Above all, we have a good chance of translating our position as the bank “in the heart of Europe” into success:

On 1 May 2004, Europe will make a momentous step forward as ten new members join the European Union. This step will create a widely visible single market of more than 500 million people, of whom 200 million live in our core markets – for us, for Bank Austria Creditanstalt, this will be a very special day! We have been working towards this moment for more than ten years. As a member of HVB Group, and with the most extensive network in the CEE region, we now enjoy an exceptional position: number 1 in Austria, number 2 in Germany, number 3 in Poland.

We are very well placed. In order to make dynamic use of our excellent position, we carried out an initial public offering in 2003. The net proceeds from the capital increase are fully reflected in Bank Austria Creditanstalt’s equity capital and constitute the strong base for further expansion. In 2003 alone, together with generated profits, we strengthened our capital base by 1.2 billion euros. With 5.8 billion euros in shareholders’ equity, we now have almost as much equity capital as the three largest Austrian competitors combined.

The IPO has underlined the importance of Bank Austria Creditanstalt within HVB Group. And the secondary listing of the Bank Austria Creditanstalt share in Warsaw is also a sign of our Group’s international standing. Our prospects and our performance are becoming transparent, and we receive feedback from the market which serves as a point of reference for the bank’s future development.

This market feedback has confirmed our course. The IPO was a resounding success, for us and for our shareholders. Since the shares were offered in early July 2003 – it was the first new equity issue launched in the year and took place in the difficult stock market environment then still prevailing – the share price has risen by more than 50% until recently.

Bank Austria Creditanstalt offers a financial services network linking the mature markets and extensive know-how in Austria and Germany with the dynamic growth markets in Central and Eastern Europe. While these markets are complementary today, they will become a single market in the near future. And we are bringing customers in this market together. In this way CEE broadens our business base and gives us significant growth potential. Conversely, in Austria, we enhance our ability to serve customers through a needs-driven mix of standardised services, pre-structured investment products and individual advice. We will follow industrial models in further improving the efficiency of back-office processes and settlement through a division of tasks, and use all locational advantages in the entire HVB Group. The promised value enhancement is thus based on two pillars: growth and efficiency progress.

Our success is intricately linked with our customers’ success. This is an obligation for us, not an empty phrase. The success of a bank is decided at the point of sale. We want to become more flexible in this regard. More time for customers, closer to customers’ requests and preferences, more internal mobility, more motivation and recognition of performance. The sweeping success of our mobile sales units is pointing in this direction.

Ladies and Gentlemen,

This is the course we will pursue to reach the financial targets which we aim to achieve by 2006:

Profitability:      ROE over 13% after taxes

Growth:            profit contribution from CEE to 38%

Cost efficiency: cost/income ratio below 63%

Risk:                risk/earnings ratio below 20%

Capital base:    Tier 1 capital ratio at least 7%

We will work to achieve these targets with a top management team meeting all essential requirements: experience and determination, expertise and international orientation, flexibility and the will to succeed.

We have entered 2004 full of energy and confidence.

Yours sincerely,

Gerhard Randa
Karl Samstag
Erich Hampel