Letno poročilo 2007 - UniCredit Banka Slovenija dd

were introduced in September 2006. Wewill maintain the most competitive offer forthese two products. In addition, we intendto enhance our offer of investment productswith a new insurance partner.By taking these steps, our existing and newbusiness clients would be able to use theentire branch network for their businesssupport, not just the regional hubs anymore.The Bank also intends to develop closerrelationships with their clients, especiallymicro companies.Asset management and a few otherinvestment services will be introduced forour most demanding Private banking clients.Last but not least, we are set to further investin developing our sales staff knowledge andupgrading their skills in order to be able tobetter capitalize on business potential andclients’ trust.Corporate BankingGeneral overviewA strong macro-economic environmentcoupled with increasing economic growthof 6 % in 2007 continued to attract newcompetitors while current market playerswere fighting vigorously in almost all marketsegments of our business.In the first half of 2007, we saw a continuingtrend of declining interest margins. Thisindicated that interest margins on theSlovenian banking market for companiesholding a comparable credit rating werelower than European, while non-interestrevenues continued to gain importancecompared with interest revenues.During the second half of the year, decliningtrust in the banking system, stemming fromthe US banking crisis, was felt in Sloveniaas well. The inter-bank money marketbecame very sensitive to the news about thelosses related to American mortgage loans.All of these factors created a feeling ofuncertainty with higher prices of inter-bankloans and consequently higher prices ofcustomer loans.Slovenia, a member of the EuropeanUnion since 2004, also experiencedstrong competitive pressures in 2007 incertain economic segments as well asperformance deterioration in some businessentities. The introduction of the euro asa common currency meant an additionalloss of revenues in the areas of paymenttransactions and currency swaps.The corporate business line at UniCreditBanka Slovenija d.d. recorded good resultsin 2007 and thus, despite the high levelof competitiveness of this industry and thecontinued falling interest margins in the firsthalf of the year, exceeded its goals.The revenues were 14 % above budget and12 % above the preceeding year. The growthof revenues in the real estate financingsegment reached as high as 29 %. The Bankhas thus managed to maintain solid growth,which is a major success, consideringthe circumstances as well as the Bank’ssomewhat altered policy of focusing moreon the relationship between risk and returnon capital and seeing increased credit risk insome situations.The overall market share in the loanssegment dropped somewhat. This is to alarge extent a direct result of the Bank’sconservative approach as the foundation forcomprehensive assessment of companies’credit ratings. We decline many businesses,which we deem to be too high-risk.Additionally, compared to our competitors,we have been less aggressive in makingloan deals, if the offered deal did not meetthe required return/risk ratio.On the other hand, we have increasedmarket share in non-interest revenues, inparticular with risk management products forcorporate clients and partially with specialbanking products, such as project financing,retail financing, managing cash and the socalled group payment products (inside theUniCredit Group).Segments and productsDespite the fact that a slight decline wasrecorded on the corporate liabilities sidein 2007, significant growth was achievedwithin the framework of some sectors.One example is a segment of mid-sizecompanies, where the volume of depositsincreased by 36 % over the previous year.The volume increase of the Bank’s loans tocorporations was 15 % bigger than in 2006,and even higher within some segments,including the real estate and projectfinancing segments, where the growth ratewas as high as 43 %, and in the segment ofmid-size companies, where we recorded38 % growth.The volume of foreign payment transactionsin the segment of electronic payment ordersrose by 50 %, while the volume of domesticpayment transactions in the segment ofelectronic payment orders rose by 54 %.The overall number of transactions rose by21 %. Due to the harmonisation of thepayment system with the Europeandirectives on the one hand and theintroduction of the euro on the other hand,the Bank planned for a loss of revenues inthe amount of approximately 1 million euros.This projection was based on the followingassumptions: lower non-interest revenuesin the area of currency swaps; lower fees inpayment transactions or levelling fees fordomestic payment transactions with feesfor cross-border payment transactions; andlower fees for managing money. In reality,UniCredit Bank · 2007 Annual Report 127