Segment Reports Central Europe 82 Southeastern Europe 86 CIS countries 91
1 Cosmopolitan The atmosphere is urban and the choice of breakfasts and newspapers is international. So Sunday is best begun in the Szpilka café and bar. Pl. Trzech Krzyży 18 2 Devotion The Catholic Church of St. Anna is very popular with students. Go to Sunday mass to share in the authenticity and living faith that are typical here. Kościóĺ s̀więtej Anny, Ul. Krakowskie Przedmieście 68 3 Shop ‘til you drop Early risers can find some remarkable treasures at the antique market in Warsaw’s Kola quarter. The market closes at 2 pm.
4 Galleries Slovenia and, above all, Ljubljana are known for their lively young art scene. One gallery adjoins another along Židovska street. This could be a good opportunity to buy some art. Židovska steza 5 Lunch Pri Kovaču serves excellent local food combined with wines from the various regions of Slovenia.
87 outlets; Head Office: Rruga Kavajes, Tirana Phone: +355-4-274 912 Fax: +355-4-230 013 www.raiffeisen.al
You don’t have to look far to find a statute of Lenin in Moscow. A count was made of the current total in the summer of 2005.
7 Nightlife The music at the centrally located Te Kaqa bar is not too loud for conversation. Dancing does not begin until later in the evening, and even then, one can still escape to the garden. Or just join the fun on the dancefloor! Rruga Tirana 8 Raiffeisen International Raiffeisen Bank Kosovo J.S.C.
Our business model is aimed at identifying opportunities early in the rapidly growing markets of Central and Eastern Europe. By appealing to new customer groups and launching new products and services, we are striving to grow faster than the overall market while maintaining our high profitability. In comparison with the previous year, we increased our balance sheet total by 40.8 per cent to € 40.7 billion and simultaneously raised Group profit by 82.6 per cent to € 382.3 million.
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The business focus is on retail banking and the regional focus on the two areas of Southeastern Europe and the CIS countries. Altogether, the network was serving 9.7 million customers with more than 43,600 employees in 2,443 business outlets at the end of December.
Immediately after the IPO, the stock was admitted to the ATX, the most important Austrian index. It is also represented in the ATX Five, which comprises the five largest ATX securities. As the year proceeded, the stock was admitted to the Dow Jones EURO STOXX Banks, the benchmark index for European banks, as well as to other indices.
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62 www.ri.co.at Preface Managing Board Supervisory Board’s Report Overview Interview Stock
As expected, the retail customer segment showed the strongest increase of all business areas last year and accounted for a 21 per cent share of earnings. Its earnings before taxes rose by 184 per cent to € 118 million despite still high capital investments in new business outlets and services. Because of those investments, the costincome ratio still stood at 78.6 per cent. The riskweighted assets accounted for by retail customers increased by 86 per cent, or € 4.1 billion, to € 8.9 billion. Bank Aval accounted for about € 1 billion of that. The higher volumes were also accompanied by 54 per cent higher provisions for impairment losses. The return on equity climbed from 11.1 to 15.1 per cent.
CIS countries, which registered an increase of 118 per cent, or € 53 million. Almost half of that was due to Bank Aval, which was taken into account for the first time in October 2005.
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Securities, which belong to several valuation categories and balance sheet items but are combined in the chart, increased only slightly by 7 per cent to € 5.8 billion. However, there were some reallocations, including especially a reduction of trading assets by 32 per cent in favour of medium- and longer-term investments. Overall, their share of the balance sheet total decreased from 19 to 14 per cent.
Raiffeisen Bank’s balance sheet total at year’s end was € 1.7 billion, which makes it the country’s top bank. In the segment of personal banking customers, there were already 100,000 accounts and about the same number of VISA debit cards in circulation at the end of 2005. The ATM network was expanded to 100 locations across Albania to give customers better access to their accounts. For the first time in seven years, Raiffeisen Bank began granting loans again to personal banking customers in 2005 (it had not been allowed to serve this segment in recent years before privatisation). The amount lent (overdraft, personal, and mortgage loans) reached € 20 million at the end of 2005.
By opening 21 new business outlets, the bank enlarged its network to 74 branches. That is supplemented by 100 mobile banking advisors operating in 10 Bulgarian cities. The range was rounded out with the founding of Raiffeisen Asset Management Bulgaria in December.
Raiffeisen Bank S.A. commenced operation in 1998 and merged in 2002 with Banca Agricola, which had been acquired in July 2001. Today, it is Romania’s third-largest bank with a balance sheet total of € 3.0 billion and is present countrywide with 216 business outlets (2004: 205).
Raiffeisenbank d.d. was founded in autumn 2000 and was thus the first Western bank in Serbia and Montenegro after the political upheavals there. It began operation in the middle of 2001 and has been the country’s largest bank since November 2004. Its balance sheet total increased by 61 per cent to € 1.4 billion in 2005.
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The number of personal banking customers grew by 10 per cent in 2005 to 535,000. The bank introduced credit cards and online banking, among other things. Bolstered by a credit card initiative, the number of credit and debit cards increased by almost 40 per cent last year to 390,000.
There were no conversion or option rights in circulation, so undiluted earnings per share were identical to diluted earnings per share.
Net income from financial investments and current financial assets 1,512 (3,205) 6,463 3,503
Cash and cash equivalents include the cash reserve recognised in the balance sheet, which consists of cash in hand and demand deposits at central banks. It does not include loans and advances to banks that are due at call, which are classed as being a part of operating activities.
Raiffeisen International is also included in the consolidated financial statements of Raiffeisen Zentralbank Österreich AG.
The consolidated financial statements for the 2005 financial year and the comparative figures for the 2004 financial year were prepared and calculated in conformity with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and the international accounting standard adopted by the EU on the basis of IAS Regulation (EC) 1725/2003 inclusive of such interpretations by the International Financial Reporting Interpretations Committee (IFRIC) as were already applicable.
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Impairment losses on loans and advances (IAS 39) The more precise requirements contained in the revision of IAS 39 in force from 2005 allow, under certain circumstances, portfolio-based provisioning for loan portfolios with identical risk profiles. To date, Raiffeisen International has only made restricted use of portfolio-based provisioning. We have now implemented new processes that take account of the more detailed rules for the valuation of loan portfolios and portfolio-based provisioning requirements applicable to them. However, we have not yet fully completed the process of standardising valuation rules in retail transactions. Portfolio impairments have thus far not had a material impact on profit.
RLRE & Eube OC – TERRONOC II., s.r.o., Prague (CZ) 69.0% 1/1 Materiality
Because of their increasing significance for Raiffeisen International, the subsidiaries of Raiffeisen-Leasing Real-Estate s.r.o., Prague (RLRE Group) were consolidated for the first time at the beginning of the financial year under review. These project companies engage in real estate project finance leasing. Of the 20 RLRE Group companies included, 6 left the scope of consolidation again as a result of mergers or sale. These are not listed above.
b) Other derivative instruments Derivative instruments held to hedge against market risks in the banking book that are based on an inhomogeneous portfolio do not satisfy the requirements for hedge accounting within the meaning of IAS 39. They were captured as follows: Positive dirty prices were recognised under other assets, and negative dirty prices were recorded under other liabilities. The effect of remeasuring those derivative instruments on a clean-price basis was recognised under other operating profit/loss (net income from other derivative instruments); interest was recorded under net interest income.
Self-originated intangible assets exclusively pertain to software and were capitalised if it was likely that the Group could derive an economic benefit from them in the future and if their production costs could be reliably measures. The usual business service life for software is four to six years. The expected useful life of major software projects may also be longer. The useful life of acquired corporate customer bases has been set at 7 years and for acquired retail customer bases at 20 years.
Basis of assessment (incl. market risk) 14,356,058 8,905,963 4,822,625 1,829,510 29,914,156
There were no conversion or option rights in circulation, so undiluted earnings per share were identical to diluted earnings per share. Previously issued profit-sharing certificates were called back in the year under review so that there is no preferred dividend payment in financial year 2005.
Shares and other variable-yield securities 27,057 10,407 of which shares 3,175 867 of which investment fund units 23,882 9,540
The consolidated financial statements contain the following volumes of assets and liabilities denominated in foreign currencies: (33) Foreign assets/liabilities
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. Depending on the type, scope, complexity, and risk content of the credit exposure, 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 authorised parties vote differently, the structure of authorities within the Group provides for escalation to the next decision-making level.
Raiffeisen International Bank-Holding AG approves, measures, monitors and manages all market risks by setting a variety of limits in coordination with RZB Group. The market risk limit for each Group unit is set according to its risk-bearing capacity and income budgeting. The individual limits set at book level will vary according to the different risk factors. Besides value-at-risk (VaR) limits, those limits may include volume and position limits as well as sensitivity limits (basis-point value, delta, gamma, vega) and stop-loss limits.
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BA Bank BR Company rendering banking-related ancillary services FI Financial institution IN Insurance company SC Securities company / official stock exchange OT Other company
Clean price – Price of a financial instrument without broken period interest (interest deferrals).
Finance lease – A lease that transfers substantially all the risks and rewards incident to ownership of an asset to the lessee.
Options – Instruments that give the holder the right to purchase the underlying from a contracting party at a prearranged price and at an agreed time or within an agreed period (call option) or to sell the underlying to a contracting party at a prearranged price and at an agreed time or within an agreed period (put option).
Austria (Head Office) Am Stadtpark 9, 1030 Vienna Phone +43-1-71 707-0 Fax +43-1-71 707-1715 www.ri.co.at investor.relations@ri.co.at ri-communications@ri.co.at
Hungary Raiffeisen Inglatan Rt. Akadémia u. 6, 1054 Budapest Phone +36-1-484 8400 Fax +36-1-484 8404 Contact: Laszlo Vancsko lvancsko@raiffeisen.hu 1 branch