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Net writedowns of loans increased by € 188 m to € 679 m in 2006. This item includes additions of € 278 m to loan loss provisions which were already explained in connection with higher provisioning based on refined risk standards for retail loans. Excluding this adjustment, which is classified as a one-off effect, the current underlying development shows that the provisioning charge for 2006 was € 401 m, € 20 m or 5 % below the adjusted figure for the previous year.
In the Austrian customer business, contributions to this trend came mainly from the Corporates Division, i.e. business with large companies. This partly reflects structural improvements in corporate balance sheets in previous years; moreover, in 2006, several restructurings were successfully completed and related provisions were released. The risk/earnings ratio for the Corporates Division was 18.9 %; adjusted for the IBNR effect, 8.7 %. The risk situation in the Retail Division remained strained as insolvencies of private individuals have been increasing and also because, under the new segment definitions, the Retail segment now includes small and medium-sized businesses, a customer group whose risk status is still unsatisfactory. In 2006, the risk/earnings ratio in the Retail Division was 54 %; adjusted for the one-off increase in provisions, the figure would have been close to 30 %.
As a result of the IBNR effect, net writedowns of loans in the CEE business segment rose by 22 % to € 141 m. The risk/earnings ratio was 13.4 % (adjusted: 11.0 %), below the BA-CA average. At BA-CA as a whole, the risk/earnings ratio was 25.3 %, or 14.9 % on an adjusted basis.