OREANDA-NEWS. March 28, 2007 consolidated profit excluding one-off effects surges by 55% to 594 million euros, reported the press-centre of  Raiffeisenbank.
Return on equity rises to 27,3% (excluding one-off effects);
Additional one-off effects of 588 million euros due to divestments;
Retail banking segment shows largest profit growth at 124%;
Excellent position in the high-growth markets of Southeastern Europe and the CIS;
Largest international banking group in Russia and the CIS;
Largest sales network of all western banks in CEE;
More than 150,000 new customers per month bring total customer base to 12,1 million;
Best performing stock in the ATX and the Dow Jones Euro STOXX Banks indices.


Raiffeisen International Bank-Holding AG, a part of the RZB Group, significantly improved its business results in 2006 and once again achieved a record profit. Adjusted for one-off effects, the consolidated profit (after tax and minorities) rose by 55 per cent to 594 million euros (2005: 382 million euros). Profit before tax (excluding one-off effects) amounted to 891 million euros (2005: 569 million euros), while profit after tax (excluding one-off effects) was 686 million euros (2005: 460 million euros). Earnings per share (excluding one-off effects) increased from 2,79 euros in 2005 to 4,17 euros. All data according to International Financial Reporting Standards (IFRS). In the course of 2006, Raiffeisen International sold two bank holdings: a minority participation in Bank TuranAlem of Kazakhstan (102 million euros) and the former Raiffeisenbank Ukraine (486 million euros). The net proceeds from these sales amounted to 588 million euros. Including these one-off effects, consolidated profit rose to 1,182 million euros, representing a 209 per cent increase compared to 2005.


Herbert Stepic, CEO of Raiffeisen International, said, "2006 was another very successful year for us. Our growth dynamics is best shown by the development of our profits, which grew six-fold in the past fours years. On top of that, we have taken a decisive step into the future with the acquisition of Impexbank. As the largest international banking group in Russia and in the entire CIS, we are excellently positioned in the markets with the highest growth potential". At the beginning of 2006, Raiffeisen International acquired OAO Impexbank, one of the leading universal banks with a primary focus on retail banking in Russia. With this transaction, the Group became the largest foreign bank in Russia, the largest banking market in Central and Eastern Europe (CEE) with 140 million inhabitants. By the end of 2007, Impexbank is scheduled to be legally merged with ZAO Raiffeisenbank Austria, which was founded in Russia in 1996. The merged bank will be named Raiffeisenbank. "Our good position in the high-growth markets of the CIS and Southeastern Europe already pays off," said Stepic. Both regions already contribute about 65% to profit before tax, excluding the one-off effects. "By acquiring eBanka, we have also strongly reinforced our market position in the Czech Republic," Stepic referred to Raiffeisen International's acquisition of a bank also in Central Europe last year.

Strong growth in customer business - Balance sheet total increases by 37%. In the year under review, Raiffeisen International continued to utilize the positive growth environment in CEE and notably extended its customer business. Loans and advances to customers grew by 41,8% to 35 billion euros, while deposits from customers increased by 33,2% to 33,2 billion euros. "The corporate customers segment again grew substantially in 2006 and remains our largest segment in terms of assets and profit. The retail customers segment already contributed almost one third to the profit before tax - tending upwards," said CFO Martin Groll. "In Russia, we already rank third in consumer deposits and fourth in consumer loans," he said, underlining the positive development of this segment.


Due to its high service standards and products that are closely aligned with demand in the marketplace, combined with further expansion in the sales network, Raiffeisen International was again able to attract numerous new customers. With 9,7 million customers recorded at year-end 2005, the Group increased this figure to 12,1 million customers at the end of 2006. "Every month, more than 150,000 new customers turn to Raiffeisen," Stepic said. The remaining customers were added through the acquisitions of Impexbank and eBanka. The balance sheet total increased by 37,3% to 55,9 billion euros at the end of the year, almost 90% of the increase was accounted for by organic growth. Within the past four years, Raiffeisen International's balance sheet total has almost quadrupled.
Operating results and efficiency further improved;
Operating income improved across all components and grew by 52% to 2,867,7 million euros;
General administrative expenses increased by 45,7% to 1,693,7 million euros because of significant investments. Due to tight cost management, the growth stayed below the increase in operating income. As a result, profit from operating activities increased by 62% to 1,174,1 million euros. The cost/income ratio, which represents general administrative expenses in relation to operating income, thus further improved from 61,6% to 59,1%;
Allocations to provisioning for impairment losses rose by 84,7%, or 142 million euros, to 308,9 million euros in 2006. About 60 million euros of this increase derives from changes in the scope of consolidation;
Strong equity base;
Raiffeisen International increased its equity, including consolidated profit and minority interests, by 40% or 1,314 million euros in the year under review. It amounted to 4,590 million euros at the balance sheet date (2005: 3,276 million euros). The return on equity before tax (excluding one-off effects) amounted to 27,3%. The significant increase of 5,5 percentage points resulted from the strong profit growth;
The Group's Tier 1 ratio for the banking book, which reflects the financial strength, amounted to 9,8% (2005: 9%). The Tier 1 ratio including market risk was 9% (2005: 8%), which is more than twice the amount required by Austrian law for banks (4%).
4th quarter 2006: Best result in the company's history;
In the fourth quarter of 2006, Raiffeisen International achieved a profit before tax of 727 million euros, which was essentially influenced by the proceeds booked in the amount of 486 million euros from the sale of Raiffeisenbank Ukraine. Without this one-off effect, profit before tax amounted to 240,6 million euros (Q4 2005: 152,1 million euros). "Without the one-off effects in the third and fourth quarter 2006, we have achieved the best quarterly result in the history of Raiffeisen International due to the strong development of operating business in the fourth quarter 2006," Groll said;
Largest sales network of all western banks in CEE.


In the year under review, Raiffeisen International further extended its already wide-reaching network of sales outlets. In total, 178 new branches were opened, more than in any other year of the company's history (2005: 145). Taking into account the acquisitions and the divestment of Raiffeisenbank Ukraine, the number of branches increased by 405. The sales network of Raiffeisen International comprised 2,848 business outlets in 16 CEE-markets at the balance-sheet date. "No other international bank in the region offers such a far-reaching and closely-knit sales network. We open three to four branches per week," Stepic said. At the end of 2000, the number of branches of Raiffeisen International in CEE amounted to only 185. This corresponds to an increase by the factor 15 within six years.The number of employees advanced by 21% to 52,732 (2005: 43,614) in the reporting period, primarily due to the acquisitions of Impexbank and eBanka.

Best performing stock in the DJ Euro STOXX Banks;
The successful trend of Raiffeisen International's stock continued in 2006. The stock outperformed by far not only the ATX but also the sector average. It stood at 55,55 euros at the end of 2005 and advanced to 115,51 euros on the last trading day of 2006. The stock thus registered a plus of 108 per cent as of year-end and was the best performing stock in the European peer index DJ Euro STOXX Banks;
The Managing Board will propose a dividend per share of 0,71 euros (2005: 0,45 euros) to the annual general meeting;

Segment Reporting
The business activities of Raiffeisen International are portrayed by business lines as well as regional segments.

Business Lines
The Retail Customers segment encompasses all private individuals, the self-employed and small enterprises with annual revenues of less than 5 million euros. This segment registered the highest profit growth with 124,1 per cent in the year under review and contributed 263,5 million euros to the Group's profit before tax (2005: 117,6 million euros). The ROE before tax improved significantly to 24,8% (2005: 15,1%) and the cost/income ratio to 72,3% (2005: 78,6%);
The Corporate Customers segment comprises business with large and middle-market companies from CEE as well as companies from other countries that are active in the region, especially multinational groups. The segment reached a profit before tax of 467,2 million euros (2005: 336,8 million euros), representing an increase of 38,7%. The ROE before tax improved to 31,7% (2005: 26,9%) and the cost/income ratio to 36,7% (2005: 40,2%);
The Treasury segment encompasses the treasury departments' trading for their own account as well as investment banking activities, which are only carried out by some Group units. The segment earned a profit before tax of 241,5 million euros (2005: 184,1 million euros), a plus of 31,1%. The ROE before tax was 44,7% (2005: 43,8%) and the cost/income ratio 22,8% (2005: 18,1%);
Participations and Other recorded a profit before tax of 507,4 million euros due to the proceeds from divestments (2005: minus 70,0 million euros). Besides non-banking activities, this segment encompasses the refinancing as well as the management of equity participations;
Excluding the one-off effects the Corporate Customers segment remained the largest contributor to profit before tax with 52% (2005: 59%). The retail business continued to grow rapidly which is reflected in the segment's substantial increase of profit contribution to 30% (2005: 21%). The combined contribution of the segments Treasury and Participation and Other decreased slightly to 18% (2005: 20%).

Outlook 2007
The management expects a consolidated profit of at least 700 million euros for 2007. The corporate customer business is again expected to 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 the branch network and of alternative distribution channels, e.g. the internet and call centres.  For the period to 2009, Raiffeisen International anticipates annual growth of the balance sheet total by at least 20 per cent. The largest increases should continue to come from the CIS despite the absence of Raiffeisenbank Ukraine. Raiffeisen International forecasts an ROE before tax of more than 25% for the year 2009. The cost/income ratio is expected to be below 58% and the target for the risk/earnings ratio is set at about 15%.