incl. excl. excl. Monetary values are in € mn one-offs1 one-offs1 one-offs1
Bank specific information3 Basis of assessment (incl. market risk) 41,052 41,052 37.2% 29,914 19,638 12,802 9,283
Segment Reports 90 Central Europe 92 Southeastern Europe 96 CIS 100
Ćevapčići with red onion rings Ingredients for 4 portions: 2 large, red onions, 4 cloves of garlic, 2 small eggs, 500g of minced beef, 2 pinches of cayenne pepper, 3-4 tsp. of hot paprika, salt and olive oil for frying.
Ćevapčići are found on many Belgrade street corners. The little sausage-shaped meat-rolls are made of lamb, beef and sometimes pork, are five to eight centimeters long on average, seasoned with garlic, salt, pepper and paprika as well as herbs depending on their availability, topped with red onion rings and served with somun bread. Some diners like to add a dollop of the sour cream called kajmak or some ajvar, a mixture of paprika and puréed eggplant.
In case you have never tried them: imagine large ravioli filled with mushrooms, potatoes, cabbage, fish or liver – even a sweet filling – and then doused with hot butter. Downed with a shot of vodka, they’re even better. Polish chefs show the same level of inventiveness when it comes to preparing bigos, a hunter’s stew of steamed sauerkraut with various kinds of meat. Bigos improves with every reheating and used to be particularly popular with the Polish gentry, the szlachta. The real fans today, however, are the skiers you can see fortifying themselves with bigos in the ski-lodges of Zakopane at the foot of the Tatra Mountains. Gourmets dining at Warsaw’s top restaurants are equally reluctant to renounce the country’s culinary symbol.
Hash dumplings Ingredients for 4-6 portions: For the mixture: 500g of potatoes (high starch content), approx. 150-200g of fine flour, 2 tbsp. of semolina (if the potatoes don’t have a high starch content), 1 egg and salt. For the filling: 150g of boiled beef, 150g of smoked meat (or sausage pieces), 200g of onion, 1 bunch of parsley, 4 cloves of garlic, salt and pepper.
It is kept in brine in small wooden barrels, where its shelf life is of quite limited duration. In any case, bryndza tastes best when it’s absolutely fresh. It can be used as a spread on black bread, as an ingredient in liptauer, or in bryndza dumplings. People who love sheep’s milk cheese but find conventional bryndza a bit overwhelming can try the milder version, which tastes a lot like Greek feta without the saltiness.
Interview with Herbert Stepic, Chairman of the Managing Board of Raiffeisen International Bank-Holding AG
A significant net increase is also shown in provisioning for impairment losses, which was raised by  142 million, or 85 per cent, to  309 million. Portfolio-based provisions, which are not matched with any concrete loan defaults, account for almost 40 per cent of that. The breakdown according to business areas shows a share of 62 per cent, or  192 million, for retail customers. In regional terms, the emphasis of provisioning for impairment losses is in the CIS with a share of 40 per cent, or  127 million, while Central Europe and Southeastern Europe each account for about 30 per cent. The reason for the increase in the CIS region lies in the newly acquired, strongly retail-oriented group units Raiffeisen Bank Aval (October 2005) and Impexbank (May 2006), which together booked provisions of almost  77 million. The risk/earnings ratio consequently rose from 13.9 per cent to 17.5 per cent.
The increase of income taxes by 88 per cent to  205 million is disproportionaly lower than the increase in profit before tax, which climbed by 160 per cent to  1,480 million. No tax payments were incurred in Austria for the one-off effects. Compared with earnings excluding one-off effects of  891 million (plus 57 per cent), however, the increase is disproportionaly higher, due to the changed distribution of profit in countries with higher income tax rates.
Minority interests in profit grew by only 19 per cent from  77 million to  92 million and thus far below average, which is likewise due to a profit shift in favor of Group units without minority interests. No earnings are allocable to minority interests from the one-off effects.
We expect a consolidated profit of at least  700 million for 2007.
For Euromoney and Global Finance, Raiffeisen Bank was the country’s “Best Bank” in 2006.
The bank’s loan portfolio increased by 33 per cent to  225 million, and total deposits increased 36 per cent to  310 million. Raiffeisen Bank has a special focus on small and medium-sized enterprises. It leads the market with a share of approximately 35 per cent (up six percentage points versus 2005). The bank increased the number of outlets by four to 33 during the period under review, servicing more than 120,000 customers (up 32 per cent) throughout Kosovo. It also introduced e-banking as a new service for its customers, setting a local benchmark.
In mid-2006, the launch of Raiffeisen Asset Management enhanced the range of financial products provided in Romania. The company focuses on both individual and institutional customers and had become one of the top-3 players on the market with more than  22 million under management and a market share of 12 per cent at year-end. The investment bank Raiffeisen Capital & Investment recorded the second highest trading volume on the Romanian capital market at  450 million, nearly 25 per cent more than in 2005. It was joint lead manager in the biggest local IPO to date, structured for Transelectrica.
102 www.ri.co.at Pre face Managing Board Super v isor y Board‘s Repor t Over v iew In t e r v iew S tock
The subscribed capital of Raiffeisen International Bank-Holding AG as defined by the articles of incorporation amounted to € 434,517 thousand as of 31 December 2006. It comprises 142,770 thousand no-par bearer shares. Excluding own shares of 262,260, the stated subscribed capital came to € 433,719 thousand.
Other changes in retained earnings are largely due to currency differences between the income statement and the balance sheet and especially due to changes in shares in group units.
Material interests in associated companies – on whose financial and operating polices the Group exerts a significant influence – are valued at equity and reported under financial investments. Profit or losses occurring in companies valued at-equity are shown net in net interest income. The same rules apply to companies valued at-equity (offsetting acquisition costs against proportional fair net asset value) as apply to fully consolidated companies. On principle, IFRS financial statements of associated companies are used.
Shareholdings in subsidiaries not included in the consolidated financial statements because of their minor significance and shareholdings in companies not valued at-equity are shown under financial investments and are measured at amortised cost.
Other provisions are made to uncertain liabilities to third parties in the amount of the expected claim. These provisions are not discounted because the resulting interest effect is immaterial.
Current income 2,734 2,807 from shares and other variable-yield securities 335 93 from shares in affiliated companies 1,831 from companies valued at-equity (908) 502 from other interests 1,476 2,212
The position trading profit also includes interest and dividend income, refinancing costs, commissions and any changes in fair value of trading portfolios.
The Group did not recognise deferred income tax assets of € 4,759 thousand (2005: € 7,911 thousand) because from present point of view there is no prospect to realise them within a reasonable period of time.
Disclosures on Raiffeisen International’s relations to key management are reported under item 47.
The consolidated financial statements consist of the following volumes of assets and liabilities denominated in foreign currencies: (33) Foreign assets/liabilities
Loans and advances to customers 481,822 10,585 378,066 (205,007) (81,110) (10,307) 574,049
Alongside value-at-risk measurement, interest rate risk in the banking book is also estimated using classical means of capital and interest maturity analysis. Furthermore, because of the special importance and complexity of interest rate risk in the banking book, Raiffeisen International also employs interest-income scenarios and simulations. Managing the structure of balance sheets is a core task of the treasury departments at network banks, which receive assistance from assets /liabilities management committees.
Own funds requirement for open currency positions according to Sec. 26 BWG 107,465 154,164
In 2005 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.
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
DBO – Defined benefit obligation = The present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods.
Derivatives – Financial instruments whose value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable, that requires no initial net investment or small initial net investment and that is settled at a future date.
Bosnia and Herzegovina Raiffeisen Leasing d.o.o. Sarajevo St. Branilaca Sarajeva No. 20 71000 Sarajevo Tel. +387-33-254 340 Fax +387-33-212 273 www.rlbh.ba