Resources 1 Excluding one-off effects due to the sale of Raiffeisenbank Ukraine and the stake in Bank TuranAlem. 2 Calculated according to the Austrian Banking Act (Bankwesengesetz, BWG). Raiffeisen International as part of the RZB-Group is not subject to the Austrian Banking Act.
Below you will also fi nd brief profi les of the countries in Central and Eastern Europe where Raiff eisen International is currently active.
Top 5 countries of import Germany 20% Czech Republic 12% Russia 9% PR China 5% Hungary 5%
Import goods (Top 5) Machinery and transport equipment 52% Processed goods 32%
Import goods (Top 4) Machinery and devices 16% Minerals, fuels, and lubricants 15% Chemical products 9% Transport equipment 7%
Population Inhabitants per km2 96 Average growth 0.0% Serbs 82.7% Hungarians 3.9% Bosnians 1.8% Other 11.6%
Import goods (Top 5) Primary energy sources and mineral products 30% Machinery and electro-technological products 17% Vehicles 14% Chemicals 9% Food products 7%
(World ranking: 83) Inhabitants 9.7 million (World ranking: 81) Capital Minsk (1.7 million inhabitants) Other large Homel’, Mahilëŭ, cities Vicebsk, Hrodna, Brėst Offi cial Belarusian, languages Russian Währung Belarus rouble
In the course of the year, the market uncertainties triggered by the subprime crisis developed into a crisis of confi dence that eventually led to turmoil on the global money and capital markets and hence to a full-scale banking crisis. The real economic eff ects of this development were also already noticeable in the economic region of Central and Eastern Europe toward the end of 2008. The growth rates of the countries there slowed and will probably continue to decline in 2009.
The eff ects of the changes in capital market conditions on the Company and the Group were also dealt with thoroughly both during and between the Supervisory Board meetings. In addition, the Supervisory Board received regular reports on the current earnings position and liquidity and risk situation of the Group.
Global Finance named Raiff eisen International together with RZB as “Best Bank in Central and Eastern Europe 2007” in March 2008. In addition, Global Finance gave the network banks in Albania, Bosnia and Herzegovina, Serbia, and Slovakia the “Best Bank” award.
2009 will be a diffi cult year for many sectors worldwide. It will primarily be characterized by consolidation. Our top goal will be to continue growing on the deposit side. We are certainly not alone in that and would be ill-advised to undermine ourselves with cutthroat terms in this situation. We have the region’s strongest fi nancial brand and are a proven symbol of values like safety and trust. In more than 120 years, no saver has lost even a single cent with Raiffeisen. That is a convincing argument for many existing and potential customers especially in turbulent times.
Market participants got a taste of what was to come in the following months at the beginning of 2008. Bad economic news from the United States and negative headlines about major international banks resulting from a widening US mortgage crisis caused stock markets to slump in January and March. Added to that were worries about possible eff ects of the fi nancial crisis on the real economy. The US central bank reacted with huge key interest rate cuts in the fi rst quarter, which brought temporary calm.
In the fourth quarter, the emerging market countries of Central and Eastern Europe were no longer able to escape this development. The situation there was shaped in October and November by high exchange rate volatility and a sharp decline of growth, which had still been strong until then. That was especially true of Ukraine and Hungary. The International Monetary Fund then extended loans to both countries of about US$ 16 billion each to stabilize the overall economic situation and restore the confi dence of market participants.
Participating in conferences is an important part of Raiffeisen International’s communica­ tion with the capital market. Analysts and insti­ tutional investors were kept informed in 2008 through roadshows in Europe, the United States, and Asia and for the first time in the Arab­speaking region as well as in many ad­ ditional individual talks.
Number of companies Weight of RI Index (selection) in the index in the index
All Raiff eisen International shareholders are again cordially invited to the next Annual General Meeting on 9 June 2009 at the Austria Center Vienna. Details regarding the last and the upcoming Annual General Meetings as well as other important dates may be found on the company website at www.ri.co.at → Investor Relations.
No member of the Supervisory Boards failed to participate personally in more than half of the Supervisory Board meetings last year.
The business management measures that require the consent of the Supervisory Board or the responsible Committee are regulated in the bylaws of the Managing Board and the Supervisory Board and its Committees.
The Supervisory Board convened for fi ve meeting in the reporting period. In addition, the Managing Board regularly informed the Supervisory Board in a timely and comprehensive manner about all issues relevant to business development, including the risk situation and risk management of the Company and material Group entities, and particularly about events of major signifi cance. The Audit Committee met once. As a rule, the Working and Personnel Committees made their decisions in writing on a circulating basis, with important decision being dealt with orally in advance.
Annual General Meeting The Annual General Meeting for 2007 was held on 10 June 2008 at the Austria Center in Vienna. The next Annual General Meeting for 2008 will take place on 9 June 2009. The invitation to shareholders for this meeting will be published at least three weeks in advance.
Raiff eisen International operates in 17 markets, each with their own identity and culture. That the company appreciates those cultures may be seen, for example, in its sponsorship of local traditions. The international composition of its more than 63,000-strong workforce also testifi es to the company’s openness to diversity.
In addition to environmentally and socially responsible conduct directly related to core business, Raiff eisen International is involved in achieving goals through donations and sponsoring. It was, for example, the fi rst private company to contribute considerably to fi nancing the Albanian government’s project “To bring the Internet to every school”. It has thus made possible in the last three years the creation of 12 computer areas in higher schools across Albania. Furthermore, the H. Stepic CEE Charity, established by Raiff eisen International’s CEO, is working to help children, teenagers, and young women in economically disadvantaged regions of Central and Eastern Europe.
Furthermore, against the background of the Ukrainian currency’s devaluation against the US$, the hedge for capital investments in Ukraine became partly ineff ective and was therefore recognized in the income statement in October. A resulting charge of € 88 million was made to earnings.
Infl uenced in particular by the negative eff ect of currency translation, own funds only rose by 5 per cent to € 6,991 million. The core capital ratio based on total risk therefore fell by 2.4 percentage points to 8.1 per cent, and the own funds ratio fell by 2.7 percentage points to 9.7 per cent.
foreign exchange transactions for hedging measures. Raiff eisen Bank Aval in Ukraine and Raiff eisen Bank in Romania made substantial contributions to this result of € 47 million and € 44 million, respectively. The valuation of the foreign exchange positions after the severe devaluations of the Ukrainian hryvnia and Romanian leu was responsible for that.
In view of the diffi cult market environment, targeted use was made of the Group’s advantages, and fi nancing activities were bundled to a greater extent. Cooperation was intensifi ed between Raiff eisen International (Treasury Coordination), RZB (Treasury & Global Markets ), and the network banks in preparing structured treasury products and meeting wholesale funding needs. Raiff eisen International and RZB carried out a liquidity management project and set up a liquidity committee in the fi rst half of 2008. In the middle of the year, an inter national sales network was established between RZB and the network banks, which now serves as a virtual platform for joint activities in development, placement, and trading of fi nancial market products.
its refi nancing. The task of these institutions lies essentially in promoting the region’s economic development by establishing and expanding a functioning banking and fi nancial system. Among other things, they make fi nancial resources available for that purpose. The Raiff eisen International Group fulfi lls all the prerequisites for distribution of such supranational credit to customers in the segment of small and medium-sized businesses. The importance of supranational institutions for Raiff eisen International’s network is underscored by a refi nancing total of € 1.4 billion outstanding at year’s end, granted primarily on a long-term basis. A further intensifi cation of this cooperation appears likely in 2009, especially in view of the fi nancial market environment.
As a result, the more developed instruments form a standardized system with whose help all risks arising from the portfolios of the network banks and leasing companies can be reviewed and assessed.
Uniform process and valuation methods are the declared goal of all Raiff eisen International activities in the areas of Basel II and data quality management.
Data quality management is also an important aspect of implementing Basel II. The quality of data is reviewed on a monthly basis based on centrally developed indicators. Any needed corrections are made immediately. In addition, defi ciencies in data quality are proactively avoided by continuously optimizing credit processes both in the central offi ce and for the local portfolios in the network units.
The average age of employees in all network banks remained comparatively low at 33 years and thus refl ects Raiff eisen International’s role as a young and dynamic bank. The personnel structure also confi rms how highly qualifi ed the staff is. Raiff eisen International’s ratio of university graduates was an impressive 72 per cent at the end of 2008. Women accounted for 70 per cent of the employees. However, because conditions in Raiff eisen International’s markets vary considerably, there are divergences from these averages in some countries. The diff erences relate primarily to labor market structures, educational systems, and general economic conditions.
Lower imports of consumer and capital goods and hence more balanced current accounts should be one important consequence of the decline in credit growth and direct investment. That is a positive thing inasmuch as current account defi cits in some countries have already reached exceptionally high levels in the past years.
Income taxes rose on the comparable period by 25 per cent to € 84 million. Profi t after tax and minority interests amounted to € 429 million.
Subsidiaries such as Raiff eisen Leasing d.o.o. Sarajevo and brokerage fi rm Raiff eisen Brokers d.o.o. complete the range of off erings in Bosnia and Herzegovina.
After 54.1 per cent in the preceding year, the cost/income ratio of Raiffeisen in Croatia improved in 2008 to 61.2 per cent. Thanks primarily to the widely diversified range of services such as leasing, asset management, factoring, insurance, and pension plans, profit before tax rose in 2008 to € 76 million. Profit after tax amounted to € 61 million. The return on equity thus came to 11.7 per cent before tax, and to 9.3 per cent after tax.
Raiffeisenbank Austria was awarded the title of Best Bank in Croatia by The Banker in 2008.
Moody’s gives Raiff eisen Bank a foreign currency deposit rating of Baa3 with a stable outlook. Global Finance awarded the bank the title of Best Consumer Internet Bank in Romania in 2008.
Net fee and commission income registered growth in 2008 of € 64 million to € 457 million. Payment transfer business was the most important source at € 261 million. Foreign currency and precious-metals business contributed € 146 million.
The cost/income ratio of Raiffeisen in Russia improved to 42.6 per cent in 2008 from 49.1 per cent in the preceding year. Profit before tax amounted to € 438 million at the end of 2008 (2007: € 260 million), and profit after tax to € 313 million (2007: € 197 million). The resulting return on equity was 36.2 per cent before tax and 25.8 per cent after tax.
Net income from fi nancial investments 1 0 (9) (1) (9)
Net income from disposal of group assets – – – 27 27
Net income from disposal of group assets — 5,834 (188) 2,213
Net income from disposal of group assets 14,144 204 13,080 (911)
Deferred taxes on income and expenses directly recognized in equity 2,420 – – –
Gains (losses) from disposals of tangible fixed assets and financial investments 2,754 2,648
In order to ensure a transparent and significant segment reporting, the following control and reporting indicators were used to evaluate the performance of a CGU.
January 2009), IAS 23 (Borrowing Costs; effective date: periods beginning on or after 1 January 2009), IAS 32 (Financial Instruments: Presentation; effective date: periods beginning on or after 1
On each balance-sheet date, goodwill is examined with a view to their future economic utility on the basis of Cash Generating Units. The Cash Generating Units are defined by the management. The carrying value of the Cash Generating Unit (including any allocated goodwill) is compared with their recoverable value. The recoverable value represents the higher of an item’s value in use and the fair value less cost to sell. It is based on the expected cash flows in accordance with the business plan of the units. They are discounted at an interest rate reflecting the risk involved. The estimation of future earnings requires judgement of the past and actual performance and the expected development in the respective markets and overall macro-economic environment.
These instruments are measured at fair value according to IAS 39. They are stated under the balance sheet item financial investments, current income is shown under net interest income, and valuation gains and losses and proceeds from sale are stated in net income from financial investments.
c) Hedging of a net investment (capital hedge) In the Group, hedges of investments in economically independent sub-units (IAS 39.102) were made in order to reduce differences arising from the translation of equity. Liabilities in foreign currency, currency options, currency futures and currency swaps are mainly used as hedging instruments. The resulting gains and losses from currency translation are shown in equity without affecting profit and are separately disclosed in the statement of changes in equity, insofar as the hedging relation is effective. The ineffective part of this hedge relation is recognized in profit under net trading income. The related interest components are shown in net interest income. There were no deferred taxes calculated due to the applied exception regulations according to IAS 12.39.
Securitization transactions The Group securitises several financial assets from transactions with private customers and business customers by selling them to a special purpose vehicle which issues securities to investors. The assets transferred are derecognized fully or partly by applying the relevant accounting principles. Rights to securitized financial assets can be retained in the form of junior or subordinated tranches, interest claims or other remaining claims.
Shareholdings in subsidiaries not included in the consolidated financial statements because of their minor significance and shareholdings in companies that are not valued at equity are shown under financial investments and are measured at amortized cost if no share prices are available.
Investment property is reported at amortized cost using the cost model permitted by IAS 40 and is shown under fixed assets because of minor importance. Income resulting from investment property is shown in other net operating income.
Under defined contribution plans, the company pays fixed contributions into a separate entity (a fund). These payments are recognized as staff expense in the income statement.
Net fee and commission income mainly includes income and expenses arising from payment transfers, credit business and foreign exchange business. Fee and commission income and expenses are accrued in the reporting period.
The net interest income position includes income and expenses from items of banking business, dividend income and commissions with interest-like characteristics.
Companies can carry out business with related parties that may affect the entity’s asset, financial and earnings position. The following related companies have been identified mainly as related parties: Parent companies are Raiffeisen-Landesbanken-Holding GmbH and Raiffeisen Zentralbank Österreich Aktiengesellschaft.
Assets under finance leases break down as follows: Gross investment value 4,692,700 4,065,461
Risk committees Committees bring together decision makers from different units (and therefore also representatives of Raiffeisen International) involved in risk management activities. The Group Risk Committee (GRC) secures coherent regulations within RZB Group with respect to the definition and measurement of risks.
Limit application process In the non-retail divisions, no lending transaction is performed without running through the limit application process beforehand. This process is also consistently applied – besides new lending – to overdrafts, increases in existing limits, extensions, and if changes in the risk profile of a borrower occur (e.g. with respect to the financial situation, the terms and conditions, or collateral) compared to the time an original lending decision was made. In addition it is used when setting limits for particular borrowers in treasury and investment banking operations, and for equity participations.
6.3 Acceptable project risk profile – average risk 664,786 18.4% 326,356 20.8%
Fair values different from the carrying amount are calculated for fixed-interest loans and advances to and deposits from banks or customers, if the remaining maturity is more than one year. Variableinterest loans and advances and deposits are taken into account if they have an interest rollover period of more than one year. The fair value of loans and advances is calculated by discounting future cash flows and using interest rates at which similar loans and advances with the same maturities could have been granted to customers with similar creditworthiness.
As Raiffeisen International is part of RZB Group, the main focus is on the core capital ratio. This control is monitored by the Managing Board.
All members of the Supervisory Board declare themselves to be independent in the meaning of criteria of independence agreed by the Supervisory Board and in conformity with the Austrian Corporate Governance Codex. None of the members holds a more than 10 per cent share in the company.
JLLC "Raiffeisen-leasing", Minsk (BY) 4,300,250,000 BYR 83.9% FI OAO Priorbank, Minsk (BY) 412,279,277,350 BYR 87.7% BA OOO “Raiffeisen Capital” Asset-Management Company, Moscow (RU) 225,000,000 RUB 100.0% FI OOO Raiffeisen-Leasing, Moscow (RU) 491,000,000 RUB 87.5% FI Raiffeisen Bank d.d. Bosna i Hercegovina, Sarajevo (BA) 237,388,000 BAM 97.0% BA Raiffeisen Bank Kosovo J.S.C., Pristina (RS) 58,000,000 EUR 100.0% BA Raiffeisen Bank Polska S.A., Warsaw (PL) 998,018,370 PLN 100.0% BA Raiffeisen Bank S.A., Bucharest (RO) 1,196,258,639 RON 99.5% BA Raiffeisen Bank Sh.a., Tirane (AL) 4,348,232,686 ALL 100.0% BA Raiffeisen Bank Zrt., Budapest (HU) 45,129,140,000 HUF 70.3% BA Raiffeisen banka a.d., Belgrade (RS) 27,466,157,580 RSD 100.0% BA Raiffeisen Banka d.d., Maribor (SI) 16,355,847 EUR 86.3% BA Raiffeisen Capital & Investment S.A., Bucharest (RO) 1,600,000 RON 99.5% FI Raiffeisen Factoring Ltd., Sofia (BG) 1,000,000 BGN 100.0% FI Raiffeisen Factoring Ltd., Zagreb (HR) 15,000,000 HRK 73.4% FI Raiffeisen Invest d.o.o., Zagreb (HR) 8,000,000 HRK 73.4% FI Raiffeisen Investment Fund Management Zrt., Budapest (HU) 100,000,000 HUF 70.3% FI Raiffeisen Leasing Aval LLC, Kiev (UA) 58,208,527 UAH 87.6% FI Raiffeisen Leasing Bulgaria OOD, Sofia (BG) 5,900,000 BGN 81.1% FI Raiffeisen Leasing d.o.o., Belgrade (RS) 226,544,550 RSD 87.5% FI Raiffeisen Leasing d.o.o., Ljubljana (SI) 3,738,107 EUR 75.0% FI Raiffeisen Leasing d.o.o., Sarajevo (BA) 7,087,590 BAM 85.8% FI Raiffeisen Leasing IFN S.A., Bucharest (RO) 14,935,400 RON 87.2% FI Raiffeisen Leasing sh.a., Tirane (AL) 123,000,000 ALL 93.8% FI Raiffeisen Lízing Zrt., Budapest (HU) 225,620,000 HUF 72.7% BA Raiffeisen Mandatory Pension Fund Management Company d.d., Zagreb (HR) 110,000,000 HRK 73.4% FI Raiffeisenbank (Bulgaria) EAD, Sofia (BG) 544,773,052 BGN 100.0% BA Raiffeisenbank a.s., Prague (CZ) 6,564,000,000 CZK 51.0% BA Raiffeisenbank Austria d.d., Zagreb (HR) 3,698,932,000 HRK 73.4% BA Raiffeisen-Leasing d.o.o., Zagreb (HR) 30,000,000 HRK 74.2% FI Raiffeisen-Leasing Polska S.A., Warsaw (PL) 150,003,800 PLN 87.5% FI Raiffeisen-Leasing Real Estate, s.r.o., Prague (CZ) 10,000,000 CZK 69.0% FI Raiffeisen-Leasing, spolecnost s.r.o., Prague (CZ) 50,000,000 CZK 63.0% FI RI Eastern European Finance B.V., Amsterdam (NL) 400,000 EUR 100.0% FI RI FINANCE (JERSEY) LIMITED, St. Helier (JE) 500,000,002 EUR <0.1% FI Tatra Asset Management sprav.spol., a.s., Bratislava (SK) 50,000,000 SKK 63.0% FI Tatra banka a.s., Bratislava (SK) 38,319,164 EUR 63.0% BA Tatra Leasing spol. s r.o., Bratislava (SK) 200,000,000 SKK 69.3% FI TOO Raiffeisen Leasing Kazakhstan, Almaty (KZ) 85,800,000 KZT 75.0% FI Ukrainian Processing Center, JSC, Kiev (UA) 180,000 UAH 100.0% BR VAT Raiffeisen Bank Aval, Kiev (UA) 2,419,934,908 UAH 95.9% BA ZAO Raiffeisenbank, Moscow (RU) 36,711,260,000 RUB 100.0% BA
Core capital ratio – This ratio’s numerator is core capital (tier 1) and its denominator are the risk-weighted assets of credit risk.
Hungary Raiff eisen Bank Zrt. Akadémia utca 6 1054 Budapest Phone: +36-1-484 4400 Fax: +36-1-484 4444 SWIFT/BIC: UBRTHUHB www.raiff eisen.hu
Kosovo Raiff eisen Bank Kosovo J.S.C. Rruga UÇK, No. 51 Prishtina 10000 Phone: +381-38-222 222 Fax: +381-38-2030 1130 SWIFT/BIC: RBKORS22 www.raiff eisen-kosovo.com
Serbia Raiff eisen Leasing d.o.o. Milutina Milankovića 134a 11070 Novi Beograd Phone: +381-11-20177 00 Fax: +381-11-31300 81 www.raiff eisen-leasing.rs
Investor relations contact Phone: +43-1-71707 2089 E-mail: investor.relations@ri.co.at Internet: www.ri.co.at → Investor Relations