Annual report 2004 (PDF, 4141 kB) - Unicredit Bank

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formerly planned. In addition, a gap in public budgets, which has a key meaning for the assessment of fulfilment of the state convergence programme, has also considerable fallen. However, the improvements were mainly the result of higher taxes and fast economic growth. Unfortunately, last year the government did not show courage to start up deep structural reforms which could guarantee long-time stability of public finances. Economic and Business Results Financial results of Živnostenská banka in 2004 were influenced by the Bank's expansion in the retail banking segment and by optimization of its organization structure and selected activities of support providing divisions which was launched as early as in 2003, following the entry of UniCredito Italiano into ŽB. In the period under consideration Živnostenská banka reported a net profit after tax in the amount of CZK 195 million according the Czech Accounting Standards. Such positive economic result is due to increase in revenues (year-on-year increased by more than 4 per cent) and due to management of costs for the Bank's expansion, in particular, in the retail banking and branch network development. Although in 2004 the volume of total assets slightly fell to CZK 46.8 billion, the Bank managed to fulfil its objectives in the corporate finance sphere and in a segment of services to citizens and small business clients. The Bank's business has grown mainly in the sphere of loans to individuals, the volume of which amounted to approx. CZK 3.3 billion (year-on-year increase by 50 per cent). By acquiring more than 12 000 clients the Bank created preconditions for the future growth of a client basis, mainly in a segment of affluent clients - individuals and in a segment of medium-size clients. Owing to a traditionally conservative approach to the risk management, the Bank preserved a low risk ratio of granted loans - a proportion of non-performing loans remained below the level of 2 per cent, which is deep below a long-time average in a banking sector. In 2004 the Bank continued to optimize its organization structure, launched the implementation of projects in the sphere of IT and human resources management, focussing prevailingly on identification of synergy effects within the New Europe Division of the UniCredit Group. In 2004 Živnostenská banka transferred the facility management activities to the company Altys from the Sodexho Aliance Group and operations related to payment cards transactions to the company Transacty Slovakia. In a human resources sphere the Bank enlarged the MBO remuneration system (Management By Objective) and TRS system (Team Reward System) by new criteria of assessment of employees based on the market value of individual jobs. Human Resources Division organized a number of training projects the aim of which was to increase sales skills of the Bank's employees on commercial positions in the Bank. Private and retail banking Pursuant to a new business strategy adopted by Živnostenská banka, a.s. after the entry of UniCredito Italiano (UCI) to ŽB, the Bank focused all its efforts on the acquisition of new clients, development of products and services for affluent clients - individuals and small business clients, as well as on expansion of its branch network. 8
During 2004, the Bank opened 14 new branches in Prague, Brno, Ostrava and other large cities and thus increased the number of its outlets from 26 to 40. It implemented a new organization structure of the retail banking segment, in particular, it split the operating management of its distribution network from the creation of this segment strategy and from the product development and controlling. We anticipate that this change will contribute to more efficient management of the Bank's trading network and to creation of the target-based segment strategy corresponding to the Bank's business objectives and current market conditions. In 2004, the Bank completed the integration of ŽB-Asset Management and ŽB-Trust into Pioneer Investments Group, UniCredit Group's specialized division, which focuses on the collective investment and assets management. The Bank also enlarged its investment products portfolio by mutual funds from the Pioneer Investments group, which offer certificates denominated in foreign currencies. We assume that close cooperation of Živnostenská banka, a.s. and Pioneer Investments will continue also in future and enable Živnostenská banka to exploit synergy effects arising from the merge of both companies. During the year the Bank significantly increased its exposure in the residential property financing. It granted more than 600 mortgage loans in the total volume exceeding CZK 1.3 billion (year-on -year increase by 40 per cent). It follows that mortgage loans appeared to be most rapidly growing within the whole retail banking segment and will become one of the main pillars of the Bank's future expansion in a segment of services to individuals. Last year the Bank enlarged its offer of investment products by new structured EUROTOP deposits, which products combine features of standard time deposits and investments into shares and share index. The Bank complemented its portfolio of services for small business clients by operating and investment loans with simple administration. In direct banking channels Živnostenská banka enlarged operability and user comfort of Netbanka (internet banking) which, jointly with MiniBanka (GSM Banking) and TeleBanka (phone banking), provides a client with comfort of easy contact with his Bank. Direct banking of Živnostenská banka is widely used and last year the number of its users increased by 44 per cent. Corporate Banking In many aspects the year 2004 marked a turning point in the corporate banking segment. The Bank successfully expanded in a segment of medium-size corporate clients, where it acquired about 300 new corporate clients and achieved 16 per cent increase in revenues. The Bank had also strengthened its position in a segment of large corporations. Last year ŽB continued to implement a business model and risk management standards in accord with UniCredito launched in 2003. Živnostenská banka reorganized its trade financing, integrated documentary payments and guarantees, hitherto independent department, into a newly created department. A corporate banking segment was enlarged by clients from the financial institutions group, which were moved there from the investment banking division. Trade finance activities were complemented by the factoring which had shortly become a significant alternative of financing requested both by new and existing clients. The Bank 9
Page 1 and 2: Annual Report of Živnostenská ban
Page 3 and 4: Composition of the Supervisory Boar
Page 5 and 6: Introduction by the Chairman of the
Page 7: Directors’ Report Dear Clients an
Page 11: provided support to a number of pro
Page 14 and 15: Liabilities: Note 31 December 2004
Page 16 and 17: Income Statement for the Year Ended
Page 18 and 19: Schedule to the Financial Statement
Page 20 and 21: • on sale or transfer of any secu
Page 22 and 23: (o) Receivables Receivables are sta
Page 24 and 25: The Bank creates social fund. The s
Page 26 and 27: In 2004 and 2003, the Bank did not
Page 28 and 29: for comparable transactions with ot
Page 30 and 31: Securities available-for-sale at 31
Page 32 and 33: (c) Movements in investments in sub
Page 34 and 35: Tangible fixed assets 31 December 2
Page 36 and 37: 10 ALLOWANCES, PROVISIONS AND WRITE
Page 38 and 39: 11 DUE TO BANKS 31 December 2004 CZ
Page 40 and 41: 13 LIABILITIES FROM DEBT SECURITIES
Page 42 and 43: If the balance of the statutory res
Page 44 and 45: 31 December 2004 31.December 2003 C
Page 46 and 47: 20 COMMISSION AND FEE INCOME AND EX
Page 48 and 49: 23 ADMINISTRATIVE EXPENSES 31 Decem
Page 50 and 51: 24 TAXATION 31 December 2004 CZK m
Page 52 and 53: 26 FINANCIAL RISKS (a) Strategy in
Page 54 and 55: on a daily basis (so-called “back
Page 56 and 57: As at 31 December 2004 Assets CZK E
Page 58 and 59:
The VaR amount for interest rate ri
Page 60 and 61:
(g) Liquidity risk The Bank is expo
Page 62 and 63:
At 31 December 2003 Assets Within 3
Page 65 and 66:
Consolidated Financial Statement au
Page 67 and 68:
Consolidated Income Statements of C
Page 69 and 70:
Schedule to the Consolidated Financ
Page 71 and 72:
(c) Foreign currencies The consolid
Page 73 and 74:
(h) Sale and repurchase agreements
Page 75 and 76:
Property, plant and equipment and i
Page 77 and 78:
3 NET FEE AND COMMISSION INCOME 31
Page 79 and 80:
7 OPERATING EXPENSES Operating expe
Page 81 and 82:
The tax on the operating profit dif
Page 83 and 84:
13 STATE TREASURY AND OTHER BILLS E
Page 85 and 86:
31 December 2004 31 December 2003 N
Page 87 and 88:
18 SECURITIES AVAILABLE-FOR-SALE 31
Page 89 and 90:
Property, plant and equipment Dispo
Page 91 and 92:
y 29 December 2014, with no repayme
Page 93 and 94:
The following table indicates the c
Page 95 and 96:
(b) Capital adequacy To monitor the
Page 97 and 98:
Geographical concentrations of asse
Page 99 and 100:
market movements. The Board of Dire
Page 101 and 102:
CZK USD GBP EUR Other Total As at 3
Page 103 and 104:
As at 31 December 2004 Up to 1-3 3-
Page 105 and 106:
The table below summarises the effe
Page 107 and 108:
Maturities of assets and liabilitie
Page 109 and 110:
to be completely matched since busi
Page 111 and 112:
34 RELATED PARTY TRANSACTIONS Parti
Page 113 and 114:
Non-Audited Supplemental Informatio
Page 115 and 116:
NON-AUDITED RECONCILIATION OF THE I
Page 117 and 118:
Report on Relations between the Con
Page 119 and 120:
1.4. In addition to the above menti
Page 121 and 122:
Supplementary Data in Conformity wi
Page 123 and 124:
1.3. The Board of Directors as at 3
Page 125 and 126:
- supplementary investment services
Page 127 and 128:
was launched aimed to introduce the
Page 129 and 130:
Other Top Managers of Živnostensk
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Annual report 2004 (PDF, 4141 kB) - Unicredit Bank

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