Balance sheet Loans and advances to banks 8,202 8,202 41.6% 5,794 4,779 3,521 2,719
Return on equity (ROE) after tax 39.1% 21.0% 3.4 PP 17.6% 17.6% 19.8% 15.4%
Consolidated return on equity 42.6% 21.4% 4.2 PP 17.2% 17.0% 19.4% 13.8%
Vodka consumption is falling at the moment, a trend that some see as a sign of economic stability. Vodka has always been a child of its time. With the collapse of the ruble in 1998, the cheap vodka brand “Crisis” was the thing to drink, but in recent months “Putinka” has become especially popular. Vodka has always played an important role in politics as well. Lenin saw it as the drug of capitalism, demanded a dictatorship of sobriety, and deported members of the most famous vodka dynasty. But the results, even when viewed soberly, were no more successful than similar projects undertaken by his successors. Apart from the wines made by the Rothschilds, there is hardly another beverage that has so many legends connected with it as does vodka. They begin with the story of how it was first made back in the 15th century, but both Poland and Russia claim this honor for themselves.
What remained, however, were the blinis. These thin pancakes of buckwheat flour can be found today as a convenience product of the “caviar society” in any gourmet shop worthy of the name. Aficionados, however, insist on the necessity of freshly preparing them in a heavy cast-iron blini pan. Sour cream is an obligatory addition, whether the blinis are served with caviar or salmon. What many people don’t realize, however, is that blinis can also be served with a mushroom, vegetable or meat filling, or simply brushed with melted butter. Adding lots of butter to the yeast batter as well makes the blinis especially light.
Blini Ingredients for 4 portions: 1/2 liter of milk, 10g of yeast, 250g of buckwheat flour, 1/2 tsp. of sugar, 1/2 tsp. of salt, 40g of butter, 1 egg yolk, 50g of clarified butter, 200g of sour cream and 150g of caviar.
Pre face Managing Board Super v isor y Board‘s Repor t Over v iew In t e r v iew S tock
April May June July Aug Sept Oct Nov Dec 05 Jan Feb March April May June July Aug Sept Oct Nov Dec 06
Raiffeisen International is one of the 20 stocks represented in the most important Austrian index, the ATX. It is also in the Dow Jones Euro STOXX Banks, the key index for European banks.
Net interest income grew by 47 per cent, or  562 million, to  1,764 million. That puts its share of total operating income at 61 per cent, 3 percentage points below the preceding year. The increase in net commission income (plus 54 per cent to  933 million) and trading profit (plus 73 per cent to  175 million) were even stronger. Their share of operating income went up by 1 percentage point each. Other operating income represents only a subordinate role in the composition of operating earnings.
Raiffeisen International 2006 those investments are still not complete, which is shown by a 51 per cent rise of general administrative expenses. For that reason, the cost/ income ratio of 72.3 per cent is still relatively high, but it nevertheless improved by 6.3 percentage points. The risk assets allocable to retail customers increased by more than half to  14.1 billion. However, with higher volume, it was necessary to make increased provisioning for impairment losses, which nearly doubled to  191 million. One-third of that is portfolio-based provisioning. The return on equity rose significantly from 15.1 per cent to 24.8 per cent. About four of five employees now work in the retail customers segment.
As a consequence of acquisitions, the average number of staff (full-time equivalents) in the Group rose by 72 per cent, or 20,585, to 49,173. Raiffeisen Bank Aval, which was not fully included in 2005, was primarily responsible for this increase.The average number of staff grew by 23 per cent in Central Europe and by 14 per cent in Southeastern Europe, but tripled in the CIS region. Altogether, the increase of staff is significantly above that of staff expenses, which is due to lower staff expenses in the expanding markets. Operating income per staff member declined, however, from  66 thousand to  58 thousand.
Growth on the asset side was driven by loans and advances to customers, which increased by 41.8 per cent, or  10.3 billion, to a total of  35.0 billion. Changes in the scope of consolidation contributed  0.4 billion. Adjusted for impairment loss provisioning of  872 million, loans and advances to customers now account for 61 per cent of balance sheet assets.
We expect that corporate customer business will again make the largest contribution to overall profit in 2007. The focus on the mid-market segment will be intensified this year. The emphasis in the retail segment, which is developing very well, will be on further expansion of our branch network and of alternative distribution channels e.g. the internet and call centers.
Raiffeisen International classifies its business primarily according to customer groups: • Corporate customers • Retail customers • Treasury • Participations and other
Due to the range of innovative products, Raiffeisen Bank is now fourth in the personal banking segment. Among other innovations, the bank launched a unique card product that combines the advantages of all card types, with purchase transactions being debited from a spending limit and cash-withdrawals charged to the cardholder’s current account. The bank succeeded in maintaining its excellent standing regarding corporate customers. Its position as number four in corporate loans was supported by the enlargement of the successful product group “Instant loans”. In total, loans to corporate customers increased by 29 per cent to  2.7 billion.
New loan and operational products were developed for the small and medium-sized enterprise customers, resulting in an increase of 29 per cent in loans up to  217 million. Deposits increased by 32 per cent to  461 million.
Its corporate loan portfolio surged by 71 per cent to  3.8 billion. Its customer base in that segment grew by half to nearly 5,800. The bank acted as arranger of 17 corporate bond issues totaling  1.4 billion and arranged 27 syndications amounting to  3.6 billion.
Gains (losses) from disposals of tangible fixed assets and financial investments (825) 1,204
Raiffeisen International Bank-Holding AG is a financial holding company domiciled at Am Stadtpark 9, A-1030 Vienna and registered in the Companies Register at the Vienna Commercial Court (Handelsgericht Wien) under Companies Register number FN 122.119m. The shares have been listed on the Prime Market of the Vienna Stock Exchange since 25 April 2005. Raiffeisen Zentralbank Österreich AG, Vienna, holds the majority stake in the company, totalling 70 per cent of its issued share capital as of the balance sheet date. The company also belongs to the Group of RaiffeisenLandesbanken -Holding GmbH, Vienna, which is the ultimate parent. This financial holding owns the majority stake in Raiffeisen Zentralbank Österreich AG. Moreover Raiffeisen International is also included in the consolidated financial statements of Raiffeisen Zentralbank Österreich AG.
IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 7 Cash Flow Statements IAS 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies IAS 10 Events after the Balance Sheet Date IAS 12 Income Taxes IAS 14 Segment Reporting IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Borrowing Costs IAS 24 Related Party Disclosures IAS 26 Accounting and Reporting by Retirement benefit Plans IAS 27 Consolidated and Separate Financial Statements IAS 28 Investments in Associates IAS 29 Financial Reporting in Hyperinflationary Economies IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions IAS 32 Financial Instruments: Presentation IAS 33 Earnings per Share IAS 34 Interim Financial Reporting IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement IAS 40 Investment Property IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
Banks: OAO “Impexbank”, Moscow (RU) 100.0% 1/5 Acquisition eBanka a.s., Prague (CZ) 100.0% 1/11 Acquisition
OAO “Impexbank”, Moscow, was consolidated in the Group for the first time on 1 May 2006. The contract to purchase 100 per cent of the shares in Impexbank was signed on 31 January 2006. The approvals required for the acquisition were obtained from the Central Bank of Russia and antitrust authorities in Russia and in Austria by April 2006, the closing took place on 28 April 2006. The total purchase price for OAO “Impexbank” amounted to USD 563,200 thousand.
Management’s Report Segment Reports Financial Statements Glossary Contacts www.ri.co.at 3. Loans and advances 4. Available-for-sale financial assets 5. Liabilities 1. Financial assets or liabilities recognised at fair value via the income statement 1 a. Trading assets/liabilities
The treasury segment encompasses the treasury’s proprietary trading and investment banking activities, which are carried out only in a few Group units.
Net income from other current financial assets 598 6,080 Net valuations of other current financial assets (3,193) 1,571
Income taxes break down as follows: Raiffeisen International Bank-Holding AG and three of its subsidiaries form a joint tax entity headed by Raiffeisen Zentralbank Österreich AG. This enables them to allocate Group member losses to the Group parent’s tax income. As tax apportionment Raiffeisen International Bank-Holding AG received a tax equalization of € 1,781 thousand (2005: € 8,003 thousand) from Raiffeisen Zentralbank Österreich AG.
Loans and advances to banks classified regionally (counterparty’s seat) are as follows: Loans and advances break down into the following bank segments: Multinational development banks (MDB) 12,357 5,114
Additions to intangible and tangible assets did not include major individual investments.
Office furniture and equipment as well as other tangible fixed assets (322,513) 64 (72,771) 370,961
Deferred tax assets 206,690 184,026 Loans and advances to banks 430 10,547
Any other business 532,634 347,402 €000 Amount Currency Interest rate Due Raiffeisen Zentralbank Österreich AG: Subordinated loan agreement with ZAO Raiffeisenbank Austria, Moscow 82,600 USD
In the financial year 2006, the following transactions with related parties are shown: Parent companies
Unearned finance income 347,308 274,952 Up to 3 months 37,484 34,074
Individual risk types in relation to Raiffeisen International’s economic capital as of 31 December 2006
Local lending decisions are delegated to Group units to an extent decided by the Managing Board of Raiffeisen International or the Supervisory Board of the Group unit in question. Two votes of approval from front office and back office are always required for a loan to be granted and to ratify the regular re-evaluation of the counterparty risk. In the event that the individual authorized parties vote differently, the structure of authorities within the Group provides for escalation to the next decision-making level.
To curb liquidity risk, the individual group units use limits that likewise require a positive short-term liquidity gap on conservative assumptions for liquid asset positions and liability outflows. The bank maintains extensive liquid holdings of securities to ensure its liquidity in various currencies, prepares liquidity balances, and performs cash-flow forecasts at regular intervals. These too are the responsibility of the assets/liabilities management committees.
OTC products: Products trading on stock exchange: OTC products: Cross-currency interest rate swaps 1,989,299 227,611 - 2,216,909 8,467 (2,498)
Own funds requirement for the trading book according to Sec. 22b (1) BWG 136,542 112,405
Raiffeisen Zentralbank is entitled to send up to one third of the members of the Supervisory Board, insofar as it has a shareholding in Raiffeisen International. Individuals finishing the stage of life of 75 years are not able to be elected to a member of the Supervisory Board and may not be appointed of another functional period. In addition, individuals having more than 8 mandates in Supervisory Boards of quoted companies may not be elected. The chairmanship in the Supervisory Board of a quoted company is counted twice.
We have audited the accompanying consolidated financial statements of Raiffeisen International Bank-Holding AG, Vienna, for the financial year from 1 January to 31 December 2006. These consolidated financial statements comprise the balance sheet as at 31 December 2006, and the income statement, statement of changes in equity and cash flow statement for the year ended 31 December 2006, and a summary of significant accounting policies and other explanatory notes.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
The following table shows a selection of operating companies of Raiffeisen International’s consolidated group. The complete list of Raiffeisen International’s equity participations is deposited with the Group parent’s headquarters.
Consolidated ROE – Return on Consolidated Equity, i.e. the equity attributable to the shareholder of Raiffeisen International. It is calculated by consolidated profit in relation to average balance sheet equity (without minority interest). Average equity is based on month-end figures and does not include current year profit.
Splitting – A procedure that is particularly com-mon in U.S. investment banking where equities that have become very highly priced are split into two or more shares or share certificates.
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Public Relations E-mail: ri-communications@ri.co.at Website: www.ri.co.at ➞ Public Relations 2007 Financial Calendar 28 March Annual Report 2006, Analysts’ Conference, Conference Call 26 April Start of the Quiet Period 10 May First Quarter Report, Conference Call 5 June Annual General Meeting, (Austria Vienna Center) 13 June Ex-dividend & dividend payment date 26 July Start of the Quiet Period 9 August Semi-Annual Report, Conference Call 25 October Start of the Quiet Period 8 November Third Quarter Report, Conference Call