OREANDA-NEWS. April 18, 2007. The group of Raiffeisen Zentralbank Osterreich AG (RZB) continued its successful growth path during the 2006 business year and achieved a record result for the seventh time in a row. Profit before tax, established according to the International Financial Reporting Standards (IFRS) surged from 930 million euros last year to 1,882 million euros this year. Even when discounting a one-off effect of 596 million euros, resulting from the sale of Raiffeisenbank Ukraine and the minority share in Bank TuranAlem in Kazakhstan, RZB has crossed the billion euro line for the first time with a pre-tax result of 1,286 million euros, reported the press-centre of  Raiffeisen Bank.

"The result for 2006 proves once again that RZB holds a good strategic position. Not only does RZB have sustained earning power but continues to grow clearly faster than the market, as a result of which it has further improved its market position both in Austria and Central and Eastern Europe. Even when taking out the one-off effect, the profit for the business year still grew by more than 38 per cent, another record as well," said Walter Rothensteiner, RZB's Chief Executive Officer.

RZB grows significantly stronger than the Austrian banking market
During the year under review, the balance-sheet total of the RZB Group rose from 93,9 billion to 115,6 billion euros — which corresponds to an increase of 23,2 per cent. 64 per cent of the balance-sheet total was generated inside the European Union. With its dynamic increase in total assets, RZB surpassed the average growth of the Austrian banking market by more than twice its value. OeNB, the Austrian National Bank, reported an average growth of 9,9 per cent for Austria's banks. The share of RZB in the cumulated total assets of all banks in Austria grew once again and has reached 14,4 per cent at year-end 2006 (after 13 per cent the year before).

Business in Austria — the Group's backbone
Over the years, the Corporate Customers segment has shown a particularly successful development with corporate accounts managed from Vienna. This business line achieved a major leap forward of almost 17 per cent in terms of gross earnings, which amounted to 236,6 million euros. "The fiercest struggle over a customer segments in Austria is waged on the corporate customers market. It is all the more gratifying therefore that our team succeeded once again to achieve impressive growth," said Rothensteiner. RZB's leading position in syndicating large-volume loans also contributed to the success of the corporate customers business. With 63 mandates, RZB is the market leader concerning syndication in Central and Eastern Europe (CEE).

Increased earning power
"For many years, RZB has also reported success figures that are significantly above the sector's average. It also did so in 2006," said Rothensteiner indicating that the good performance of practically all corporate units was responsible for the record result. The RZB Group continues to have undiminished earning power. The P&L statement for the 2006 business year reveals significant growth for the most important performance indicators: net interest income after provisioning — plus 31,5 per cent to 1,840 million euros; net commission income — plus 43,7 per cent to 1,177 million euros; trading profit — plus 48,8 per cent to 257 million euros. As administrative expenses grew less in absolute as well as in relative terms, profit before tax (excluding the one-off effect) grew by 38,3 per cent to 1,286 million euros.

Income taxes due for the year 2006 amounted to 251 million euros. Profit after tax amounted to 1,631 million euros, or 1,035 million euros without one-off effect (plus 46,9 per cent).
Key indicators further improved
Although the focus of the 2006 business year was on expanding the distribution network, the cost/income ratio was ultimately clearly better than in the previous year: The relationship between administrative expenses and operating earnings decreased to 56,7 per cent and thus improved by 2,2 percentage points. In spite of a clearly higher equity base the increase in profit led to an absolute record result in terms of return on equity (ROE). ROE went up by 15,2 percentage points to 39,1 per cent. Even without one-off effect it is 2,8 percentage points above the value scored last year. Return on assets (ROA) before tax improved from 1,17 per cent to 1,25 per cent (without one-off effect).

Own funds at 7,6 billion euros
Total own funds of the RZB Group increased by more than 46 per cent to 7,6 billion euros. The excess-cover ratio at the balance-sheet date amounted to 34,7 per cent, the own funds ratio was 10,8 per cent and the Tier 1 ratio amounted to 9,0 per cent. "We have an excess of own funds of more than 1,960 million euros, which is truly comfortable," stated Rothensteiner.

4,300 jobs created
On the balance-sheet date, RZB had 55,434 employees. Of these, about 2,600 worked in Austria, some 52,500 in CEE and about 350 in the rest of the world. 4,300 jobs were created by organic growth, and a further 6,500 were added to the Group through acquisitions.
Dynamic development of Raiffeisen International
The development of Raiffeisen International Bank-Holding AG, the subsidiary listed on the Vienna Stock Exchange, was particularly gratifying. It was not only that the balance-sheet total of the CEE-finance-holding company grew by 37 per cent to almost 56 billion euros; the sub-group also achieved record growth in 2006. Discounting the one-off effect, consolidated profit after tax and minorities improved by 55 per cent and amounted to 594 million euros (2005: 382 million euros). Earnings per share (without one-off effect) went up from 2,79 euros in 2005 to 4,17 euros. [Note: On account of the refinancing and steering costs, as well as CEE business by other corporate entities, the geographic segments Central Europe, Southeastern Europe and CIS of RZB do not completely reflect the profit achieved by Raiffeisen International.]

The development in the number of retail customer accounts serviced by Raiffeisen International's Network Banks in CEE, was particularly impressive. With additional new customers of more than 150,000 per month, the total customer figure rose to 12,1 million in 2006. As a result, the retail business contributed the biggest growth (124 per cent) to the result of Raiffeisen International.

A comprehensive description of the business segments as well as detailed information regarding business development, the balance sheet and P&L statement are contained in the Annual Report 2006. It can be accessed online at http://ar2006.rzb.at.