Annual report 2005 - Dexia.com

Annual Report 2005ResultsThe 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.This year again, Treasury and FinancialMarkets had a very good year, with netincome – Group share reaching EUR 267 million,up 15.4% on the previous year. The maincontributors to the business line’s yearly netincome remain the credit spread portfolio(CSP) – representing 65% thereof – and themoney market activities (19%).Total income for 2005 amounted toEUR 487 mil lion, up 8.5% or EUR +38 millionover the previous year, and was largelypulled by the revenue progression of CSP(EUR +21.4 mil lion), money market(EUR +15.6 million), and of the securitizationactivities (EUR +11.5 million) where businesshas been particularly buoyant. The financialengineering and derivatives (FED) deskalso performed well in 2005.The businessline’s income was however mitigated, thisyear again, by products involving arbitragestrategies, which embed cash and derivativeinstruments whose change in value may causesimultaneously either increased revenues andtaxes at times, or reduced revenues and taxes atother times.The overall effect was one of reduced revenuesboth in 2005 (EUR 35 million) and in 2004(EUR 14 million) leading to a negativevariance of EUR 21 million year on year.Costs were up 8.5% to EUR 177 millionfor the full year 2005. This EUR 14 millionincrease results from several factors amongwhich are structuring charge for thedownsizing of cash-equity activities in France(EUR 5 million) and the developmentsof securitization activities in the US(EUR 5 million).95