A4 für Copyshop GB.indd - Bayerische Landesbank

In the 2004 financial year, the operating profit of the Real Estate segment totalled
EUR 62 million, compared to an operating loss in the previous year of EUR 250 million
because of high risk provisioning requirements due to conservative assessments. In
addition to the reduction of risk provisions, this encouraging development was the
result of increased income thanks to a slight fall in administrative expenses. Return on
the average equity in 2004 stands at 13.8 percent and thus within the target range,
compared to the previous year’s –55.1 percent. The cost-income ratio improved year
on year from 29.9 percent to 26.7 percent. The considerable fall in average staff capac-
ity from 234 positions in 2003 to 140 positions in 2004 is largely attributable to the
outsourcing of employees to the Risk Office Support Operations, in accordance with
the Minimum Requirements for the Credit Business of Credit Institutions.
With a 2004 operating profit of EUR 76 million, the Global Markets segment generated
a more modest contribution to the Group operating result than in the previous year
(EUR 279 million). This downward trend was primarily due to the segment’s lower net
interest income. The result was also affected by expenditure on measures aimed at
preserving liquidity. The segment’s cost-income ratio stands at 70.3 percent, represent-
ing a significant increase on the previous year’s ratio of 44.7 percent. The return on
equity posted in 2004 was 12.5 percent, compared to 28 percent in 2003. The year-on-
year decline in staff capacity, falling from 546 to 474 positions, was due to the closure
of foreign entities as well as to personnel fluctuations at home.
The Financial Institutions & Sovereigns segment reported a 2004 operating profit of
EUR 99 million, compared with the previous year’s EUR 116 million. This decline is
attributable to increased administrative expenses and a slight reduction in the net
interest income. Due to these factors, the cost-income ratio rose from 18.8 percent
to 31 percent. At 29 percent, the rate of return on the equity capital disclosed was
below that of the previous year (42.8 percent). Nonetheless, it still clearly exceeded
the Group target.
The segment Savings Banks, Bavarian Municipals / Corporates posted a much improved
operating profit of EUR 86 million, compared with the previous year’s result of EUR – 11
million. This was predominantly the result of the write-back of loan loss provisions
built up in previous years in credit business. Comparison with the previous year is only
possible to a limited degree due to portfolio realignment. The segment’s return on
equity of 24.1 percent, compared with the previous year’s – 4.1 percent, is a clear illus-
tration of its successful business performance. Likewise, the cost-income ratio
improved significantly year on year from 77.3 percent to 65.3 percent.
The exclusively retail-oriented Labo / LBS segment generated a contribution of EUR 109
million to the consolidated operating profit in 2004, compared to EUR 173 million in
2003. While Labo posted a decline in its result due to increased expenditure on fund-
ing, LBS, on the other hand, reported yet another increase. The return on equity of the
segment as a whole was thus maintained at the level of the previous year, standing at
8.6 percent compared to 8.7 percent in 2003. At 49 percent, the cost-income ratio
posted represents an increase against 2003’s ratio of 44.5 percent.
Report on the Bank and the Group
101
} Real Estate
segment result
} Global Markets
segment result
} Financial
Institutions &
Sovereigns
segment result
} Savings Banks,
Bavarian Municipals
/ Corporates
segment result
} Labo / LBS
segment result