Net interest income after provisioning 2,062 41.7% 1,455 1,035 666 476
Consolidated financial statements Income statement ................................................................................................... 126 Profit development ................................................................................................. 128 Balance sheet ......................................................................................................... 130 Statement of changes in equity ............................................................................. 132 Cash flow statement ............................................................................................... 136
Follow us into our world of languages. Take a short language course with us and learn how to withdraw money at a Moscow cash machine, take out a mortgage in Zagreb or negotiate project financing in Hungary.
T.: Az tényleg nagyon hasznos lenne. Így holnapig össze tudok állítani Önnek egy lízing-finanszírozási javaslatot.
Vocabulary: Grammar: Present – future: we supply – we will supply, I fly – I will fly, he sends – he will send, she goes – she will go.
Lesson 6 Mr Horvat recently started working for a major construction company. He now wants to take out a mortgage with Raiffeisenbank Austria to build a holiday home on the island of Krk.
B.: Would you prefer a long-term loan with low repayments or a short-term loan with higher monthly repayments?
Mënyra kushtore: ai thotë – të thotë, ajo qëndroi – të qëndrojë, unë shkoj – të shkoj, ajo është shtrirë – të jetë shtrirë, ajo ka – të ketë, unë jap – të jap, ai vjen – të vijë.
Mr and Mrs Gashi are invited to dine at the Kastrioti family in Pristina.
account – konto, račun transfer – doznaka, doznačivanje to withdraw – podići pare money bank branch – banka all day – neprekidno open otvoreno hour – čas day – dan closed – zatvoreno morning – jutro passer-by – prolaznik way – put work – posao
*S ta nd ar d op en in g ho ur s, re gi on al d iff er en ce s m ay o cc ur
D.: Just one. Non-smoker of course. I will give you a two-year guarantee on the car.
T.: Da, şi untul este foarte scump. Aici poţi găsi unt bun din producţie autohtonă, iar 200 de grame costă doar 2,50 lei.
20 відсотків знижки від вартості номера. Ви платитимете кредитною карткою чи готівкою?
P.: Ой, перепрошую, вже знайшовся. На Ваше ім’я заброньовано номер на чотири доби. Як я бачу, Ваша фірма отримує у нас
Raiffeisen International’s network today consists of 16 banks and numerous leasing companies in 16 markets. In addition, the Group has a representative office in Moldova and Lithuania. Raiffeisen International’s net work banks rank among the top three in each of 8 national markets. They are the market leader among the banks of Albania. Raiffeisen International is the leading Western­owned banking group in the CIS. As of 31 December 2007, it had 58,365 employees serving about 13.7 million customers in 3,015 business outlets.
Following the Raiffeisen tradition, Raiffeisen International recognizes its responsibility to society. As a global corporate citizen aware of its duties to the society around it, Raiffeisen International strives to prac­ tice corporate governance oriented to sustainability. As a consequence of defin­ ing itself in these terms, the company is dedicated to the long­term economic, en­ vironmental, and social compatibility of its activities.
Raiffeisen International’s earnings in­ creased again strongly in the past year. Do you expect that dynamic growth to slow, especially in view of overheating tendencies in the Balkan countries? Raiffeisen International made a profit be­ fore tax of more than one billion euros for the first time last year, when one­off effects in 2006 are left out of account. That is an increase of about 39 per cent. We have raised our net profit on average by 52 per cent per year in the last five years. Such momentum cannot be maintained at this level indefinitely. Our goal is to expand our market position continuously. As far as the overheating tendencies in some countries are con­ cerned, I am very confident that they are
International financial markets took parti­ cipants on an emotional roller coaster ride in 2007. At the beginning of the year, mostly positive corporate data and unexpectedly favorable economic data caused stock indices to soar to new highs, but then sentiment turned around and the first lows were hit. The causes of this development were significant losses on Chinese stocks as well as worries in the United States about economic and initial problems in the mortgage business. However, signs of possible central bank rate cuts stabilized the situation temporarily.
Raiffeisen International Bank­Holding AG, Investor Relations Am Stadtpark 9, 1030 Wien, Austria
The purpose of corporate governance is responsible and sustainable management of a company with a view to long­ term value creation. That means a high level of transparency achieved through open communication with shareholders, customers, employees, and other business associates. An efficient management and control structure – particularly in regards to the cooperation between the Managing Board and the Supervisory Board – promotes confidence in the company. That is not only a matter of compliance with certain standards, but also of a real­ life corporate culture to which Raiffeisen International is committed.
The next Annual General Meeting of Raiffeisen International will be held on 10 June 2008 at the Austria Center Vienna. Pursuant to Raiffeisen Inter na­ tional’s Articles of Association, the invi ta­ tion to shareholders for that event will be published at least three weeks in advance.
Inflation rates rose markedly in some parts of the CEE region in the second half of 2007. Besides high oil prices, the rise of food prices was primarily responsible for that. On the one hand, that development was based on the increasing world market prices for grain and corn, which advanced sharply because of high demand for bioethanol. On the other hand, weather­ related yield losses also created a scarcity of supply in 2007.
Trading profit Net commission income Net interest income Other operating profit/loss
More than 60 per cent of provisioning for impairment losses was attributable to the retail customer segment, a total of € 218 million was allocated to this segment. The corporate customer segment accounted for the remaining nearly 40 per cent. In regional terms, the operations in the CIS booked new provisioning for impairment losses with a share of 47 per cent, or € 169 million, while new allocations in Southeastern Europe were very moderate. That region had a risk/earnings ratio of only 9 per cent.
Net interest income Net interest income grew in the reporting year by 37 per cent, or € 655 million, to € 2,419 million. The increase is higher than the growth of the balance sheet total of 33 per cent, so the interest mar­
Net income from other current financial assets, which consists primarily of net revaluations of current financial assets and net proceeds from sales of current financial assets at fair value through profit and loss, declined from plus € 1 million to minus € 9 million. These valuation losses came from Slovakia, where market values of local treasury bills fell.
Other assets Securities Loans and advances to customers (net) Loans and advances to banks
Earned capital grew by 30 per cent, or € 645 million, to € 2,771 million. That includes consolidated profit for the reporting year in the amount of € 841 million and retained earnings of € 1,929 million. In addition to retention of profits from 2006, the main influences were exchange rate developments in the CEE countries (minus € 160 million) and the valuation result from capital hedge positions (€ 104 million) taken to partly hedge exchange rate effects in equity. The net effect amounted to minus € 56 million.
■ New product launches in the retail segment require approval from the Group’s head office.
To ensure the Group’s profitable growth, risk management will also continue to evaluate all new products. Parallel to that, the business teams will be supported in developing a new customer relationship management system. Risk management will simultaneously promote the use of rating tools beyond the straight credit approval process. It is furthermore planned to improve the image presented to customers who either as private individuals express the desire for a housing loan, or as small and medium­sized enterprises the need for additional operating funds.
E­learning Raiffeisen International again made pro­ gress in the area of e­learning in 2007. In addition to the e­learning initiatives already in place for some years in indi­ vidual countries (Poland, Romania, Russia, Czech Republic, and Hungary), the banks number of employees as of the balance sheet date
However, such a weakening of private demand would have a positive effect on sustainable medium­ to long­term economic growth in some countries of Southeastern Europe where the credit boom has contributed to strong increases of current account deficits. Moreover, the CEE economies have already proven in the past that they are quite capable of escaping the negative effects of a temporary economic downturn in the euro area. The momentum of the region’s economic catch­up process should remain largely intact despite diminished consumer demand. Consequently, a continuation of the real and, in some cases, nominal revaluation of CEE currencies would also be assured in the medium term.
We have set a return on equity (ROE) before tax of more than 25 per cent as a goal for 2010. That does not take into account any acquisitions or capital increases. The cost/income ratio should come to about 56 per cent. Our target risk/earnings ratio is about 15 per cent.
Provisioning for impairment losses rose by 31 per cent to € 122 million, to a smaller extent than net interest income. New allocations to portfolio-based provisions in some of the region’s group units accounted for 30 per cent of that increase. In Slovenia, a release of provisioning for impairment losses was made possible by an out-of- court settlement with a credit insurer. The risk/earnings ratio for the entire region im proved on the comparable period by 0.6 per centage points to 14.9 per cent. The share of the credit portfolio attributable to non-performing loans increased on the pre ce ding year by 0.35 percentage points to 2.64 per cent. The coverage ratio (provisions to non-performing loans) fell slightly.
Net interest income in the region grew by 28 per cent, or € 158 million, to € 718 million, although the net interest margin declined slightly, by 6 basis points to 3.48 per cent. Balance sheet assets rose by 23 per cent to € 23.2 billion. The riskweighted assets increased somewhat more strongly, by 30 per cent from € 12.6 billion before to € 16.4 billion.
Net interest income 718,317 560,082 28.3% Provisioning for impairment losses (65,860) (88,352) (25.5)% Net interest income after provisioning 652,457 471,731 38.3%
Founded in 1994, Raiffeisenbank (Bulgaria ) EAD increased its balance sheet total in 2007 by 55 per cent to € 3.8 billion at year’s end. Measured by that parameter, the bank had a market share of more than 10 per cent and thus kept its fourth place in the Bulgarian market. The branch network also increased in 2007 by 40 outlets to 151 in the context of an ambitious expansion program. Mobile bankers complement a wide presence in the country.
Raiffeisen Leasing IFN S.A. achieved new business worth € 252 million last year, which is about 60 per cent more than in 2006. It ranked third among leasing companies in Romania at the end of 2007.
Raiffeisen banka a.d. is the first bank in Serbia to be completely owned by foreign investors. It was founded immedi ately after the political changes in autumn 2000. The bank has been serving corporate customers since July 2001. Three months later, it entered the retail banking segment and within three years has already become the country’s leading bank. As an all-round bank, it today offers the full range of products of a Western bank, adapted to the local market.
The bank was honored for its achievements in 2007 as Best Bank or Bank of the Year by Euromoney, The Banker, and Global Finance.
Last year, OOO Raiffeisen-Leasing registered the fastest growth in its history. With new business of about € 268 million, an increase of 131 per cent was achieved in comparison with the year before.
In February 2007, Global Finance honored Raiffeisenbank as Best Overseas Bank in Russia.
The restructuring of the bank that began immediately after the takeover continued in 2007, particularly by implementing Raiffeisen International Group standards for products, IT, and human resource management.
There were no material deferred taxes on income and expenses directly recognised in equity. Moreover, the item sundry income and expenses recognised in equity contains a minor valuation result of available-for-sale securities.
Cash and cash equivalents at the end of previous period 4,063,633 2,908,161 Net cash from operating activities (1,507,014) 382,669
Moreover, business with banks, providers of financial services, and insurance companies is reported in this segment (financial institutions). This excludes transactions which are connected to the proprietary trading with financial instruments respectively invested within the asset and liability management as those are allocated to the segment treasury. The banks sub-segment encompasses national and international commercial, retail and private banks. Banks also include supranational institutions like the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the International Monetary Fund (IMF). Financial service providers include brokers and asset managers such as investment banks, investment fund companies, leasing companies as well as companies operating in businesses related to the credit industry. Insurance companies consist of all kind of insurers and reinsurers. They include property, health, life and pension insurers.
Net interest income after provisioning 663,948 1,222,928 150,835 24,161 2,061,872 Net commission income 420,220 799,161 22,102 8,351 1,249,834 Trading profit 4,747 2,636 129,085 (8,577) 127,891 Valuation result from derivatives 41 (8,652) (21,559) – (30,170) Net income from financial investments 501 83 (9,034) (793) (9,243) General administrative expenses (447,475) (1,536,886) (83,445) (116,214) (2,184,020) Other operating profit 26,639 7,381 (6) (39,092) (5,078) Income from disposal of group assets – – – 26,517 26,517
The number of common shares in Raiffeisen International Bank-Holding AG to be actually transferred will depend on meeting two performance criteria: the targeted average return on equity (ROE) and the total shareholder return (TSR) for Raiffeisen International Bank-Holding AG shares in relation to TSRs of shares in the DJ EURO STOXX BANKS index after a three-year holding period. Moreover, beneficiaries have to be in active service for Raiffeisen International. SIP participation is voluntary.
Transactions arising from the holding and placing of assets on behalf of third parties are not shown in the balance sheet. Fees arising from these transactions are shown under net commission income.
The following table shows income statement according to IAS 39 valuation categories: Change
Financial assets held-to-maturity 2,528,165 2,783,975 (9.2)% Bonds, notes and other fixed-interest securities 2,483,123 2,719,133 (8.7)%
Land and buildings used by the Group for own purposes 505,255 487,257
Deposits from banks classified regionally (counterparty’s seat) break down as follows: Central Europe (CE) 1,620,452 1,427,102
In 2007, expenses on subordinated liabilities totalled € 84,019 thousand (2006: € 52,046 thousand).
As of 31 December 2007, the contingent allotment under the share incentive program came to 235,712 no-par shares (111,687 shares are due to the allotment of 2005, 69,452 shares to 2006 and 54,573 shares to 2007).
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-LandesbankenHolding GmbH and Raiffeisen Zentralbank Österreich Aktiengesellschaft. Companies with a significant influence are mainly Raiffeisen-Holding Niederösterreich-Wien registrierte Genossenschaft mit beschränkter Haftung and Raiffeisenlandesbank Niederösterreich - Wien AG.
The junior tranche was purchased by a group unit and hence as a group-internal position, it was cleared with the corresponding group-internal loans. A credit default swap is used as securitisation in the Synthetic transaction ROOF CEE 2006-1 which is concluded between Raiffeisenbank Polska S. A., Warsaw (PL), and Raiffeisenbank a.s., Prague (CZ), as well as the German Kreditanstalt für Wiederaufbau (KfW). The credit default swap serves as it is often used in synthetic transactions as financial guarantee. Both Raiffeisen banks are the beneficiary and KfW takes the credit risks arising from the portfolio of company loans at terms agreed.
Being an active player in the world’s financial markets inherently means taking risks. For this reason, the ability of
Risk taking capacity (projected earnings plus capital exceeding regulatory requirements ) must not fall below the annualized value-at-risk 99% reflecting the owners’ willingness to inject fresh capital
4.0 Weak credit standing/sub4. 5 Very weak credit standing/doubtful 1,024,717 2.4% 986,997 3.0%
The following table shows the corresponding loans outstanding in the defined asset classes within loans and advances to banks and loans and advances to customers on the balance sheet (excluding off-balance sheet transactions) and the corresponding proportion of non-performing loans (without taking any collateral into account) and impairment provisions split by region: €000 CE SEE CIS Total 2007
Within the scope of its risk policy and assessments of creditworthiness, Raiffeisen International also considers the borrower’s industry. The following table covers the customer credit exposure (off-balance sheet items included, but without banks and central banks): Public administration and social insurance institutions 5,821,176 8.2% 5,353,191 10.3%
Operational risk is analysed and managed on the basis of the Group’s own historical loss data and the results of risk self assessments. As with other risk types the principle of firewalling between risk management and risk controlling is also applied to operational risk in Raiffeisen International. The Group implements a centraliseddecentralised system for operational risk management and controlling: operational risk controlling units are mainly responsible for the implementation and refinement of methods for operational risk management in different Group members (e.g. performing self assessment, defining and monitoring KRIs, etc.) and for reporting to the central operational risk controlling function. Business line managers are the persons responsible for managing and mitigating operational risks. They decide on pro-active operational risk steering actions such as buying insurance and the use of further risk mitigating instruments.
An important task for controlling operational risks is identifying and evaluating risky areas which might endanger the bank’s existence if a loss occurs (but where losses are unlikely to be realised) and also areas where losses are more likely to happen frequently (but are not threatening the bank’s existence).
The own funds of Raiffeisen International according to the Austrian Banking Act (BWG) break down as follows: Tier 1 capital (core capital) 5,692,283 3,705,392
In the case of termination of function or employment contract, two members of the Managing Board are entitled to receive severance payments according to the Salaried Employee Act (Angestelltengesetz), two members of the Managing Board according to contractual agreements and two members of the Managing Board according to the Company Retirement Plan Act (Betriebliches Mitarbeiter- und Selbständigenvorsorgegesetz ). The entitlement to receive severance payments according to the Salaried Employee Act (Angestelltengesetz) and according to contractual agreements lapses with the exemption of one member of the Managing Board in case of termination by the employee.
The members of the Supervisory Board have further mandates in the Supervisory Board of quoted companies at home and abroad: Walter Rothensteiner: UNIQA Versicherungen AG Karl Sevelda: Bene AG, Unternehmens Invest AG Peter L. Woicke: Anglo American plc, Plug Power Inc, MTN Group Limited
Our audit did not give rise to any objections. Based on the results of our audit in our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the group as of 31 December 2007 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.
Affiliated companies – Entity over which the investor has control (i.e. power to govern the financial and operating policies).
CE – Central Europe. For Raiffeisen International it is defined as Hungary, Poland, Slovakia, Slovenia, and the Czech Republic.
OTC instruments – Financial instruments that are neither standardized nor traded on a stock exchange. They are traded directly between market participants "over-thecounter ".
Bulgaria Raiffeisenbank (Bulgaria) EAD 18/20 Ulica N. Gogol 1504 Sofia Phone: +359-2-9198 5101 Fax: +359-2-943 4528 SWIFT/BIC: RZBBBGSF www.rbb.bg
Bosnia and Herzegovina Raiffeisen Leasing d.o.o. Sarajevo St. Branilaca Sarajeva No. 20 71000 Sarajevo Phone: +387-33-254 340 Fax: +387-33-212 273 www.rlbh.ba
The forecasts, plans, and statements addressing the future are based on knowledge and assumptions of Raiffeisen International at the time at which they are drawn up. Like all statements addressing the future, they are exposed to risks and uncertainty factors that may lead to considerable deviations in the result. No guarantees can therefore be provided that the forecasts and targeted values, or the statements addressing the future, will actually materialize.