Return on investment

The current return (1) of the Group's bond portfolio remained substantially stable at 4.4% (4.3% at 31 December 2010), thanks to the increase in current return of the government component. By contrast, the contribution to the result for the period of the realized and unrealized gains and losses through profit or loss (harvesting rate)(2), worsened from 0.6% at 31 December 2010 to -0.5%. Realized gains raised from € 2,110.3 million at 31 December 2010 to € 2,614.3  million, whereas an increase was recorded both in realized losses, achieved within the reduction of cross-border exposure, which amounted to € -1,127.4 million (€ -627.7 million at 31 December 2010), and impairment losses, which amounted to € -2,359.4 million (€ -64.0 million at 31 December 2010), especially as of the second quarter of the year on Greek bonds.

Comprehensive return (3),which includes gains and losses during the period recognized through both profit or loss and equity (4), went from 2.6% at 31 December 2010 to 0.9%, due to the significant decrease in the value of bond portfolios recognized through equity, affected by the intensification in the last quarter of the widening of the spread on government bond in particular of Italy.

The current return on equities grew from 3.0% at 31 December 2010 to 3.6%. Overall harvesting rate declined to -4.3% (1.3% at 31 December 2010) due to the negative performance of all its components. In fact, net realized gains decreased and impairment losses recognized through profit or loss increased significantly.

Despite the recovery of the stock markets witnessed in the fourth quarter, the comprehensive return, which includes value changes in the period recognized through profit or loss and equity, declined significantly  to -11.2% (3.2% at 31 December 2010), as it was also affected by the sharp decrease in the value of the portfolio recognized through equity, especially in the third quarter. 

Current return on real estate investments remained stable at 7.7% (7.8% at 31 December 2010). Finally, return from realized gains, net of depreciation and impairment losses for the period (harvesting rate) went from 1.5% at 31 December 2010 to 2.0%, thanks to higher realized gains. 

Other investments, which also include investments in subsidiaries, associated companies and joint ventures, amounted to € 11,769.7 million (€ 12,457.7 million at 31 December 2010). The related current return remained largely stable at 2.0% (1.8% at 31 December 2010), whereas the contribution of the return on investment resulting from realized gains and valuations through profit or loss (harvesting rate) amounting to € -1.5% (€ -0.6% at 31 December 2010) was largely affected by the impairment of the investment in Telco, which was partly offset by higher realized gains.

Return on investments and harvesting rate
 
Current return Harvesting rate P&L return Comprehensive return
 
31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010 31.12.2011 31.12.2010
Fixed income instruments 4,4% 4,3% -0,5% 0,6% 3,9% 4,9% 0,9% 2,6%
Equities and equity-like investments 3,6% 3,0% -4,3% 1,3% -0,7% 4,3% -11,2% 3,2%
Real estate investments 7,7% 7,8% 2,0% 1,5% 9,7% 9,3% 9,5% 9,6%
Other investments 2,0% 1,8% -1,5% -0,6% 0,5% 1,2% 0,5% 1,2%
Total investments 4,3% 4,2% -0,7% 0,6% 3,7% 4,9% 0,6% 3,0%

 

(1) Further information on the principles and procedures used to calculate this indicator is described in the appendix to this report.

(2) The harvesting rate is calculated on the basis of the realized and unrealized gains or losses through profit or loss different than current income. Further information is given in the appendix to this report.

(3) Comprehensive return is calculated on the basis of current income plus unrealized gains or losses of the period recognized through profit or loss or equity. Further information is given in the appendix to this report.

(4) Included in the Other Comprehensive Income.

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Investment yields64.3 KB
Focus on impairments82.2 KB