of                  Commerzbank AG,
Commerzbank AG,                                               Frankfurt/Main
Frankfurt/Main

Klaus Müller-Gebel                                            Angelika Kierstein
Deputy Chairman                                               Department Support Finance, Controlling & Organisation at
Lawyer,                                                       comdirect bank AG,
Frankfurt/Main                                                Quickborn

Dr. Eric Strutz                                               Mitja Sack
Member of the Board of Managing Directors of                  Group Leader Customer Care Centre Customer Complaints at
Commerzbank AG,                                               comdirect bank AG,
Frankfurt/Main                                                Quickborn



Board of Managing Directors

Dr. Andre Carls, CEO
Torsten Daenert, Member of the Board of Managing Directors
Karin Katerbau, Member of the Board of Managing Directors



(71) Seats on Supervisory Boards and other executive bodies

Members of the Supervisory Board of comdirect bank AG


Dr. Achim Kassow

Seats on statutory Supervisory Boards                         Seats on comparable supervisory bodies
• cominvest Asset Management GmbH, Frankfurt/Main             • BRE Bank SA, Warsaw
  (Chairman)                                                  • Commerz Grundbesitz-Investmentgesellschaft mbH,
• Commerz Real AG (formerly Commerz Grundbesitz-                Wiesbaden (until 31 March 2007)
  gesellschaft mbH), Eschborn (until 31 January 2007)           (Chairman)
  (Chairman)                                                  • COMMERZ PARTNER Beratungsgesellschaft für
• Eurohypo AG, Eschborn (until 29 August 2007)                  Vorsorge- und Finanzprodukte mbH, Frankfurt/Main
• ThyssenKrupp Steel AG, Duisburg                               (Chairman)
• Volksfürsorge Deutsche Sachversicherung AG, Hamburg         • Commerzbank (Schweiz) AG, Zurich
                                                                (President)

Klaus Müller-Gebel

Seats on statutory Supervisory Boards
• Commerzbank AG, Frankfurt/Main
• Deutsche Schiffsbank AG, Bremen/Hamburg
• Eurohypo AG, Eschborn
  (Deputy Chairman)


                                                                                                                    133
Frank Annuscheit

Seats on comparable supervisory bodies
• Bank Verlag GmbH, Cologne (until 18 September 2007)
• Eurohyposystems GmbH, Eschborn
  (Chairman)



Dr. Eric Strutz

Seats on statutory supervisory boards                   Seats on comparable supervisory bodies
• ABB AG, Mannheim                                      • Commerzbank Inlandsbanken Holding GmbH,
• cominvest Asset Management GmbH, Frankfurt/Main         Frankfurt/Main
• Commerzbank Auslandsbanken Holding AG,                  (Chairman)
  Frankfurt/Main                                        • Commerzbank International S.A., Luxembourg
  (Chairman)                                            • Erste Europäische Pfandbrief- und Kommunalkreditbank
• Hypothekenbank in Essen AG, Essen                       AG, Luxembourg
• RWE Power AG, Cologne/Essen                           • Mediobanca – Banca di Credito Finanziario S.p.A.,
                                                          Milan

Members of the Board of Managing Directors
of comdirect bank AG

Dr. Andre Carls

Seats on statutory supervisory boards
• comdirect private finance AG, Quickborn
  (Deputy Chairman)



Karin Katerbau

Seats on statutory supervisory boards                   Seats on comparable supervisory bodies
• comdirect private finance AG, Quickborn               • Commerz Service Gesellschaft für Kundenbetreuung mbH,
  (Chairman)                                              Quickborn (Chairman)
                                                        • European Bank for Fund Services GmbH (ebase), Haar




134
                                                                                                    Consolidated financial statements •


(72) Remuneration and loans to Board members

The remuneration for the Board of Managing Directors of comdirect bank AG is set by the Supervisory Board. In addition to
the non-performance-related fixed compensation comprising the annual fixed salary and fringe benefits, the compensation
of the members of the Board of Managing Directors comprises a variable compensation component linked to the profit of the
company and personal performance as well as a component with long-term incentive effect and risk elements. In addition,
the members of the Board of Managing Directors also receive a company pension for their activities at comdirect bank AG.

Taking into account commercial and accounting regulations, remuneration of €1,886 thousand was reported for the members
of the Board of Managing Directors (2006: €1,165 thousand).


Fixed and variable remuneration
Provided that the financial statements of comdirect bank AG are adopted in the present form, the members of the Board of
Managing Directors will receive overall remuneration for financial year 2007 as follows:

€ thousand                                          Dr. Andre Carls                   Torsten Daenert                 Karin Katerbau
                                                    2007              2006             2007             2006              2007            2006
Non-variable components
in financial year                                     263               222             145                0               193             157
Value of fringe benefits in financial year             22                25              11                0                15              12
Variable components in financial year                 550               400             240                0               300             255
Total                                                 835              647              396                0               508             424




Components with long-term incentive effect and risk elements
The components with long-term incentive effect and risk elements in financial year 2007 are based on the Long Term Incen-
tive Programme (LTIP), the model replacing the stock option programme (see note (27)). As beneficiaries under the LTIP,
members of the Board of Managing Directors began receiving a conditional allocation of virtual, non-tradeable shares (per-
formance shares) in yearly tranches in 2005. As of the reporting date, the members of the Board of Managing Directors held
the following number of performance shares:
                                             Value per share                    Dr. Andre Carls         Torsten Daenert          Karin Katerbau
Allocated performance shares
  Tranche 2005 in units                                                                    7,428                      –                  5,061
  Tranche 2006 in units                                                                    7,048                      –                  4,992
  Tranche 2007 in units                                                                    9,129                 4,983                   6,676
Total tranches                                                                            23,605                 4,983                  16,729
Value when granted
  Tranche 2005                               in €           7.29      in € thousand            54                     –                     37
  Tranche 2006                               in €           7.84      in € thousand            55                     –                     39
  Tranche 2007                               in €           7.10      in € thousand            65                   35                      47
Total tranches                                                                                174                   35                     123
Value as of balance sheet date
  Tranche 2005                               in €           6.16      in € thousand            46                     –                     31
  Tranche 2006                               in €           5.39      in € thousand            38                     –                     27
  Tranche 2007                               in €           6.25      in € thousand            57                   31                      42
Total tranches                                                                                141                   31                     100




                                                                                                                                            135
The members of the Board of Managing Directors are eligible under the stock option programme described in note (26). As of
the reporting date, the members of the Board of Managing Directors held the following number of stock options:

Options held                                                                       Dr. Andre Carls          Karin Katerbau
                                           Value per option                  Number          Value in      Number         Value in
                                         in € when granted                                € thousand                   € thousand
Tranche 2003, subset A                                0.1600                   17,500                  3           0            0
Tranche 2003, subset B                                1.0626                         0                 0           0            0
Tranche 2004, subset A                                0.4358                   27,500                 12    17,500              8
Tranche 2004, subset B                                1.2485                         0                 0           0            0
Total tranches                                                                 45,000                15    17,500               8


Options exercises                          Value per option                  Number          Value in      Number         Value in
                                         in € when granted                                € thousand                   € thousand
Tranche 2003, subset B                                5.3024                    7,500                 40
Tranche 2004, subset B                                5.5350                   27,500                152    17,500             97
Total tranches                                                                 35,000                192   17,500              97


As of the reporting date of 31 December 2007, no exercise windows existed for any of the tranches in accordance with the
option terms.

In addition, Karin Katerbau obtained non-cash benefits amounting to €27 thousand from the exercise of 5 thousand options
acquired as divisional manager at comdirect bank AG.


Pension commitments
The members of the Board of Managing Directors receive a pension commitment for their activities at comdirect bank AG. Dr.
Carls and Karin Katerbau receive regular pension payments when they retire. Torsten Daenert acquires the right to a capital
payment. The company has formed pension provisions under IFRS for these future claims, the amount of which depends
on the length of service, pensionable salary and current calculatory interest rate. The valuation is based on actuarial surveys
using the unit-credit method, which are carried out by an independent actuary. In the reporting year, pension commitments
towards the active members of the Board of Managing Directors under IFRS fell by €22 thousand, essentially as a result of
the increase in the calculatory interest rate used. As of the reporting date, the breakdown in pension commitments towards
active members of the Board of Managing Directors under IFRS is as follows:

€ thousand                                   Dr. Andre Carls               Torsten Daenert                 Karin Katerbau
                                              2007             2006         2007             2006           2007             2006
Pension commitment under IFRS
(DBO) as of the reporting date                 962             1,029          24                 0           307              286
Change in financial year                       – 67              60           24                 0            21               37




136
                                                                                               Consolidated financial statements •


The contract of employment of a member of the Board of Managing Directors includes an agreement for the payment of a
temporary allowance amounting to the monthly basic salary for a further 12 months upon expiration of the appointment. In
the event that the appointment to the Board of a member of the Board of Managing Directors is terminated prematurely by
the company, the member of the Board of Managing Directors is released from his duties while the respective contract of
employment of the relevant member of the Board of Managing Directors is in principle continued until the end of the original
term of office and the fixed compensation is paid for the remaining term of the contract of employment. The CEO additionally
receives 100% of the last target bonus as a one-off payment for each year until expiry of his contract of employment. There
is no entitlement to further remuneration where the termination takes place for good cause. There may be a settlement in
the event of premature termination of employment resulting from an individually agreed rescission agreement. In the past
financial year, no member of the Board of Managing Directors has received payments or corresponding commitments from a
third party in relation to their activities as a member of the Board of Managing Directors.

In financial year 2007, €159 thousand was paid to former members of the Board of Managing Directors of comdirect bank AG
(2006: €156 thousand).

In the financial year, no stock options were exercised by former members of the Board of Managing Directors.

Former members of the Board of Managing Directors still hold a further 27,500 stock options.

The bank provides old-age provision for former members of the Board of Managing Directors or their surviving dependents. As
of the balance sheet date, pension commitments under IFRS (Defined Benefit Obligations) for former members of the Board
of Managing Directors amounted to €3,134 thousand (2006: €3,609 thousand).

In accordance with the German Corporate Governance Code, the purchase and sale of comdirect shares and options by
members of the Board of Managing Directors must be notified where it exceeds €5 thousand within 30 days. The following
transactions were executed by members of the Board of Managing Directors during the financial year:

Name                           Date         Transaction                                     Number    Value per share       Value in
                                                                                                                  in €   € thousand
Dr. Andre Carls           24.5.2007         Akquisition through exercise of stock options
                                            under stock option programme                     27,500             5.815           160
Dr. Andre Carls           24.5.2007         Akquisition through exercise of stock options
                                            under stock option programme                      7,500             6.048            45
Dr. Andre Carls           11.6.2007         Sales under stock option programme                1,000             10.31            10
Dr. Andre Carls           11.6.2007         Sales under stock option programme                1,000             10.32            10
Dr. Andre Carls           11.6.2007         Sales under stock option programme                1,000             10.33            10
Dr. Andre Carls           11.6.2007         Sales under stock option programme                1,000             10.34            10
Dr. Andre Carls           11.6.2007         Sales under stock option programme                1,000             10.35            10
Dr. Andre Carls           13.6.2007         Sales under stock option programme                1,000             10.57            11
Dr. Andre Carls           13.6.2007         Sales under stock option programme                2,000             10.56            21
Dr. Andre Carls           13.6.2007         Sales under stock option programme                2,000             10.55            21
Karin Katerbau            24.5.2007         Akquisition through exercise of stock options
                                            under stock option programme                     17,500             5.815           102
Karin Katerbau            24.5.2007         Akquisition through exercise of stock options
                                            under stock option programme                      5,000             6.048            30


The remuneration of Supervisory Board members is regulated in Section 16 of our Articles of Association. In addition to the non-
variable components, the remuneration comprises a separate component for committee activities and a variable component,
which depends on the amount of the dividend to be distributed.




                                                                                                                                 137
Provided that the financial statements of comdirect bank AG are adopted in their present form and that the annual general meet-
ing approves the proposed appropriation of profits, the remuneration of members of the Supervisory Board will total €281 thou-
sand (2006: €271 thousand). The remuneration breakdown by the Supervisory Board members is as follows:

€ thousand                             Non-variable              Variable             Remuneration for              Total
                                       components              components            committee activities
                                    2007         2006        2007         2006        2007         2006      2007            2006
Dr. Achim Kassow                       36             36       47           47           27             27    110             110
Klaus Müller-Gebel                     18             18       23           23            9             9      50              50
Dr. Eric Strutz                        12             12       16           15            6             6      34              33
Frank Annuscheit                       12              9       16           12            0             0      28              21
Angelika Kierstein                     12             12       16           15            3             3      31              30
Mitja Sack                             12             12       16           15            0             0      28              27


Neither advance payments nor loans were extended. comdirect bank AG did not take on any contingent liabilities.



(73) Holdings

Affiliated companies included in the consolidated financial statements:

Name                                  Domicile                                               Share of                     Equity
                                                                                    capital held in %             in € thousand
comdirect private finance AG          Quickborn/Germany                                        100.0                         5,034



SPEs and special funds included in the consolidated financial statements as per IAS 27/SIC-12:

Name                                  Domicile/Registered office                             Share of             Funds volume
                                      of the management company                     capital held in %             in € thousand
CDBS-Cofonds                          Frankfurt am Main/Germany                                100.0                        93,717
CDBS-Cofonds II                       Frankfurt am Main/Germany                                100.0                        92,175
CDBS-Cofonds III                      Frankfurt am Main/Germany                                100.0                        93,248
CDBS-Cofonds IV                       Frankfurt am Main/Germany                                100.0                        90,299
OP-Fonds CDBS V                       Cologne/Germany                                          100.0                        89,968



Other affiliated companies not included in the consolidated financial statements:

Name                                  Domicile                                               Share of                     Equity
                                                                                    capital held in %             in € thousand
WST-Broker GmbH                       Frankfurt am Main/Germany                                 54.0                          373




138
                                                                    Declaration of the Board of Managing Directors •




> Declaration of the Board of Managing Directors

To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabili-
ties, financial position and profit or loss of the group, and
the group management report includes a fair review of the
development and performance of the business and the po-
sition of the group, together with a description of the prin-
cipal opportunities and risks associated with the expected
development of the group.


Quickborn, 14 February 2008
The Board of Managing Directors




Dr. Andre Carls                                   Torsten Daenert                   Karin Katerbau




                                                                                                                 139
> Auditor’s certificate

We have audited the consolidated financial statements           includes assessing the annual financial statements of the
prepared by comdirect bank Aktiengesellschaft, Quickborn,       companies included in the consolidation, the determination
consisting of the balance sheet, the income statement and       of the companies to be included in the consolidation, the
the statement of changes in equity, the cash flow statement     accounting and consolidation principles used and the sig-
and the notes to the consolidated financial statements, as      nificant estimates made by the Board of Managing Direc-
well as the combined management report for the company          tors as well as evaluating the overall presentation of the
and the group for the financial year 1 January to 31 De-        consolidated financial statements and the group manage-
cember 2007. The preparation of the consolidated financial      ment report. We believe that our audit procedure provides a
statements and the group management report in accord-           reasonable basis for our opinion.
ance with IFRS, as applicable in the EU, as well as in ac-
cordance with the accounting regulations applicable under       Our audit has not led to any reservations.
Section 315a (1) of the German Commercial Code (HGB),
is the responsibility of the company’s Board of Managing        In our opinion, based on our audit, the consolidated finan-
Directors. Our responsibility is to express an opinion on the   cial statements comply with IFRS as applicable in the EU as
consolidated financial statements and the group manage-         well as with the accounting regulations applicable under
ment report based on our audit.                                 Section 315a (1) of the German Commercial Code (HGB)
                                                                and give a true and fair view of the net assets, financial
We conducted our audit of the consolidated financial state-     situation and result of operations of the group in accordance
ments in accordance with Section 317 of the German              with these regulations. The group management report is
Commercial Code (HGB), taking into account the generally        consistent with the consolidated financial statements and
accepted German standards for the audit of financial state-     provides a suitable understanding of the group’s position
ments promulgated by the Institut der Wirtschaftsprüfer         and suitably presents the risks and opportunities of future
(IDW, German Institute of Auditors). These standards require    development.
that we plan and perform the audit such that misstatements
and infringements materially affecting the presentation of      Hamburg, 15 February 2008
the net assets, financial position and results of operations    PricewaterhouseCoopers
in the consolidated financial statements in accordance with     Aktiengesellschaft
the applicable accounting regulations and in the group man-     Wirtschaftsprüfungsgesellschaft
agement report are detected with reasonable assurance.
Knowledge of the business activities and the economic and       Gero Martens                      Mirko Braun
legal environment of the group and evaluations of possible      Wirtschaftsprüfer                 Wirtschaftsprüfer
misstatements are taken into account in the determination       (German public accountant)        (German public accountant)
of audit procedures. The effectiveness of the accounting-
related internal control system and the evidence supporting
the disclosures in the consolidated financial statements and    The English translation of the auditor’s certificate is provided
the group management report are examined primarily on           for convenience only. The German original is definitive.
a test basis within the framework of the audit. The audit




140
                                                                                                                  Glossary •




> Glossary

Accruals                                                        Bearer bonds
Sub-category of financial liabilities according to IFRS. They   Entitle the holder to demand the rights securitised by these
are distinguishable from provisions by a significantly higher   instruments from the debtor. The claim is transferred through
degree of security in terms of amount or time of settlement     the agreement and handover of the paper.
obligation.
                                                                Bearer shares
Advanced Internal Ratings Based Approach (AIRB)                 No-par-value shares which are not registered to a particu-
Under Basel II, this represents the most advanced approach      lar owner (as opposed to registered shares). Easy transfer
to calculating the minimum capital requirement for credit       of ownership is possible. The share represents a fractional
risk. It enables banks to conduct internal assessments of the   amount of the share capital.
credit standing of lending customers; however, the bank’s
rating processes must comply with strict requirements and       BIS
are subject to verification and continual monitoring for        Bank for International Settlements based in Basel, Switzer-
appropriateness by the banking supervisory authority.           land. The BIS is an international organisation which promotes
                                                                cooperation in the monetary and financial sectors and acts
Advanced Measurement Approach (AMA)                             as a bank for central banks. Its committees develop interna-
Advanced measurement approach for operational risk ac-          tional banking supervision standards, such as Basel II.
cording to the equity regulations under Basel II.
                                                                Bond with warrant
Available-for-sale                                              Bond issued by a corporation, which contains warrants.
IAS 39 classification which describes financial instruments     These give the holder of the option the right to purchase
available to sell immediately.                                  shares in the company during a certain period at a prede-
                                                                termined price.
Aval
Loan through provision of a surety or furnishment of a guar-    Brand awareness
antee.                                                          Brand awareness corresponds to the proportion of people
                                                                who know a certain brand. A distinction is made between
Bank bond                                                       aided brand awareness (respondents shown a prompt) and
Instrument issued by a financial institution which obliges      unaided or active brand awareness (no prompt).
the bank to repay the amount loaned and pay a regular
yield to the bondholders.                                       Business Continuity Management
                                                                Describes the concepts of a company aimed at ensuring
Banking book                                                    business continuity, especially under potentially difficult
All balance sheet and off-balance sheet items of a bank that    conditions.
cannot be allocated to the trading book.
                                                                Capability Maturity Model Integration (CMMI)
Basel II                                                        Process model for measuring the quality (maturity) of an
Equity guidelines for financial institutions which stipulate    organisation’s software process (software development,
how much equity banks require to cover various risks (cre-      maintenance, configuration etc.) and determining improve-
dit and operational risks in particular) and which methods      ment measures.
should be used to assess risks. The guidelines also define
standards to monitor risk management applied by the bank-
ing supervisory authority and set out how risks are to be
published.




                                                                                                                         141
Cash flow                                                         Credit value-at-risk (CVaR)
Used to assess a company’s financial strength. Extraordinary      Risk indicator. Unexpected, maximum, anticipated loss from
income or income from other periods is not included in the        credit default risks, which is determined using the VaR con-
cash flow statement.                                              cept (see Value-at-risk).

Cash reserve                                                      Cross-selling
Cash holdings, liquidity.                                         Aimed at generating new business on the basis of exist-
                                                                  ing customer relationships by means of products or services
Certificate                                                       not yet used by this customer group. This can be measured
Derivative whose performance depends on the price devel-          using the cross-selling ratio, which is defined at comdirect
opment of the underlying securities and financial products,       as the number of bank products per head.
in particular indices (index certificates) and specially struc-
tured stock baskets (basket certificates).                        Deferred compensation
                                                                  Deferred remuneration. Under an occupational old age pen-
Closed-end fund                                                   sion, part of an employee’s salary is invested to later be
Fund where the capital is raised through the sale of a limited    converted into pension payments.
number of units stipulated at the outset. When the planned
volume is achieved, the fund is closed and no more units          Deferred taxes
are issued.                                                       Income taxes to be paid or received in the future, which
                                                                  mainly result from the different valuation bases used for the
Conditional capital                                               tax balance sheet and the commercial balance sheet. They
Capital increase of a joint stock corporation which is only       do not constitute actual tax office claims or liabilities at the
utilised to the extent required to service conversion or sub-     time the balance sheet is prepared.
scription rights.
                                                                  Demand deposits
Confidence level                                                  Direct access deposits with financial institutions.
The probability that a possible loss will not exceed the maxi-
mum level defined by the Value-at-risk (VaR).                     Deposit business
                                                                  Management of customer deposits, including in current and
Core capital according to BIS                                     time deposit accounts. Earnings are generated by fees as well
See Equity according to BIS.                                      as, in particular, by the positive interest margin. Also referred
                                                                  to as deposit-taking as customer deposits represent liabilities
Cost/income ratio                                                 for the bank.
Used to measure cost efficiency, i.e. the relationship between
administrative expenses and earnings recorded in a financial      Deposit protection fund
year.                                                             The deposit protection fund of the Association of German
                                                                  Banks fully covers the deposits of every retail bank cus-
Counterparty risk                                                 tomer for up to 30% of the definitive liable equity of the
Risk that a counterparty, e.g. in securities trading, is unable   respective bank as of the publication date of the last set of
to fulfill its contractual obligations.                           financial statements. As of 31 December 2007, the deposit
                                                                  protection of comdirect bank amounted to €162.6 million
Credit spread                                                     per customer.
Measure of the premium or discount on a reference interest
rate whose level depends on the credit rating and market
positioning of the respective debtor.




142
                                                                                                                   Glossary •




Deposit volume                                                  Fair Value
Total volume of customer credit balances.                       Price at which assets and liabilities would normally be trad-
                                                                ed between business partners. The fair value is used in the
Dividend yield                                                  event that market prices are not used for the assets.
Ratio of dividend paid per share to share price.
                                                                Final withholding tax
Economic capital (economic risk capital)                        Flat rate 25% tax levied on income from capital investments
Measurement which determines with a high level of cer-          and private capital gains as of 1 January 2009. The final
tainty the equity of a company that could be required at any    withholding tax applies to interest, dividends, capital gains,
given time to cover unexpected losses from current compa-       income from investment funds and certificates. A specula-
ny activities. There is a strict distinction between economic   tion period no longer applies.
capital and balance sheet equity.
                                                                Free float
Entry Standard                                                  The freely tradable shares of a company. The free float
Sub-segment of the open market and alternative capital          includes all shares which are acquired and held by the in-
market admission route to the EU regulated segments. The        vesting public as opposed to major shareholders.
Entry Standard is open to all companies desiring efficient
trading of their shares with few formal obligations.            Front-end load
                                                                Premium on the nominal value, calculated, for example,
Equity according to BIS                                         when fund units are acquired.
Recognised regulatory capital comprising liable capital (core
and supplementary capital) and tier 3 capital. Essentially      Funds volume
core capital is composed of paid-in share capital and re-       Current price of units in investment funds held by customers.
serves. Supplementary capital includes profit-sharing cer-
tificates outstanding and long-term subordinated liabilities.   Futures contract
Tier 3 capital includes short-term subordinated liabilities.    Contractual agreement to buy or sell a set amount of a
                                                                particular commodity at a specific price on a specific future
ETF index funds                                                 date. Standardised futures contracts traded on the stock ex-
ETF stands for Exchange Traded Funds. These funds are trad-     change are called futures. The underlying instruments for
ed on the stock exchange and track an index (e.g. share,        financial futures contracts can be individual shares, indices,
bond or commodities index).                                     bonds and foreign exchange.

Eurex                                                           Futures market
Eurex is one of the world’s largest futures and options ex-     Futures markets trade in contracts for the fulfilment of
changes and at the same time the leading clearing house in      future transactions rather than physical goods or securities.
Europe. It offers access to the European derivatives market     These contracts take the form of derivatives.
for futures and options.
                                                                General Standard
European Interbank Offered Rate (Euribor)                       EU regulated stock exchange segment with the minimum
The interest rate that European banks demand from each          legal requirements of the Regulated Market.
other when trading deposits with a fixed term of one week
or between one and 12 months. It is the most important
reference interest rate for variable rate euro bonds.




                                                                                                                          143
German Accounting Standards (GAS)                                Interest rate swap
– Deutscher Rechnungslegungs Standard (DRS) –                    Contractual agreement between two parties relating to the
Recommendations (standards) on the application of ac-            exchange of differently-structured payment flows for a spe-
counting principles. These are developed by the German           cific period of time. This offsets fixed and variable payment
Accounting Standards Committee or its executive body, the        flows. Interest rate swaps can be used to hedge against an
German Standardisation Council, and adopted after a formal       increase or decrease in interest rates.
consultation process.
                                                                 International Accounting Standards (IAS)/International
German Banking Act (KWG)                                         Financial Reporting Standards (IFRS)
Act introduced to ensure the protection of creditors and the     International accounting principles which facilitate inter-
functioning of the banking industry, which contains regula-      national comparison of a company’s consolidated financial
tions on banking practices and banking supervision.              statements.

Gross domestic product                                           International Accounting Standards Board (IASB)/
Figure expressing the total goods and services produced          International Financial Reporting Interpretations
within a certain period of time by a national economy in         Committee (IFRIC)
exchange for payment.                                            The IASB is responsible for approving accounting standards.
                                                                 It is supported by the IFRIC, formerly the Standard Interpre-
Hedge accounting                                                 tations Committee (SIC).
Creation of hedging relationships between underlying trans-
actions (e.g. retail lending) and derivative financial instru-   Investment grade
ments used for hedging purposes (e.g. interest rate swaps),      Upper ratings category, e.g. at Moody’s ratings Aaa to Baa.
in order to minimise the effects of changes in value in the
income statement.                                                IT Infrastructure Library (ITIL)
                                                                 Describes the necessary processes for the operation of an IT
Home Banking Computer Interface (HBCI)                           infrastructure. ITIL is based on processes which focus on IT
Online banking standard first published in 1996 by the           services rather than technology. ITIL therefore represents a
German Central Credit Committee (ZKA) to standardise the         possible basis for IT service management.
interfaces between bank customers and one or more banks.
Since 2002, HBCI has been continually developed under the        Markets in Financial Instruments Directive (MiFID)
name of its successor, FinTS (Financial Transaction Services).   Directive used by the EU to standardise the European financial
                                                                 markets, strengthen competition and ensure greater trans-
Insurance Contract Act (VVG)                                     parency and investor protection in securities trading. MiFID is
Regulates the rights and obligations of insurers and insured     being incorporated into German law under the MiFID Imple-
persons in Germany. The Act was fundamentally amended            mentation Act (Finanzmarkt-Richtlinie-Umsetzungsgesetz).
with effect from 1 January 2008. The main changes relate to
the right to revoke an insurance policy, the duty to provide     Minimum Requirements for Risk Management
information to the insured as well as the disclosure obliga-     (MaRisk)
tion relating to parts of the contract prior to concluding the   These include, in particular, setting up a proper business or-
policy.                                                          ganisation (e.g. function separation of sales and back office)
                                                                 and implementing a system of appropriate internal controls
Insurance directive                                              for the trading and lending divisions.
European Union directive on the standardisation of qualify-
ing criteria for the provision of insurance policies. The Ger-
man Insurance Provision Act.




144
                                                                                                                      Glossary •




Minimum reserve requirement                                       Principles of materiality
Obligation of an individual financial institution not to use a    Basis for obligatory accounting principles: according to the
specific proportion of its short and medium-term deposits         IASB, an item of information is considered material if its
(current, fixed-term and savings account deposits) for lend-      non-representation or misrepresentation would impact on
ing, but to maintain them as non-interest bearing credit bal-     the recipient’s financial decision.
ances held at Deutsche Bundesbank.
                                                                  Profit and loss transfer agreement
Multi-tier server structure                                       Also called a profit transfer agreement or affiliation agree-
Multi-layered software infrastructure in which the software       ment. Often concluded between a group parent company
components are shared between several systems. Applica-           and its subsidiaries. It obliges the subsidiary to transfer its
tions whose operation is based on a multi-tier server struc-      profit to the parent company and conversely obliges the
ture are served by an office server (client). This operates via   parent to balance out any losses of the subsidiary.
a network with one server or several cascaded intermedi-
ate servers which contain the main part of the application        Projected unit credit method
logic. The last intermediate server in the chain exchanges        Method used to determine pension commitments, which
information with a central server (back-end), which stores        takes account of future rates of increase in salaries and pen-
relevant information in a database.                               sions among other factors.

No-fee campaign                                                   Rating
Limited-period campaigns during which securities such as          Assessment of the personal and material creditworthiness of
certificates may be bought without paying a fee. The fee is       a company or private customer.
covered by the product provider.
                                                                  Regulated Market
Own funds ratio according to BIS                                  Organised market within the meaning of the Securities Trad-
According to the definition of the Bank for International         ing Act (WpHG). The Regulated Market replaced the two
Settlements (BIS), the equity ratio is the ratio of equity to     previous organised markets (Official and Regulated Market)
risk-weighted assets (RWA).                                       on 1 November 2007.

P/E Ratio                                                         Retail derivatives exchange
Price to earnings ratio of a share.                               Futures market for derivatives in which principally orders
                                                                  from private investors are executed.
Portfolio volume
Total number of securities held by customers multiplied by        Return on Equity
their respective stock exchange price on a reporting date.        Ratio of profit from ordinary activities to equity capital.

Prime Financial Services Price Index                              Revaluation reserve
One of 18 sector indices which make up Deutsche Börse’s           The market value changes in securities and participations
Prime All Share Index. Various financial service providers are    are shown in the revaluation reserve with an income-neu-
listed in the index.                                              tral effect.

Prime Standard                                                    Risk cover assets
Sub-segment of the Regulated Market with additional ad-           These comprise the maximum available equity which can be
mission requirements. Prime Standard companies must               used to hedge against unexpected losses.
comply with high international transparency standards.




                                                                                                                                145
Risk-taking capability                                           Stress test
Corresponds to the risk cover funds that is the maximum          Test method to analyse the effects of extreme situations
amount of equity available to cover unforeseen losses.           (e.g. extraordinary increases in interest rates) of portfolios.

Risk-weighted assets                                             Technical analysis
Risk-weighted assets (RWA) according to BIS and Basel II         Monitors movements in price and turnover of securities in
comprise balance sheet assets and off-balance sheet trans-       order to identify probabilities for future price developments
actions with different risk-weightings according to the cred-    using typical price trends. In contrast, fundamental analysis
it-standing of the issuer or business associate. These RWA       determines the intrinsic value of a company and compares
have to be backed by 8% of liable capital.                       this with the current price on the stock market.

Sales follow-up commission                                       Term deposits
Annual fee paid by an investment company to the brokers          Deposits made for a certain period of time.
of its funds.
                                                                 Total shareholder return (TSR)
Scoring                                                          This indicates the average performance of investment in a
See Rating.                                                      share and is defined as the sum of share price increases and
                                                                 dividend payments of a company over a given period of
Special funds                                                    time compared with the share price at the end of the period
Investment funds which are only available to a limited           in the previous year.
number of institutional investors (in extreme cases one in-
vestor).                                                         Trade
                                                                 Executed order.
Special purpose entity (SPE)
Company established for a particular purpose.                    Trading derivatives
                                                                 Financial products which are based on underlying instru-
Spot market                                                      ments held in the trading book and are not allocated to
At Deutsche Börse, this encompasses the XETRA trading plat-      hedge accounting. These include for example interest rate
form and the trading floor of the Frankfurt Stock Exchange.      and currency swaps.
The spot market statistics of Deutsche Börse also indicate
the trading volume of other German stock exchanges.              Treasury
                                                                 Head office division that manages liquidity and market price
Standard Interpretations Committee (SIC)                         risks. Traditionally responsible for liquidity management, re-
See International Accounting Standards Board (IASB)/In-          financing and carrying out transactions in foreign exchange,
ternational Financial Reporting Interpretations Committee        money market, precious metals as well as issuing notes.
(IFRIC).
                                                                 Value-at-risk (VaR)
Stock option programme                                           The maximum loss of value of a portfolio in line with a spe-
Issue of non-transferable subscription rights to selected        cific probability and within a specific holding period.
employees, in particular management and executives, which
entitle them to purchase the equivalent number of shares in      Volatility
the company within a specified exercise period once specific     Market price fluctuations e.g. of assets within a particular
performance targets (exercise hurdles) have been achieved.       period of time.
The calculation formula for the exercise price also forms part
of the previously adopted exercise conditions.                   VorstOG
                                                                 Management Compensation Disclosure Act.



146
                                                                 Glossary •




Warrant
The owner of a warrant is entitled (but not obliged) to buy
(call option) or sell (put option) a certain number of shares
or other securities at a stipulated price within a certain pe-
riod of time.

XETRA
Electronic trading system of the Deutsche Börse (Exchange
Electronic Trading).

Yield curve
Graphical representation of interest rates and yields which
are applicable to the market at a given point in time for
different maturities. The flatter the curve, the smaller the
difference between long and short-term maturities.




                                                                       147
> Six-year overview of comdirect bank group
                                                                                        2007                  Change            2006    Change
                                                                                                                in %                      in %
Customer figures as of 31.12.
Total customers                                                                    1.000,722                       24.4      804,690      22.7
Customers in the business line comdirect online                                      996,599                       24.2      802,102      22.5
Customers in the business line comdirect offline                                      32,469                       62.2       20,024     > 100


Business line comdirect online
Placed orders                                                                    12,581,115                        14.2    11,017,780     30.2
Executed orders                                                                   9,950,097                        16.1     8,572,255     28.1
Average order activity per custody account                                             15.9                          8.2         14.7     19.5
Share of fund transactions in executed orders                        in %              30.6                            –         28.4        –
Order volume per executed order                                       in €            5,273                        – 3.5        5,465      8.6
Total assets under custody as of 31.12.                       in € million           20,373                        24.3        16,387     27.2
  of which: portfolio volume (excluding funds)                in € million            8,666                          7.6        8,056     12.8
  of which: funds volume                                      in € million            4,022                          8.6        3,703     22.7
  of which: deposit volume                                    in € million            7,686                        66.1         4,627     70.2
Credit volume as of 31.12.                                    in € million              216                          4.1          208      5.1
Number of custody accounts as of 31.12.                                             645,893                          6.6      606,110     10.0
Number of securities savings plans as of 31.12.                                     150,196                        24.4       120,723     30.7
Number of current accounts as of 31.12.                                             337,578                        29.7       260,334     66.9
Number of Tagesgeld PLUS (“call money plus”)
accounts as of 31.12.                                                                400,414                      439.1       66,840         –


Business line comdirect offline
Advisers as of 31.12.                                                                    202                       27.8          158      45.0
Offices as of 31.12.                                                                      27                       42.1           19      46.2
Commission income                                          in € thousand              22,997                       39.1       16,530     > 100


Earnings ratio
Net commission income                                      in € thousand             152,724                        11.8     136,565      37.9
Net interest income before provisions                      in € thousand             127,164                        43.3      88,733      38.6
Administrative expenses                                    in € thousand             187,437                        38.2     135,626      13.7
Profit from ordinary activities                            in € thousand              90,480                         5.7      85,600      62.2
Pre-tax profit                                             in € thousand              90,480                         5.7      85,600      62.2
Net profit                                                 in € thousand              57,697                         1.2      57,002      66.7
Earnings per share                                                   in €               0.41                         2.5        0.40      66.7
Dividend per share                                                   in €              0.41 1)                    – 70.7       1.402)    > 100


Balance sheet key figures as of 31.12.
Balance sheet total                                           in € million              8,233                       55.3        5,301     57.4
Equity                                                        in € million                478                     – 22.9          620      3.5
Equity ratio3)                                                       in %                  5.9                         –         11.8        –
BIS own funds ratio                                                  in %                21.4                          –         40.9        –


Relative ratios
Return on equity before tax4)                                         in %               16.3                         –          14.0        –
Cost/Income ratio5)                                                   in %               67.0                         –          60.4        –
Earnings per customer                                                  in €             307.9                       4.7         294.1      9.1


Employees’ figures as of 31.12.
Employees                                                                                824                       12.6         732       14.7
 of which: in the business line comdirect online                                         786                       11.5         705       14.1
 of which: in the business line comdirect offline                                         38                       40.7          27       35.0
Employees full-time basis                                                               721.5                      11.3        648.0      15.9

1)   Dividend proposal
2)   Including special dividend
3)   Equity ratio = equity (excluding revaluation reserve) / balance sheet total
4)   Return on equity = pre-tax profit / average equity (excluding revaluation reserve) in the reporting period
5)   Excluding extraordinary result and restructuring costs

148
                                                              Six-year overview •




    2005    Change        2004    Change        2003    Change             2002
              in %                  in %                  in %


 656,064        5.7    620,952      – 3.0    640,221       2.9           622,242
 654,714        5.6    620,274      – 3.1    640,197       2.9           622,242
   8,240     > 100       2,114     > 100          67         –                 0



8,461,681     22.7    6,897,298     – 9.8   7,648,711     10.7         6,910,359
6,689,617     12.5    5,947,687     – 6.6   6,368,969     11.8         5,699,299
     12.3     11.8         11.0       2.8        10.7     12.6                9.5
     26.3        –         21.5         –        15.2         –             14.2
    5,033      6.2        4,740     – 0.9       4,784     26.2             3,790
   12,879     29.9        9,914     – 4.3      10,362     47.9             7,005
    7,142     24.3        5,748     – 6.2       6,127     53.5             3,991
    3,019     64.9        1,831      23.8       1,479     38.7             1,066
    2,718     16.4        2,335    – 15.3       2,756     41.5             1,948
      198     19.3          166     – 9.8         184       5.1              175
  550,948      2.3      538,522     – 9.0     591,642     – 0.5          594,701
   92,395     35.1       68,401      35.1      50,616     32.9            38,079
  155,958     75.4       88,905      28.7      69,085       2.3           67,503

       0         –           0         –           0          –                0



     109     > 100          54     > 100          17         –                 0
      13      62.5           8     > 100           3         –                 0
   6,678      53.4       4,352     > 100          37         –                 0



  99,033      13.7      87,093        4.8     83,107        7.7           77,142
  64,020      12.4      56,952      – 0.4     57,207     – 10.5           63,896
 119,330      15.2     103,559      – 7.9    112,494     – 18.6         138,138
  52,780       3.3      51,090      30.7      39,102     > 100             4,695
  52,780       3.3      51,090      30.7      39,102          –         – 18,600
  34,187       0.6      33,969      45.4      23,361          –          – 9,764
    0.24       0.0        0.24      41.2        0.17          –            – 0.07
    0.24       0.0        0.24      50.0        0.16          –              0.00



   3,367      13.1       2,978     – 13.1      3,426      32.3             2,589
     599      – 0.3        601        2.9        584       3.5               564
    17.8          –       20.2          –       17.1         –              21.8
    54.7          –       72.2          –       68.0         –              84.4



     8.8         –         8.6         –         6.8         –               0.8
    68.8         –        66.8         –        74.2         –              96.2
   269.6       9.6       246.0       5.8       232.6       2.6             226.6



    638        3.6        616        4.6        589      – 36.1             922
    618        2.8        601        3.6        580      – 37.1             922
     20       33.3         15       66.7           9          –                0
   558.9       5.8       528.3       1.2       522.0     – 33.9            790.0




                                                                              149
> Financial calendar 2008

13    February              Press/Analysts’ conference in Frankfurt/Main
14    March                 Annual report 2007
22    April                 Quarterly Report 2008
 9    May                   Annual general meeting in Hamburg
22    July                  Half-year report 2008
23    October               Nine-month report 2008




> Contacts

Investor Relations                                            Press Relations
Thore Ludwig                                                  Johannes Friedemann
Phone +49 (0) 41 06/704-19 66                                 Phone +49 (0) 41 06/704-13 40
Fax     +49 (0) 41 06/704-19 69                               Fax     +49 (0) 41 06/704-34 02
e-mail investorrelations@comdirect.de                         e-mail presse@comdirect.de

Tobias Vossberg
Phone +49 (0) 41 06/704-19 80                                 You can download our annual and interim reports in German
Fax     +49 (0) 41 06/704-19 69                               or in English from our website at www.comdirect.de/ir, un-
e-mail investorrelations@comdirect.de                         der “Publications”. Our order service also offers the option
                                                              of inclusion in the distribution list, which means that the
comdirect bank AG                                             report will be sent to you on publication. An online version
Pascalkehre 15                                                of the 2003 –2007 annual reports is also available here.
D-25451 Quickborn
www.comdirect.de                                              You can download our published press releases in German
                                                              or in English on our website at www.comdirect.de/pr.
Concept, layout and translation
ergo Unternehmenskommunikation, Cologne/                      The English translation of the comdirect bank group annual
Frankfurt a.M./Berlin                                         report is provided for convenience only. The German original
                                                              is definitive.
Photography
Uwe Martin, Hamburg




150
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            comdirect bank AG
            Pascalkehre 15
            D-25451 Quickborn
            www.comdirect.de

								
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