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employees’ qualification levels and INM’s expansion of business,
staffing levels at INM are today 11% below the level of
2000 despite the integration of employees from the bank’s
sales units in the Centre of Competence (about 21 full-time
equivalents).
In 2005, net income before taxes was up by 25 % to € 147 m.
Net income after taxes rose by 44 % to € 126 m. The return on
equity before taxes improved from 55.0 % to 68.0 %, and the
ROE after taxes from 41.1% to 58.4 %. This reflects both the
further improvement in net income before taxes and the fact
that this was achieved with a lower allocation of equity. Since
2000, the equity capital allocated to INM (€ 216 m) has been
reduced by one third, highlighting the significance of derivative
products as trading instruments and the benefits derived from
the successful conclusion of collateral and netting agreements.
Business activities in 2005 focused on strengthening INM’s
leading position in local customer business in the bank’s markets,
and on implementing our emerging markets expertise in
international financial market transactions, a strategy which
realised all its objectives.
� INM cooperated with international and local corporate customer
managers within the framework of the CEE Sales Initiative
to start rolling out the successful Treasury Sales project in
CEE markets. With the installation of the requisite IT systems
we created the conditions enabling us to offer all derivative
products and structures available in the BA-CA Group to corporate
customers in CEE. This in turn unlocks earnings and
customer potential, especially potential for achieving sustained
growth in the area of risk-free fee and commission income.
� A further objective was to step up services offered to institutional
customers. To this end we bundled sales activities targeted
at institutional customers within the Institutional Sales
& Origination unit, and we achieved good results with innovative
structured products. In addition, we established ties with
international hedge funds, and we are focusing our attention
on this promising customer segment.
� In new issue business we dominated the market for Austrian
corporate bonds and arranged public placements for seven
bonds with a total volume of € 945 m. In the area of equities
we played an important role in four large-volume public offerings
in Austria. In Central and Eastern Europe, CA IB was
involved in 12 transactions totalling € 722 m in countries ranging
from Estonia to Turkey.
Balance sheet *)
In 2005, the BA-CA Group’s total assets rose by € 12.3 bn or
8 % to € 158.9 bn. This increase reflects primarily organic
growth of customer business, in both Austria and Central and
Eastern Europe; a smaller portion of this growth (€ 2.2 bn)
was accounted for by changes in the group of consolidated
companies. Exchange rate effects were a less significant factor
in 2005 (about one-tenth of the increase in total assets resulted
from currency appreciation), all the more so as the amounts
of balance sheet items are translated at closing rates, changes
in which were smaller than in the average annual rates applied
to items in the income statement.
On the assets side, loans and advances to customers grew by
6 %. With an increase of € 5.1 bn, they accounted for most of
the growth of total assets; 60 % of this amount came from
the CEE business segment. Within total customer lendings,
overdraft facilities (+ 46 %) and real estate financing (+19 %)
recorded the highest growth rates (while term loans declined
by 5 %). In line with this development, the strongest growth
was seen in maturities up to 3 months and over 5 years. Loans
and advances to customers (€ 86.4 bn) accounted for 56 % of
total assets. The provisioning charge for loans and advances to
customers was slightly reduced (– 3 %). At the end of 2005,
loans and advances to, and placements with, banks (€ 26.3 bn)
*) The balance sheet items described in this section exclude HVB Splitska
banka d.d., Split. As the Croatian banking supervisory authority rejected
UniCredit’s indirect acquisition of a majority interest in HVB Splitska banka
on antitrust grounds, we intend to sell this bank. In the balance sheet at 31
December 2005, HVB Splitska banka was therefore classified as “held for
sale” pursuant to IFRS 5 (see note 1).
Changes in key balance sheet items
Changes in € m (bars) and in %
*) after loan loss provisions
Change in
total assets
Assets
Loans and advances
to customers*)
Loans and advances to,
and placements with, banks*)
Investments
Trading assets
Liabilities and shareholders’ equity
Primary funds
Amounts owed
to banks
Trading liabilities – 23.8%
Provisions
Shareholders' equity
– 4.9%
+4.9%
+ 18.8%
+9.0%
+9.9%
+ 6.7%
+10.9%
+ 8.7%
– 4,000 – 2,000 0 2,000 4,000 6,000 8,000 10,000 12,000
Decrease Increase
Management Report of the Group 39
+8.4%