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•  Group profit before tax falls to € -116 million
•  Negative impact of € 355 million from capital market crisis included in the result
•  Costs reduced by over € 200 million

The major disruptions on the international capital markets, which intensified further in the third quarter, had a negative impact of € 355 million on WestLB AG´s result as at September 30, 2007. As a consequence, and taking into account the losses incurred in our proprietary trading activities involving spread positions, Group profit before tax fell to € -116 million in the first nine months of 2007, compared with € 297 million in the same period of the previous year. Progress in the customer business, together with substantially reduced costs, did, however, cushion the impact of the losses incurred. Net interest income and net fee and commission income showed positive development.

Alexander Stuhlmann, Chairman of the Managing Board of WestLB AG, said:

“The capital market crisis has left its mark on our balance sheet and profit and loss account, as indeed it has at numerous other banks. The current situation is difficult, but it will not throw WestLB off course. The strong performance in other areas of our operating business has enabled us to cushion the impact of the present substantial losses. In particular, the Bank is making good headway in its domestic and international business with corporate clients and in the cooperation with the savings banks.”

Sharp Rise in Net Fee and Commission Income

Net interest income in the first nine months of the year totalled € 736 million, virtually replicating the previous year´s level of € 741 million. Despite interest margins remaining tight, it was possible to achieve further growth in the lending business. Net allocations of € 6 million were reported under the impairment charge for credit losses, compared with a net reversal of € 151 million in the corresponding period of the previous year. The Bank addressed all identifiable credit risks in full.

Net fee and commission income rose sharply by € 76 million, or 31%, to € 319 million. In particular, we generated higher income in our lending and underwriting businesses as well as in our securities business and payment transactions.

The net trading result fell from € 321 million to € -384 million. The decrease is primarily the result of the losses on spread positions in ordinary and preferred shares in our proprietary trading as well as valuation losses in connection with the subprime crisis. Without these losses, the net trading result would have been higher than in the year-earlier period.

Higher capital gains in our private equity and equity investments business were the main reason for an increase in the result from financial investments of € 110 million to € 375 million. Compared with the same period of the previous year, there was also a reduction in expenses from the assumption of losses. Impairments on structured securities (ABS and CDO holdings) as a consequence of the subprime mortgage crisis had the opposite effect.

Costs Reduced by 14.8%

We reduced our administrative expenses substantially in the first nine months by € 202 million (-14.8%) to € 1,167 million. Personnel expenses, at € 640 million, were € 131 million below the same period last year, chiefly because of a decrease in non-linear salary components and a decline in average staff numbers by approximately 250 full-time employees compared with the first nine months of 2006. Compared to the end of 2006, the number of full-time employees rose fractionally from 5,862 to 5,900. Other administrative expenses decreased by a further € 61 million, mainly due to additional savings in the context of the Lean Bank programme.

Customer Business Expanded

Profit before tax in the Corporates & Sparkassen segment rose to € 250 million, exceeding the figure from the year-earlier period by € 194 million. Nearly all of the segment´s customer units contributed to the increase in net interest income and net fee and commission income. With margins in the lending business remaining tight, the Corporates unit profited from an expansion of business with corporate clients. The Global Origination & Syndication unit posted sizeable earnings growth in the energy and transportation sectors in particular.

The result before taxes in the Capital Markets segment fell from € 386 million in the previous year to € -333 million due to the losses on the spread positions in the proprietary trading activities and from the subprime mortgage crisis. The segment´s other units, by contrast, performed satisfactorily. In particular, we recorded growth in the sale of structured products as well as from our business with bonds, currency and derivatives.

Compared with the end of 2006, WestLB Group´s total assets decreased by € 5.3 billion to € 280.0 billion. Effects from the addition of companies to the WestLB Group were offset by an overall decline in our money market business. The improvement in the customer business is primarily reflected in the higher volume of loans and advances. Loans and advances to customers rose by € 7.8 billion to € 74.3 billion and loans and advances to banks by € 6.2 billion to € 23.3 billion. Credit volume under IFRS increased by € 8.1 billion to € 106.5 billion.

The volume of trading assets fell by € 22.3 billion to € 123.8 billion and is primarily the result of reverse repo transactions. Financial investments, by contrast, rose by € 10.8 billion to € 21.7 billion. The increase is largely attributable to the first-time consolidation of Greyhawk Funding LCC, New York.

On the refinancing side, liabilities to customers amounted to € 25.0 billion and liabilities to banks € 39.7 billion. The decreases of € 22.0 billion and € 14.8 billion, respectively, are primarily the result of money market transactions which became due. We reported a large portion of our new business under financial liabilities designated at fair value, which increased by € 26.0 billion to € 67.8 billion. Certificated liabilities rose by € 0.9 billion to € 42.5 billion. Group equity as reported on the balance sheet was down € 0.5 billion to € 6.3 billion.

Outlook

The consequences of the U.S. subprime mortgage crisis are currently weighing heavily on the global financial sector. The crisis has meanwhile spread to other market segments which have only limited links with the U.S. real estate sector. The difficult market situation deteriorated further in October and November. The increased volatility in the global financial markets led to further losses, in particular from structured securities. For this reason the Managing Board no longer believes it will be possible to achieve a positive Group result before tax in 2007. From today´s perspective, WestLB expects to post a pre-tax loss in the low three-figure million range.

Enclosures:
Group Statement of Income January 1 – September 30, 2007
Group Balance Sheet at September 30, 2007