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� Net income up by 60 %. 21% increase in operating profit from
revenue growth of 11%, while cost/income ratio declines.
CEE contributes about one-half to overall results.
� One-off income reinvested for UniCredit-related special expenses,
provisions for restructuring costs and one-off adjustment of provisioning
charge in Private Customers segment.
The capital gains realised in 2005 on the sale of shares in
Investkredit, and on the exchange of shares in connection with
the acquisition of Banca Comerciala “Ion Tiriac” in Romania,
– a total of € 254 m – were already included in the interim
financial statements for the first nine months of 2005. We
used a large part of the gains for “reinvestment” in structural
improvements in our business: € 90 m for restructuring the
SMEs Austria business segment and € 18 m for the CEE and
Corporate Center segments. Based on refined methodologies
and more accurate risk management instruments, and partly
also in line with market developments, we increased the
provisioning charge by € 70 m, thereby also moving closer to
the higher provisioning rates applied by UniCredit Group.
A special charge of € 25 m for rebranding and other costs in
connection with integration into UniCredit Group is mainly
reflected in general administrative expenses. On balance, oneoff
effects in 2005 were € 51 m.
� The quality of results continued to improve in 2005, a
development which we aim to put on a sustainable basis with
the above-mentioned one-off expenses for structural improvements.
� Sustained revenue growth. Operating revenues (including
other operating income and expenses) rose by 11% or
€ 436 m to € 4,258 m. Within the total figure, net interest
income and net fee and commission income improved in the
year as a whole and steadily from quarter to quarter. While net
interest income rose particularly strongly in CEE business, contributions
to the increase of € 225 m or 18 % in net fee and
commission income came from all business segments. This
shows the rapid progress made in our two core markets by
financing and investment instruments which are available in
capital markets and thus help to reduce capital requirements.
� Net trading result: a stable contributor to profits. The
results from trading activities for 2005 reached € 237 m,
slightly surpassing the strong previous year’s performance of
€ 233 m.
� Value-oriented growth: strong expansion in CEE and also in Austrian
customer business. Profitability of Large Corporates and Real Estate as
well as International Markets segments remains high. Restructuring of
SMEs Austria segment starts with a view to improving profitability.
� Further growth of business volume and revenues expected for 2006.
Integration into UniCredit brings undisputed market leadership position
in CEE growth markets.
� Value-based management: expansion in business segments
with growth and profitability prospects. Overall,
average risk-weighted assets grew by 7 %; the increase in
Central and Eastern Europe (CEE) was 26 % and in the Private
Customers Austria segment 19 %. In 2005 we acquired
and/or integrated further banks in Bulgaria, Romania, Serbia,
and Bosnia and Herzegovina. The CEE segment accounted for
54 % of net income before taxes; adjusted for one-off effects,
the CEE contribution reached 47 %.
� Costs firmly under control. In 2005, general administrative
expenses increased at a significantly lower rate than business
volume. The cost/income ratio declined by more than
3 percentage points to 61.6 %. Most of the cost increase
(92 %) related to CEE and was due to exchange rate effects
(from the translation of local income statements at average
exchange rates) and the larger number of consolidated companies.
� Progress in risk and credit portfolio management.
Expressed as a percentage of net interest income, the provisioning
charge in the strongly expanding CEE business segment
in 2005 by and large matched the figure for the previous
year (12.0 % after 11.5 %). In 2005 we improved the
methodology we use for credit risk identification in Austrian
business with private customers and SMEs in line with Basel II
rules.The higher provisioning rates for flat-rate specific provisions
resulting from the new methodology are in line with the
levels applied in UniCredit Group. We significantly reduced (by
6 %) credit risk in the Large Corporates and Real Estate segment
through active management in the secondary market.
� Very strong capital base: within the UniCredit Group, BA-
CA’s geographic reach and the market position in various CEE
countries will expand. With shareholders’ equity (in accordance
with IFRSs, including minority interests at year-end) of
€ 7.5 bn Bank Austria Creditanstalt is well equipped for continued
strong growth. The Tier 1 capital ratio of 8.29 % is an
indicator of this potential.
Management Report of the Group 25