Letno poročilo 2007 - UniCredit Banka Slovenija dd

Business ReportBank’s Segment Performance Reviewthe lost revenue was 15 % to 20 % higherthan planned. Despite that, we were morethan able to compensate for the loss withadditonal income in other areas.As a part of caring for better performance ofits partners who increasingly appreciate theadvantages of protection against currency,commodity and interest risks in 2007, theBank also increased its offer of instrumentsaimed at reducing such risks.The Bank was successful in interest hedging(interest swap), in composite hedginginstruments used for hedging interest risksand in foreign-currency forward contractsused for hedging currency risks. In terms oftotal market share, in this segment we werethe absolute No. 1 player on the Slovenianmarket with market share of over 50 % andwith a 141 % increase in 2007.The Bank also has been building itsexpertise about products and services inthe challenging and complex area of projectfinancing, where it has successfully carriedout several deals.We further improved our offer in the areaof cash management and took severaladditional steps in the provision of morecomplex services like automatic cashpooling. The group of companies thatdecide on such services has been growingresulting from the establishment of theirsubsidiaries abroad.Within the framework of the re-brandingproject, which encompassed the entire Bank,we have, among other things, successfullyrenovated our web site. It is now more userfriendly, confirmed by positive feed-backfrom existing and potential clients.Besides exceeding our goal in terms of totalrevenues, we also significantly increased ourcontribution to the overall profit of the Bankthrough cost and process efficiency.Future forecastUniCredit Banka Slovenija d.d will continueto follow its ambitious goals in the area ofcorporate banking, with particular focus onthe following:• further growth of revenue, profitabilityand above-average growth of non-interestrevenues;• increased client satisfaction compared toother banks and to the previous period;• maintaining or achieving a leading positionin the area of products such as structureddeposits, instruments for reducing risks,issuing bonds, project financing andothers;• improving the sales process in termsof better transparency and efficiency forclients as well as for employees;• developing the knowledge, experienceand satisfaction of our team, which isa necessary requirement for long-termsuccess.In 2008, we expect even fiercer competitionin the banking industry, while the changedeconomic environment in the country willalso contribute to difficult conditions fordoing business. The anticipated higherinflation growth rate and growth of the GDPwill lead to deteriorated conditions forcompanies. This consequently would mean achange of conditions for the Bank, since riskswould increase.Despite announcements about lowereconomic growth, in the range of 4 % to5 %, our aim will continue to be ensuringquality business solutions for our clients andexceeding set goals with well trained andexperienced banking staff.International MarketsThe International Markets business segmentcomprises the Bank’s activities in currency,interest rate and fixed income trading,sales of treasury products to corporate andinstitutional customers, and debt capitalmarkets origination. Thus, this segmentlinks international financial markets withcustomers and the Bank. In line with thisfocus, 2008 will see the integration of equityexecution and custody units to form aneffective structure with clear governance.This reorganization will enable us to furtherbroaden and deepen the range of productsand services offered to our customers. Thevarious units are to benefit from each otherin terms of know-how sharing, placementpower and market presence, and this backedalso by the strength of a large internationalfinancial group with proven competence intrading in international financial markets andinvestment banking ultimately will benefitcustomers.General overviewFor International Markets business segment,2007 was a very successful year. Totalrevenues increased by 0.6 million andreached 8 million euros despite a loss oftraditional income components related tointroduction of the single European currency,euro, in Slovenia and giving up domesticcurrency related conversion and interesttrading business. By consuming only4 % of the Bank’s capital, InternationalMarkets business segment increased itsshare in total profit of the Bank to 25 %.Return on allocated capital reached81%. Contributions to the strong overallperformance came from both customerbusiness and trading activities.Segments and productsCurrency and interest rate trading: againstthe background of major market weaknessand increased volatilities originated bythe US sub-prime credit crisis, the tradingunit added substantial contribution to totalrevenues in 2007, amounting to 4.7 millioneuros. The strongest contribution came from128 2007 Annual Report · UniCredit Bank