G ROUP MANAGEMENT REPORT Banking Business 75 Our banking business again experienced a difficult fiscal year 2003: while managing to significantly improve the operating result, the  non-operating result was lower because of adjustment measures.  In the banking business, that is essentially driven by the business performance of Dresdner Bank Group, we  managed to significantly improve the operating result by 1.6 billion euros compared to the previous year. This turnaround came about in a business environment characterized by a recovery in share prices and a gradual improvement in economic development in the second half of 2003. At the same time we streamlined the  business portfolio of Dresdner Bank and eliminated risks from the balance sheet. Banking Business The decline in the  operating income resulted primarily from a lower  net interest income which dropped 26.7 percent to 2.8 billion euros. This is mostly attributable to the de-consolidation of Deutsche Hyp in the third quarter 2002. Adjusted for conso- lidation and exchange rate effects, net interest income fell by 10.4 percent. This reduction is to be looked at with the follow- ing background: between year-end 2002 and year-end 2003, the risk weighted assets at Dresdner Bank were reduced by 30.8 billion euros – a cut of some 20 percent – to 111.7 billion eu- ros. Given that the adjusted net interest income declined less sharply, our measures to improve portfolio quality are yielding 2003 2002 Net interest income ¤  mn 2,805 3,827 Net fee and commission income ¤  mn 2,452 2,658 Trading income ¤  mn 1,486 1,081 Operating income ¤  mn 6,743 7,566 Administrative expenses ¤  mn – 6,086 – 7,314 Loan loss provisions ¤  mn –1,014 – 2,222 Operating result ¤  mn –357 –1,970 Other income/expenses ¤  mn –1,580 675 Net income for the year ¤  mn –1,279 – 1,358 Operating cost/income ratio % 90.3 96.7 Loans and advances to customers and banks ¤  bn 289 246 Liabilities to customers and banks ¤  bn 325 278 In fiscal year 2003, the banking business recorded an  operating result  of – 357 million euros. An operating loss from the Insti- tutional Restructuring Unit of Dresdner Bank of 728 million euros was partly compensated by a positive operating result of 371 million euros in the other banking business. Overall, oper- ating income declined in fiscal year 2003 by 10.9 percent to 6.7 billion euros. This is essentially due to consolidation and ex- change rate effects. Adjusted for these effects, the decline is only 3.1 percent. At the same time, we managed to reduce admin- istrative expenses by altogether 16.8 percent to 6.1 billion eu- ros. Adjusted for consolidation and exchange rate effects, the cost reduction was 12.7 percent. We were thus able to surpass our cost cutting goals. In addition, we made significant progress in reducing loan loss provisions. The  non-operating business  was charged by 1.6 billion euros especially due to write-downs and restructuring expenses. Overall, our banking business reported a  net loss for the year of 1,279 million euros.