Letno poročilo 2007 - UniCredit Banka Slovenija dd

10080P & L income5% 6%27% 30%Finance. Additionally, the Bank reports inthis position, write-offs of loans carriedat effective interest method and theirrecoveries, both summing up to 0.12million euros net loss (2006: 0.14 millioneuros gain). The reason for the lower resultin 2007 is the IFRS adoption with strictpolicy on write-offs. Recoveries of writtenoffloans derive in both years from loanswritten-off before IFRS adoption.604020068%64%Share 2006 Share 2007NET INTEREST INCOMENET FEE INCOME TRADING RESULTOTHER INCOMEThe activities of the treasury departmenttrading on the Bank’s own account arereflected in the profit and loss statement inpositions 9, 10 and 11. The trading resultdoubled in 2007 and reached 3.76 millioneuros after 1.84 million euros in 2006. TheBank strongly profited from the anticipatedSlovenian credit spread compressionafter introduction of the euro. However,positioning on the yield curve also resultedin significant profits. Moreover, the activitieson the foreign currency markets contributedpositively to overall trading results.2006 to 4.98 million euros in 2007. In thecorporate business, the Bank approximatesthe effective yield concept by accruing feesin interest net income; however, it doesnot do the same for retail business. In bothbusiness segments, the appropriate systemsupport will be implemented in 2008.Besides increased business, the fact that theBank insures fewer loans than in the past isanother reason for the positive development.Consequently, lending fee income in retailincreased by 85.1 %. Payment and foreigntrade related fees increased in 2007 from5.28 million euros to 5.52 million euros.Given the increased transaction volumes,the profitability of the business unfortunatelydeclined after introduction of the euro, asmost former foreign payments are nowdomestic payments. The focus on innovativesolutions for clients with derivativeinstruments launched in 2005 further paidoff in 2007. The Bank achieved a net feeresult of 2.73 million euros, which is 0.94million euros more out of this business thanin 2006.In 2007, the Bank reports a loss of 0.75million euros in realized gains and losseson financial assets and liabilities notmeasured at fair value through profit andloss (2006 saw a profit of 0.69 millioneuros in this same segment). Within thisposition, the Bank reports the result of thesale of available for sale bonds. In 2007,the Bank decided to participate in thebuy-back of Republic of Slovenia bondsat favourable market rates and recorded aloss of 0.6 million euros. The interest ratehedges related to these positions werenot terminated at that time. Economically,the Bank profited by participating in thosebuy-backs organized by the Ministry ofWithin position “Gains and losses onderecognition of assets other than held forsale”, the Bank reports gains and losses onderecognition of its property and equipmentas well as intangible assets.Naturally, the increased business also isreflected in increasing costs. Expanding thenumber of employees as well as openingnew branches to increase regional presencefor retail and corporate business and theinvestment in IT infrastructure lead to higherexpenses. Also, the re-branding, which tookplace in 2007, was supported by heavymarketing activities. However, the Bankmanages its administrative costs tightly andcautiously. The administration costs amountto 28.84 million euros (2006: 25.52 millioneuros) in total, which is an increase of 3.32million euros or 13 %.UniCredit Bank · 2007 Annual Report 121