The British are the most profitable on average

What are the effects of the transition to the new international accounting standards IFRS on the results of the banks

We are still in a transitional phase, as the majority of banking groups has not established accounts 2004 results, i.e. established completely in the same manner as those of 2005, the first exercise which had accounts according to IFRS standards. At this point, the transition to the new standards has been rather an impact on net interest margin and own funds, but it is not significant for most of the banks and it did not have much impact on our notes. It can be said that there is an impact on banks which has not changed our fundamental analysis on the economic plan.

The hierarchy Bank European much changed in 2005

Non. The most important is that the gap has decreased among the best in terms of profitability and the weak. The general trend has been clearly positive for profits, in line with that of 2004. The results were drawn by the growth of credit outstanding, allocations to provisions which have remained at a level very low and market activities. While improving their performance, the major German banks remain somewhat overdue with their European counterparts. The British are the most profitable on average.

How to present 2006

Very well, the year 2006 began, except the volatility higher than observed in the financial markets for two months. The economic recovery currently confirmed in Europe.

If the environment does not change in the second half, large banks should maintain their level of profitability this year and perhaps even succeed in improving it. However, if you look at longer term, we do not consider that the current level of profitability is sustainable. It is based largely on a sharp increase in stocks in the retail bank for 15-20 and some banks including the real estate credit sometimes more. If the outstanding growth slows and market conditions are less favourable, the current level will hardly tenable.

Precisely, how banks prepare them and what are their relays of growth

The key to success lies with the diversification of products, cross-sales, distribution of products with high added value. Most groups also have recourse to external growth. Most large banks are well capitalized and therefore have the means for acquisitions. Many more to look to the emerging countries, the growth potential is more important and the most attractive margins. In Western Europe, the Italy is the most attractive market for acquisitions, but the Covenants of shareholders can complicate the situation.

In this context, how evolved the control costs

Both as revenues are growing, the priority of the big banks is to invest, even if the cost control is still an important objective and that they do not want to buy at any price. The level of the coefficients of operation is satisfactory at the present time for most of the major European groups: costs are well controlled. He improved in countries such as the Netherlands or the Switzerland. German banks have already reduced their costs in recent years and the additional reduction potential is limited.