The economy will continue to be favourable in 2007 but may be affected by a further relative slowdown, mainly due to slower US growth. It is very probable that the severe crisis of the US property market seen throughout 2006 will have repercussions outside the real estate sector, i.e., on household consumption and the labour market. This may cause a relative slowdown in the eurozone given weaker export demand. Even so – thanks to persistent strong domestic demand – the eurozone economy’s growth should stay above 2%. This should be accompanied by a continuance of the ECB’s restrictive monetary orientation, with two further policy interest-rate rises in the year to bring the ECB refi rate up to 4% by the end of 2007.
Banking profitability drivers should therefore continue to benefit from a largely favourable environment. Interest income should be sustained by further business volume growth – though a little less lively than in 2006 – and a further widening of the interest-rate spread, especially in Italy. Banking profitability should also continue to benefit from growth in other income, thanks to expected consolidation of stock-exchange gains, which will have a favourable effect on the asset and wealth management market.
Against this background UniCredit Group has set 2007 objectives in line with the three-year strategic plan presented in July 2006, of which the following are the main points:
- unchanged short-term targets, to be met through marked revenue growth in all Divisions, restructuring and rationalisation of the Group’s Corporate Centres and careful control of credit risk
- investments to drive future growth, such as new branch opening in Italy and certain CEE countries
- extension of the Group’s common IT platform
- international development of global businesses such as consumer credit, leasing and global financial services
- maintenance of the Group’s financial flexibility by means of sustained revenue generation, rationalisation of risk-weighted assets and an increase in the latter’s profitability.
Milan, 21 March 2007
Board of Directors
Chairman
DIETER RAMPL
Managing Director/CEO
ALESSANDRO PROFUMO
