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<strong>Dexia</strong>Investment Management and Insurance ServicesResultsThe analysis hereafter is based on theunderlying data (i.e. excluding non-operatingitems) for this business line, in order to allowa better understanding of the fundamentaltrends of the business line. Items considerednon-operating are defined on page 36.Net in<strong>com</strong>e – Group share of the businessline in <strong>2005</strong> increased strongly to EUR 230million, up 28.6% <strong>com</strong>pared to 2004.The performances of all three units pertainingto this segment were good, as analyzed below.• Asset management performed very wellin <strong>2005</strong>, with increased revenues (+4.8% orEUR 9 million in one year). This progressionmust be analyzed in view of the fact thatvarious changes were introduced in <strong>2005</strong>(no more absolute performance fees as fromJanuary 1, <strong>2005</strong>; revised fee structure oncertain products/services; different split in<strong>com</strong>missions between the distributors and theasset managers for some mutual funds). On alike-for-like basis, the revenue increase year onyear would have been +21%, quite consistentwith the volume growth. Costs increased(+17.3% in one year, or EUR 16 million), inconjunction with the strong developmentsof the activity. In particular, three new salesoffices were opened (in Milan, Madridand Rotterdam) to develop business withinstitutional clients. Staff increased by 67 in<strong>2005</strong>, adding to the recruitments made at theend of 2004. This increase of the costs did nothowever preclude the efficiency ratio (costper unit of asset managed) of <strong>Dexia</strong> AssetManagement to keep improving, from 13basis points in 2004 to 12 basis points in <strong>2005</strong>.• Fund administration revenues were up14.0% (or EUR +35 million) at EUR 282 millionin <strong>2005</strong>. In<strong>com</strong>e was pulled by highervolumes and <strong>com</strong>missions on mutualfunds and higher foreign exchange in<strong>com</strong>e,but somewhat mitigated by the closure ofoperations in the Netherlands and by thepressure on fees in a strong <strong>com</strong>petitiveenvironment. The costs rose by EUR 16 million,due to the cost of establishing the newjoint venture (RBC <strong>Dexia</strong> Investor Services– EUR 8 million) and by IT developmentsin the Spanish and Italian units. As a result,gross operating in<strong>com</strong>e increased by 23.9%(or EUR +18 million) to reach EUR 95 millionfor the full year.88
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