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<strong>Dexia</strong>Financial results• Of important note is the fact that in PersonalFinancial Services – which represents abouthalf of total costs, and where the cost-in<strong>com</strong>eratio is the highest – the underlying cost basewas up only 1.8%, in line with the objectivesset at the beginning of the year in this businessline, and substantially below the underlyingrevenue progression thereof.The cost-in<strong>com</strong>e ratio was 54.0%, in the fullyear <strong>2005</strong>, below that of 2004 (54.4%).The underlying cost-in<strong>com</strong>e ratio stoodat 55.8% (down <strong>com</strong>pared to 56.1% in2004). This reduction is satisfactory whenconsidering the expenditure engaged todevelop the business and franchise of <strong>Dexia</strong>both domestically and internationally duringthe year, and the number of items discussedherein, which have borne on the cost base in<strong>2005</strong>.Gross operating in<strong>com</strong>eThe gross operating in<strong>com</strong>e amounted toEUR 2,747 million in <strong>2005</strong>, up 7.1%. Onthe underlying basis, the growth was +6.9%(+6.8% at constant exchange rate). Takingaside the effects of the non-operating items,one can see the very satisfactory underlyingperformances in the business lines, particularlyin Public Finance, where a +11.1% growthyear on year was achieved, in PersonalFinancial Services which delivered a +6.9%progression, in Investment Management andInsurance Services (+10.6%) and in Treasuryand Financial Markets (+8.5%). Overall,the exchange rates fluctuations in <strong>2005</strong> hada small influence on the gross operatingin<strong>com</strong>e (EUR 2 million positive impact).Cost of riskThe cost of risk (impairments on loansand provisions for credit risks) was verylow, amounting to EUR 52 million in <strong>2005</strong>,<strong>com</strong>pared to EUR 226 million in 2004.Excluding the provision movements at<strong>Dexia</strong> Bank Nederland (described below),the underlying cost of risk increasedslightly (EUR 59 million in <strong>2005</strong> againstEUR 48 million in 2004), but remainedhowever at a very low level (1.6 basis points onaverage outstanding banking <strong>com</strong>mitments).TaxesTax expense (<strong>com</strong>prising both current anddeferred tax) amounted to EUR 602 millionin <strong>2005</strong>, up 40.3% <strong>com</strong>pared to 2004. Thisamount includes the non-operating items(net credits of respectively EUR 40 million in<strong>2005</strong>, and EUR 230 million in 2004 – see detail40
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