Annual report 2005 - Dexia.com

Annual Report 2005Costs amounted to EUR 1,596 millionfor the full year 2005, a modest 1.8%increase compared to those of 2004, andgiven the strong revenue momentum in2005. Yet, they include the investment infranchise, distribution and marketing thathas contributed to the increase of business.Particularly noteworthy is the fact that thebranch closure target decided in 2001 wasexceeded, the total number of branchesstanding at 1,069 at the end of 2005,compared to the initial target of 1,099.Gross operating income in 2005 thus went up6.9% to EUR 623 million.The cost-income ratio continued to improve,from 72.9% in 2004 to 71.9% this year,reflecting the good trends described above.The cost of risk remained very small at EUR23 million in the year, a decrease of 34.4%.Tax expenses remained almost stable in 2005at EUR 182 million. Owing to a more efficientmanagement of the tax base, the tax rate stoodat 29%, lower than in 2004 (37%).The return on economic equity (ROEE)continued to improve and stood at 23.5% forthe full year 2005, up from 21.6% in 2004.UNDERLYING STATEMENT OF INCOME (excluding non-operating items)(in millions of EUR)(1) Pro forma.(1) (2) Pro Return forma on pour economic 2004. equity.(2) Rentabilité sur fonds propres économiques.2004 (1) 2005 Variation2005/2004Income 2,150 2,219 +3.2%of which net commissions 669 736 +10.0%Costs (1,568) (1,596) +1.8%Gross operating income 583 623 +6.9%Cost of risk (35) (23) -34.4%Impairments on (in)tangible assets 0 0 n.s.Tax expense (179) (182) +1.6%Net income 369 418 +13.4%Minority interests (2) (1) -20.1%Net income – Group share 370 420 +13.3%Cost-income ratio 72.9% 71.9%ROEE (2) 21.6% 23.5%Allocated equity 1,718 1,78281