Bank Austria Creditanstalt - Annual Report 2006

The primary segment reporting format is based on the internal reporting structure of business segments, which reflects management responsibilities in the Bank Austria Creditanstalt Group in 2006. The business segments are presented as independent units with their own capital resources and are responsible for their own results.

The definition of business segments is primarily based on organisational responsibility for customers.

As part of the standardisation of internal control within UniCredit Group, segments and methods are presented in a standardised form. All changes have been calculated for the previous year and for all preceding quarters to make a comparison meaningful.

Retail
Responsibility for the Retail Division covers Bank Austria Creditanstalt AG’s business with private customers and small businesses and the credit card business.

Private Banking & Asset Management
The new Private Banking & Asset Management Division comprises the subsidiaries BANKPRIVAT, Schoellerbank AG, Asset Management Gesellschaft AMG and Pioneer Investments Austria.

Corporates
The Corporates Division covers the previous Large Corporates (multinational corporates, financial institutions, public sector) and Real Estate segment, business with medium-sized companies and customers using specific products (e.g derivatives) as well as the activities of BA-CA Wohnbaubank AG, BA-CA Real Invest GmbH and the leasing business of the Bank Austria Creditanstalt Leasing Group.

CEE
The CEE business segment includes the commercial banking units of the Bank Austria Creditanstalt Group in the region of Central and Eastern Europe.

Markets and Investment Banking
The Markets and Investment Banking Division essentially comprises the treasury activities of Bank Austria Creditanstalt AG.

Corporate Center
“Corporate Center” covers all equity interests that are not assigned to other segments. Also included are inter-segment eliminations and other items which cannot be assigned to other business segments.

Methods

Net interest income is split up according to the market interest rate method. Costs are allocated to the individual business segments from which they arise. Goodwill arising on acquisitions is also assigned to the individual business segments.

The result of each business segment is measured by the net profit before tax and the net profit after tax earned by the respective segment. In addition to the cost/income ratio, the return on equity is one of the key ratios used for controlling the business segments. The segment reporting data also show the net profit after tax.

Changes in methods:
The interest rate applied to investment of equity allocated to the business segments has been reduced and corresponds to the 3-month EURIBOR plus a margin of the average 5-year UniCredit credit spread. The rate applied to the business segments for investment of equity is determined for one year as part of the budgeting process. As a result of this change, the amount of notional income from investment of capital allocated to the divisions is lower compared with the method used so far, while net interest income in the Corporate Center increases.

As part of the standardisation of capital allocation in UniCredit Group, the factor used for calculating the market risk equivalent was increased to 12.5 %.

The reference interest rate for the valuation of assets on which interest is not being accrued and for writedowns was also changed from the 1-month money market rate to a standard rate, which is applied to the current financial year on a fixed basis.

At BA-CA AG, overhead costs have so far been allocated proportionately on the basis of the segment result before overhead costs. Under the new method, overhead costs are allocated proportionately to direct and indirect costs.

Capital allocated to the business segments in BA-CA AG continues to amount to 7 % of risk-weighted assets. Capital allocation to subsidiaries reflects the equity capital actually available; equity capital is no longer standardised.

For the 2006 financial year, all capital gains are recognised in the Corporate Center business segment.

Enlarge

Download table (.xls)

€ M		RETAIL DIVISION	PRIVATE BANKING & ASSET MANAGE- MENT DIVISION	COR- PORATES DIVISION	CENTRAL EASTERN EUROPE DIVISION	MARKETS & INVEST- MENT BANKING DIVISION	COR- PORATE CENTER	BA-CA GRUPPE
Net interest income	1 – 12 2006	768	14	653	1,048	124	73	2,681
	1 – 12 2005	772	14	663	932	150	30	2,560
Net fee and	1 – 12 2006	535	124	374	588	70	–25	1,667
commission income	1 – 12 2005	479	123	303	519	40	–7	1,457
Net trading income	1 – 12 2006	–1	1	–	106	201	42	348
	1 – 12 2005	3	2	–1	132	118	10	264
Net other operating	1 – 12 2006	–19	31	32	–17	6	33	66
income/expenses	1 – 12 2005	–	–1	41	–23	–33	–	–16
Net non-interest income	1 – 12 2006	514	156	406	677	277	50	2,081
	1 – 12 2005	482	125	343	628	125	3	1,706
TOTAL REVENUES	1 – 12 2006	1,283	171	1,059	1,725	402	123	4,762
	1 – 12 2005	1,254	138	1,006	1,560	274	33	4,266
OPERATING EXPENSES	1 – 12 2006	–978	–105	–436	–917	–167	–154	–2,757
	1 – 12 2005	–1,147	–90	–432	–828	–99	–61	–2,658
OPERATING PROFIT	1 – 12 2006	305	66	623	808	235	–31	2,005
	1 – 12 2005	107	48	573	733	175	–27	1,608
Provisions for	1 – 12 2006	–6	–1	1	–6	–6	–94	–111
risks and charges	1 – 12 2005	7	1	–3	5	1	–21	–9
Goodwill impairment	1 – 12 2006	–8	–	–	–	–	–	–8
	1 – 12 2005	–4	–	–	–	–	–	–4
Net writedowns of loans and provisions	1 – 12 2006	–414	1	–124	–141	1	–2	–679
for guarantees and commitments	1 – 12 2005	–302	2	–86	–116	10	2	–491
Net income	1 – 12 2006	6	–1	7	5	7	2,289	2,313
from investments	1 – 12 2005	–1	15	158	126	19	–13	305
Integration costs	1 – 12 2006	–1	–1	–	–12	–31	–203	–248
	1 – 12 2005	–90	–2	–	–7	–	–9	–108
PROFIT BEFORE TAX	1 – 12 2006	–119	63	507	655	207	1,960	3,272
	1 – 12 2005	–283	64	642	741	206	–68	1,301
Income tax	1 – 12 2006	34	–12	–115	–134	–46	132	–140
	1 – 12 2005	68	–15	–165	–127	–36	49	–226
NET PROFIT FOR THE PERIOD	1 – 12 2006	–85	51	393	520	161	2,092	3,132
	1 – 12 2005	–215	49	477	614	170	–19	1,075
Risk-weighted assets	1 – 12 2006	16,564	441	31,768	24,720	3,266	3,014	79,773
(average, Austrian Banking Act)	1 – 12 2005	16,280	502	30,873	21,556	4,689	3,288	77,189
Equity allocated (average)	1 – 12 2006	1,184	172	2,469	3,639	311	481	8,257
	1 – 12 2005	1,170	156	2,336	3,471	328	–172	7,290
Return on equity	1 – 12 2006	–10.1	36.5	20.5	18.0	66.4	n.m.	39.6
before tax in %	1 – 12 2005	–24.2	40.8	27.5	21.3	62.7	n.m.	17.9
Return on equity after tax	1 – 12 2006	–7.2	29.8	15.9	14.3	51.7	n.m.	37.9
before deduction of minority interests in %	1 – 12 2005	–18.4	31.1	20.4	17.7	51.8	n.m.	14.8
Cost/income ratio in %	1 – 12 2006	76.2	61.6	41.2	53.2	41.6	n.m.	57.9
	1 – 12 2005	91.5	65.3	43.0	53.0	36.2	n.m.	62.3
Risk/earnings ratio in %	1 – 12 2006	53.9	n,a,	18.9	13.4	n.m.	n.m.	25.3
	1 – 12 2005	39.1	n,a,	13.0	12.4	n.m.	n.m.	19.2

*)	not meaningful

(40) Segment reporting

Methods