Net provisioning ratio (risk-weighted assets) 0.84% (0.13) PP 0.97% 0.81% 0.98% 0.86%
Group management report General economic environment .............................................................................. 70 Banking sector development in CEE ....................................................................... 73 Highlights of the financial year 2007 .................................................................... 73 Summary of consolidated performance ................................................................. 75 Detailed review of items in the income statement .................................................. 81 Balance sheet development .................................................................................... 88 Development of equity ............................................................................................. 91 Risk management ..................................................................................................... 93 Operations and IT ................................................................................................. 100 Human resources ................................................................................................... 102
I.: That’s easy to find. Taxi and bus are signposted. The signs are behind you.
businessman – üzletember account – tanácsadó manager leasing – lízing real estate – ingatlan central – központi raktár warehouse cost estimate – költségbecslés investment – beruházási costs költségek documents – iratok address – cím business card – névjegykártya suggestion – javaslat
A.: Do you want to setup a central warehouse in Győr?
Vocabulary: Grammar: Present – past: can – he could, think – I thought, collect – he collected, dream – she dreamed, have – we had, be – they were, have – I had, write – you wrote.
Vocabulary, Croatian: Adjectives: strong – weak, big – small, old – young, beautiful – ugly, fat – thin, long – short, loud – quiet, a lot – a little, soft – rough.
S.: Nëse mendohem mirë a është e mundur të më jepni vetëm kartëmonedha të mëdha? Ndryshe me fryhet portofoli!
Lesson asking price – База за преговори cash payment – Плащане в брой purchase – Покупка small car – Малка кола winter tires – Зимни гуми year of – Година на manufacture производство
T.: I also go to the market a lot. The vegetables, in particular, are always fresh and cheaper there.
S.: But the choice on the market is not so big.
to pay – платити room price – вартість номера per cent – відсоток discount – знижка credit card – кредитна картка
Raiffeisen International Bank­Holding AG continued its successful growth trend again in 2007. That is especially remarkable because the past year was one of great challenges for the financial sector. Our success in 2007 thus confirms the correctness of our strategy and the prudence of Raiffeisen International’s management.
M an ag in g Bo ar d the gable cross
How satisfied are you with the price performance of Raiffeisen International stock? I can only say I am satisfied with the stock’s performance, with qualifications. Unfortunately, we cannot disconnect from the general market trends. But we have held up very well relative to the performance of other bank stocks. With a market capitalization of about 16 billion euros at the end of last year, we are one of the three largest companies in Austria. We can be proud of that!
Some of the analyses published by these firms are also available as PDF documents at www.ri.co.at ▸ Investor Relations ▸ RI Shares ▸ Analyst Reports.
Price as of 31 December 2007 € 103.60 High/low (closing prices) in 2007 € 122.5 / € 98.25 Earnings per share for 2007 € 5.80 Market capitalization as of 31 December 2007 € 16.0 billion Average daily trading volume (single counting) in 2007 294,787 shares Stock exchange turnover (single counting) in 2007 € 7.9 billion Free float as of 31 December 2007 31.5%
If Supervisory Board members get into conflicts of interest, they must disclose that without delay to the Chairman of the Supervisory Board. If the Chairman gets into conflicts of interest, he must disclose them to the Deputy Chairman without delay.
Economic growth in Central and Eastern Europe (CEE) continued in 2007 almost seamlessly from the record year 2006. Real GDP in the new EU member states of Central Europe (Poland, Hungary, Czech Republic, Slovakia, and Slovenia) grew on average by 6.0 per cent in 2007, according to current estimates, which is just below the record increase of 6.1 per cent in 2006. The slowdown of economic activity in Hungary brought about by budget consolidation measures was the primary factor responsible for the slight slowing of growth.
Provisioning for impairment losses rose less than propor­ tionately With an increase of 16 per cent, allocations to provisioning for impairment losses remained significantly below business volume growth in 2007. New allocations increased by € 48 million to € 357 million. While specific provisions rose by 49 per cent, portfolio­related provisions actually
Corporate customers With a 54 per cent share of total earnings, the corporate customer segment is the largest and continues to develop satisfactorily. Earnings before tax rose by 43 per cent to € 669 million, which was higher than business volume growth. Risk assets allocable to the segment increased by 30 per cent to € 24.7 billion. With an increase of 39 per cent, net interest income contributed to the good result, as did net commission income, which rose by 26 per cent. General administrative expenses increased by 32 per cent. The cost/income ratio improved by another 0.9 percentage points to 35.8 per cent. Only a moderate increase in provisioning for impairment losses of 17 per cent was registered, which was below the increase in net interest income. Since the equity allocable to the segment rose by 50 per cent, the return on equity fell slightly, by 1.5 percentage points to 30.2 per cent. The average number of employees climbed by 10 per cent to 8,089.
Participations and other The one­off effects in 2006 (sales of Raiffeisenbank Ukraine and the minority stake in Bank TuranAlem) were booked in the participations and other segment, which had a positive result of € 507 million. Adjusted for these one­off effects, the segment’s result in 2006 were minus € 81 million. This figure in 2007 was minus € 106 million. The result is negative because in addition to net income from equity holdings and non­banking activities, the segment includes the costs of central group management. Those remain in the segment and are not distributed to the other business areas. It also includes the computational results from the investment of equity.
Other banking services FX, notes/coins, precious metals business Securities business Loan and guarantee business Payment transfers
Income from disposal of group assets Income from disposal of group assets amounted to € 27 million in 2007 after € 20 million in the preceding year (excluding one­off effects). It came pri mar­ ily from the sale of two fully consolidated project companies in Hungary. SINESCO Ener giaszolgáltató Kft., an energy gener­ ating company in Budapest, was sold at the end of March 2007, which netted € 11 million. Furthermore, Arena Corner Ingatlanfejlesztö Kft., a real estate project in Budapest, was sold in July 2007, leading to a deconsolidation effect of € 15 million.
Money market business amounted to about € 6.3 billion on the balance sheet date (plus 13 per cent). The share of funding from the RZB Group was about 57 per cent at the end of December 2007.
The share of other liabilities rose by 1 per­ centage point to 6 per cent. The liabilities evidenced by paper included in this item, i.e., funding from the capital market by the issuance of debt securities, grew by 63 per cent to € 2.3 billion. That increase is mainly due to new issues in Central Europe (Slovakia) and the CIS (Ukraine).
Paid-in capital, consisting of subscribed capital and capital reserves, increased on the preceding year by 64 per cent, or € 1,197 million, to € 3,057 million. After placement costs, the capital increase in October 2007 amounted to € 1,220 million. The net effect of share buy­backs and the expenses for the Share Incentive Program, booked directly to equity, reduced paid­in capital by € 23 million.
Additional own funds increased by 18 per cent, or € 149 million, to € 957 million, including € 91 million of supplementary capital (upper Tier 2). The greater part of this subordinated capital, needed primarily because of local supervisory regulations, is financed by RZB.
M an ag in g Bo ar d signed to supervise him is automatically informed and can either correct or au­ thorize the rating after consulting with Sergej.
is now under way for RZB as parent company and for some units in the new EU countries. That should be completed in the first half of 2008 in line with the official implementation schedule. Since the Group’s declared goal is to calculate the risk assets for all material portfolios using the IRB approach, its implementation for all remaining countries (including Russia and Ukraine) continues to be pursued with the same priority as in past years.
The legal merger of Impexbank into Raiff­ eisenbank in Russia was successfully completed in November. As a result of the merger, a common front­end system has been installed that allows customers to be served with maximum efficiency in the whole network. The range of products and services of both banks has also been standardized. Work on standardizing and upgrading the entire IT environment is in high gear.
Payments A center for payment settlement and other back­office activities of Raiffeisen International began operation in Romania as planned in spring 2007. In a first step, CRISP (Centralized Raiffeisen Inter national Services & Payments SRL) functions as a SWIFT hub for eleven subsidiary banks in Central and Eastern Europe. In a second step, international payments are centra lized by way of joint IT software. Together with the SWIFT transactions and international payments, audits are per­ formed centrally by CRISP in the areas of compliance and anti­money laundering.
Through the use of e­learning, Raiffeisen International will be able to support em ployees of all levels more quickly, directly and efficiently in their education and training and in that way contribute substantially to the company’s success.
Earnings grew significantly in the region of Central Europe in the reporting period. With an increase of € 112 million, or 36 per cent on the preceding year, an impressive increase was registered in profit before tax. Initial consolidation of asset management companies in Slovakia and Hungary resulted in an additional contribution to annual earnings in the amount of € 20 million. The return on equity before tax for Central Europe fell slightly, by 1.7 percentage points to 21.7 per cent. The main reason for that was an increase of equity by 46 per cent on the comparable period.
Raiffeisenbank and eBanka were prepared organizationally for their impending merger already last year. The process of legally combining the two banks was initiated at the beginning of 2008. The aim is to obtain regulatory approval in the third quarter of 2008.
MasterCard International honored Raiffeisenbank as The Most Dynamic Bank in the Czech Republic.
Thanks to its extensive product range, Raiffeisen Bank increased deposits in the retail customer segment again last year by 7 per cent to € 2.6 billion.
Despite rigid regulatory growth restric tions, Raiffeisenbank increased its customer loan portfolio by 17 per cent in 2007 to € 3.2 billion not least because of increased concentration on business with personal customers and small and medium-sized enterprises. Loans in that segment alone rose by 16 per cent in 2007 to € 2.0 billion. Expansion of the branch network by 9 outlets led, among other things, to a rise of primary deposits from personal customers by 11 per cent to € 1.5 billion.
Among the country’s four pension funds, Raiffeisenbank ranks as Number 2 with
The Banker awarded Raiffeisen Bank the title Best Bank in Kosovo last year.
Net income/loss on derivative financial instruments amounted to minus € 31 million. That was largely based on a valuation result in Russia, where interest rate swap positions were taken for the purpose of reducing interest rate structure risk whose valuation at year’s end yielded losses of € 26 million as a result of market turbulence.
M an ag in g Bo ar d of Impexbank, which was successfully completed in November.
The subsidiary Priorleasing maintained its dominant position among the country’s leasing companies again in 2007.
Net interest income after provisioning 429,061 496,445 536,178 600,188 Net commission income 275,075 297,151 322,765 354,844 Trading profit 35,605 43,721 41,435 7,130 Valuation result from derivatives (2,683) 6,836 (26,336) (7,987) Net income from financial investments 806 (7,964) (2,894) 809 General administrative expenses (476,533) (526,211) (534,963) (646,313) Other operating profit/loss 16,986 3,933 (2,455) (23,542) Income from disposal of group assets 14,144 204 13,080 (911)
Payments for purchase of: Financial investments and equity participations (1,601,710) (1,996,884)
In the financial year 2007, the following companies were included in the consolidated financial statements for the first time: Name Share Included as of
RLRE & EUBE OC - TERRONIC I., s.r.o., Prague (CZ) 69.0% 20/4 Sold
In the case of a subsidiary not headquartered in the Euro-area (GSI Group Software Investment AG, Zug), the euro was the reporting currency for measurement purposes given the economic substance of the underlying transactions. Roof Russia S.A., Luxembourg, carries out its business transactions and refinancing in USD, therefore the functional currency is the USD.
Cash flow hedge accounting according to IAS 39 applies for those derivatives which are used to hedge against the risk of fluctuating future cash flows. Especially variableinterest liabilities are subject to such cash flow risks.
If a permanent impairment was to be expected, extraordinary write-downs were carried out. In the event that the reason for the write-down no longer applies, a write-up will take place up to the amount of the amortised cost of the asset.
The actuarial calculation of pension obligations for active employees is based on the following assumptions: Effective salary increase for active employees 3.0 3.0
Trading profit comprises the customer margins resulting from the foreign exchange business, results due to foreign exchange revaluations and all realised and unrealised gains and losses from financial assets and liabilities at fair value. In addition, it includes all interest and dividend income attributable to trading activities and related refinancing costs.
General administrative expenses contain staff expenses, other administrative expenses and depreciation on tangible and intangible assets. They break down as follows: Staff expenses (1,084,847) (824,772) Wages and salaries (835,884) (632,309)
Provisions for impairment losses are formed in accordance with uniform Group standards and cover all recognisable counterparty risks. A table with the development of the impairment losses for loans and advances can be found in the risk report on page 244. Provisions for impairment losses are allocated to the following asset classes according to Basel II definition: Corporate customers – large 465,175 374,801
Tangible fixed assets (683,971) 136 (152,634) 1,153,596 Land and buildings used by the Group for own purposes (122,712) – (20,516) 505,255
The consolidated financial statements consist of the following volumes of assets and liabilities denominated in foreign currencies: (38) Foreign assets/liabilities
The lending portfolio and individual borrowers are subject to constant monitoring. The main purposes of monitoring are to ensure that the borrower is meeting the terms and conditions of the contract as well as following the obligor’s economic development. A review is conducted at least once annually for corporate customers, financial institutions, and sovereigns. This includes rating validation and the re-evaluation of financial and tangible collaterals.
Individual loan loss provisions 618,160 (9) 541,585 (260,156) (86,589) (9,394) 803,597 Loans and advances to banks 161 – 19 (1) – (32) 146
Corporate customers – small business 4,369,308 1,500,308 1,494,779 31/12/2006 Maximum credit exposure Fair value of collaterals
Alongside value-at-risk calculations, interest-rate risk in the banking book is also estimated using well-established tools of capital and interest maturity analysis. Furthermore, because of the special importance and complexity of interest-rate risk in the banking book, RZB also employs interest-income scenarios and simulations. Managing the structure of balance sheets is a core task of treasury departments in network banks, which receive assistance from asset/liability management committees.
The following report shows cumulative excess liquidity and the ratio of due assets to liabilities (liquidity ratio) for select maturities, taking into account balance sheet items and off-balance-sheet transactions. Based on expert opinions, statistical analyses and country specifics, this process also incorporates cautious estimates on the liquidation of defined assets or on the so-called sediment of customer deposits.
The total volume of unsettled financial instruments as of 31 December 2006 breaks down as follows: Nominal amount by maturity Fair values
Peter L. Woicke 24 January 2005 Retired as of 31 December 2007
"Asset Management Company "Raiffeisen Aval", Kiev (UA) 5,583,280 UAH 100.0% FI Biroul de Credit S.A., Bucharest (RO) 4,114,615 RON 14.1% FI Centralised Raiffeisen International Services & Payments S.R.L., Bucharest (RO) 6,800,000 RON 100.0% BR CJSC Areximbank "Armenian-Russian Export-Import Bank", Erevan (AM) 2,497,248,000 AMD 19.9% FI CREDEX FINANTARI IFN SA, Bucharest (RO) 15,112,500 RON 30.0% FI Czech Real Estate Fund (CREF) B.V., Amsterdam (NL) 18,000 EUR 20.0% FI Doplnková dôchodková spolo nos Tatra banky, a.s., Bratislava (SK) 50,000,000 SKK 100.0% FI ELIOT, s. r. o., Bratislava (SK) 48,610,000 SKK 100.0% BR Fondul de Garantare a Creditului Rural S.A., Bucharest (RO) 2,914,750 RON 30.8% FI Raiffeisen Asset Management (Bulgaria) EAD, Sofia (BG) 250,000 BGN 100.0% FI Raiffeisen BROKERS doo, Sarajevo (BA) 1,000,000 BAM 100.0% FI Raiffeisen Capital & Investment S.A., Bucharest (RO) 1,600,000 RON 100.0% FI
Romania Raiffeisen Bank S.A. Piaţa Charles de Gaulle 15 011857 Bucureşti 3 Phone: +40-21-306 1000 Fax: +40-21-230 0700 SWIFT/BIC: RZBRROBU www.raiffeisen.ro