UniCredit Bank (bisher HVB Bank Hungary)

The bank’s membership of UniCredit Group is reflected in its new name. At the beginning of 2007, the name of HVB Bank Hungary was changed to UniCredit Bank.

After an extremely good year in 2005, UniCredit Bank achieved a further increase of 30% in its total assets in 2006 and raised its market share to 6.4%. Even though the number of branches increased from 54 to 76 as part of a network expansion project, the cost/income ratio was at the low level of 49%. The number of customers rose by 60,000 to just under 200,000.

Assets under management increased by 40%, thus outgrowing the market; on this basis, the bank’s market share reached 10%.

Retail customers:

Both lending business and deposits business with private customers grew more strongly than expected and even outgrew the market. This trend was supported by the acquisition of the private customer portfolio of ING Bank Hungary which accounts for 17% of the loan portfolio and 3% of the deposit base of UniCredit Bank.

Securities business increased by 36% year on year. The market for loans to private individuals in Hungary grew by a further 25% (following an increase of 26% in 2005); there was a 67% increase in the volume of loans extended by UniCredit Bank to private customers.

The introduction of a 20% tax on interest income dampened the deposits market in Hungary, which only increased by 4.6% year on year. As customers switched to mutual funds and fixed long-term deposits, however, the bank achieved 34% growth in the retail segment.

Corporate customers:

UniCredit Bank has always been strong in corporate banking, especially in business with large corporates. In spite of rising competition the bank maintained its market share of over 8% in loans to corporate customers and over 10% of the deposit market. Total revenues rose by 16% over 2005.

New products such as "Creditautomat-Extra", standardised pre-financings for the public sector or the "T+O" fixed-term deposit account were implemented successfully.

International Markets

Benefiting from the strong year enjoyed by the Budapest Stock Exchange, the equity trading unit at UniCredit Bank increased its turnover by 50% and its market share to over 11%.

The leading position in custody business and with treasury products was maintained, and results improved yet again. The Treasury Sales unit increased total sales by 50% and income by 40%. The custody unit has a market share of between 30% and 35% in custody business for international investors; assets under custody totalled € 16.2 bn at year-end 2006.

Outlook:

The three-year branch network expansion programme will be completed in 2007. Both network expansion and the further development of alternative sales channels will play an important role in the future to boost additional growth in retail banking.

Being part of a large banking group will provide the bank with synergies from cross-border business and also open up new opportunities for the Hungarian market.