Pre-tax profit up 34 per cent toˆ 930 million. Balance-sheet total expands by 38 per cent to 93.3 billion. Market-share gains in Austria and Central and Eastern Europe.
The group headed by Vienna-based Raiffeisen Zentralbank Osterreich AG(RZB) has continued on its successful growth path and achieved a recordresult for the sixth time in a row in 2005. Profit before tax accordingto IFRS surged by 34.3 per cent toˆ 929.9 million.
"The result delivered in 2005 again shows RZB''s excellent strategicalignment. The growth path chosen, combined with sustained high earningpower, brought us market share gains in Austria and Central and EasternEurope", said RZB''s CEO Walter Rothensteiner. RZB has increased itsmarket share in Austria (by cumulated total assets of all banks) from10.4 at year-end 2004 to 13.0 per cent.
Growing significantly stronger than the market again.
The RZB Group''s balance-sheet total increased fromˆ 67.9 to ˆ 93.9 billion, an increase of 38.3 per cent. This rate exceeds the 10.9 per cent average growth of Austria''s banks (as published by Oesterreichische Nationalbank, the Austrian National Bank) by far. RZB showed significantly higher-than-average growth also in recent years.
The economic development of Central and Eastern Europe (CEE) was muchbetter than in the Eurozone. Therefore, the growth of RaiffeisenInternational Bank-Holding AG– the company steering RZB’s Network Banks and leasing units – was even stronger than the one of the entire Group. This was also due to the acquisition of Bank Aval, the second-largest Ukrainian bank, and the sustained demand for banking services in CEE.
In 2005, the banking network in CEE was further expanded both locallyand regionally. In addition to the purchase of Bank Aval, leasing unitswere founded in Belarus and Kazakhstan. Bank Aval increased the numberof Raiffeisen International''s business outlets by 1,342, and another 185branches were opened throughout the region."We have opened more thanthree branches per week on average, making us the banking market''spacemaker in this respect", said Rothensteiner.
Increased earning power.
"RZB''s earning figures have been better than the Austrian market''saverage for many years", said Rothensteiner referring to the recordresult that was based on the excellent performance of practically allthe Group''s units. Consequently, RZB''s earning power remains unbroken,with significant increases in the most important components of theP&L-statement: Net interest income after provisioning– plus 50.8 per cent to ˆ 1,400 million; Net commission income – plus 28 per cent to ˆ 619 million; Trading profit – plus 19.5 per cent to ˆ 372.3 million. Administrative expenses grew less than earnings both in absolute and relative terms, resulting in profitbefore tax growing by 34.3 per cent to ˆ 929.9 million.
Income taxes grew by 78 per cent toˆ 225.2 million, and profit after tax increased by 24.5 per cent to ˆ 704.6 million. RZB''s share in Raiffeisen International decreased to 70 per cent following the latter''s Initial Public Offering (IPO) in April 2005. Consequently, minority interests increased and consolidated profit (after minorities) grew by only 1.2 per cent to ˆ 450.9 million.
Ratios on a good level.
The RZB Group''s result was influenced by sustained high investments intoexpansion, designed to secure the long-term base for business andearnings. Nevertheless, the cost/income ratio improved to 58.9 per cent(2004: 59.8 per cent). Return on equity (ROE) before tax went down sixpercentage points to 23.9 per cent due to the significantly increasedequity base. Return on Assets (ROA) before tax improved from 1.11 to1.17 per cent.
The risk/earnings ratio improved again: After a marked reduction of sixpercentage points in 2004, it fell again by 4.6 percentage points to12.9 per cent in 2005."This is the logic result of a traditionallyprudent risk policy and thorough risk-monitoring", said Rothensteiner.The mentioned ratios are the best among Austria''s large banks.
Corporate customers is largest business segment.
The corporate customer segment is not only RZB''s largest businesssegment; it is also the most important profit contributor. The segment''scontribution to profit before tax rose by 2.1 percentage points to 48.3per cent. One important factor for the larger volume in corporatecustomer business were the significantly increased direct investments ofthe Group''s customers.
Provisioning for impairment losses developed very well: With an increaseof 5.6 per cent toˆ 206.6 million they remained well below the increase of business volume. Especially provisioning for Austrian business declined by 42 per cent to ˆ 29.6 million reflecting 14.3 per cent of total provisioning, whereas the share in risk weighted assets was 42.5 per cent.
"Geographically, RZB''s business rests on two firm pillars– Austria and CEE", said Rothensteiner. Austria accounted for 49 per cent of thebalance-sheet total and 40 per cent of profit before tax. CEEcontributed 42 per cent and 55 per cent, respectively, based on thehigher margins in the region.
Own funds atˆ 5.2 billion.
Total own funds of RZB Group increased by 26.2 per cent toˆ 5.2 billion. This development is primarily due to the proceeds from Raiffeisen International''s IPO as well as to retained earnings. The excess-cover ratio at the balance-sheet date amounted to 16.5 per cent, the own funds ratio to 9.3 per cent and the Tier 1 ratio to8.3 per cent. Therefore, RZB''s equity base is sound.
Development of staff number reflects strong expansion.
The acquisition of Bank Aval brought 16,645 new employees. An additional4,275 jobs (full time equivalents) were created in the reporting period,156 thereof in Austria. The number of staff increased by 82.6 per centto 46,243.
Dynamic development of Raiffeisen International.
One of the year''s highlights was the IPO of Raiffeisen International inApril. The order-book was 22-times oversubscribed. The total volume ofthe issue wasˆ 1.1 billion, making it the largest IPO in Austria''s history.
Raiffeisen International''s total assets rose by 40.8 per cent toˆ 40.7 billion and consolidated profit (after tax and minorities) showed a record growth of 82.6 per cent to ˆ 382.3 million. Earnings per share were up ˆ 0.86 at ˆ 2.79.
The number of Raiffeisen International''s retail customers developed veryimpressively indeed, climbing by 4.7 million to 9.7 million. 1.4 millionwere new customers and 3.3 million were contributed by Bank Aval. RZB isnow present in 18 markets of the region through Raiffeisen International.
A comprehensive description of the business segments as well as detailedinformation regarding business development, the balance sheet and P&Lstatement are contained in the Annual Report 2005. It can be accessedonline at http://ar2005.rzb.at. Raiffeisen International''s Annual Reportcan be accessed at http://ar2005.ri.co.at.
RZB is the central institution of the Austrian Raiffeisen Banking Group,the country''s largest and most powerful banking group. It is a leadingcorporate and investment bank in Austria and also considers Central andEastern Europe (CEE) as its home market. Via subsidiary RaiffeisenInternational, it operates one of the leading banking networks in CEEwith 16 subsidiary banks and many finance leasing companies in 16markets. 10 million customers are attended to through more 2,400business outlets. In seven markets, the respective Network Bank ranksamong the three largest local banks. Representative offices in Lithuaniaand Moldova complement the group''s presence in the region. RaiffeisenInternational''s shares are traded on the Vienna Stock Exchange. RZB owns70 per cent, the balance is free-float.
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