Preface from the Chairman of the Managing Board

Ladies and Gentlemen,

At Bank Austria Creditanstalt we can look back on a year in which we took a big step forward – in all our core markets. Net income before taxes exceeded the forecast made at the beginning of the year and increased by 29% to € 836 m.

The improvement was generated by operating business. Our CEE banking subsidiaries contributed about 75% to the increase in operating profit. They thus lived up to expectations placed in them as generators of growth. But considerable progress was also made in Austria in 2004, where we achieved an increase in operating profit. The most important factor is that the bank is expanding in customer business, primarily in CEE but also in private customer business in Austria. In 2004 business expansion was accompanied by a further reduction in the provisioning charge, and costs remained unchanged in absolute terms.

2004 was the year in which part of our vision became reality: through EU enlargement, Central and Eastern Europe experienced strong economic growth. The courageous, far-reaching reforms are beginning to pay off. Anyone who has travelled around the new EU member countries, the candidate countries or South-East Europe, cannot fail to be impressed by the will to succeed and the professionalism in those countries. This also applies to our local banking subsidiaries.

Performance transparency, pleasure in achievement and using the pool of ideas in our extensive market will determine the further development of the entire bank. We want to create value in two ways: we aim to increase the value of the company through targeted growth in our core markets. The new
value management approach which we will introduce at all levels of the bank in 2005 will produce transparency and sharpen our focus. Simultaneously, we want to create value – together with our customers – by catering to concrete needs, both in the life cycle of private individuals, families or medium-sized companies, and in the development of large companies or multinational corporates. Our employees want to make things happen. For this reason we have modernised our internal service regulations in Austria and have selected a path to more performance-oriented remuneration and flexibility.

External requirements and our internal goals go hand in hand. The price of Bank Austria Creditanstalt shares has risen by over 150% since the shares were first listed. We see this as an obligation for us. We have set ourselves ambitious targets, on the basis of performance levels achieved by the best competitors in Europe. In the medium term, we aim to increase the return on equity to 15% and improve the cost/income ratio to below 60%. In 2005 we want to achieve net income before taxes of over € 1 bn.

We have carried the strong momentum from 2004 over into the current year and are tackling our targets for 2005 with energy and confidence.

With best wishes for the rest of 2005.

Yours sincerely,

Erich Hampel