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Operating expenses (€ 2,757 m) grew by 4 %, a much lower rate than revenue growth, and thus remained under control. Within the total figure, staff expenses (€ 1,606 m) rose by € 88 m or 6 %, mainly in CEE and – as a result of changes in the group of consolidated companies – in Markets & Investment Banking (MIB), while staff expenses in the Austrian customer business remained unchanged. In the three Austrian customer business segments, BA-CA reduced operating expenses by 9 %. While staff costs remained unchanged, other administrative expenses declined especially in the Retail segment, reflecting the transfer of settlement and administrative functions to Administration Services GmbH (AS) and the related process and cost optimisation. The “SME plus” restructuring programme also showed the expected positive effects. Moreover, as part of the introduction of the new divisional structure, the business segments assumed various central governance functions, which resulted in a decrease in other administrative expenses. In the middle of 2006, we changed overhead cost allocation, from a system based on profit before tax to a system using direct and indirect costs as a calculation basis. Operating expenses in the CEE business segment increased by 11 %.
In 2006, the cost/income ratio of BA-CA was 57.9 %, significantly below the 60 % mark. This compares with 62.3 % in the previous year and almost 70 % three years ago. Most recently, the cost/income ratio for Austrian customer business was 60.5 %; in the Retail segment it stood at 76.2 %, far above average. The CEE business segment showed a cost/income ratio of 53.3 %, more or less unchanged compared with the previous year and still considerably lower than for the bank as a whole.