www.teatrwielki.pl 7 Evenings Nights can be pretty long at Foksal 19. The musicians and DJs only play quietly on the ground floor, because that is where people eat. The guests – and the noise – then head upstairs for dancing. www.foksal19.pl 8 Raiffeisen International Raiffeisen Bank Polska S.A.
2 Charles Bridge Charles Bridge is one of the oldest bridges in Europe, having been built in 1342. Touching the relief beneath the statue of John of Nepomuk is said to bring luck.
Ul. Moskovska 6 8 Raiffeisen International Raiffeisenbank (Bulgaria) EAD 74 outlets; Head Office: 18/20 Gogol Ulica, 1504 Sofia Phone: +359-2-9198 5101 Fax: +359-2-943 4528 www.rbb.bg
Rruga Tirana 5 Rest Sunday may be a day of rest – but not for the many good restaurants im Germia Park where one can fortify oneself after a run or a walk.
Prague cubism is a unique but up to now far too neglected phenomenon of cultural history. The inspiration and the name came from Picasso and Braque in Paris, but something completely different was made out of them in Bohemia in the period around 1910, namely an extensive cultural movement that conjoined every field of art and swept them all along with it. Some 40 examples of cubist architecture went up in Prague alone. These sculptural buildings are scattered about, but there are tours that will give you an overview. The houses were once filled with cubist furniture, sculptures, paintings and artistic decorations. The few preserved examples can be admired in the House of the Black Madonna. This centrally located cubist building is now a museum of those crystal-like forms that strove to be more than just a style. At the time, poets and theorists alike came up with wildly enthusiastic, expressionistic reasons why cubist forms would improve humanity and guide society to truth. The result was a kind of “total art work” that gave expression to the spirit of a new beginning.
Bratislava, Slovakia 1 Modernism Bratislava’s TV Tower is architecturally unique. This upside-down iron pyramid was built between 1969 and 1984. The whole structure hangs on one central pillar.
5 History The National Museum covers Albanian history since the time of the Illyrians. The many archaeological finds are particularly impressive. Sheshi Skenderbej 6 Evenings Let the relaxing atmosphere at the Ujvara envelop you. Quiet music plays in the background and superb cuisine dominates in the foreground. Rruga Gjin Bue Shpata 7 Nightlife The Living Room is by far the coolest bar in the city. Recover from a hot day in its roof level lounge as you enjoy the pleasant refreshing breeze and a cold drink.
3 Boat ride The Dnieper: Boat trips lasting one or two hours start from Poshtova Ploshcha harbour. The scenery and architecture are delightful, but you need good weather.
Transparent structures and clear rules, including internal accounting at market prices, govern cooperation with our parent company. At the same time, Raiffeisen International has all the controls at its disposal to conduct its business independently and successfully. That – and the certainty of sharing the same interests – gives the new shareholders security and confidence. They also have in Stewart Gager and Peter Woicke professionally experienced and internationally recognised representatives on the Supervisory Board. The two perform their duties independently. Because of the expansion of the Supervisory Board, the following committees had to be formed for the sake of efficient and flexible discussion and preparation: the Working Committee, the Audit Committee, and the Personnel and Strategy Committee. Walter Rothensteiner, Manfred Url, and Karl Sevelda are on the Audit Committee, and Messrs Rothensteiner and Url are on the Work Committee and the Personnel and Strategy Committee.
KPMG Austria GmbH, Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna, audited the accompanying consolidated financial statements (balance sheet, income statement, and notes) and the management’s report on the Group as well as the annual financial statements and the management’s report on Raiffeisen International. Their audit revealed no grounds for objection and the statutory requirements were satisfied in full, so an unconditional Auditors’ Certificate could be issued. The Supervisory Board concurs with the Managing Board’s report on the results of the audit and with the proposal regarding the appropriation of profit and has approved the annual financial statements of Raiffeisen International Bank-Holding AG. They are thus final in accordance with Section 125 (2) of the Austrian Companies Act (Aktiengesetz).
The share price advanced to € 55.55 by the end of the year, which represents a plus of more than 70 per cent on the issuance price. Based on the issuance price, the company’s market capitalisation amounted to € 4.6 billion. It rose to more than € 7.9 billion by the end of 2005.
As in the year before, the CIS countries (Belarus, Russia, and Ukraine) achieved the strongest average GDP growth compared with the region’s other countries at 5.9 per cent (2004: 7.8 per cent).
56 www.ri.co.at Preface Managing Board Supervisory Board’s Report Overview Interview Stock
Banking sector development in CEE The banking sectors of the countries in CEE have experienced a remarkable development in the 16 years since the beginning of the transformation. In the beginning, the national government faced the challenge of restructuring their financial systems. The key points of the reforms were the introduction of a two-tier banking system, the privatisation of previously state-owned banks, the licensing of foreign banks, and the establishment of a solid legal framework and efficient bank supervision.
At € 167 million net, provisioning for impairment losses also developed satisfactorily, rising by only 22 per cent, or € 30 million. That is a clear indication of the good quality and broad diversification of the existing loan portfolio, as the increase was below both the growth of operating income and that of lending volume, which was 52 per cent. As planned, provisioning for retail customers, at € 96 million, for the first time exceeded provisioning for corporate customers, at € 72 million. There is also a balanced regional distribution of provisioning viewed in absolute terms, with the regions with higher margins showing pro rata the higher provisioning needs.
The positive overall development was due to two factors. On the one hand, provisioning for impairment losses related to corporate customers declined by 5 per cent to € 72 million. The reason for that decline was a stable risk situation in the area of corporate customers. Only a few relatively large provisions were formed, with the largest specific provision amounting to € 11million for a case in Romania. On the other hand, provisioning for the retail banking segment – made primarily on a portfolio basis – rose by 54 per cent, or € 34 million, to € 96 million. That was well within the framework of volume growth. The increase was significant especially in Southeastern Europe and the CIS countries, which are relatively young markets for Raiffeisen International, with the acquisition of Bank Aval also being a weighty influence there.
Other administrative outlay rose by 38 per cent, or € 132 million, to € 480 million. It thus accounted for 41 per cent (2004: 42 per cent) of all operating expenses. Newly consolidated units were responsible for 12 per cent, or € 16 million, of the increase. A large part of it was due to continued expansion of the business outlet network in
Depreciation/amortisation/write-downs of tangible and intangible fixed assets increased year-on-year by 37 per cent, or € 35 million, to € 130 million. Intangible assets, including especially software, accounted for € 39 million of that (preceding year: € 22 million).
Changes in the scope of consolidation, including especially the acquisition of Bank Aval in the fourth quarter, accounted for about 30 per cent, or € 3.3 billion, of that increase. The Group’s organic growth thus amounted to € 8.4 billion, which represents a plus of 29 per cent compared with the end of 2004.
The share of funding by banks went up in the reporting period by 2 percentage points to 25 per cent. Deposits from banks rose by 55 per cent, or € 3.6 billion to € 10.2 billion. The relatively long-term funding arrangements through banks and supranational institutions likewise increased by 55 per cent to € 5.6 billion. Money market business reached a total of € 4.3 billion (plus 63 per cent) as of the balance sheet date.
There is a Training and Development Catalogue for implementing all training measures, which applies to employees in all network banks. It contains the international training materials, which are usually written in English, the Group’s common language. Of course, we also conduct training geared to local needs in the various countries.
Raiffeisen International organises its business according to customer groups and to regional aspects. To provide a better overview of developments in the regions, we report in this section only on the regional aspects.
In existence since 1992, Raiffeisen Krekova banka d.d. serves about 100,000 personal banking customers as well as SMEs at 13 business outlets. Its market share in loans to retail customers increased to 5.5 per cent last year, and its share of the overall market to 3.1 per cent. The bank defended its leading position in foreign investment funds. In 2005, about € 49 million was invested in the Raiffeisen Capital Management fund, which is the largest amount of all investment funds in Slovenia.
Raiffeisen Bank Zrt. was founded in 1986 as Unicbank Rt., already three years before the lifting of the Iron Curtain. It began operation in 1987. With a balance sheet total of € 4.9 billion, it is the country’s sixth-largest bank.
The strong rise of personal banking customers is due in particular to newly developed products and services. The new Mobile Banker’s Network, the launch of new investment and saving programmes, and the range of funds offered contributed to that. The bank further expanded its DirectNet service, which increased the number of customers using online banking.
The number of larger corporate customers came to 1,700 and was thus almost 15 per cent higher than at the end of 2004. Lending volume increased last year by 24 per cent to € 201 million, and deposit volume grew by 22 per cent to € 213 million.
The bank paid special attention last year to serving the segment of small and medium-sized enterprises (SMEs). Loans to those customers increased by 70 per cent to € 147 million, and deposits from them by more than 66 per cent to € 254 million. In October, Raiffeisen Bank signed a loan contract for € 30 million under the EU’s assistance programme for SMEs. It is thus expanding lending activities in this segment, especially in rural areas.
The bank strengthened its leading role on the ruble bond market. It was responsible last year for 15 transactions with a total value of US$ 2.5 billion. The financial magazine Global Finance selected Raiffeisenbank for its Best Syndicated Loans Arranger and Best Overseas Bank awards.
Debt consolidation consisted of offsetting intra-Group receivables and payables. Remaining temporary differences were recognised under other assets/other liabilities in the consolidated balance sheet.
Ukrainian Processing Center JSC (UPC) Raiffeisen International took over the Ukrainian Processing Center, JSC, Kiev, for a purchase price of € 27,095 thousand. The Ukrainian Processing Center offers credit card, ATM, and regional interbank clearing services. The company’s balance sheet total at the time of initial consolidation came to € 2,759 thousand, and its equity amounted to € 1,030 thousand.
Hedges of investments in economically independent sub-units (IAS 39.102) were undertaken in the Group. The resulting currency translation differences were netted directly against equity and are shown separately in the equity reconciliation.
The entirety of the provision for impairment losses arising from on-balance-sheet receivables is shown as a separate item on the assets side of the balance sheet, below loans and advances to banks and customers. The provision for impairment losses arising from off-balance-sheet transactions was recorded under provisions for liabilities and charges.
Intangible fixed assets acquired for consideration (software, client base) were capitalised at cost less amortisation.
Other provisions were also allocated for indefinite liabilities to third parties at the amount of the expected entitlement. Because of the insignificance of the resulting interest effect, these provisions were not discounted.
Regional allocation by respective branch location taking refinancing costs into account yields the following distribution: Financial year 2005 €000 CE SEE CIS Total
Net remeasurements of securities classified as current financial assets 1,571 1,473
Average number of ordinary shares outstanding during period (in 1000 units) 137,094 108,169
130 www.ri.co.at Preface Managing Board Supervisory Board’s Report Overview Interview Stock
Equity participations 82,814 73,982 of which interests in associated companies 24,169 18,120 of which interests in companies accounted for using the equity method 22,146 15,128 of which other equity participations 36,499 40,734
Land and buildings used by the Group for its own operations 236,458 105,015 22,688 36,673 (18,898) (6,548) 375,388 of which land value of developed land 9 430 31 384 - - 853
All other financial instruments were valued using internal measurement models, including in particular present value models or accepted option price models. Fixed-interest receivables from and payables to banks or customers were only remeasured to fair values different from their carrying amounts in the balance sheet if they had a residual maturity of more than one year. Variable-rate receivables and payables were only taken into account if they had an interest rollover period of more than one year. Only in those cases does discounting based on an assumed interest rate in line with market rates have a significant effect.
The remuneration amounts for the years 2004 and 2005 are not immediately comparable, as the Managing Board has been expanded. The Chairman of the Managing Board is furthermore still working for the board of RZB. Remuneration for this position also covers his activities for Raiffeisen International, and the Group is reimbursing RZB for this on a prorated basis. Moreover, there was a one-off compensation charge for early termination of a long-term bonus program that has been replaced with the share incentive program.
Legend: 1) Equity participations held via non-consolidated companies (aliquot share) 2) Company type
Raiffeisen Asset Management (Bulgaria) EAD, Sofia (BG) 250,000 BGN 100.0% OT
RAIFFEISEN Real Estate Management Company Ltd., Budapest (HU) 25,300,000 HUF 72.7% BR
Affiliated enterprise – Company upon whose business or financial policies a controlling influence is exerted.
Market risk – The risk that the value of a financial instrument will fluctuate as a result of changes in market prices whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market.
Negative goodwill – Any (remaining) excess, as at the date of the exchange transaction, of the acquirer’s interest in the fair values of the identifiable assets and liabilities acquired over the cost of the acquisition.
OTC instruments – Financial instruments that are neither standardised nor traded on a stock exchange. They are traded directly between market participants “over-the-counter”.
Croatia Raiffeisenbank Austria d.d. Petrinjska 59, 10000 Zagreb Phone +385-1-456 6466 Fax +385-1-481 1624 SWIFT/BIC: RZBHHR2X www.rba.hr Contact: Lovorka Penavić lovorka.penavic@rba-zagreb.raiffeisen.at 39 banking outlets
Number of Staff on balance-sheet date 43,614 90.9% 22,851 18,386 13,478 * Because of amended and new IFRS rules, comparative figures have been adjusted slightly (see Notes, p. 101ff). ** 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. *** 25 Apr. to 31 Dec. 2005