annual report 2000. - amazon s3s3.amazonaws.com/zanran_storage/ file1 contents. investkredit at a...
TRANSCRIPT
1
CONTENTS.
Investkredit at a glance. ................................................................................................. 2
Income development of the Investkredit Group 1996 – 2000. .................................... 3
Key figures of the Investkredit Group 1996 – 2000. .................................................... 4
Letter from the Board of Management. ....................................................................... 5
Policy-making bodies. .................................................................................................... 8
Supervisory Board. ..................................................................................................... 8
State Commissioner. .................................................................................................. 9
Board of Management. ............................................................................................. 9
Organizational chart. ................................................................................................... 10
Investkredit shares. ...................................................................................................... 11
Management discussion. ............................................................................................. 13
Investkredit Group. ................................................................................................. 13
Development of earnings. ...................................................................................... 16
Total assets and capital development. ................................................................... 18
Outlook for 2001. .................................................................................................... 19
Segment reporting according to IAS. .......................................................................... 21
Enterprises. .............................................................................................................. 21
Financing and aid. .............................................................................................. 21
Corporate finance, private equity and counselling. ........................................ 26
Financial asset management. ............................................................................ 28
Treasury. .............................................................................................................. 30
Local government. ................................................................................................... 32
Real estate. .............................................................................................................. 34
Financial statements of the Investkredit Group for 2000. ......................................... 36
Balance sheet. .......................................................................................................... 36
Income statement. ................................................................................................... 37
Statement of changes in equity. ............................................................................. 38
Cash flow statement. .............................................................................................. 39
Notes to the financial statements of the Investkredit Group. .............................. 40
Accounting principles. ....................................................................................... 40
Information on the balance sheet. ................................................................... 46
Information on the income statement. ............................................................ 55
Other information. ............................................................................................ 59
Audit certificates pursuant to § 245a of the Austrian Commercial Code. ........... 73
Report of the Supervisory Board. ................................................................................ 74
Glossary of important technical terms. ....................................................................... 75
Our photographic presentation. .................................................................................. 83
2
Investkredit shares.
2000 1999 Change
Earnings per share (in EUR) 42.28 27.33 +55 %
Dividend per share (in EUR) 8.72 8.72
Year-end price (in EUR) 350.00 325.50 +7 %
High 360.25 331.50
Low 325.50 318.73
Market capitalization (in EUR m) 221.6 206.0 +7 %
Price-earnings ratio 8.3 11.9
Investkredit Group.2)
2000 2000 1999 1999 ChangeEUR ATS3) EUR ATS
m m m m
Net interest income 76.4 1,052 62.1 854 +23 %
Profit for the year before tax 32.4 445 24.3 334 +33 %
Profit for the year after tax 30.2 415 19.5 268 +55 %
Total assets 8,703.4 119,762 6,920.4 95,227 +26 %
Financing4) 7,437.8 102,346 5,896.1 81,183 +26 %Core capital (Tier 1) pursuant tothe Austrian Banking Act 272.0 3,742 247.5 3,406 +10 %
Own funds (Tier 1 + 2 + 3) pursuantto the Austrian Banking Act 421.5 5,800 422.0 5,807 - 0 %
Total capital ratio 9.9 % 12.6 %
Number of employees (year-end) 290 269 +8 %
2) In this Annual Report, totals may not add precisely because of rounding3) The 2000 Annual Report has been drawn up in EUR. The ATS figures have been converted4) Loans and advances to customers, provision for guarantees and trust loans as well as bonds and
other fixed-interest securities of other non-bank issuers
Rating.
Moody’s Investors Service long-term short-term
Investkredit Bank AG A1 P-1
Kommunalkredit Austria AG A1 P-1
INVESTKREDIT AT A GLANCE.
3
INCOME DEVELOPMENT OF THEINVESTKREDIT GROUP 1996 – 2000.
65 %
60 %
55 %
50 %
45 %
40 %
35 %
30 %
25 %
16 %
12 %
8 %
4 %
0 %1996 1997 1998 1999 2000
Cost-income ratio Return on equity
Cost-income ratio
Return on equity
53.6
1.7 %
11.8 %
14 %
10 %
6 %
2 %
52.6 52.654.0
42.55.9 %6.3 %
9.9 %
40
35
30
25
20
15
10
5
0
1.2 %
0.9 %
0.6 %
0.3 %
0.0 %1996 1997 1998 1999 2000
in EUR m Return on assets
Profit for the year before tax
Profit for the year after tax
Return on assets
2.5
24.3
3.40.14 %
0.85 %
8.9
0.46 %
10.3
13.7
0.51 %
30.2
19.5
0.80 %
32.4
11.9
4
KEY FIGURES OF THE INVESTKREDIT GROUP1996 – 2000.
HGB HGB HGB IAS IAS
1996 1997 1998 1999 2000
Net interest income (in EUR m) 43.9 49.3 51.1 62.1 76.4
Profit for the year before tax (in EUR m) 3.4 11.9 13.7 24.3 32.4
Profit for the year after tax (in EUR m) 2.5 8.9 10.3 19.5 30.2
Core capital (Tier 1) pursuant to theAustrian Banking Act (in EUR m) 194.2 209.0 227.9 247.5 272.0
Own funds (Tier 1 + 2 + 3) pursuant to theAustrian Banking Act (in EUR m) 286.0 330.4 372.2 422.0 421.5
Total assets (in EUR m) 4,209.6 4,750.1 5,298.4 6,920.4 8,703.4
Employees (year-end) 225 232 244 269 290
Market capitalization (in EUR m) 157.2 187.7 204.7 206.0 221.6
Total capital ratio 11.2 % 12.7 % 13.2 % 12.6 % 9.9 %
Core capital ratio 7.6 % 8.1 % 8.1 % 7.4 % 6.4 %
Interest margin1) 1.09 % 1.10 % 1.02 % 1.02 % 0.98 %
Operating income per employee (in EUR m) 0.26 0.26 0.26 0.24 0.29
Cost-income ratio2) 53.6 % 52.6 % 52.6 % 54.0 % 42.5 %
Return on assets3) 0.25 % 0.46 % 0.53 % 0.80 % 0.85 %
Return on equity4) 1.7 % 5.9 % 6.3 % 9.9 % 11.8 %
Return on equity after tax5) 1.3 % 4.4 % 4.7 % 8.0 % 11.0 %
Earnings per share (in EUR) 10.7 13.6 14.2 27.3 42.3
Owing to the application of IAS, the figures for 1996 to 1998 are only partly comparable
1) Ratio of net interest income to average total assets2) Ratio of administrative expenses to income3) Ratio of net income before tax to average risk-weighted assets4) Ratio of net income before tax to average equity5) Ratio of net income after tax to average equity
5
LETTER FROM THE BOARD OFMANAGEMENT.
This financial statement is a “first” in two respects. To begin with, the results of the
Bank for Corporates are expressed in euros and also, for the first time, the IAS (Inter-
national Accounting Standards) rules have been adopted in the balance sheet. The
significance of these two innovations certainly goes beyond the related accounting
and presentation challenges.
Euro and IAS represent a basic transformation of our financing culture. The European
Union currency creates absolutely new possibilities, because it transforms previously
fragmented capital markets into an extremely liquid all-European financial market.
Thereby, instruments that have been in common use for many years in Anglo-Ameri-
can financing business are now also available in continental Europe.
The intensive growth of the markets for corporate bonds and equity instruments –
ranging from venture capital and subordinated financing (mezzanine capital) to stock
exchange placements – reflects this trend.
Long-term lending, for which a pan-European market is also evolving, also faces new
conditions after the elimination of currency frontiers, including the expectation of
new capital requirements for lending banks. This will in future lead to a more marked
differentiation of risk and capital costs according to customer ratings and the matu-
rity period of commitments.
The significance of external and internal ratings is distinctly increasing and is also
becoming more and more significant for medium-sized manufacturing enterprises, if
they wish to enter the capital market with bonds or planned stock exchange listings.
Fears that the financing of medium-sized enterprises is in jeopardy owing to the
reorientation of banks according to rating categories are in our view, however, just as
unjustified as exaggerated euphoria with regard to the newly accessible financing
products.
A decisive factor in applying the new rules on the European financial market is to
ensure that they are implemented for the benefit of corporate customers. In the final
analysis – as is shown not least by the drastic market movements in the so-called new
economy – the new financing world will in essence not be much different from the
old.
In all individual discussions with our customers, we therefore consistently seek solu-
tions that best support the corporate aims of long-term stability and autonomy, de-
pending on the available scope for risk-taking and financing.
6
Alfred Reiter
The year under review has shown
that this approach by Investkredit
as the Bank for Corporates is fully
accepted by our customers and
market partners. Competency
teams of the Bank have success-
fully translated their skills into
concrete results: from the reorgan-
ized Enterprise Financing Depart-
ment to Corporate Finance, the
Mezzanine Fund and the equity
funds, from Treasury with its risk-
hedging instruments to the coun-
selling services of Europa Consult.
In the international area, we have
continued to expand our struc-
tured bond portfolio both in the
USA and Europe. In parallel, the
high-quality Europolis real estate
portfolio was further developed in
EU candidate country capitals.
Our purpose in developing project financing into a separate business segment is to
assist our customers more systematically than before in their international investment
projects. Also, special bank representative offices are to make the entire range of
bank services available in individual target markets.
New media facilities for our customers have also been distinctly expanded. InvestDirekt
(www.investdirekt.at) provides direct access to accounts and deposits. Up-to-date serv-
icing with data on money and foreign currency has been supplemented with a direct
transaction platform (www.investdirektfx.at). Investkredit’s internet presence
(www.investkredit.at) has also been modernized and enlivened. We regard this as a
major step towards intensifying information for investors, which should improve trad-
ing openings for our shares in the specialist market of the Vienna Stock Exchange. At
the moment, the price movements of Investkredit shares do not adequately reflect
the growth in the value of the Bank because of the low liquidity of these securities.
Nevertheless, at the end of the year, the price-earnings ratio of the share stood at 8.3,
which is an attractive value for bank securities. Not only to Investkredit Bank AG itself
but also, and prominently, Kommunalkredit Austria AG and Investkredit International
Bank p.l.c., Malta, as well as to other successful subsidiaries of the Group produced
the positive performance underpinning this Investkredit Group value.
7
Wilfried Stadler
The capital increase in
Kommunalkredit that was carried
out at an attractive valuation by
the Franco-Belgian Dexia Group,
the market leader in European lo-
cal government financing, is grati-
fying confirmation of the
Investkredit Group’s specialist
bank focus. We welcome the deci-
sion of this strategic partner to ex-
pand its activities in Central and
Eastern Europe in full partnership
with Investkredit. The first result
has been the acquisition of the PBK
bank in Slovakia, in which
Investkredit held an overall
31.36 % investment via a holding
company at the end of the year
2000.
In the reporting year, we also
worked consistently to ensure
greater value for money for our
customers by increasing cost-effectiveness. Thus, the cost-income ratio was improved
despite a larger payroll, and the proportion of personnel and administrative expenses
that were necessary to generate income was reduced. With a new boost in return on
equity before tax (ROE) from 9.9 % to 11.8 %, we are further improving capital yield
in the interests of our shareholders.
Precisely in periods of upheaval in financial markets, specialization proves to be the
right way forward for the Investkredit Group. Together with our staff, whom we thank
for their commitment and personal competence, we intend to continue this develop-
ment to the satisfaction of our customers and shareholders.
Alfred Reiter Wilfried Stadler
8
POLICY-MAKING BODIES.
Supervisory Board.
Geiserich E. Tichy
Chairman
Karl Samstag
Vice-Chairman
Vice-Chairman of the Board of Management
Bank Austria AG
Karl Sevelda
Vice-Chairman
Member of the Board of Management
Raiffeisen Zentralbank Österreich
Aktiengesellschaft
Elisabeth Bleyleben-Koren
Vice-Chairperson (to 24 May 2000)
Vice-Chairperson of the Board of Manage-
ment, Erste Bank der oesterreichischen
Sparkassen AG
Helmut Elsner
Chairman of the Board of Management
Bank für Arbeit und Wirtschaft
Aktiengesellschaft
Max Kothbauer
(to 31 December 2000)
Vice Chairman
(from 24 May 2000 to 31 December 2000)
Chairman of the Board of Management
Österreichische Postsparkasse
Aktiengesellschaft
(to 1 December 2000)
Klaus Haberzettl
Head of Division
Commercial Customers 1, Bank Austria AG
Herwig Hutterer
Manager, Finanzierungsgarantie-
Gesellschaft m.b.H.
(to 30 June 2000)
Heinz Kessler
Chairman of the Board of Management
Nettingsdorfer Papierfabrik AG
Kurt Löffler
Manager, ERP Fund
Regina Prehofer
Head of Division, International
Groups, Corporate Finance and
Foreign Trade, Bank Austria AG
Gerhard Tanew-Iliitschew
Head of Division, Raiffeisen Zentralbank
Österreich Aktiengesellschaft
Klaus Thalhammer
Chairman of the Board of Management
Österreichische Volksbanken-AG
Wolfgang Agler
Employees‘ representative
Gabriele Bauer
Employees‘ representative
Regina Frick
Employees‘ representative
Otto Kantner
Employees‘ representative
Peter Wimmer
Employees‘ representative
9
State Commissioner.
Board of Management.
Alexander Gancz Kurt Bayer
State Commissioner Deputy State Commissioner
Director Head of Department
Federal Ministry of Finance Economic Policy and Integration
Federal Ministry of Finance
Alfred Reiter Wilfried Stadler
CEO and Chairman Member of the Board of Management
“invest.outlook panel“
10
ORGANIZATIONAL CHART.
Member of the Board ofManagement
Wilfried StadlerTel. 53 1 35 Ext. [email protected]
Enterprise Financing
Claudia Schmied Ext. [email protected] Riess Ext. [email protected]
International Business andFinancial Asset Management
Walter Anscheringer Ext. [email protected]
International BusinessJohannes Wundsam Ext. [email protected]
International Project Financingand Representative OfficesMichael Smutny Ext. [email protected]
Financial Asset ManagementThomas Heinisch Ext. [email protected]
Business Analysis and Technical Consulting
Klaus Gugglberger Ext. [email protected] Ehringer Ext. [email protected] Mayer Ext. [email protected]
Corporate FinanceGerhard Ehringer Ext. [email protected]
Financial AnalysisBernhard Mayer Ext. [email protected]
Technical Consulting and Real EstateJohann Salzmann Ext. [email protected]
CEO & Chairmanof the Board of Management
Alfred ReiterTel. 53 1 35 [email protected]
Treasury
Peter Tschusch [email protected] Hochgatterer [email protected]
Money and currency market dealingsAlfred Buder [email protected]
Capital marketRita Hochgatterer [email protected]
HandlingFerdinand Dietersdorfer [email protected]
Legal Department
Stefan Süssenbach [email protected] Hanzl [email protected]
Organization and Controlling
Julius Gaugusch Ext. [email protected] Grechenig Ext. [email protected]
User Service andOrganization DevelopmentGottfried Grechenig Ext. [email protected]
ITHeinz Polke Ext. [email protected]
Accounts, Taxation andControllingGerald Stich Ext. [email protected]
Board of Management
Internal Audit
Anton Taubenschuss Ext. [email protected] Angerer Ext. [email protected]
Personnel
Karl Öckher Ext. [email protected] Wimmer DW [email protected]
Corporate Communications
Hannah Rieger Ext. [email protected]
Company Secretary andInternational Relations
Margot Binder Ext. [email protected]
11
Key data per share As at 31 December 2000
Share capital EUR 46,000,110
Shares outstanding 633,000
Securities code number 74810
ISIN Code AT0000748108
Reuters OIKV.VI
Bloomberg OEIKAVEquity
Shareholders
BA/CA Group 24.8 %
BAWAG/P.S.K. Group 21.3 %
RZB 15.6 %
Erste Bank 11.3 %
Wiener Städtische 7.1 %
ÖVAG 3.4 %
Other Banks 3.1 %
Shares widely held, especially 13.4 %by industrial enterprises
100.0 %
INVESTKREDIT SHARES.
Important information on Investkredit shares. The Investkredit shares are listed in the
specialist market of the Vienna Stock Exchange. The share capital remained unchanged
in the reporting year at some EUR 46 m. Conversion of the ordinary capital to euros
was undertaken in 1999. The Annual General Meeting of 24 May 2000 empowered
Investkredit Bank AG to hold own shares for trading purposes up to a level of 5 %.
Earnings per share were increased in
2000 to EUR 42.3, and the price/earn-
ings ratio – 11.9 at the end of 1999 –
was sharply improved to 8.3 by the end
of 2000. The carrying amount per share
at year-end 2000 was EUR 464.72. As a
result of the increased stock exchange
price, market capitalization rose from
EUR 206 m to EUR 222 m.
Stable shareholder structure. The chief
shareholders of Investkredit are all the
major Austrian banking groups. The
special task of the Bank and its broad-
based shareholder structure determine
its neutral sectoral position towards the
universal banks. Some 13 % of the
shares are held by industrial enter-
prises, private shareholders and staff of
the Bank. More shareholders were won
in the year 2000 through a staff sub-
scription drive.
Share markets 2000. The year 2000 was a turbulent period on the international share
markets. After high gains in the first three months for growth and technology stocks,
telecom and media shares, there was a turnaround against the background of persist-
ent losses by Internet enterprises and costs for UMTS licences and telecom takeovers.
Some “new economy” stocks that had earlier been much overvalued fell dramatically.
For the first time in years, the share markets thereby developed less favourably in
many countries in 2000 than the markets for government bonds. With a share index
performance of minus 11 %, the negative experience of other European bourses has
been echoed in Vienna, though it could not build on a comparably profitable past.
The market capitalization of the Vienna Stock Exchange (A-market and specialist mar-
ket), namely, some EUR 27 bn as at 28 December 2000, indicates the bourse’s subordi-
12
1st quarter result 23 May 2001
AnnualGeneral Meeting 23 May 2001
Ex-date 30 May 2001
Dividend payment date 30 May 2001
1st half-year result 3 August 2001
1st -3rd quarter results 23 November 2001
Financial market calendar 2001
Investkredit Bank AG shares (EUR)*
ATX index (EUR)*
112.00
110.00
108.00
106.00
104.00
102.00
100.00
98.00
96.00
94.00
92.00
90.00
88.00
86.00
84.00
1/00 2/00 3/00 4/00 5/00 6/00 7/00 8/00 9/00 10/00 11/00
1.1.2000 - 31.12.2000
* Standardized presentation
12/00
nate importance in the European context. The profit outlook for some financial shares
remained positive, however, even in a difficult environment. With a price increase of
7 %, Investkredit shares performed better in the year 2000 than the overall share
index on the Vienna Stock Exchange.
EUR 5,687,414.54, be used to pay a
dividend of EUR 8.72 per share. The
resulting total distribution is
EUR 5,519,760.00, or some 12 % of
the 2000 dividend-bearing capital
of EUR 46,000,110.00. By reference
to the Investkredit share price of
EUR 350.00 as of 28 December
2000, that gives a 2.5 % dividend
yield.
Proposal for the distribution of the profit. The Board of Management proposes to the
Annual General Meeting of 23 May 2001 that the net annual profit for 2000, namely,
13
MANAGEMENT DISCUSSION.
Investkredit Group.
Enterprises Local GovernmentINVESTKREDIT
Board of ManagementAlfred ReiterWilfried Stadler
INVEST EQUITY
Board of ManagementHelmut BousekMartin Prohazka
INVEST EQUITYEARLY STAGE
Board of ManagementBurkhard FeursteinMartin Prohazka
INVEST MEZZANIN
ManagersGerhard EhringerOliver Grabherr
INVESTKREDITINTERNATIONAL BANK
Board of DirectorsJohn ButtigiegWalter AnscheringerThomas HeinischJoseph Said
VBV AG
Board of ManagementJulius GauguschStefan Süssenbach
VBV HOLDING
ManagersJulius GauguschKlaus GugglbergerStefan Süssenbach
EUROPA CONSULT
ManagersGerhard EhringerKlaus GugglbergerHeike Jandl
EUROTECHMANAGEMENT
ManagersJosef ErnstAndreas Gotwald
KOMMUNALKREDIT
Board of ManagementReinhard PlatzerGerhard Gangl
PRVA KOMUNALNABANKA A.S.
Board of ManagementJozef MihalikGernot DaumanFrancis Teynier
Real EstateEUROPOLISINVEST
ManagersWolfgang LunardonEduard KornfeldBernhard Mayer
EUROPOLIS CEHOLDING
ManagersEduard KornfeldWolfgang LunardonBernhard Mayer
Investkredit Bank AG 53 %
Kommunalkredit Austria AG 37 %
Investkredit International Bank p.l.c. 4 %
VBV AG 1 %
Other 5 %
Shares of the most important companiesin total assets for 2000
The Investkredit Group. Through
the activities of Investkredit and
its subsidiaries in the areas of spe-
cialist banking, equity invest-
ment financing, corporate fi-
nance and consultancy as well as
real estate, the Investkredit
14
Group covers practically all aspects of medium- and long-term enterprise and local
government financing. Investkredit Bank AG holds about 53 % of the Group’s total
assets. The International Accounting Standards (IAS) were adopted in the Investkredit
Group’s accounting in 2000. The relevant figures for the previous year were calculated
and verified. Also, accounts were changed from schillings to euros.
Strategy. Investkredit regards itself as a Bank for Corporates and as an independent
financial services provider. The Group is primarily concerned with Austrian enterprises
and local government bodies, but opportunities in the international financial markets
are also grasped. As a specialist bank, Investkredit combines the functions of a financ-
ing bank, an equity investor, a financial assets management bank, a treasury bank and
a real-estate bank. The Investkredit Group’s strategy is to expand existing business
segments, while retaining its specialization as a Bank for Corporates. Its aim is to
provide continuous high-quality service for existing customers and to enlarge its cus-
“invest.outlook panel“
15
tomer base among enterprises with turnover higher than EUR 8 m. Simultaneously, it
aspires to further refine credit risk control, consistently seeking appropriate combina-
tions of risk and income profiles.
Our customers. The latest regular survey commissioned by Austrian banks in the year
2000, conducted by the independent financial consultant Schwabe, Ley & Greiner
among 1,100 large enterprises with a turnover of more than EUR 40 m, shows that
Investkredit is the second-largest long-term loan financier for this customer group.
The Bank’s services are used not only in long-term financing but also, increasingly, in
asset management and foreign currency dealings. The survey also confirmed the ex-
cellent reputation of Investkredit, whose customers rated it first among the 21 banks
surveyed in the categories of “technical competence”, “flawless conduct of business”
and “action on complaints”. In the overall assessment of all six factors, which also
included “decisiveness”, “openness/partnership” and “price”, Investkredit is first among
all banks. These customer assessments show that Investkredit is awarded top marks
for quality. If one also takes into account the results of the latest TOP 2000 study,
conducted in 1999 and covering enterprises above EUR 7.3 m, Investkredit is the third-
largest source of long-term financing in Austria. The consistent expansion of its fields
of business as a Bank for Corporates thus finds a positive echo in Investkredit’s main
target group.
The market environment. 2000 was a good year for the Austrian economy. Under the
favourable influence of a stable world economy, the development of the euro and a
positive unit wage costs situation, export dynamism was extremely high, at a real
+12 % on the average for the year. Domestic consumption also developed encourag-
ingly and reached +2.7 % owing to the effects of the 1999 tax reform. In parallel with
the vigorous cyclical upswing in the EU, economic growth in Austria attained a real
+3.3 %. The year began on a dynamic note, but the international economy weakened
from mid-2000 and the sharp rise in petroleum prices caused a drift of purchasing
power to the oil-producing countries. As compared with the first half of the year,
economic growth in Austria almost halved. Manufacturing output reflected a spe-
cially favourable business situation. The growth in output almost trebled as compared
with the year before – against the background of a strong improvement in the rela-
tive unit wage costs position and extremely dynamic foreign demand. Total exports
achieved a new record high. Expectations regarding the business situation and pro-
duction development have deteriorated somewhat since the middle of the year. Over-
all, the mood is, however, upbeat following one of the best years in recent history. As
the earnings situation remains favourable, but also taking into account a major mod-
ernization requirement, enterprises are continuing the rapid renewal of their capital
equipment. Capital investment in the economy as a whole rose by some 6 % in the
year 2000. As a result of growing uncertainty as to future cyclical development, capi-
tal investment activity recently lost some of its momentum. Capital spending over the
entire year amounted to some EUR 7 bn in manufacturing and to some EUR 5.5 bn in
16
industry in the narrower sense, so that the investment ratio in industry will have reached
6.7 %, a typical value for boom phases.
Increase in earnings. The Bank’s consistent expansion of business segments in recent
years – while retaining its specialization – also led to improved earnings in the report-
ing year. The Investkredit Group recorded distinct growth in net interest income, the
net trading result and profit for the year as compared with 1999.
Net interest income. Net interest income rose by EUR 14.4 m or 23 % to EUR 76.4 m.
The increase was primarily due to the expansion of business in the year. Income from
lending business in the narrower sense was increased not only through the expansion
of lending business but also through the improvement of margins. Income from vari-
able-yield securities, equity investments and real-estate assets management also rose.
Margit Poglits-Raffetseder Johann Salzmann
Development of earnings.
17
It was not possible to avoid the effect of higher refinancing costs and a decline in
interest contributions caused by the flatter interest curve. The interest margin – i.e.
the ratio of net interest income to average total assets – thus dipped overall from
1.02 % to 0.98 %.
Other operating results. Net fee and commission income at EUR 5.9 m rose slightly
over 1999. The most significant items of income came from environmental aid admin-
istered by Kommunalkredit for the Republic of Austria on a trust basis. The net result
of risk provisions in lending business remained relatively stable in the reporting year
at EUR 6.6 m. Overall, total risk provision for loans in lending business decreased by
some EUR 7.7 m to EUR 64.3 m owing to the more relaxed risk situation. The net
trading result at EUR 3.0 m was distinctly higher than in the previous year, when losses
occurred. Within trading activities, profits were achieved in bonds and shares trading
and in derivatives. Only currency business showed a negative result. In the case of
financial investments, there were write-offs, particularly among securities held as in-
vestments available for sale, whereas sales of equity investments had a positive effect.
On the whole, the net financial investments result at minus EUR 10.9 m was distinctly
below expectations.
General administrative expenses. Personnel expenses fell to EUR 20.9 m, despite the
increase in staff by 21 to 290 (disregarding the Board of Management and maternity
leave). The reason was the reduction in provisions expenses. Other administrative ex-
penses rose 47 % in the year from EUR 9.1 m to EUR 13.4 m – chiefly in connection
with consultancy costs. Depreciation and write-downs of property and equipment re-
mained practically unchanged at EUR 2.5 m. Overall, general administrative expenses
rose 5 % from EUR 34.6 m to EUR 36.2 m, proportionately less than income. Accord-
ingly, the cost-income ratio in the reporting year was sharply reduced from 54 % to
42 %.
Profit for the year. Other operating results amounting to EUR 0.8 m comprised prima-
rily the increase in the value of derivatives that do not serve for trading purposes. The
profit for the year before tax improved by 33 % or EUR 8.1 m to EUR 32.4 m, as
compared with 1999. Taking into account taxes of EUR 2.2 m, the profit for the year
after tax rose 55 % from EUR 19.5 m to EUR 30.2 m. Accordingly, earnings per share
jumped from EUR 27.3 to EUR 42.3.
18
Balance sheet structure. The Investkredit
Group recorded a 26 % expansion in to-
tal assets to some EUR 8.7 bn, its strong-
est growth since 1980. The greatest con-
tributions came from loans and advances
to customers. In particular, local govern-
ment business expanded greatly in rela-
tion with bidding for loans auctioned by
the Republic of Austria. Furthermore, se-
curities financing in financial investments
also rose. Loans and advances to custom-
ers continue to represent the largest share
on the assets side at 57 %. On the liabili-
ties side, debts evidenced by certificates re-
main the largest item at 59 %. Amounts
owed to banks declined to 27 %. Risk-
weighted assets did not rise as distinctly as
total assets, since the Investkredit Group
continues to adopt a low-risk business
policy.
Capital resources. The core capital of the
Investkredit Group rose to EUR 272.0 m
through the formation of reserves. The to-
tal capital resources to be taken into account according to § 23 of the Austrian Bank-
ing Act declined to EUR 421 m owing to higher deductions following new equity
investments in the Group. As at 31 December 2000, the solvency ratio had fallen from
12.6 % of the assessment basis to 9.9 % as a result of the expansion. The Tier 1 capital
ratio also fell, namely, from 7.4 % to 6.4 %.
Rating. Moody’s Investors Service fixed the ratings for Investkredit and Kommunalkredit
in 2000 at A1 in the long-term and Prime 1 in the short-term area. The financial strength
ratings were unchanged at D+ for Investkredit and C for Kommunalkredit.
Kommunalkredit was reviewed for a “possible upgrade” at the beginning of 2001.
Staff. The proportion of female employees is 52 % and that of part-time staff – with
contracts covering between 50 % and 90 % of normal working hours – is 38 persons
or 13 %. In terms of normal working hours, this represents a staff of 278, in compari-
son with 258 the year before. The average age of employees in the Investkredit Group
is just under 39.
Volume in EUR m10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
019991997 200019981996
4,2104,750
5,298
6,920
8,701
2,550 2,5922,812
3,343
4,276
Total assets
Risk-weighted assets
Total assets and capital development.
Loans and advancesto customers 57 %
Financial investments 31 %
Other assets 12 %
Debts evidenced bycertificates 59 %
Amounts owed to banks 27 %
Other liabilites 14 %
19
Latest developments. The capital of Kommunalkredit Austria AG was increased at the
beginning of 2001. The related rise in the share held by Dexia PFB will further inten-
sify the international involvement of Kommunalkredit. Shortly after the publication
of the new shareholder structure, the Moody’s rating was reviewed positively. Up-
grading to the AA segment could take place in the first half of 2001.
Market development. The weakening of the international economy, the consequences
of the oil-price increase and the restrictive effects of the Government’s package will
lead to a slowdown in economic growth this year. The real growth rate of GDP will
still be 2.2 % in 2001, and will be approximately the same in 2002. The situation on the
labour market will continue to develop favourably in 2001. With a declining oil price
and dollar exchange rate, the rate of inflation will again fall to 1.7 %. The slowdown
of the world economy in 2001 will have a negative effect on Austrian exports, which
will rise by a real 6%. Furthermore, the competitive advantages derived from the
euro-dollar relationship will no longer apply, so that relative unit wage costs will rise
slightly as compared with those of trading partners (+0.4 %). This will also retard the
expansion of manufacturing output, which can be expected to achieve a real produc-
tion increase of +3.8 % in 2001. Nevertheless, capital investment by industry will
remain high in 2001. Enterprises recently reported a planned volume of some
EUR 6.1 bn, in nominal terms some 10 % more than in 2000. In that context, expansive
plans are chiefly to be found among enterprises in the basic sector and technical process-
ing, while building sub-con-
tractors and producers of
traditional consumer goods
may perceptibly restrict their
capital investment.
Preview. Continuing its busi-
ness strategy, Investkredit
plans additional increases in
results in 2001. Earnings per
share are planned to rise to
over EUR 45, as against EUR
42.3 in the year 2000. This is
to be achieved by further
growth and the improvement
of margins in business with
domestic enterprises. In the
wake of reorganization of the
European capital markets
through the introduction ofHelmut Hinek Sabine Dungl
Outlook for 2001.
20
the euro, Investkredit plans to utilize its securities competence in the field of corpo-
rate bonds and to develop its market position. In the local government and real estate
areas, investments in Central and Eastern Europe are to be continued. Further aims
are to achieve a sustained increase in the return on equity by broadening and deepen-
ing customer relations. An expansion of the existing business segments, coupled with
the maintenance of specialization is expected to contribute to further improvement
of the cost-income ratio to less than 40 % by the year 2004.
Bedrija Ismaili
21
Enterprises.
SEGMENT REPORTING ACCORDING TO IAS.
FINANCING AND AID.
Core service. Demand for long-term financing was high in Austrian industry, against
the background of excellent cyclical development. Our most important concerns as a
Bank for Corporates in the year 2000 were the structuring of enterprise financing in
the M&A area and project financing in the energy sector. Services to the Austrian SME
sector were also important. Family enterprises are an important customer group of
the Bank for Corporates, since their busi-
ness development and innovative power
make important contributions to the
sustained prosperity of Austria as a busi-
ness location. In the structured financ-
ing, the Investkredit Group’s services
range from the provision of equity capi-
tal to borrowings and consultancy serv-
ices related to aid. Interest rate and cur-
rency risk management instruments are
in increasing demand. In line with in-
ternational capital market develop-
ments, interest in capital market prod-
ucts such as private placements and cor-
porate bonds is also growing in Austria.
Our customer service officers work out
individual solutions for all financing
problems, in collaboration with the en-
terprises and experts. They are reliable
advisers in entrepreneurial matters. Con-
tinuity and dependability in customer
relations contributed to our success in
the year 2000, as before. Investkredit
contracted EUR 553 m of financial loans
in 2000 (see table: Financing transac-
tions with enterprises). An important
area in enterprise financing is capital in-
vestment financing. In the year 2000 a
volume of EUR 2.3 bn of investments
was co-financed by Investkredit (see ta-
ble: Financing transactions with enter-Hannah Rieger Claudia Schmied
22
prises). The average amount of loans in 2000 was EUR 2.9 m, which was considerably
higher than the average for 1999 (EUR 1.9 m). Maturity at 10.1 years has on average
risen from 1999 (8.7 years). The trend towards long-term liquidity provision was thus
continued in the reporting year. Against the background of portfolio control by banks,
syndicated financing is growing in importance. Investkredit was much in demand as a
syndicate partner in the year 2000, primarily by Austrian banks. It also played a lead-
ing role in syndicates for major projects.
The following table shows the regional breakdown of cumulative lending business.
Enterprises with their domicile outside Austria account for an aggregate 10 % of fi-
nancing. This share of financing is concentrated in enterprises in the European Union
and in the countries of Central and Eastern Europe. In terms of cumulative regional
financing, Vienna, Lower Austria and Upper Austria are still in the lead.
In 2000, Vienna had the largest share of financing, partly because many enterprises
have their registered domicile in Vienna. Tyrol came second. 56 % of new financing
transactions concluded in the year 2000 was accounted for by industrial enterprises
(1999: 52 %). This shows the importance of Investkredit as a financier for industry. The
Financing transactions with enterprises
Annual 1996 1997 1998 1999 2000 2000 (cumulative from 1957)
Financing (in EUR m) 337 415 308 500 553 8,943
Investments (in EUR m) 1,048 1,135 1,090 1,323 2,296 32,229
Regional breakdown of financing transactions with enterprises, 1957 – 2000
Regions Financingin EUR m Share
Vienna 2,283 26 %
Lower Austria 1,557 17 %
Upper Austria 1,348 15 %
Styria 830 9 %
Tyrol 749 8 %
Salzburg 462 5 %
Carinthia 416 5 %
Vorarlberg 367 4 %
Burgenland 42 1 %
Total – Austria 8,054 90 %
Europe 830 9 %
Rest of world 59 1 %
Total – international business 889 10 %
Grand total 8,943 100 %
23
branches that received the largest shares of financing in the year 2000 were the
papermaking industry, electrical engineering and the petroleum and chemical engi-
neering industries. In the reporting year, business was considerably expanded in the
energy sector. The liberalization of the markets for electricity and gas ushered in di-
versification projects, among other things in the field of renewable energy.
The total volume of financing outstanding in the Investkredit Group in the year 2000,
including guarantees, trust loans and securities financing, grew by 13 % to some EUR
4.6 bn. The following table shows the structure of financing in the enterprise seg-
ment, broken down into domestic loans with and without aid, and international busi-
ness.
Domestic enterprise financing without aid. Loans and advances to domestic custom-
ers without a public aid component rose 5 % in the reporting year to EUR 1.9 bn. In
the domestic sector, special attention is devoted to margins in risk and earnings policy.
The income margins in domestic business improved in the year 2000, but are below
those in foreign business. Financing without aid also includes guarantee loans, which
declined in the reporting year by 4 % to EUR 381 m. Guarantee loans were mostly
related to the ERP Fund and are thus induced by aid-related business.
Financing with aid. The persistent year-long trend towards financing without aid is
clearly revealed in the declining share of aid-related business in the total volume from
23 % in 1999 to 16 % in 2000. The outstanding volume of loans with aid fell by 21 %
to EUR 749 m. This distinct decline was caused by extraordinary premature public-
sector repayments totalling EUR 160 m. The category of aid-related financing includes
ERP trust loans amounting to EUR 423 m. That shows the position of Investkredit as an
ERP Trust Bank. Disbursements in aid-related lending amounted to EUR 70 m in the
year 2000.
Aid management. Aid management from application to final settlement is a special
task of the Bank. The aim is to reduce enterprises’ financing costs by making use of
interest support, low-interest loans, grants, EU co-financing and guarantees by the
Domestic, without aid Domestic, with aid International business Total
1) Loans and advances to customers, trust loans and provision for guarantees2) Bonds and other fixed-income securities of other non-bank issuers
Financing in the enterprise segment
in EUR m2000 1999 Chan- 2000 1999 Chan- 2000 1999 Chan- 2000 1999 Chan-
ge ge ge ge
Loans1) 1,745 1,680 +4 % 749 950 -21 % 932 755 +24 % 3,426 3,385 +1 %
Securitiesfinancing 2) 196 174 +13 % - - 952 501 +90 % 1,148 676 +70 %
Total finan-cing 1,941 1,854 +5 % 749 950 -21 % 1,884 1,256 +50 % 4,574 4,061 +13 %
24
Federal, Provincial and local authorities. With the advent of the new Structural Fund
period 2000-2006, procedures and European rules for aid to enterprises have funda-
mentally changed. In the reporting year, the relevant objective programmes for EU
co-financing, except for the Objective 1 programme for Burgenland, had not yet been
approved by the European Commission. Application could therefore not yet be made,
so that it was not possible to apply for EU co-financing funds for new Objective 2
projects. The “Handbuch EU-konformer Förderungen” (Handbook of EU-conforming
aid measures), Hannah Rieger and Claudia Schmied, Wirtschaftsverlag Ueberreuter,
5th edition, Vienna, 2000) is a concise presentation of aid regulations. The “EU-
Förderdatenbank” and “EU-konform interaktiv” online services (www.investkredit.at)
support the Bank’s counselling in aid questions. There is a perceptible trend towards
direct grants in Austrian aid instruments. It is to be expected that decisions on aid
with regard to co-financing will shift noticeably towards the Provincial level. Domes-
tic partners in the field of aid are the ERP Fund, the BÜRGES-Förderungsbank, the
Austrian Industrial Research Fund (FFF), the Financing Guarantee Company (FGG), and
Bedrija Ismaili Hans-Michael Schania Johannes Wundsam
25
the aid institutions at Provincial level. Under the Environmental Aid Act,
Kommunalkredit is responsible for Federal environmental aid schemes. Applications
under the Austrian export financing and guarantee system are processed by the
Oesterreichische Kontrollbank AG.
European aid. At European level, cooperation with the European Investment Bank
(EIB), Luxembourg, was continued in the year in the context of the global loan. This
loan covers investments by SMEs as well as environmental protection and energy in-
vestments and is awarded either as an EIB bonus loan or – through close cooperation
with the customer banks of the enterprises – in the context of an EIB Europe loan.
Under that scheme, the partner banks provide guarantees to Investkredit, which makes
the funds available. Investkredit operates as a financial intermediary for the Euro-
pean Commission’s Joint European Venture Initiative (JEV). In the summer of 2000, a
loan agreement for EUR 150 m to refinance investment projects of medium-sized
enterprises in Austria, Slovenia, Hungary, the Slovakian Republic and the Czech Re-
public was concluded with the Kreditanstalt für Wiederaufbau (KfW), Frankfurt – the
largest aid bank in Germany. Investkredit’s counselling subsidiary EuroTech Manage-
ment provides Austrian enterprises with access to EU research and technology promo-
tion programmes, particularly under the EU Framework V Programme. A special Bank
technical team helps enterprises in the evaluation and submission of projects.
International business. As before, the focus of international business in the year un-
der review lay in the area of asset backed securities (ABS). The worldwide issue of this
type of security reached a volume of about USD 370 bn in the year 2000 and European
transactions had a 20 % share, a perceptible increase over the year before. In the
expansion of its ABS portfolio, the Bank concentrated on low-risk and high-rating
tranches. For margin reasons, investment was chiefly made in transactions on the US
market. Overall, the quality of the ABS portfolio was improved over 1999 in terms of
the average weighted rating factor. To control return in international risk business,
transactions with a higher risk profile were concluded in the area of internationally
syndicated loans, in addition to the ABS portfolio – though at a far lower level. The
risk/gains profile in international risk business also improved in the past financial year
with better overall quality owing to repayments but also to positive rating migra-
tions.
Leasing. In the leasing area, movable and real property was held with an aggregate
financing volume of some EUR 74 m. The lessees are Investkredit corporate custom-
ers. In the year 2000, there was a decline in volume and the Investkredit Group con-
centrated on servicing existing projects.
26
CORPORATE FINANCE, PRIVATE EQUITY AND COUNSELLING.
Corporate finance. The corporate finance field continued to develop dynamically in
the year. The growing demand for corporate finance services reflects a change in the
financing culture that is now also increasingly taking hold among Austrian enter-
prises. The Investkredit Group has stimulated the proactive shaping of this change by
means of new structured financing instruments. In the corporate finance field, the
Group now has a comprehensive range of services for enterprises throughout their
lives, from the early phases to pre-IPO financing. Thereby, the Bank for Corporates can
provide instruments suited to all financing situations. The enterprise finance field is
served by Investkredit Bank AG itself and by the subsidiaries INVEST EQUITY, Invest
Mezzanin and Europa Consult.
INVEST EQUITY. INVEST EQUITY Beteiligungs-AG expanded and strengthened its position
in the Austrian private equity and venture capital market. Cooperation with the found-
ing shareholder, Investkredit, the shareholder bank EIB and with shareholders from
the venture capital industry, namely, Parnib Holding BV and Financière Natexis Inter-
national S.A., strengthened its position. Companies in the INVEST EQUITY portfolio were
further developed both in the technology area and in the transaction-oriented sec-
tors of established production enterprises. In December 1999, CyberTron Telekom AG,
Vienna, was the first Austrian telecom enterprise to be listed on the Vienna Stock
Exchange; the second stock market venture from the INVEST EQUITY portfolio,
update.software AG, Vienna, also distributed dividends to INVEST EQUITY. New capital
investments made in 2000 in the technology companies TIANI MEDGRAPH GmbH, Brunn
am Gebirge, Viviance new media AG, St. Gallen and INFONIQA Informationstechnik
GmbH, Wels, strengthened the involvement of INVEST EQUITY in the B2B segment of
“Internet-enabling technology”. The portfolio enterprise Lomographische AG, Vienna,
is active both in the lifestyle branded goods area and the B2C market. These enter-
prises have the qualifications for necessary organic growth as well as for the strategic
development of their position in their respective market segments by means of acqui-
sitions. They can therefore be regarded as potential stock market candidates. Chemson
Polymer-Additive AG, Arnoldstein, was spun off from the Metallgesellschaft Group,
Frankfurt, and was acquired in 2000 by the management jointly with Leman Capital
and INVEST EQUITY. Chemson is the second-largest producer of additives for the PVC
industry world-wide; it also produces additives for the glass industry. At the end of the
year, INVEST EQUITY disposed of its stake in the Salzburg medical technology enter-
prise Anthos Labtec Instruments GmbH. INVEST EQUITY early stage Beteiligungs-AG
also established itself on the market in the year as an early-phase technology investor.
Invest Mezzanin. At the end of 1999, Investkredit established an EUR 40 m mezzanine
capital fund (Invest Mezzanin) in cooperation with FGG, as the first of its kind in Aus-
tria. This innovative financing instrument offers Austrian enterprises access to a form
of financing that has proved itself for many years internationally. It is chiefly regarded
27
as subordinated financing and has
the function of equity mezzanine
capital. Mezzanine capital has a
higher risk than loans but is serv-
iced before equity and thus occu-
pies an intermediate position be-
tween equity and borrowing in
the financing structure. Invest
Mezzanin had a very dynamic start
to the year. An autonomous risk
financing profile was created for
mezzanine capital, and incentives
were created for new and exist-
ing Investkredit customers in market development. In 2000, Invest Mezzanin analysed
and evaluated over 200 projects. Four investments were carried out in Austria in 2000,
for both “old-” and “new-economy” enterprises. With the establishment of Invest
Mezzanine Capital Management GmbH in December 2000, Investkredit laid the foun-
dation for the management of other funds.
Europa Consult. The growing demand among Austrian enterprises for corporate fi-
nance services was also felt by Europa Consult. Europa Consult – a wholly owned sub-
sidiary of Investkredit – concentrates on advisory services to medium-sized enterprises.
The range of services available for consulting on mergers and acquisitions (M&A) was
successfully expanded in the year. Against the background of a rapidly growing M&A
market, the combination of innovative financing instruments and a comprehensive
advisory service is becoming more and more important. Europa Consult assists its cus-
tomers in assembling structured financing packages and also in the acquisition and
disposal of enterprises, management buy-outs (MBOs), management buy-ins (MBIs)
and cooperation arrangements. Consultancy services in 2000 focused specially on the
solution of problems of succession in Austrian family enterprises. Europa Consult also
acted as an adviser on several sales assignments related to the privatization of public-
sector enterprises.
EuroTech Management. This Investkredit consultancy subsidiary, founded in 1996, has
two main fields of activity: EU projects, and technical consultancy on R&D projects.
EuroTech Management had a gratifying increase in orders in the year, 34 Austrian and
EU projects for Austrian enterprises and ministries being successfully processed. In
that context, EuroTech Management concentrates on the preparation, submission and
management of aid projects in research and technology (EU Framework V Programme)
and in EU environmental technology programmes (e.g. the ASIA Urbs programme).
EuroTech Management submitted project proposals to the European Commission jointly
with Austrian and international partners in large and small-scale industry, in research
centres and with the Municipality of Vienna. Through close personal cooperation with
Heike Jandl Oliver Grabherr
28
Investkredit technical experts, EuroTech advises enterprises on access to Austrian aid
programmes focusing on environmental protection and production technology. The
range of services on offer comprises the analysis, structuring and submission of projects
and the coordination of aid when several institutions are involved. In addition to aid
consultancy, EuroTech Management provides enterprises with technological, product
and market analysis and also with ongoing technical project controlling in implement-
ing investment projects and in the assessment of real estate, buildings and plant – if
necessary with the assistance of sworn court experts.
FINANCIAL ASSET MANAGEMENT.
Investkredit investment funds. Financial asset management services in the year con-
tinued to focus on the Investkredit investment funds. These are specially tailored to
the asset management needs of enterprises and institutional investors. With their
very conservative approach (dynamic asset allocation), the Investkredit floor funds
Julius Wallner Christian Doppler Thomas Heinisch
29
(i2F, i2-bond and i2-dollar), managed by UBS AG, are particularly suitable for enter-
prises that have high risk-awareness. By means of its prudential funds (i2V-
Vorsorgefonds, i2V-Euro, i2V-Select and i2V-Protect), the Bank takes into account the
expanded possibilities of corporate provision, among other things for severance
payment and pension commitments. Since October 2000, the Bank Vontobel Öster-
reich AG has taken over from UBS AG as fund manager for i2V-Protect. In the first half
of 2000, the Mercury Europäischer High Yield Anleihefonds – as the first foreign fund
– was included in the Investkredit marketing programme. This fund invests in corpo-
rate bonds from West European countries and is also suitable for corporate provident
schemes.
Performance and development by volume. In the year 2000, the value development
of the funds could not escape the effect of trends on the international securities mar-
kets. While the floor funds were all able to achieve positive returns, thanks to their
hedging approach, some provident funds with share components (i2V-Vorsorgefonds)
ended the year on a negative note. Therefore, the dynamic growth in the funds area
of recent past years could not be continued. Since the Investkredit investment funds
have a mainly short-term orientation, repurchasing of fund holdings exceeded sales.
The two funds chiefly affected were i2F and i2-bond. The total volume of Investkredit
investment funds as at year-end 2000 was EUR 230 m – see chart. Despite this decline
in volume, current income from the financial assets management segment topped
EUR 1.3 m, which was higher than in the year before. That was due to a natural delay-
ing effect in the disbursement of commissions. Accordingly, a decline is to be expected
in the current year.
350
300
250
200
150
100
50
0
12/96
EUR m
06/97 12/97 06/98 12/98 06/99 12/99 06/00 12/00
i2V-Select
i2V-Protect
i2V-Euro
i2V-Vorsorgefonds
i2-dollar
i2-bond
i2F
Investkredit investment funds: development by volume
30
Deposit business. The fi-
nancial asset management
requirements of corporate
customers were chiefly met
in the year 2000 by the use
of Investkredit’s and
Kommunalkredit’s own se-
curities holdings, own bond
issues and by Investkredit
investment funds. Deposit
business rose further in the
year to EUR 3.5 bn (assets
under management).
The InvestDirekt Internet
p r o g r a m m e
(www.investdirekt.at) ,
which was established in
2000, is already being used
by every fourth deposit cus-
tomer. This programme
makes it possible to create
charts presenting price
changes for individual secu-
rities holdings. The charts
also show the development of selected indices, for instance, ATX. With InvestDirekt,
users can individually create the charts that best meet their information needs.
Time deposits. Deposits by corporate customers are accepted via Investkredit Interna-
tional Bank p.l.c., Malta, which was founded in 1996 with an onshore banking licence
from the Maltese central bank and is a wholly owned Investkredit subsidiary. The
volume of time deposits by Austrian corporate customers shot up 23 % from the year
before to EUR 96 m. The total assets of Investkredit International were just under EUR
320 m.
TREASURY.
Refinancing. Bond issues for the refinancing of new business by enterprises in 2000
reached a volume of EUR 921 m. Investkredit launched a total of six issues during the
year. The largest transactions were three EUR floating rate notes (issue volumes: EUR
100 m, EUR 250 m and EUR 300 m). Prominent among the USD issues was the variable
basis USD 200 m transaction. Private placements were also launched to supplement
activity in the USD area. The facility for strengthening the capital resources basis was
Gernot Rux Josef Bernhard
31
used by means of a 20-year subordinated EUR 5 m issue. All new bond issues are listed
on European bourses. In the unsecuritized area, funds were raised chiefly by means of
note loans.
Securities management and derivatives. In the year 2000, securities management fo-
cused mainly on the euro capital market and on the United States economic area.
Trading activities concentrated on liquid bond markets. In addition, the Bank engaged
in trading on selected West European share markets. Even under difficult market con-
ditions, it was possible to achieve positive contributions to results in the year. Demand
by corporate customers for derivative instruments strengthened. The use of treasury
services thus makes a lasting contribution to optimizing the financial structure of en-
terprises. In the foreign exchange field, Investkredit has created a new Internet serv-
ice, InvestDirektFX (www.investdirektfx.at), an online currency trading system that has
been available since the spring of 2001. Its most important features are the availability
of tradable real-time currency cash and futures rates on PC and the possibility of hedg-
ing against currency risks by mouse-click. Derivatives are used in the Investkredit Group
for the fine tuning of interest and currency risk management. Trading with derivatives
also made important contributions to revenue.
32
The business approach. Kommunalkredit Austria AG is the investment bank for local
authorities. It specializes in financing infrastructural investments by public-sector and
similar institutions (local authorities, cities, associations, provinces, regions, States, etc.),
both in Austria and internationally. In the domestic market, 60 % of Austrian local
authorities are Kommunalkredit customers, while the chief international customers
are public-sector entities in Euroland, the other EU States, Switzerland and East Euro-
pean countries carefully selected in the light of risk assessment. A further important
field of business is management on a trust basis (aid processing and consulting serv-
ices for public-sector customers). In the framework of its internationalization strat-
egy, Kommunalkredit seeks investments in Central and East European financial serv-
ices providers that also have a communal/public-sector customer structure. The larg-
est investment so far – in the Slovakian bank Prvá Komunálna Banka, PKB – was car-
ried out in the year 2000.
Financing. 1,364 new loan agreements with an aggregate volume of EUR 893.4 m
were concluded in 2000. The related project costs (investment costs) amounted to
EUR 1.4 bn. Despite a difficult initial situation, Kommunalkredit succeeded in substan-
tially increasing its market share in the financing of local government infrastructural
projects in Austria. That became possible through successful bidding for Environmen-
tal and Water Management Fund loans. In the year, the Austrian Government under-
took its fifth sale of Fund loans (1,461 loans to a nominal amount of EUR 1.3 bn).
Kommunalkredit was awarded 844 loans. Development in the international financing
area is gratifying: overall in the year 2000, 145 projects with a volume of EUR 261.9 m
were financed (just under one-third of the entire volume of loans for the year). The
group of customers comprises local authorities, cities, regions and also States (Euroland,
EU States, East European States selected in the light of risk assessment). Switzerland,
with a share of some 80 % of new international business, became Kommunalkredit’s
second “home market”. In addition, Kommunalkredit financed projects in Greece,
Iceland, Lithuania, Norway, Poland, Slovakia, Spain and Cyprus. The following table
shows the dynamic development of local government financing business:
2000 1999 Chan- 2000 1999 Chan- 2000 1999 Chan-ge ge ge
Loans1) 2,140 1,529 +40 % 416 134 +211 % 2,557 1,663 +54 %
Securitiesfinancing2) 48 42 +13 % 104 56 +86 % 151 98 +55 %
Totalfinancing 2,188 1,571 +39 % 520 190 +174 % 2,708 1,760 +54 %
Austria Abroad Total
1) Loans and advances to customers, trust loans and provision for guarantees2) Bonds and other fixed-income securities of other non-bank issuers
in EUR m
Financing in the local government segment
Local government.
33
Management of Trust Funds. In the year Kommunalkredit carried out projects for the
following institutions: the Federal Ministry of Agriculture and Forestry, Environment
and Water Management, the Province of Upper Austria, the Federal Ministry of For-
eign Affairs, and Oesterreichische Kontrollbank AG, as well as for international part-
ners (such as the World Bank, the European Commission, or the European Bank for
Reconstruction and Development). 2000 was a record year for the management of
Federal and Provincial aid. More than 3,000 applications were filed with
Kommunalkredit. Concrete awards were made for 2,624 projects.
Equity investments. For the purpose of joint strategic action in Central European coun-
tries, Dexia and Kommunalkredit established Dexia Kommunalkredit Holding in the
year 2000. The ownership ratio is 40 % Kommunalkredit and 60 % Dexia. Through this
new holding company, Dexia and Kommunalkredit acquired 78.4 % of the Slovakian
Prvá Komunálna Banka (PKB) – registered office in Zilina – in May 2000. With a staff of
614 and 47 branch offices, PKB has more than 70 % of the Slovakian market. Since
Dexia and Kommunalkredit joined PKB, its strategic approach has been aligned with
that of the parent enterprises and initial action to optimize its organization has been
taken.
Treasury. Kommunalkredit raised some EUR 1.1 bn on the capital market in 2000 for
the financing of local government environmental projects. Twelve issues were launched
in all, and were documented under the debt issuance programme established in 1998.
Six of the twelve were public-sector syndicated environmental bond issues and the
remainder were private placements. In December 2000, the volume of this programme
was increased from EUR 2 bn to EUR 3 bn.
34
Business approach. The Investkredit Group’s activities with regard to commercial real-
estate are concentrated in Europolis Invest, which has specialized in three fields:
real-estate investments, real-estate project development and real-estate portfolio
management. It is company policy in Europolis Invest to focus on office properties,
and the aims are long-term safeguarding of revenue and the expansion of volume.
Accordingly, the main factors in project selection are the quality of buildings, the
credit rating of tenants and the long-term contractual safeguarding of rentals. A nu-
cleus of high-yield properties in Vienna was the starting base for the first activities in
Central Europe. The success achieved since 1997 has now led to concentration on mar-
kets in Central and Eastern Europe, in order to benefit from the extremely advanta-
geous relationship between revenue and risk in those markets. The continuous rev-
enue achievable in this area is 3-4 % higher than in Austria, legal and economic con-
ditions are stable and there are concrete prospects of entry into the EU. Accordingly,
current revenue should be accompanied by an increase in value, which will be antici-
pated by the markets before formal entry takes place. The real-estate segment there-
fore meaningfully supplements the financing business of Investkredit Bank AG.
Real-estate project development. Europolis Invest has so far carried out three real-
estate project developments in Vienna. After the completion of the Akademiehof
Karlsplatz in Vienna, activities were switched in 1997 towards former Eastern-bloc
States in Central and Eastern Europe. The decisive factors in this policy shift were not
only the positive economic developments in some of these countries, with an attend-
ant increase in the interest shown by many international enterprises, but also the
stable legal environment and the availability of first-class advisers. The first target
markets defined were Budapest, Prague and Warsaw. In Prague, Europolis developed
a project with a town-planning component, situated directly on the bank of the Vltava
(www.rivercity.cz). The first project stage of River City Prague will comprise two office
buildings, a hotel and an apartment hotel. The internationally renowned Kohn Petersen
Fox group of architects was commissioned to design the project complex. Planning
and construction of the advanced energy installations are in the hands of a team of
2000 1999 Chan- 2000 1999 Chan- 2000 1999 Chan-ge ge ge
Loans1) 9 13 -34 % 5 19 -73 % 14 32 -57 %
Securitiesfinancing2) 42 8 +417 % - - 42 8 +417 %
Buildings 55 35 +58 % 45 - 100 35 +187 %
Totalfinancing 105 56 +88 % 50 19 +163 % 155 75 +107 %
Austria Abroad Total
1) Loans and advances to customers, trust loans and provision for guarantees2) Bonds and other fixed-income securities of other non-bank issuers
in EUR m
Real estate.
Financing in the real-estate segment
35
leading enterprises in this highly specialized field. In the reporting period, Investkredit
took over all the project companies, in agreement with the previous project partner,
in order to safeguard the entire potential revenue for the Group. Building permission
has already been granted for the first office building (“Danube House”), which will
have a gross floor area of some 30,000 m2. Building work commenced at the turn of
the year. A further landmark project is being started in Budapest. The project is for a
high-rise office building with a floor area of some 30,000 m2 meeting international
technical and architectural standards. The project is being carried out in cooperation
with a developer with years of experience in this market.
Real-estate investments. Investkredit has founded a company, Europolis CE Holding
GmbH with the task of assembling a high-quality real-estate portfolio in Central and
Eastern Europe. The aim is to invest in first-class fully rented properties in top loca-
tions in Warsaw, Prague and Budapest, with amenities that meet Western investment
standards. Four investments have already been carried out, to a volume of some EUR
175 m, for two properties in Budapest (City Gate and Info-Park Research Center), one
in Prague (Hadovka Office Park), and one in Warsaw (Warsaw Towers). Europolis CE
thus has some 70,000 m2 of office space available for rental. A factor of decisive impor-
tance in these dynamic markets is to have a tenant structure that ensures stable long-
term revenue. The long-term value generated through this strategy should give a
distinct boost to growth through the entry of these countries into the European Un-
ion. The projects have already been almost entirely let, enterprises such as Nokia,
Siemens, Sun Microsystems, Ernst & Young, IBM and HP being among the largest ten-
ants. It is our constant concern to sustain and improve services to all our tenants. The
investment focus of Europolis CE has been expanded both regionally and substantively
in a second phase. Investment opportunities are being examined not only in office
properties but also in industrial and logistic parks. Assuming appropriate return and
suitable properties, commitments are possible in Bratislava, Polish regional centres
and in the capitals of the Baltic States.
Real-estate portfolio management. The portfolio so far assembled by Europolis CE is
one of the largest in the region. A locally staffed management company was set up in
the context of expanding activities in Prague.
36
FINANCIAL STATEMENTS OF THEINVESTKREDIT GROUP FOR 2000.
Balance sheet.
Assets Notes 31.12.2000 31.12.1999 Changein EUR 1,000
Cash and balances with central banks 18 4,780 69,367 -93 %
Loans and advances to banks 19 661,866 934,395 -29 %
Loans and advances to customers 20 4,950,232 3,869,844 28 %
Risk provisions for loans and advances 7, 22 -64,310 -71,977 -11 %
Trading assets 8, 23 187,169 118,578 58 %
Financial investments 24 2,689,824 1,898,629 42 %
Property and equipment 25 214,839 66,964 221 %
Other assets 27 59,007 34,602 71 %
Total assets 8,703,408 6,920,402 26 %
Liabilities 31.12.2000 31.12.1999 Changein EUR 1,000
Amounts owed to banks 28 2,357,201 2,419,734 -3 %
Amounts owed to customers 29 328,155 397,597 -17 %
Debts evidenced by certificates 30 5,139,159 3,477,785 48 %
Provisions 31 40,675 43,614 -11 %
Other liabilities 33 324,429 112,971 187 %
Subordinated capital 34 197,087 190,245 4 %
Minority interests 22,532 22,785 -1 %
Equity 35 294,168 255,671 15 %
Total liabilities and equity 8,703,408 6,920,402 26 %
37
Income statement.
Income statement Notes 31.12.2000 31.12.1999 Changein EUR 1,000
Interest and similar income 835,221 500,592 67 %
Interest and similar expenses -758,773 -438,501 73 %
Net interest income 36 76,448 62,091 23 %
Fee and commission income 10,369 9,193 13 %Fee and commission expenses -4,511 -3,523 28 %
Net fee and commission income 37 5,857 5,670 3 %
Net credit risk result 38 -6,586 -7,401 -11 %
Trading result 39 2,968 -3,699 -180 %
Net financial investments result 40 -10,861 14,974 -173 %
General administrative expenses 41 -36,227 -34,605 5 %
Other operating results 42 770 -12,779 -106 %
Extraordinary result 0 0 -
Profit for the year before tax 32,369 24,251 33 %
Tax on income 43 -2,193 -4,758 -54 %
Profit for the year after tax 30,176 19,492 55 %
Minority interests -3,415 -2,191 56 %
Net profit for the year 26,760 17,301 55 %
38
Statement of changes in equity.
Changein EUR 1,000 31.12.2000 31.12.1999 2000
Subscribed capital 46,000 46,000 0
Capital reserve 61,047 61,047 0
Profit reserves in the strict sense 157,038 128,231 28,807
Hedging reserve 8,842 8,611 231
Net profit for the year 26,760 17,301 9,459
Dividend paid by Investkredit Bank AG -5,520 -5,520 0
Aggregate 294,168 255,671 38,498
39
in EUR 1,000 2000 1999
Profit for the year (before minority interests) 30,176 19,492
Non-cash items included in profit for the year, and adjustments to reconcileprofit for the year to cash flows from operating activities
Depreciation/revaluation gains on property and equipment and financial investments 2,002 429 Transfer to/release of provisions and risk provisions for loans and advances -10,606 -3,030
Profit/loss from the disposal/valuation of financial assets, property and equipment 10,861 -14,974
Other adjustments (net) -72,977 -37,638
Changes in assets and liabilities from operating activities after adjustments for non-cash components
Loans and advances to banks 272,529 -134,644 Loans and advances to customers -1,080,389 -345,627 Trading portfolio -68,592 48,694 Currents assets -707,079 -141,576 Other assets from operating activities -24,405 3,079 Amounts owed to banks -62,533 205,658 Amounts owed to customers -69,441 48,625 Debts evidenced by certificates 1,661,373 1,113,438 Other liabilities from operating activities 211,458 -22,459
Interest and dividends received 835,221 500,592 Interest paid -758,773 -438,501 Extraordinary proceeds 0 0 Extraordinary payments 0 0 Income tax payments -2,493 -3,169
Cash flow from operating activities 166,333 798,391
Proceeds from the disposal of Financial investments 335,844 132,591 Tangible and intangible fixed assets 7,873 496
Payments for the acquisition of Financial investments -411,316 -892,836 Tangible and intangible fixed assets -162,806 -1,593
Currency translation adjustments -1,586 -2,283
Cash flow from investing activities -231,991 -763,625
Proceeds from capital increases 0 0 Dividend payments -5,520 -5,520 Changes in resources from other financing activities 6,843 29,967
Cash flow from financing activities 1,323 24,447
Cash holdings at the end of the previous period 69,367 6,150
Cash flow from operating activities 166,333 798,391Cash flow from investing activities -231,991 -763,625Cash flow from financing activities 1,323 24,447Effects of Exchange rate fluctuations 0 0 Changes in the group of consolidated enterprises -252 4,003
Cash holdings at the end of the period 4,780 69,367
Cash flow statement.
40
ACCOUNTING PRINCIPLES.
(1) General principles. The consolidated financial statements of Investkredit Bank AG
(the Investkredit Group) were prepared on the basis of the International Accounting
Standards (IAS) adopted and published by the International Accounting Standards
Committee (IASC). The statements qualify under the relevant legislation for exemption
from the requirement to present a Group Financial Statement according to Austrian
commercial law. In its accounting, the Investkredit Group is guided in principle by all
interpretations adopted and published as at the balance sheet date by the Standing
Interpretations Committee (SIC), even though they may not enter into force until later.
The principles of IAS 39 (Financial Instruments: Recognition and Measurement) and
IAS 40 (Investment Property) are therefore already being applied. Accounts are
presented according to uniform Group methods. The financial statements of the
Investkredit Group are based on the following relevant International Accounting
Standards:
IAS 1 Presentation of Financial Statements
IAS 4 Depreciation Accounting
IAS 7 Cash flow Statements
IAS 8 Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
IAS 10 Events After the Balance Sheet Date
IAS 12 Income Taxes
IAS 14 Segment Reporting
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 22 Business Combinations
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries
IAS 28 Accounting for Investments in Associates
IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions
IAS 32 Financial Instruments: Disclosures and Presentation
IAS 33 Earnings per Share
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
Notes to the financial statements of the Investkredit Group.
41
(2) Consolidated enterprises. A list of all enterprises included in the Financial State-
ments of the Investkredit Group is presented under point 66 (Disclosure of equity
investments). The group of fully consolidated enterprises includes not only the parent
company Investkredit Bank AG (”Investkredit”) but also 21 Austrian and foreign
enterprises, the most important of which are Kommunalkredit Austria AG, Vienna
(”Kommunalkredit”) and Investkredit International Bank p.l.c., Sliema/Malta. In the
financial year, the following companies were included for the first time:
Acquisition cost in EUR m Investment
Europolis Hadovka s.r.o., Prague 17,9 100 %
Europolis Holding Sp. z. o.o., Warsaw 25,2 100 %
Warsaw Tower s.p.z.o.o., Warsaw 27,2 100 %
Infopark Research Center I Kft, Budapest 11,0 100 %
RCP Holding GmbH, Vienna 12,4 100 %
RCP Beteiligungsverwaltungs-Gesellschaft mbH, Vienna 7,6 100 %
In the financial year, one company, i2B Holding Aktiengesellschaft, Vienna, was no
longer included among the fully consolidated enterprises. 29 enterprises whose overall
influence on the financial position of the Group is of minor significance were not
consolidated. The total assets of these enterprises together amount to less than 2.0 %
of the Group’s total assets. In the Investkredit Group’s financial statements, 10 associates
were accounted for under the equity method. In the financial year, the following
companies were included for the first time:
Dexia Kommunalkredit Holding Gesellschaft mbH, Vienna
Prvá Komunálna Banka a.s., Zilina, Slovak Republic
Nine investments in associates are accounted for at cost because of their overall minor
significance.
(3) Consolidation principles. The consolidation action taken in the context of preparing
the Group Financial Statements includes capital consolidation, consolidation under
the equity method, debt consolidation, the consolidation of expenses and income
and the elimination of intra-Group results. The fully consolidated enterprises present
their annual financial statements uniformly as of 31 December. Capital consolidation
is carried out at cost. In that process, the acquisition costs for investments in the Group
company are offset against the proportionate equity capital of the subsidiary at the
time of acquisition. Differences on the assets side arising as from 1 January 1995 – if
significant – are added to the assets of the subsidiary. Any remaining amounts on the
assets side are capitalized as goodwill and amortized over a period of 15 years. They
are reported as intangible assets under other assets. Differences arising up to 31
December 1994 are offset against retained earnings. Intra-Group receivables, liabilities,
expenses and income as well as intra-Group profits are eliminated, unless they are of
42
minor significance. Associates are accounted for under the equity method and are
reported under financial investments as investments in enterprises accounted for under
the equity method. Local financial statements are used for valuation under the equity
method. Alignment with the uniform Group valuation methods is undertaken only in
the event of significant measurement differences in leasing business, but not otherwise.
The annual results of associates are taken from the latest annual financial statements
available, allowing for current forecasting, so that changes in equity are reflected in
the same year. Dividends distributed are cancelled. Annual profits are shown in the
income statement under Other investment earnings.
(4) Currency translation. In the case of the euro-currencies, the exchange rates
correspond to those published by the European Commission on 31 December 1998.
Assets and liabilities in other currencies (third currencies) are translated at the rate
recommended by the European Central Bank as at the balance sheet date.
(5) Loans and advances. Loans and advances to banks and customers are entered at
nominal value or at cost. Individual valuation adjustments or provisions are made to
take into account recognizable credit and sovereign risks. Valuation adjustments are
not offset against the corresponding loans and advances but are shown openly in the
balance sheet. Premiums and discounts are distributed over the maturity period of the
debt and are entered under Other assets or Other liabilities.
(6) Leasing business. Fixed assets serving for leasing purposes are classified as Finance
leases and are entered in the consolidated balance sheet in accordance with IAS 17
under the individual categories of receivables and at the present value of the discounted
leasing claims.
(7) Risk provisions. Risk provisions cover impairment losses and reserves for all
recognizable credit and sovereign risks. In its credit risk management, Investkredit
uses a financial standing assessment system and an internal rating procedure. Every
borrower is thus assigned an external or internal rating. Internal ratings correspond
to the standard scale of Standard & Poor’s and are made in several stages. The business
development of all enterprises is continuously analysed and the credit risk is regularly
evaluated. That makes it possible to classify assets in the banking book and off-balance-
sheet business fully according to criteria of soundness and collateralization. In the
case of problem commitments, intensive services are provided by a special management
team.
(8) Trading assets. Securities, derivative financial instruments and other items of the
trading portfolio are entered at the fair value on the balance sheet date, using IAS 39.
In the case of listed products, the stock exchange price is taken as the fair value. Unlisted
products are measured by the present value method (present value of discounted
future payment flows) or by the use of suitable option price models (value resulting
43
from the application of option price formulae according to the Garman-Kohlhagen,
Black-Scholes or the Hull-White models). All results under these items are presented in
the Income statement under the Net trading result. To measure the market risk, value
at risk (VAR) is calculated according to a model based on a confidence level of 99 %
and a holding period of 1 day. There are VAR limits for the interest rate risk, the share
price risk and the currency risk. The standard procedure is applied for the regulatory
reporting system. Interest rate risks arising outside of trading activities are analysed
continuously, using the value at risk of the banking book and interest simulations.
(9) Financial investments. All fixed-interest and variable-yield securities, investments
in unconsolidated subsidiaries and associates and other investments not attributed to
the trading book are entered in this item. The items are either ”held to maturity” or
are ”available for sale”.
1. Held to maturity: Fixed-interest securities are valued at cost. If the cost differs
from the repayment amount, the difference is written back, affecting current
results proportionately over time. If the credit standing of the security debtor
indicates a permanent impairment, the item is written off as necessary. Effects
on current results are shown under the Net financial investments result. Vari-
able-yield securities are valued at the fair price. Significant associates are
accounted for under the equity method. Investments in unconsolidated
subsidiaries as well as other investments are valued at cost. In the event of
permanent impairment, the relevant item is written down.
2. Available for sale: Securities that are attributed neither to fixed assets nor to
the trading portfolio have the function of a liquidity reserve (available for
sale) and are entered at the fair value on the balance sheet date. They are
recorded in the balance sheet under financial investments, and effects on results
are shown in the Net financial investments result.
(10) Derivatives. The fair value of derivatives is calculated according to recognized
methods in every case. Derivatives are treated differently according to their category,
applying IAS 39:
1. Derivatives in the trading portfolio are recognized as trading assets or trading
liabilities. If they show positive fair values, including deferred interest (dirty
price), they are recognized as trading assets. Trading liabilities include negati-
ve market values. Trading assets are not offset against trading liabilities
(netting). The change in the dirty price is shown as affecting results under the
Net trading result.
2. Derivatives intended to protect the fair value of banking book items (fair value
hedges) are also shown at their fair value (dirty price) under Financial
investments or Other liabilities. Changes in the fair value of the items to be
protected are entered with an effect on the current results in the Net financial
investments result in the same way as the derivatives in this category.
3. Derivatives intended to protect payment flows arising out of balance sheet
44
items (cash flow hedges) are also shown under Financial investments or Other
assets at their banking book fair value (dirty price). The change in fair value is,
however, entered against the valuation reserve without effect on the results.
4. Other derivatives are intended to protect against banking book market risks,
but it is not possible to show a microhedge because hedging is conducted in
relation with a whole portfolio (macrohedge). In application of IAS 39, the
fair values in this category are recorded in the balance sheet, namely, dirty
prices under Financial investments and negative dirty prices under Other
liabilities. The change in the value of these derivatives on a clean-price basis is
presented in the Income statement under Other operating results. Since the
Bank uses derivatives to control the interest rate risk at a global level, but
since the fair value changes of items protected at a macro level according to
IAS 39 cannot be shown with an effect on the results, this part of the result is
of only limited informative value.
(11) Goodwill. Positive differences arising from capital and equity consolidation taking
place after 1995 are entered as goodwill under Other assets and are written off over
15 years. Such differences arising up to 1994 were offset against Profit reserves.
Depreciation of goodwill is shown under Other operating results. Negative differences
arising out of capital and equity consolidation were attributed to Profit reserves, if
the negative effects on results expected at the time of acquisition had already occurred
on the date of the first presentation of IAS consolidated financial statements. Because
of their minor significance, all other negative differences were accounted for under
Profit reserves, with a neutral effect on results.
(12) Property and equipment. Property and equipment comprises land and buildings
used by the Bank and by outside parties as well as office furniture and equipment.
Land and buildings used by the Bank serve mainly for the Bank’s own operations. The
item of land and buildings used by outside parties includes those that function as
investments and are let to outside parties.
1. Land and buildings used by the Bank as well as office furniture and equipment
are entered at acquisition cost less planned straight-line depreciation. The
assumed projected periods of use are:
Buildings 50 years
Office furniture and equipment 2.5 to 10 years
IT investments 2.5 to 5 years
2. Minor value assets up to an individual acquisition cost of EUR 363.36 are written
off in the year of purchase.
3. Land and buildings used by outside parties that function as investments are
recognized at their fair value in accordance with IAS 40. Land and buildings
inside Austria are valued internally according to the Royal Institution of Charte-
red Surveyors (RICS) Standard. Land and buildings abroad are valued by external
45
experts according to guidelines that are recognized not only by the IVSC (In-
ternational Valuation Standards Committee) but also by TEGOVA (The
European Group of Valuers’ Associations). The gross rental method is used in
calculations, on the basis of current rental lists and assumptions concerning
market developments and interest rates. The change in the value of buildings
between balance sheet dates is carried in the Income Statement.
(13) Intangible assets. Intangible assets include not only the Bank’s logo but also
goodwill as well as software purchases. The Bank’s logo was written off over 10 years
and is now entered in the books at the pro memoria value of ATS 1. Goodwill purchased
after 1 January 1995 is written off over 15 years by the straight-line method, and
similar items arising before that date are offset against equity. Software is written off
by the straight-line method over 4 years. Intangible investments are presented under
Other assets.
(14) Liabilities. Liabilities are entered at cost. Premiums and discounts are distributed
over the maturity period of the debt.
(15) Trading liabilities. Trading liabilities include the negative fair values arising out of
derivative financial instruments and are shown under Other liabilities. They are ente-
red at the fair value.
(16) Provisions. Provisions for pensions, severance payments and jubilee bonus
obligations are calculated annually by an independent actuary according to the
projected unit credit method, in accordance with IAS 19. The biometric basis was the
”Calculation bases for pension insurance (Salaried employees, Generation table)” by
F.W. Pagler – unpublished – using prediction factors (for salaried employees) taken
from the ”Calculation bases for occupational disability insurance in Austria” by Pagler
& Pagler. The most important parameters are a 5.75 % discount rate, a 2 % incremental
rate of active salary and pension payments, a 1.5 % career trend and pensionable ages
of 56.5 years for women and 61.5 years for men.
In earlier years, staff pension entitlements were transferred to a pension fund. The
provisions now contain entitlements of staff who were already on pension at the time
of transfer as well as the entitlements of active staff for invalidity and widows’ pensions.
The difference between the amount required for coverage and the proportionate
pension provision at the time of transfer is entered in the balance sheet under deferred
assets and is written back evenly over 10 years. Reserves for severance payments are
formed to cover legal and contractual entitlements. A jubilee bonus reserve is formed
for the payment of bonuses to long-serving staff. Other reserves are formed in the
amount of projected use in each case.
46
(20) Loans and advances to customers.
Repayable on demand Otherin EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Austrian customers 92 57 1,708 1,828 Enterprises 76 42 1,586 1,535 Public sector 1 4 0 160 Other 14 11 122 133
Foreign customers 34 13 3,116 1,970 Enterprises 25 13 1,233 943 Public sector 9 0 1,830 1,007 Other 0 0 53 20
Aggregate 126 70 4,824 3,799
(17) Current and deferred taxes. Taxes on income are accounted for and calculated in
accordance with IAS 12. Current income tax assets and liabilities are stated according
to local tax rates. Tax assets are shown under Other assets, and tax liabilities under
Other liabilities or Reserves. The liability concept is used for the calculation of deferred
taxes, and all temporary differences in amount are taken into consideration. Under
this concept, the values of assets and liabilities in the IAS balance sheet are compared
with the values that are applicable to taxation of the consolidated company in question.
Differences between these values lead to temporary differences in value, for which
deferred taxation items must be formed on the assets or liabilities side – irrespective
of the time of their release. Deferred tax assets and deferred tax liabilities are then
offset, if they exist for each company against the same tax creditor. Deferred tax assets
or unused tax losses carried forward are recorded in the balance sheet if they will
probably be used in relation with future profits.
INFORMATION ON THE BALANCE SHEET.
(18) Cash and balances with central banks. This item consists solely of cash and balances
with central banks. In the previous year, credit balances with post office banks were
also included.
The amount of EUR 79 m (1999: EUR 102 m) included in this item represents the
refinancing shares of customer banks in the TOP scheme, an aid plan of the Republic
of Austria that was discontinued in 1995.
This item includes loans and advances of EUR 1.1 m (1999: EUR 8.2 m) in respect of
finance lease contracts. The total of leasing instalments outstanding and residual values
(19) Loans and advances to banks.
Repayable on demand Otherin EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Austrian Banks 18 39 270 353
Foreign Banks 22 226 352 316
Aggregate 40 265 622 669
47
not guaranteed is EUR 1.2 m (1999: EUR 8.5 m), and the aggregate of the interest
components not yet earned is EUR 0.1 m (1999: EUR 0.2 m).
(22) Risk provisions. Risk provisions are related exclusively to loans and advances to
customers. They include only credit risks as well as a litigation risk in relation with a
financing transaction. The assessment basis for valuation adjustment also includes
deferred interest as at the balance sheet date. Provisions for sovereign risks did not
have to be formed. Global valuation adjustments were not undertaken. The amount
of loans and advances bearing no interest and earnings was EUR 79 m (1999: EUR 89
m) before valuation adjustment.
(21) Loans and advances to related enterprises and enterprises in which an equity
investment is held.
Related enterprises Enterprises in which an equity investment is held
in EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Loans and advances to banks 0 0 0 0
Loans and advances to customers 46 36 110 102
Other assets 342 195 50 18
Aggregate 388 231 160 120
(23) Trading assets.
in EUR m 31.12.2000 31.12.1999
Bonds and otherfixed-income securities 110 63 Money market paper 0 0 Loans and bonds 110 63thereof:Listed bonds 83 63Own bonds 0 10
Shares and other variable-yield securities 6 8 Shares 5 6 Investment certificates 0 2 Other 0 0thereof:Listed shares and other variable-yield securities 6 8Own shares and other variable-yield securities 0 0
Positive fair values from derivative financial instruments 72 47
Other trading portfolio items 0 0
Aggregate 187 119
in EUR m 31.12.2000 31.12.1999As at 1 January 72 74Additions Allocation to risk provisions for loans and advances 13 13
Disposals Earmarked use -13 -10 Release of risk provisions for loans and advances -9 -5
Currency adjustments 1 0
As at 31 December 64 72
48
Financial investments include Other current assets amounting to EUR 1,015 m (1999:
EUR 554 m). No investments in banks were contained in investments in unconsolidated
related enterprises. Investments in enterprises accounted for under the equity method
include an EUR 9 m bank investment. The development and composition of financial
investments is disclosed under point 26 (Schedule of fixed asset transactions). The
Schedule in point 66 (Disclosure of equity investments) contains a complete list and
classification of all holdings in unconsolidated related enterprises, enterprises accounted
for under the equity method and other investments. That list also gives information
about the proportionate investments, equity and annual results. The Investkredit Group
investments include chiefly banks and financial institutions as well as real-estate
enterprises. There is a single-entity relationship with VBV beta Anlagen Vermietung
Gesellschaft mbH in the field of corporation tax and turnover tax.
The development and composition of property and equipment is presented under
point 26 (Schedule of fixed asset transactions). Minor value assets are entered in the
schedule of fixed asset transactions as additions and disposals in the year of acquisition.
(25) Property and equipment.
in EUR m 31.12.2000 31.12.1999
Land and buildings used by the Group 24 24
Land and buildings used by outside parties 185 38
Office furniture and equipment 6 6
Aggregate 215 67
(24) Financial investments.
in EUR m 31.12.2000 31.12.1999
Bonds and other fixed-incomesecurities 2,287 1,786 Money market paper 0 0 Loans and bonds 1,958 1,519 Treasury bills 328 267thereof:Listed bonds 2,280 1,599Own bonds 0 8
Shares and other variable-yield securities 66 43 Shares 11 8 Investment certificates 55 35thereof:Listed shares and other variable-yield securities 55 37Own shares and other variable-yield securities 0 0
Other securities and derivativesfor hedging purposes 259 33
Investments in unconsolidatedrelated enterprises 32 9
Investments in enterprises accounted for under the equity method44 21Other investments 2 7
Aggregate 2,690 1,899
49
(26) Schedule of fixed asset transactions.
Property and equipment 82 0 157 -8 231 Land and buildings 69 0 155 -7 216 Office furniture and equipment 13 0 2 -1 14
Intangible assets 5 0 12 0 17 Goodwill 3 0 11 0 14 Other 1 0 1 0 2
Financial investments 1,291 2 411 -336 1,368 Other related enterprises 69 0 23 0 92 Enterprises accounted for under the equity method 50 0 25 0 74 Other investments 13 0 0 -8 5 Fixed-income securities 1,159 2 363 -327 1,197 Variable-yield securities 0 0 0 0 0 Other financial investments 0 0 0 0 0
Aggregate 1,378 2 580 -344 1,616
The balance sheet item of Land and buildings used by the Group includes a land value
of EUR 4 m (1999: EUR 4 m). The increase by EUR 148 m to EUR 185 m in the item of
land and buildings used by outside parties is due to the acquisition of three office
properties in Prague, Budapest and Warsaw. The difference between the fair value
and the carrying amount in the individual balance sheets items covering all land and
buildings used by outside parties is EUR 55 m (1999: EUR 6 m). The increase is due to
the three above-mentioned real-estate properties.
Current depreciation includes extraordinary depreciation amounting to EUR 1.8 m.
Additions related to land and buildings contain additions of EUR 148.0 m arising
through purchases of enterprises.
Property and equipment -19 3 215 -7 4 67 Land and buildings -11 3 209 -6 4 61 Office furniture and equipment -8 0 6 -2 0 6
Intangible assets -2 0 15 -1 0 3 Goodwill -1 0 14 -1 0 3 Other -1 0 1 0 0 0
Financial investments -127 10 1,251 -1 3 1,213 Other related enterprises -60 0 32 0 0 9 Enterprises accounted for under the equity method -31 1 44 -1 0 21 Other equity interests -3 0 2 0 0 7 Fixed-income securities -33 9 1,173 0 3 1,176 Variable-yield securities 0 0 0 0 0 0 Other financial investments 0 0 0 0 0 0
Aggregate -148 13 1,481 -9 7 1,283
in EUR m
Accumulateddepreciation
Accumulatedwrite-ups
Carryingamount
31.12.
Currentdepre-ciation
Currentwrite-ups
Carryingamount
1.1.
Currencytranslation
in EUR m
DisposalsAt costas of
1 January
Additions At costas of 31
December
50
(27) Other assets.
in EUR m 31.12.2000 31.12.1999
Intangible assets 15 3
Other assets 31 20
Deferred items 13 11
Deferred interest 0 0
Aggregate 59 35
The development and composition of intangible assets is shown under point 26
(Schedule of fixed asset transactions). The intangible assets include goodwill amounting
to EUR 14 m (1999: EUR 3 m). Other assets include deferred tax assets of EUR 2 m
(1999: EUR 5 m). A breakdown and explanation of deferred taxes is contained in point
32. The difference between the pension reserve at the time of transfer recorded in the
balance sheet and the pension fund capital requirement of EUR 1.9 m (1999: EUR 2.4
m) is recorded in deferred items on the assets side.
(29) Amounts owed to customers.
Repayable on demand Other liabilities
in EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Austrian customers 39 54 170 199
Enterprises 24 30 146 162 Public sector 0 0 0 0 Other 14 23 24 36
Foreign customers 9 91 110 55 Enterprises 9 79 27 19 Public sector 0 0 20 4 Other 0 12 63 32
Aggregate 48 144 280 254
(28) Amounts owed to banks.
Repayable on demand Other liabilities
in EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Austrian banks 14 6 884 877
Foreign banks 128 102 1,331 1,435
Aggregate 143 107 2,215 2,312
51
(31) Provisions.
in EUR m 31.12.2000 31.12.1999
Provisions for current tax 8 7
Provisions for personnel expenses 30 33
Other provisions 3 4
Aggregate 41 44
(30) Debts evidenced by certificates.
thereof listed
in EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Bonds issued 5,046 3,379 4,749 1,689
Money market paper issued 0 0 0 0
Other debts evidenced by certificates 93 99 0 0
Aggregate 5,139 3,478 4,749 1,689
Bonds issued amounting to EUR 287 m will fall due next year.
As a consequence of mergers in the years 1998 and 1999, tax provisions of merged
enterprises that were formed following inspections in previous years, amounting on
the balance sheet date to EUR 4.3 m, were taken over without any effect on results.
A breakdown and explanation of deferred taxes is contained under point 32.
Provisions for personnel expenses developed as follows:
in EUR m Pension Severance Jubilee bonus Total
Present value of defined benefitobligations - DBO - as at 1.1.2000 52 5 1 58
- Plan assets -27 0 0 -27
Provisions as of 1.1.2000 25 5 1 31
Service cost 1 0 0 1
Interest cost 3 0 0 3
Payments -2 0 0 -2
Change in plan assets -1 0 0 -1
Actuarial result 5 0 0 5
Definded benefit obligations - DBO - as at 31.12.2000 49 5 1 55
- Plan assets -28 0 0 -28
Actuarial provision requirementas at 31.12.2000 21 5 1 27
Vacation provisions 3
Provisions for personnel expenses as at 31.12.2000 30
52
The pension provisions are the result of obligations arising from direct promises or
individual contracts. In previous years, staff pension entitlements were transferred to
a pension fund and are shown as Plan assets in the Table. The provisions now contain
entitlements of staff who were already on pension at the time of transfer and
entitlements of active staff for invalidity and widows’ pensions. The full actuarially
calculated obligation for pensions is EUR 49.0 m (1999: EUR 52.4 m), of which
entitlements amounting to EUR 28.1 m (1999: EUR 27.4 m) have been transferred to
the pension fund, resulting in provisions of EUR 20.8 m (1999: EUR 25.0 m).
(32) Deferred tax assets and liabilities. Deferred tax assets and liabilities include taxes
arising out of temporary differences between valuation according to IAS and amounts
from the tax-based profit calculations of the Group enterprises.
No deferred tax items were formed for temporary differences in relation with
investments of EUR 7.7 m in subsidiaries, since the requirements under IAS 12.39 were
satisfied.
As at Reclassi- As at1.1.2000 Use Release Allocation fication 31.12.2000in EUR m
The provisions developed as follows:
Provisions forcurrent tax 7 0 0 1 0 8
Provisions for personnel expenses 33 0 -4 1 0 30
Other provisions 4 -4 0 3 0 3
Aggregate 44 -4 -4 5 0 41
Deferred tax were related to the following items:
Deferred tax assets Deferred tax liabilitiesin EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Financial investments 6 2 8 2
Property and equipment 0 0 1 2
Leasing 0 0 0 0
Provisions for personnel expenses 4 4 0 0
Other provisions 0 0 0 0
Risk provisions 0 0 0 0
Trading portfolio 0 0 0 0
Other items 0 0 1 0
Tax losses carried forward 2 3 0 0
Aggregate 12 9 10 4
Net 2 5
53
The negative fair values from derivative financial instruments in the trading portfolio
are presented under trading liabilities. The deferred liabilities chiefly contain premiums
from long-term loans and bonds as well as deferred items related to interest support for
the TOP schemes. Other liabilities include EUR 10.4 m of tax debts (1999: EUR 9.8 m),
most of which are deferrals arising out of a tax inspection.
Expenses related to all subordinated liabilities in the financial year amounted to EUR
11.9 m (1999: EUR 9.3 m). Claims of creditors to the repayment of these liabilities are
subordinated in relation with other creditors and, in the event of bankruptcy or
liquidation, may be paid back only after all non-subordinated creditors have been
satisfied.
(35) Equity. The share capital of EUR 46,000,110.00 is divided into 633,000 no par value
shares issued to bearer. With the consent of the Supervisory Board, the Board of Ma-
(33) Other liabilities.
in EUR m 31.12.2000 31.12.1999
Trading liabilities 52 57
Deferred items 41 21
Leasing liabilities 0 0
Other liabilities 226 30
Dividend paid by Investkredit Bank AG 5 5
Aggregate 324 112
The most important subordinated liabilities are:
Nominal in EUR InterestCurrency in m m rate Issuer/type
ATS 400.0 31.4 8.250 % Investkredit bond issue 1995-2005
ATS 300.0 23.2 6.500 % Investkredit bond issue 1997-2012
ATS 300.0 22.8 7.500 % Investkredit bond issue 1993-2005
USD 20.0 21.9 6.655 % Subordinated collared floating rate notes 1994-2004
EUR 20.0 20.7 5.465 % Subordinated Investkredit floater 1999-2014
(34) Subordinated capital.
thereof listedin EUR m 31.12.2000 31.12.1999 31.12.2000 31.12.1999
Profit participation rights capital 0 0 0 0
Supplementary capital 49 49 37 7
Other subordinated liabilities 148 141 148 141
Aggregate 197 190 185 148
54
nagement is empowered to increase the share capital up to 15 May 2002 by issuing
not more than 42,280 new no par value bearer shares, in one or more operations, and
by at most EUR 3,072,487.60. During the financial year, Investkredit traded in its own
shares for market-making reasons. As at 31 December 2000, it was not holding any of
its own shares. The maximum number of own shares held in the financial year was
30,651.
The consolidated own funds to be taken into account pursuant to the Austrian Ban-
king Act (§ 24) amounted to EUR 421.5 m as at 31 December 2000. The consolidated
assessment basis was EUR 4,276 m. That gives a consolidated solvency ratio of 9.9 %,
as compared with 12.6 % in 1999. The consolidated Tier 1 capital ratio was 6.4 %. The
composition and development of the Investkredit Group’s own funds calculated
according to the Austrian Banking Act are shown in the following table:
Assessment basis pursuant to § 22 (2) Banking Trading Total Pro- ComparedAustrian Banking Act (in EUR m) book book 2000 portion to 1999
Risk-weighted assets 3,402 3,402 84.0 % 2,760Risk- and counterpart-weightedoff-balance-sheet transactions 471 471 11.6 % 500Special off-balance-sheet transactions 175 175 4.3 % 84
Assessment basis, aggregate 4,048 4,048 100.0 % 3,344
Own funds requirement, Banking book1) 324 324 80.2 % 265Own funds requirement, Trading book2) 18 18 4.5 % 10
Own funds requirement, Currency risk2) 0 0 0.0 % 1
Total = Required own funds 324 18 342 84.7 % 276
Actual own fundsCore capital 272 272 248
Supplementary capital 163 163 172
Carrying amount of investments(holdings of more than 10 %) -31 -31 -8
Own funds (Tier 1 and Tier 2) 404 404 412
Tier 3 18 18 10
Total own funds to be taken into account 404 18 421 422
Free own funds 79 146
1) 8 % of the assessment basis2) According to capital adequacy regulations, standard procedure
55
INFORMATION ON THE INCOME STATEMENT.
Environmental aid transactions are services rendered by Kommunalkredit on behalf
of the Republic of Austria.
(38) Net credit risk result.
in EUR m 31.12.2000 31.12.1999
Allocation to risk provisions -13.4 -12.5
Release of risk provisions 8.8 5.5
Direct write-offs -0.5 0.0
Amounts received against loans and advances written off 0.1 0.1
Currency adjustments -1.6 -0.4
Aggregate -6.6 -7.4
(37) Net fee and commission income.
in EUR m 31.12.2000 31.12.1999
Lending business -0.3 0.4
Securities business 0.8 0.7
Payment transactions -0.4 -0.1
Environmental aid transactions 5.1 5.1
Other services business 0.8 -0.5
Aggregate 5.9 5.7
(36) Net interest income.
in EUR m 31.12.2000 31.12.1999Interest income 814.8 494.1
Lending business and money market 680.3 418.3 Fixed-income securities 124.4 73.5 Shares and other variable-yield securities 1.7 1.4 Interests in unconsolidated related enterprises 0.3 0.2 Investments in associates 4.0 0.1 Investments in other enterprises 4.1 0.6
Interest expenses -755.2 -433.8
Deposits -501.5 -203.6 Debts evidenced by certificates -241.8 -220.9 Subordinated capital -11.9 -9.3
Earnings from rental and leasing business 16.8 1.8
Leasing earnings 4.8 4.4 Earnings from rentals 15.6 2.1 Depreciation of property leased and other leasing expenses -3.0 -4.1 Depreciation of property rented -0.6 -0.6
Aggregate 76.4 62.1
56
(39) Trading result.
in EUR m 31.12.2000 31.12.1999
Securities trading 3.2 -0.2
Currency trading -3.1 -1.5
Interes derivatives 2.1 -2.2
Currency derivatives 0.2 -0.3
Securities derivatives 0.5 0.4
Other financial instruments 0.0 0.0
Aggregate 3.0 -3.7
The net trading result contains net results from the disposal and valuation of items in
the trading portfolio, interest and dividend earnings in the trading portfolio as well
as refinancing expenses for the trading portfolio. The trading portfolio is assessed on
a fair value basis.
(40) Net financial investments result. This item includes the results from the disposal
and valuation of securities in financial investments, investments in subsidiaries and
associates and other investments.
The net result from securities includes disposal gains amounting to EUR 1.5 m (1999:
EUR 1.5 m).
The amount also includes expenses for the real-estate sector amounting to EUR 4.2 m.
Expenses for unlet property were negligible.
(41) General administrative expenses.
in EUR m. 31.12.2000 31.12.1999Personnel expenses Salaries 16.4 14.7 Compulsory social security contributions 4.4 4.1 Expenses for retirement and employee benefits -0.6 4.2
Total personnel expenses 20.3 23.0
Other administrative expenses 13.4 9.1
Depreciation and amortization of property and equipment 2.5 2.5
Aggregate 36.2 34.6
in EUR m 31.12.2000 31.12.1999
Net result from securities -11.9 14.9
Net result from investments insubsidiaries and associates andother investments 1.1 0.1
Aggregate -10.9 15.0
57
(43) Tax on income.
in EUR m 31.12.2000 31.12.1999
Current tax expense 2.5 3.2
Deferred tax expense -0.3 1.6
Aggregate 2.2 4.8
Other operating expenses in the year 1999 are due to the depreciation of derivatives
that were not used as microhedges.
The actual taxes are calculated on the basis of the tax results for the financial year at
the local tax rates applicable to the Group company in question. The following table
shows the relation between the expected and actual taxes on income:
(44) Appropriation of the profit. The Board of Management will propose to the Annual
General Meeting on 23 May 2001 that the net profit for the year 2000 in the separate
financial statements for Investkredit, amounting to EUR 5,687,414.54, be used to pay
a dividend of EUR 8.72 per share. The total distribution is EUR 5,519,760.00. That is
some 12 % of the dividend-bearing share capital for 2000, amounting to EUR
46,000,110.00. After payment of the Supervisory Board emoluments, the remainder
of some EUR 0.05 m will be carried forward.
in EUR m 31.12.2000 31.12.1999
Profit for the year before tax 32.4 24.3
Income tax expense expected for the financialyear at the statutory tax rate (34 %) 11.0 8.3
Effects of other tax rates 0.1 0.0
Tax reductions due to tax-exemptearnings of investments -3.7 -1.4
Tax reductions due to othertax-exempt income -2.1 -3.2
Tax increases due to non-deductibleexpenses 0.2 1.4
Tax expense/income not attributable to the reporting period -3.3 -0.3
Reported income tax 2.2 4.8
(42) Other operating results.
in EUR m 31.12.2000 31.12.1999
Other operating earnings 3.2 0.0
Depreciation of intangible assets -0.8 -0.4
Other tax -0.8 0.0
Other operating expenses -0.9 -12.4
Aggregate 0.8 -12.8
58
(45) Earnings per share. According to IAS 33, earnings per share are calculated by
dividing the Group profit for the year by the number of shares outstanding:
The adjusted earnings per share take into account the potential dilution effect arising
out of the exercise of conversion and option rights. The adjusted earnings per share
for 2000 and 1999 show no deviation from the above figures.
31.12.2000 31.12.1999
Profit for the year in EUR m 26.8 17.3
Average number of no par value shares issued 633,000 633,000
Profit per share in EUR 42.3 27.3
59
OTHER INFORMATION.
(46) Information on the Cash flow statement. The Cash flow statement shows the
status and development of cash flows of the Investkredit Group. The cash holdings
recorded include cash in hand and balances with central banks, strictly interpreted.
(47) Segment reporting. The purpose of segment reporting is to present the components
of net results of the Investkredit Group in the following segments:
Enterprises (financing and aid, corporate finance, private equity and
counselling, financial asset management, Treasury)
Local government (local government financing)
Real estate (real-estate project development, investments and portfolio
management)
Consolidation bookkeeping entries are shown under ”Other”.
Disclosure of results by segments 2000
Enter- Local go- Realin EUR m prises vernment estate Other Total
Interest and similar income 498.1 331.1 18.7 -0.9 846.9
Interest and similar expenses -447.4 -312.4 -10.8 0.1 -770.5
Net interest income 50.7 18.7 7.9 -0.8 76.4
Fee and commission income 4.2 6.1 0.0 0.0 10.4Fee and commission expenses -3.9 -0.4 -0.3 0.0 -4.5Net fee and commission income 0.3 5.7 -0.2 0.0 5.9
Net credit risk result -4.5 -0.5 -1.5 0.0 -6.6
Trading result 1.7 1.3 0.0 0.0 3.0
Net financial investments result -10.8 -0.1 0.2 -0.1 -10.9
General administrative expenses -19.4 -12.6 -4.2 0.0 -36.2
Other operating results 2.9 -0.9 -1.0 -0.2 0.8
Extraordinary result 0.0 0.0 0.0 0.0 0.0
Profit for the year before tax 20.9 11.5 1.1 -1.1 32.4
Tax on income -0.6 -1.4 -0.2 0.0 -2.2
Profit for the year after tax 20.3 10.1 0.9 -1.1 30.2
Segment assets 5,349.4 3,365.7 377.2
Segment liabilities 5,070.4 3,265.3 71.4
Average equity 162.0 53.9 59.0 0.0 274.9
Cost-income ratio 36.7 % 49.0 % 55.3 % 42.5 %
Return on equity before tax 12.9 % 21.4 % 1.9 % 11.8 %
Return on equity after tax 12.5 % 18.8 % 1.5 % 11.0 %
60
In the real-estate segment, investments of EUR 101 m were made in three office
properties. Ancillary costs are therefore charged to the net segment result.
Business activities are conducted preponderantly in Austria. Therefore, a breakdown
of revenue by regions does not seem to be meaningful. The regional breakdown of
assets and liabilities is as follows:
31.12.2000 31.12.1999in EUR m Assets Liabilities Assets Liabilities
Austria 4,759 7,387 4,343 5,628
Rest or European Union 1,464 1,015 1,174 882
Rest of Western Europe 448 147 193 377
Rest of Central and Eastern Europe 599 127 355 20
North America 1,120 28 633 12
Rest of world 313 0 223 0
Total outside Austria 3,945 1,317 2,578 1,292
Aggregate 8,703 8,703 6,920 6,920
Presentation of net results by segments 1999 (Comparative figures)
Enter- Local go- Realin EUR m prises vernment estate Other Total
Interest income 351.8 167.2 4.9 -23.2 500.6
Interest and similar expenses -301.4 -151.2 -1.2 15.3 -438.5
Net interest income 50.4 15.9 3.7 -7.9 62.1
Fee and commission income 3.9 5.2 0.1 0.0 9.2Fee and commission expenses -3.3 -0.2 0.0 0.0 -3.5Net fee and commission income 0.6 5.0 0.0 0.0 5.7
Net credit risk result -6.7 -0.4 -0.4 0.0 -7.4
Trading result -6.0 2.3 0.0 0.0 -3.7
Net financial investments result -2.7 13.6 0.0 4.0 15.0
General administrative expenses -20.8 -13.2 -0.5 -0.1 -34.6
Other operating results 1.9 -14.4 -0.1 -0.2 -12.8
Extraordinary result 0.0 0.0 0.0 0.0 0.0
Profit for the year before tax 16.7 8.9 2.8 -4.2 24.3
Tax on income -2.5 -2.5 0.3 0.0 -4.8
Profit for the year after tax 14.2 6.4 3.1 -4.2 19.5
Cost-income ratio 46.3 % 56.6 % 13.8 % 54.0 %
61
Remaining maturity is the period between the balance sheet date and the date on
which the claim or liability becomes contractually due, and, in the case of partial
amounts, is calculated separately for each part. Deferred interest is accounted for
under the period ”Up to 3 months”.
Breakdown by remaining maturity as at 31 December 1999 (Comparative figures):
Repayable Up to 3 months 1 to 5 More thanin EUR m on demand 3 months to 1 year years 5 years
Loans and advances to banks 265 244 44 203 178
Loans and advances to customers 70 153 148 1,174 2,324
Securities – trading assets 8 3 3 27 24
Securities – available for sale 45 2 9 97 313
Securities – held to maturity 19 0 18 281 722
Securities – microhedges 0 0 0 43 45
Aggregate 423 388 222 1,825 3,606
Amounts owed tobanks 107 1,312 654 164 184
Amounts owed tocustomers 184 58 20 54 82
Debts evidenced by certificates 121 172 148 1,350 1,688
Subordinated capital 0 0 0 35 156
Aggregate 411 1,542 821 1,602 2,109
(48) Breakdown by remaining maturity.
Breakdown by remaining maturity as at 31 December 2000 (Comparative figures):
Repayable Up to 3 months 1 to 5 More thanin EUR m on demand 3 months to 1 year years 5 years
Loans and advances to banks 40 169 69 211 173
Loans and advances to customers 127 85 83 1,269 3,385
Securities – trading assets 6 0 0 35 75
Securities – available for sale 77 9 11 194 713
Securities – held to maturity 205 1 35 286 657
Securities – microhedges 0 8 14 36 36
Aggregate 455 274 211 2,032 5,040
Amounts owed tobanks 143 1,346 528 143 198
Amounts owed tocustomers 48 77 20 71 113
Debts evidenced by certificates 80 136 130 2,567 2,227
Subordinated capital 0 0 0 91 107
Aggregate 270 1,558 678 2,872 2,644
62
(51) Assets assigned as collateral. Investkredit has assigned claims amounting to EUR
114 m (1999: EUR 113 m) as security for global loans by the European Investment
Bank, Luxembourg.
(52) Contingent liabilities and other off-balance-sheet liabilities.
in EUR m 31.12.2000 31.12.1999
Contingent liabilities ERP bills 197 196 Guarantees 570 412 Other 0 0
Aggregate 767 608
Other liabilities Credit lines and promises 316 174 Liabilities from repurchase agreements 0 0 Other 0 0
Aggregate 316 174
(50) Subordinated assets. The assets shown on the balance sheet include the following
subordinated assets:
in EUR m 31.12.2000 31.12.1999
Loans and advances to banks 12 11
Loans and advances to customers 0 0
Fixed-income securities 35 34
Variable-yield securities 0 0
Aggregate 46 45
(49) Loans and advances to, and amounts owed to, related enterprises and enterprises
in which an equity investment is held.
in EUR m 31.12.2000 31.12.1999
Loans and advances to banks Related enterprises 0 0 Investments 0 0
Loans and advances to customers Related enterprises 46 36 Investments 110 102
Amounts owed to banks Related enterprises 0 0 Investments 0 0
Amounts owed to customers Related enterprises -10 -84
Investments -9 -8
63
31.12.2000 31.12.1999
(54) Assets and liabilities in foreign currencies. Foreign currencies are those outside
the euro area.
in EUR m Assets Liabilities Assets Liabilities
USD 1,272 1,382 610 755
GBP 75 118 87 67
CHF 553 123 167 194
JPY 111 2 102 39
Other 427 169 1,770 1,089
Total foreign currency 2,437 1,795 2,736 2,144
EUR 6,266 6,909 4,185 4,777
Aggregate 8,703 8,703 6,920 6,920
(53) Trust activities. The breakdown of trust activities not shown in the balance sheet
is as follows:
in EUR m 31.12.2000 31.12.1999
Loans and advances to banks 1 1
Loans and advances to customers 202 209
Financial investments 21 22
Trust assets 224 233
Amounts owed to banks 0 0
Amounts owed to customers -226 -242
Trust liabilities -226 -242
64
Total1999
Up to 1year
1 to 5years
Over 5years
in EUR m Total2000
Marketvalue
positive
Marketvalue
negative
Nominal amount at 31.12.2000Trading
portfolio2000
Remaining maturity
(55) Derivative financial transactions. The structure of open derivative financial transactions
is as follows:
Interest-rate related business 1,507 5,633 6,661 13,802 158 -121 8,496 2,493
OTC products
FRAs 58 80 - 138 0 -1 621 80
Interest swaps 1,415 4,877 6,300 12,592 155 -110 5,919 2,379
Interest-rate options – purchase - 7 124 131 2 - 441 -
Interest-rate options – sale 0 669 238 908 - -10 1,512 -
Other interest contracts - - - - - - - -
Products traded on the stock exchange
Interest-rate futures 33 - - 33 - - 2 33
Currency related business 1,089 1,401 766 3,256 95 -37 1,926 593
OTC products
Currency futures 35 0 - 35 1 -1 3 35
Currency swaps 956 1,400 766 3,123 93 -36 1,860 459
Currency options – purchase 53 - - 53 1 - 30 53
Currency options – sale 45 - - 45 - -1 33 45
Other currency contracts - - - - - - - -
Securities related business 1 - 4 5 - -0 17 1
OTC products
Shares-/Index futures – purchase - - - - - - - -
Shares-/Index futures – sale - - - - - - - -
Shares-/Index options – purchase - - 4 4 - - - -
Shares-/Index options – sale 1 - - 1 - -0 17 1
Products traded on the stock exchange
Shares-/Index futures - - - - - - - -
Shares-/Index options - - - - - - - -
Other business 2,387 7 - 2,395 28 -63 86 -
OTC products
Options 2,387 7 - 2,395 28 -63 86 -
Total 4,985 7,042 7,431 19,457 281 -221 10,526 3,086
65
in EUR mAvailable
for sale
Fair value
Value ofitem
Bankingbook
Tradingbook
Micro-hedge Total
(56) Fair value balance sheet.
Cash and balances with central banks 5 5 0 0 0 5
Loans and advances to banks 662 653 14 0 0 667
Loans and advances to customers 4,950 4,439 448 0 98 4,984
Risk provisions -64 -64 0 0 0 -64
Trading assets 187 0 0 187 0 187
Financial investments 2,690 1,561 1,015 0 94 2,670
Tangible fixed assets 215 215 0 0 0 215
Other assets 59 59 0 0 0 59
Aggregate 8,703 6,867 1,476 187 192 8,722
Amounts owed tobanks 2,357 2,036 0 0 328 2,364
Amounts owed to customers 328 275 0 0 52 326
Debts evidenced by certificates 5,139 4,258 0 0 920 5,178
Provisions 41 41 0 0 0 41
Other liabilities 324 219 0 52 20 292
Subordinated capital 197 157 0 0 43 199
Minority interests 23 23 0 0 0 23
Equity 294 301 0 0 0 301
Aggregate 8,703 7,308 0 52 1,362 8,722
(57) Market risks arising out of trading activities. Market risks arising out of trading
activities are calculated continuously – broken down by interest rate risk, share price
risk and currency risk – and are assessed daily after close of business. With a confidence
level of 99 % and a holding period of 1 day, a variance/covariance approach is applied
for the interest rate risk and the currency risk; in the case of the share price risk,
volatility shown by market data or figures calculated by the Bank is taken as the basis.
The strict rules of an internal risk management handbook are applied to the conduct
of trading activities. These rules also contain limits for value at risk. The breakdown of
risk is as follows:
Averagein EUR m 2000 31.12.2000 31.12.1999
Debt issues 0.6 0.4 0.1
Share price risks 0.4 0.2 0.1
Currency 0.1 0.1 0.1
Aggregate 1.1 0.7 0.4
66
31.12.2000in EUR m Volume Proportion
AAA 1,886 20 %
AA 2,242 23 %
A 2,882 30 %
BBB 1,428 15 %
BB 753 8 %
B 192 2 %
CCC 188 2 %
D 18 0 %
Aggregate 9,590 100 %
(58) Interest rate risks. The interest rate risk is assessed continuously (confidence level
99 %, holding period 1 month) in the light of the interest risk item (gap analysis using
the RiskMetrics scenarios and calculation of value at risk).
(59) Credit risk report. The Bank’s rating system is oriented initially according to the
credit risk of the debtors. Every borrower is assigned an internal or external rating.
There are eight internal classes for non-defaulting loans and two classes for defaulting/
doubtful loans. The internal classification corresponds to the standard rating scale of
Moody’s Investors Service or Standard & Poor’s and is carried out in several steps.
Changes in key balance sheet figures or other information, such as the level of
indebtedness in the case of Federal and local government authorities, can lead to
continuous changes in ratings. Ratings must be reassessed at least once a year. Where
an external rating by S & P, Moody’s or FITCH/IBCA is available, the least favourable
rating of these agencies is used. Thus, the assets in the banking book and off-balance-
sheet transactions are classified completely by credit standing and collateralization.
Furthermore, the credit risk is presented as value at risk and the return on risk-adjusted
capital (RORAC) is calculated for individual asset classes. The following table shows
the portfolio composition (assets and contingent liabilities in the form of guarantees
and other off-balance-sheet commitments) classified by rating categories – before
taking into account collateral and the netting of balance sheet items:
(60) Other liabilities. Investkredit and Kommunalkredit are required pursuant to § 93 of
the Austrian Banking Act to undertake proportionate safeguarding of depositors’
accounts in the framework of the relevant programme of Banken und Bankiers GmbH,
Vienna. On the basis of leasing agreements, liabilities in the amount of EUR 0.2 m will be
incurred in the year 2001 (previous year for 2000: EUR 0.2 m). The corresponding
liabilities for the years 2001-2005 are EUR 0.6 m (previous year for 2000-2004: EUR 0.5 m).
(61) Events after the balance sheet date. Kommunalkredit made a capital increase
in January 2001, and Investkredit’s share of Kommunalkredit’s capital was reduced to
51 %.
67
(62) The transition to IAS. The primary objective of IAS financial statements is to provide
investors with information regarding an enterprise’s financial position and
performance. On the other hand, the main emphasis in financial statements pursuant
to the Austrian Commercial Code is on the protection of creditors. These differing
goals result in differences in accounting methods and also in reporting.
Risk provisions. Risk provisions are shown openly on the assets side as a reduction,
according to usual international practice.
Trading assets and liabilities. Trading portfolio items which are contained in several
different balance sheet items pursuant to the Austrian Commercial Code are
summarized under IAS rules in Trading assets or Trading liabilities. These items also
contain the fair values of derivative financial instruments. According to IAS, items in
the trading portfolio are stated at their fair value, but according to HGB at the lower
of cost or market value.
Financial investments. The item of financial investments covers equity investments,
securities serving as financial assets as well as securities in the liquidity reserve. Securities
in current assets which are valued under the Austrian Commercial Code at the lower
of cost and market value are stated under IAS at fair value.
Derivative transactions. By application of IAS 39, derivatives are treated differently
according to their category. Derivatives in the trading portfolio are attributed to trading
assets or liabilities. They are accounted for at their fair value, which is a deviation
from the practice under the Austrian Commercial Code. Derivatives in the banking
book are treated, depending on their purpose, as fair value hedges, cash flow hedges
or macrohedges, and considerable differences arise vis-à-vis the Austrian Commercial
Code through accounting at fair value.
Reserves for personnel purposes. Reserves for pensions and similar commitments are
based according to the Austrian Commercial Code on the statistical accumulation
procedure and under the IAS on the dynamic defined benefit obligations procedure.
Future developments of salaries and pensions are taken into account in the calculation.
The discount factor is oriented according to the capital market.
Deferred taxes. According to the Austrian Commercial Code, deferred tax liabilities
that arise through differences between the result under commercial law and the tax
result are entered as liabilities, while there is an option for the entry of deferred
assets on the assets side. Pursuant to IAS 12, deferred taxes are formed according to
temporary balance sheet differences. Deferred tax assets or liabilities therefore arise
differently under the IAS balance sheet approach and the Austrian tax assessment
system – irrespective of the time of their release.
68
(63) Information on employees.
2000 1999
Employees of the Group Austria 268 246 Abroad 3 2
Aggregate 271 248
Equity capital. Equity held by outside parties is entered in a separate balance sheet
item. The Bank’s own shares are shown in the trading portfolio, but are deducted
from equity capital for the calculation of profit per share. The equity capital item
includes the hedge reserve, which contains the changes in derivative transactions of
the banking book. Changes in the fair value of real-estate investments with a neutral
effect are shown in equity capital pursuant to IAS 40.
Real-estate investment. Real estate that is not used for the Bank’s own business
operations and is not leased is entered according to the Austrian Commercial Code at
acquisition cost and according to IAS 40 at fair value. Changes in fair values are shown
in equity capital without any effect on the results.
The table shows the average number of staff during the financial year, part-time staff
being weighted according to the extent of employment.
(64) Information on emoluments of and loans to members of the policy-making bodies.
The following table contains information on the total emoluments of members of the
Board of Management and the Supervisory Board as well as on severance payments
and pensions for members of the Board of Management, senior officers and other
staff (including changes in provisions and reserves):
As at 31 December 2000, no loans to members of the Board of Management and the
Supervisory Board were outstanding. Also there were no Investkredit guarantees for
such persons.
in EUR m 2000 1999
Total emoluments of: Active Management Board members 0.8 0.7 Former Management Board members 0.5 0.5 Supervisory Board members 0.1 0.1
Severance payments for: Board of Management, Senior Officers 0.7 0.3 Other employees 0.3 0.2
Pensions for: Board of Management, Senior Officers -0.9 1.6 Other employees 2.2 0.3
69
(65) Information concerning policy-making bodies.
Members of the Board of Management.
Alfred Reiter CEO and Chairman of the Board of Management
Wilfried Stadler Member of the Board of Management
Members of the Supervisory Board
Geiserich E. Tichy Chairman
Karl Samstag Deputy Chairman
Karl Sevelda Deputy Chairman
Elisabeth Bleyleben-Koren Deputy Chairperson (to 24 May 2000)
Helmut Elsner
Max Kothbauer Deputy Chairman (from 24 May 2000 to 31 December 2000)
Klaus Haberzettl
Herwig Hutterer
Heinz Kessler
Kurt Löffler
Regina Prehofer
Gerhard Tanew-Iliitschew
Klaus Thalhammer
Employees’ Representatives on the Supervisory Board.
Wolfgang Agler
Gabriele Bauer
Regina Frick
Ing. Otto Kantner
Peter Wimmer
State Commissioner.
Alexander Gancz State Commissioner
Kurt Bayer Deputy State Commissioner
70
(66) Disclosure of equity investments.
in EUR m BWG Investment Extent of investment Information on the annual financial statement
Category without with Most recent Equity Profit fordormant dormant holding annual financial the year
Name and registered office 1) direct indirect 2) % 3) % statement 4) 5)
1. Related enterprises
1.1. Fully consolidated relatedenterprisesKommunalkredit Austria AG, Vienna CI x 61.62 % 31.12.00 60.92 8.76Investkredit International Bank p.l.c., Sliema/Malta CI x x 100.00 % 31.12.00 31.45 2.41VBV Anlagenvermietungs- und Beteiligungs-Aktiengesellschaft, Vienna FI x 100.00 % 31.12.00 54.16 5.20VBV Holding Gesellschaft mbH, Vienna FI x x 100.00 % 31.12.00 8.83 6.04VBV Vermögensanlagen und BeteiligungenVerwaltungs-GmbH Investitionsgüter-Vermietungs OHG, Vienna FI x x 100.00 % 31.12.00 65.13 0.24E.I.A. eins Immobilieninvestitionsgesellschaft mbH,Vienna OE x x x 100.00 % 100.00 % 31.12.00 3.11 0.11E.I.P. Beteiligungs Gesellschaft mbH, Vienna OE x 100.00 %EUROPOLIS CE Holding GmbH, Vienna AB x 100.00 %Europolis Hadovka s.r.o., Prague OE x 100.00 %Europolis Holding Kft, Budapest OE x 100.00 %Europolis Holding Sp. z o.o., Warsaw OE x 100.00 %Europolis Holding s.r.o., Prague OE x 100.00 %Europolis Invest Immobilieninvestitions GmbH, Vienna OE x 100.00 %Infopark Research Center I Kft, Budapest OE x 100.00 %RCP Holding GmbH, Vienna OE x 100.00 %RCP Beteiligungsverwaltungs-Gesellschaft mbH,Vienna OE x 100.00 %VBV drei Anlagen Vermietung Gesellschaft mbH,Vienna OE x 100.00 %VBV fünf Anlagen Vermietung Gesellschaft mbH,Vienna OE x 100.00 %Warsaw Tower s.p.z.o.o., Warsaw OE x 100.00 %„VBV iota“ - IEB Holding Gesellschaft mbH, Vienna OE x 86.96 %Kommunalkredit Beteiligungs- und ImmobilienGmbH, Vienna AB x 61.62 %
1.2. Included at cost
Europa Consult GmbH, Vienna OE x 100.00 % 31.12.99 0.83 -0.24i2B Holding Aktiengesellschaft, Vienna OE x 100.00 % 31.12.00 -0.04 0.00INVEST EQUITY early stage Beteiligungs-AG, Vienna OE x 100.00 % New companyInvest Mezzanine Capital ManagementGesellschaft mbH, Vienna OE x 100.00 % New companyVBV beta Anlagen Vermietung Gesellschaft mbH,Vienna (Organschaft) FI x 100.00 % 31.12.00 0.02 0.22VBV sechs Anlagen Vermietung Gesellschaft mbH,Vienna FI x x x 100.00 % 31.12.99 0.05 0.02VBV vier Anlagen Vermietung Gesellschaft mbH,Vienna OE x x x 100.00 % 31.12.99 -1.32 -1.02CALG Secunda Grundstückverwaltung GmbH, Vienna FI x x x 75.00 % 98.53 % 31.12.99 0.35 0.08VBV acht Anlagen Vermietung Gesellschaft mbH,Vienna FI x x x 75.00 % 96.09 % 31.12.99 0.12 0.00ETECH Management Consulting Gesellschaft mbH,Vienna OE x 100.00 % 31.12.99 -0.03 0.08CALG Vomido Grundstückverwaltung GmbH, Vienna FI x x x 50.00 % 92.42 % 31.12.99 0.16 -0.01EUROPOLIS INVEST Management s.r.o., Prague OE x 100.00 %RCP Alfa s.r.o., Prague OE x 100.00 %RCP Beta s.r.o., Prague OE x 100.00 %
71
in EUR m BWG Investment Extent of investment Information on the annual financial statement
Category without with Most recent Equity Profit fordormant dormant holding annual financial the year
Name and registered office 1) direct indirect 2) % 3) % statement 4) 5)
RCP Delta s.r.o., Prague OE x 100.00 %RCP Epsilon s.r.o., Prague OE x 100.00 %RCP Gama s.r.o., Prague OE x 100.00 %RCP Omega s.r.o., Prague OE x 100.00 %RCP ISC s.r.o., Prague OE x 100.00 %Schloß Gabelhofen Hotelbetriebsgesellschaft mbH,Vienna OE x 100.00 %Schloß Krumbach Hotelbetriebsgesellschaft mbH,Vienna OE x 100.00 %VBV elf Anlagen Vermietung Gesellschaft mbH, Vienna OE x 100.00 %VBV gamma Anlagen Vermietung Gesellschaft mbH,Vienna FI x 100.00 %VBV Holding GmbH & Co Anlagen Leasing OHG, Vienna OE x 100.00 %VBV neun Anlagen Vermietung Gesellschaft mbH, Vienna FI x 100.00 %Immo-Lease Grundstücksverwaltungs-GmbH, Vienna FI x 99.69 %LBL eins Grundstückverwaltung Gesellschaft mbH, Vienna FI x 75.00 %VBV zwölf Anlagen Vermietung Gesellschaft mbH, Vienna OE x 75.00 %WIKA Leasing-Gesellschaft mbH, Vienna FI x 75.00 %Cesky Komunalny Leasing s.r.o., Prague FI x 61.62 %
2. Associates
2.1. Included at equity
IMMORENT-BUSTA Grundverwertungsgesellschaft mbH,Vienna FI x x x 50.00 % 99.44 % 31.12.99 2.36 0.14Immorent-VBV Grundverwertungs-Gesellschaft mbH,Vienna FI x 100.00 %International Business Center Rt, Budapest OE x 50.00 %VBV delta Anlagen Vermietung Gesellschaft mbH,Vienna OE x 40.00 %INVEST EQUITY Beteiligungs-AG, Vienna OE x 29.85 %„Die Erste“ Büro- und Gewerbezentren Errichtungs-und Betriebs-Gesellschaft mbH, Linz OE x 25.50 %Tisi Leasinggesellschaft mbH, Vienna FI x x 25.00 % 99.26 %Dexia Kommunalkredit Holding Gesellschaft mbH,Vienna OE x 24.65 %Leasing 431 Grundstückverwaltung Gesellschaft mbH,Vienna FI x 21.95 %Prva Komunalna Banka a.s., Zilina/Slovak Republic CI x 19.32 %
2.2. Included at cost
IMMORENT-IBA Leasinggesellschaft mbH, Vienna FI x x x 50.00 % 93.59 % 31.12.99 0.05 0.02Invest Equity Management ConsultingGesellschaft mbH, Vienna OE x x 47.39 % 31.12.99 0.11 0.04APCS Power Clearing and Settlement GmbH, Vienna OE x 20.00 % New companyBetriebsanlagen & Wirtschaftsgüterleasing GmbH,Vienna FI x 50.00 %CALG 435 Grundstückverwaltung Gesellschaft mbH,Vienna FI x 50.00 %LBL drei Grundstückverwaltung-GmbH, Vienna FI x 33.20 %Informationszentrum für umweltgerechte ProduktionGesellschaft mbH, Graz OE x 30.81 %Ing. Rudolf Kaiser Gesellschaft mbH, Sattledt OE x 28.57 %
6)
72
The Board of Management of Investkredit Bank AG
Alfred Reiter Wilfried Stadler
Vienna, February 2001
in EUR m BWG Investment Extent of investment Information on the annual financial statement
Category without with Most recent Equity Profit fordormant dormant holding annual financial the year
Name and registered office 1) direct indirect 2) % 3) % statement 4) 5)
3. Other investmentsincluded at cost
Venture Capital in treuhändiger Verwaltung derVenture FinanzierungsgmbH, Vienna OE x 5.78 %Venture Finanzierungsgesellschaft mbH, Vienna CI x 5.78 %WED Holding GmbH, Vienna OE x 5.77 %Europolis Invest SA, Paris OE x 5.00 %Kasberg Lift - GmbH & Co KG, Wels OE x 4.88 %Euro Synergies Investment S.C.A., Luxembourg OE x 1.51 %Österreichisches Forschungszentrum SeibersdorfGmbH, Vienna OE x 0.93 %
Aviation Holdings plc, London OE x 0.37 %Einlagensicherung der Banken und BankiersGmbH, Vienna OE x 0.10 %
1) CI = Credit Institution, FI = Financial Institution, AB = Auxiliary Banking Service, OE = Other Enterprise2) Capital includes a dormant equity holding3) Including indirect investments without dormant equity holdings4) Equity capital including untaxed reserves and secret deposits5) Profit for the year before movement on reserves6) No controlling influence
73
We have audited the accompanying Consolidated Financial Statements of Investkredit Bank AG,
which comprise the Balance Sheets as at 31 December 2000 and 31 December 1999, and the
Income Statements, the Cash flow Statements, the Statements of Changes in Equity and the
Notes for the financial years from 1 January 2000 to 31 December 2000 and from 1 January 1999
to 31 December 1999. These consolidated financial statements are the responsibility of the
management. Our responsibility is to express an opinion on these Consolidated Financial State-
ments based on our audit.
We have conducted our audit in conformity with accounting principles applicable in Austria.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the Consolidated Financial Statements are free of material misstatements. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the Consolidated Financial Statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the Consolidated Financial Statements give a true and fair view in all material
respects of the financial position of Investkredit and its subsidiaries as at 31 December 2000 and
31 December 1999 and of the results of its operations and its cash flows for the financial years
1 January 2000 to 31 December 2000 and 1 January 1999 to 31 December 1999 in accordance
with the International Accounting Standards (IAS).
Under Austrian law, an audit of the Consolidated Management Report has to be conducted and
it has to be certified whether the legal requirements for the exemption from the preparation of
consolidated accounts according to Austrian law are met.
We confirm that the Management Report is consistent with the Consolidated Financial State-
ments and that the legal requirements for exemption from the presentation of consolidated
accounts according to Austrian law are met.
KPMG Austria GmbH
Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
Wilhelm Kovsca Martin Wagner
Chartered Accountants and Tax Consultants
Vienna, 2 March 2001
Audit certificates pursuant to § 245a of theAustrian Commercial Code
74
In the year 2000, the Supervisory Board and its Committees performed the duties entrusted to
them under the law and the Statutes. The Board of Management informed the Supervisory
Board regularly on the progress of business and the situation of the Bank. The resolutions
submitted for adoption and important principles and individual questions were discussed in
detail in five meetings of the Supervisory Board, eight meetings of the Loans Committee and
one meeting of the Accounts Review Committee in preparation for approval of the annual
financial statements.
The accompanying annual financial statements and the management discussion have been
examined by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna.
The final result of the audit gave no cause for objection, so that the auditor has issued an
unqualified opinion.
The financial statements 2000 including the Notes, in keeping with International Accounting
Standards (IAS), and the management discussion have been examined by KPMG Austria GmbH
Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna. The audit gave no cause for
objection and the legal requirements were fully met. In the opinion of the auditors, the financial
statements give a true and fair view in all material respects of the financial position of Investkredit
and its subsidiaries as of 31 December 2000 and 31 December 1999 and of the profit or loss and
cash flows in the financial years 2000 and 1999, in conformity with the International Accounting
Standards. The auditors confirm that the consolidated financial statements meet the legal
requirements for exemption from the obligation to present a consolidated financial statement
under Austrian law. The representatives of the auditors took part in the Supervisory Board meeting
of 25 April 2001 that was convened for approval of the financial statements and were available
to answer questions from members of the Supervisory Board.
The Supervisory Board has noted and given its assent to the results of the audit, has endorsed
the 2000 financial statements, the management discussion and the proposal for the distribution
of the profit and has thus given its approval pursuant to § 125 (2) of the Austrian Stock
Corporations Act. The Supervisory Board has also noted and given its assent to the result of the
audit of the consolidated financial statements.
The Supervisory Board
Geiserich E. Tichy
Chairman
Vienna, 25 April 2001
REPORT OF THE SUPERVISORY BOARD.
75
Assessment basis according to the Austrian Banking Act (BWG). Total of the risk-
weighted assets, off-balance-sheet and special off-balance-sheet items of the banking
book, calculated according to the Austrian Banking Act. See Risk assets.
Asset backed securities (ABS). Documentary evidence of payment entitlements in
tradable securities. Asset backed securities arise through the combination of certain
financial assets (securitization).
Associates. Enterprises on whose business policy decisive influence can be exercised.
They are accounted for under the equity or the cost method.
Austrian Banking Act (BWG). The Austrian Banking Act, as amended by Federal Law
Gazette BGBl. I No. 2/2001 and BGBl. II No. 5/2001.
Austrian Commercial Code (HGB). The Austrian Commercial Code as amended by
Federal Law Gazette BGBl. I No. 142/2000.
Available for sale. A category of securities that function as a liquidity reserve.
B2B. Business-to-business. E-commerce transactions between enterprises.
B2C. Business-to-consumer. E-commerce transactions between enterprises and
consumers.
Banking book. Includes all items not attributed to the trading book.
BlS capital ratio. Index of internationally active banks for underpinning their credit
risks (risk-weighted assets including off-balance-sheet transactions) and market risks
with the capital required under banking supervisory regulations (core capital,
supplementary own funds and Tier 3 capital; capital as defined by the Bank for Inter-
national Settlements – BIS). The minimum standard for the ratio of equity capital to
risk-weighted assets and the market risk items multiplied by the factor of 12.5 is 8 %.
A minimum standard of 4 % is prescribed for the ratio of core capital to risk-weighted
assets.
Capital Adequacy Directive. EU Directive on the appropriate provision of equity capital,
in particular with regard to market risks arising out of the trading activities of banks
and securities firms.
Glossary of important technical terms.
76
Capital resources. Capital resources as defined
in the Austrian Banking Act comprise paid-in
capital, capital generated as well as differences
and minority interests of other shareholders
resulting from capital consolidation (= core
capital / Tier 1), supplementary and
subordinated capital (Supplementary elements
/ Tier 2) and reclassified Tier 2 capital (= Tier 3
capital, chiefly short-term subordinated
liabilities).
Cash flow hedge. Microhedge for the
protection of cash flows out of balance-sheet
items.
Cash flow statement. Calculation and
disclosure of flows of payment resources which
a bank has generated or consumed in a
financial year out of current business activity,
investment activity and financing activity. In
addition, the cash holdings at the beginning
of the financial year are compared with the
amount at the end of the year.
Categories of equity investments. Equity
investments are classified as fully consolidated enterprises if they are controlled and
significant. If they are not controlled but are significantly influenced and are significant,
they are accounted for under the equity method, while all other equity investments
are recognized in the balance sheet at the carrying amount and in the income statement
at the dividend distributed.
Clean price. Price of a financial instrument without provision for deferred interest.
Confidence level. Probability that a potential loss lies within a range that is stated as
value at risk; the Investkredit Group calculates it at 99 %.
Core capital (Tier 1). Paid-in capital and capital generated as well as differences arising
on capital consolidation, less intangible assets.
Core capital ratio. Core capital divided by the assessment basis (including 12.5 times
the trading book requirement).
Cost-income ratio. Index of the cost-efficiency of enterprises under IAS: general admi-
Harald Reismüller
77
nistrative expenses as a proportion of income (the total of net interest income, net fee
and commission income, net trading result and net financial investment result).
Credit derivatives. Instruments with which credit risks are transferred. They neither
change nor re-establish the original credit relations of the counterparts (the parties
disposing of the credit risks).
Credit equivalent. Also called credit risk equivalent. Procedure for translating volatile
claims against customers for purposes of comparability into an equivalent, constant
claim over time with regard to the risk content. The credit equivalent consists of the
current commitment, a share of unused credit lines and, in the case of derivatives,
sometimes a surcharge for the possible future increase in the claim. It also corresponds
to the amount for the relevant regulatory credit risk (risk-weighted assets), which
must be underpinned with equity capital.
Credit risk. The danger that customers will not meet their contractually agreed payment
commitments. The credit risk includes credit, sovereign and settlement risks.
Derivatives. Derivative instruments: financing instruments whose valuation is mainly
derived from the price, price fluctuations and price expectations of a basic instrument
(for example, shares, bond issues, foreign currency, indices). The chief derivatives are
swaps, options and futures.
Dirty price. Price of a financial instrument including provision for deferred or accrued
interest.
Dividend per share. The dividend per share proposed to the Annual General Meeting.
Early stage financing. Financing of the early phase in the development of an enterprise,
from financing the basic concept to the commencement of production and marketing.
Earnings per share. According to IAS, an index that compares the profit for the year
after tax (less the result accounted for by shareholders outside the Group) to the average
number of ordinary shares. In addition to earnings per share, adjusted earnings per
share are shown if the number of shares has increased or can increase owing to the
recognition of drawing rights (”dilution effect”). In its trading portfolio, Investkredit
temporarily holds its own shares only in its capacity as a market-maker to ensure the
Vienna Stock Exchange’s ability to function. Therefore, such shares are treated as shares
outstanding.
Electronic banking. Banking transactions via the Internet or other electronic networks
or through the exchange of data carriers.
78
Enterprise financing. Services of Investkredit in the segments of financing and aid,
corporate finance, equity investment financing and counselling as well as financial
assets management.
Expected default frequency (EDF). The probability of default of a debtor within a
particular period of time (as a rule, 1 year).
Exposure. The amount that can be lost by a bank in connection with a loss from a risk
incurred, for example, the default of a borrower.
Fair value. The amount or price at which assets or liabilities could be traded between
knowledgeable, willing parties in an arm’s length transaction. The fair value is regularly
identical with the market price.
Fair value hedge. Microhedge to protect the fair value of balance-sheet items.
Foreign exchange swap. Agreement between two contracting parties to exchange
capital and interest payments in different currencies.
Forward rate agreements (FRAs). Agreements between two contracting parties fixing
the interest rate for a future period and an agreed nominal amount (not an exchange
of capital).
Fully consolidated enterprises. Related enterprises are fully consolidated if they are
not insignificant. In the context of full consolidation, assets, liabilities, earnings and
expenses are fully incorporated in the consolidated financial statement after deduction
of consolidation items.
Fund of funds. Securities fund that invests in other funds. For reasons of risk
diversification, a fund of funds may not invest more than 20 % of its assets in a single
target fund (among the Investkredit investment funds, i2V-Select is a fund of funds).
Futures. Listed contracts standardized with regard to amount, quality and date of
delivery in which an item traded in the money, capital, precious metals or foreign
exchange market is to be delivered or purchased at the price determined by the stock
exchange. Frequently, in such contracts (for example, on the basis of share indices), an
adjusting payment is due in order to fulfil the existing commitment (instead of the
physical delivery or purchase of securities).
Hedging. Procedure under which an existing risk item is neutralized by a countervailing
transaction.
Held to maturity. Category of securities that are assigned to fixed assets and are held
79
until they fall due.
IAS. International Accounting Standards: accounting rules in the development of which
international associations of accountants and experts cooperate under the leadership
of the International Accounting Standards Committee. The purpose is comparable
worldwide accounting and publicity and the processing of relevant information for a
broad public, in particular, investors. The rules include not only general accounting
principles but also, currently, 40 standards, and are becoming accepted as an EU-wide
system for financial statements.
Interest rate swap. Agreement between two contracting partners to exchange interest
payments in one and the same country or currency over a particular period of time
(not an exchange of capital).
Investments accounted for under the equity method. Significant but not controlled
equity investments are recognized in the consolidated balance sheet at the share of
own funds. The share of profits or losses for the year is entered in the consolidated
income statement.
Liability concept. Under the balance-sheet-oriented liability method, deferred taxes
are regarded as liabilities to or claims against the tax authorities.
Macrohedge. Protection of a portfolio of financial instruments that as a rule contains
several derivatives.
Market-to-market valuation. Valuation of financial instruments at current fair prices,
independently of acquisition costs and including unrealized price gains.
Market capitalization. Value of all shares as at year-end.
Market risk. Danger of a loss in value arising through unexpected changes in fair
prices (interest, share prices, exchange rates, prices of goods), before the items affected
can be closed or protected.
MBI. Management Buy-In. Acquisition of a business by an external management with
the support of a financing bank and usually of a financing investor.
MBO. Management Buy-Out. Acquisition of an enterprise by the management with
the support of a financing bank and usually of a financial investor.
Mergers and acquisitions (M&A). Combinations or purchases and sales of enterprises.
Mezzanine financing. Chiefly, subordinated financing that takes on functions similar
80
to equity capital. Mezzanine capital occupies a position between equity and borrowing
in the financing structure.
Microhedge. Protection of a financial instrument by a derivative.
Net trading result. Balance of earnings and expenses from a bank’s own trading in
securities, financial instruments (in particular, derivatives), foreign currency and precious
metals that are valued at fair prices (market-to-market valuation). This item also includes
that part of current interest, dividends and refinancing components that is to be
attributed to trading activities.
Online banking. Transaction of banking business via electronic networks (Internet)
also known as electronic banking.
Option. The right to purchase (purchase option/call) a particular item (for example,
securities or currency) from a contracting party or to sell such item to him (selling
auction/put) at a previously agreed price, at a particular time and over a particular
period of time.
OTC derivatives. Financial instruments (derivatives) that are not standardized and are
not listed on a stock exchange but are traded directly between market participants -
over the counter.
Own funds to be taken into account. Total of core capital (Tier 1) and supplementary
capital resources (Tier 2), excluding deductions. This item covers the capital resources
required for the banking book (solvency) and is used as a regulatory measure for
limiting large exposures and for other regulatory standards. Tier 3 capital is not part
of own funds to be taken into account, and can be used only to cover the regulatory
capital requirement for the trading book and for the open foreign exchange position
pursuant to the Austrian Banking Act.
Portfolio. Part or total set of assets (for example, securities, loans, equity investments
or real estate). The primary purpose of portfolio formation is the diversification of
risk. Securities: combination of like transactions, in particular of securities and/or deri-
vatives, according to price-risk considerations.
Price/earnings ratio. The price of an ordinary share as at year-end, divided by earnings
per share.
Private equity. Equity capital financing that is directed towards enterprises in more
mature markets during a period of change and growth.
Projected unit credit method. Present value pension entitlement procedure. It is a
81
capital accumulation procedure under IAS 19 (revised 1998), according to which the
commitment must be recognized at the actuarial present value of the pension
entitlement existing on the financial statements date. A characteristic is that trend
assumptions (for example, expected salary increases) must be taken into account in
the case of dynamic pension commitments. The discounting rate is oriented in the
light of the interest rates for bonds issued by enterprises with high credit standing.
Rating. Standardized assessment of the credit standing of an issuer and its securities
by specialized rating agencies, such as Moody’s Investors Service or Standard & Poor’s.
Related enterprises. Enterprises on whose business policy a controlling influence can
be exercised.
Return on assets (ROA). Total return on capital, profit for the year (before tax) divided
by average risk-weighted assets.
Return on equity (ROE). Index of the income situation of an enterprise, consisting of
the profit for the year divided
by average equity.
Risk assets. Total of the assets
in the banking book weighted
by counterpart risk. See
Assessment basis according to
the Austrian Banking Act
(BWG).
RORAC (Return on risk-adjusted
capital). Returns divided by the
economic capital used.
Securitization. Embodiment of
rights (e.g. claims) in securities
(e.g. shares and bonds).
Securitized money and capital
market financing. Securitized
financing instruments as an al-
ternative to large-volume
industrial loans.
Seed capital. Capital for the
translation of an idea into Franz Neckl
82
realizable results, covering the period up to the determination of the business concept
for an enterprise at the establishment stage.
Segment reporting. Disclosure of assets and earnings of an enterprise, classified by
segments and geographical areas (regions).
Shareholder value. Management concept that is geared to creating sustained increases
in the value of an enterprise. Strategic and operational decisions are expected to lead
to returns higher than the equity capital costs and thus to increase value for
shareholders.
Standard risk costs for credit risks. Risk premiums calculated in advance for lending
business. They cover the loss through credit defaults to be expected within a year, on
the basis of historical experience.
Structured financing. Optimization of maturity periods and financing costs with a
high degree of individuality, the coordinated use of loan financing (with the
incorporation of aid programmes and interest and exchange rate risk management
instruments), equity capital and mezzanine financing or securitized financing
instruments, taking into account tax and company law instruments.
Swap. The exchange of payment flows.
Syndication. Action by Investkredit in relation with structured financing; project-related
coordination of syndicate partners (consortia).
Trading book. Items of a bank’s own trading with financial instruments that it holds
for the purpose of resale or has taken over in order to make short-term use of existing
or expected differences between purchase and selling prices or fluctuations in prices
and interest rates. Items outside the trading book are counted in the banking book.
Value-at-risk concept. Procedure for the calculation of a potential for loss arising out
of changes in fair prices. Value at risk states the loss that will not be exceeded under
normal market conditions on the assumption of previously determined probability
(confidence level) within a defined liquidity period (for example, one day).
Venture capital. Equity financing directed towards young or newly established
businesses with extraordinary growth potential.
Volatility. Index of the change of interest rates or prices over time, in mathematical
terms the annualized standard deviation of interest rates or prices.
83
Our photographic presentation.
Page 19
Helmut Hinek, Sabine Dungl, Legal Department
Page 16
Margit Poglits-Raffetseder, Enterprise Financing;Johann Salzmann, Technical Consulting and Real Estate
Page 14
The ”invest.outlook panel”: Klaus Gugglberger, Business Analysisand Technical Consulting; Thomas Heinisch, Financial Asset Manage-ment; Walter Anscheringer, International Business and FinancialAsset Management; Wilfried Stadler, Member of the Board of Ma-nagement; Julius Gaugusch, Organization and Controlling
Page 9
The ”invest.outlook panel”: Walter Riess, Enterprise Financing;Stefan Süssenbach, Legal Department; Anton Taubenschuss,Internal Audit; Bernhard Mayer, Business Analysis and TechnicalConsulting; Hannah Rieger, Corporate Communications; AlfredReiter, Chairman of the Board of Management
Page 7
Wilfried Stadler,Member of theBoard of Management
Page 6
Alfred Reiter,Chairman of theBoard of Management
Title page
Walter Riess, Enterprise Financing
The central photographic theme is the staff of Investkredit Bank AG. In a style reminiscent of an
informal reporting assignment, the photographer Stefan Badegruber has presented snapshots
illustrating day-to-day working life in the various departments of the Investkredit Group. Of-
fices are not seen as static workplaces. The mixture of sharp focus, blurred focus and movement
creates a particularly dynamic note. Care was taken to portray people in natural, unforced poses.
Artificial casting und styling were intentionally avoided.
84
Page 81
Franz Neckl, Internal Service
Page 76
Harald Reismüller, User Service
Page 30
Gernot Rux, Josef Bernhard, Money and currency market dealings
Page 28
Julius Wallner, Financial Asset Management; Christian Doppler, Enterprise Financing;Thomas Heinisch, Financial Asset Management
Page 27
Heike Jandl, Europa Consult GmbH; Oliver Grabherr, Invest MezzanineCapital Management GmbH
Page 24
Bedrija Ismaili, International Business and Financial Asset Management;Hans-Michael Schania, International Business; Johannes Wundsam, International Business
Page 21
Hannah Rieger, Corporate Communications; Claudia Schmied, Enterprise Financing
Page 20
Bedrija Ismaili, International Business and Financial Asset Management
85
Published by:
Investkredit Bank AG
1013 Vienna, Renngasse 10
Tel.: +43/1/53 1 35-0
Fax: +43/1/53 1 35-983
www.investkredit.at
e-mail: [email protected]
Information:
Hannah Rieger
Tel. +43/1/53 1 35-112
e-mail: [email protected]
Julius Gaugusch
Tel. +43/1/53 1 35-330
e-mail: [email protected]
Graphic design and layout:
CCP, Heye Werbeagentur GmbH
1160 Vienna, Thaliastraße 125B
Photographs:
Stefan Badegruber, Vienna
Printed by:
Agens-Werk Geyer + Reisser Druck- und Verlagsgesellschaft m.b.H.,
1051 Vienna, Arbeitergasse 1 – 7
The English translation is provided for information, the German original being the authentic text.