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04.04.05

Raiffeisen International with record result

Pre-tax profit plus 24 per cent, ROE exceeds 22 per cent, balance-sheettotal plus 44 per cent. Almost 2 million new customers.

The group managed by Raiffeisen International Bank-Holding AG (RI), afully consolidated subsidiary of Vienna-based Raiffeisen ZentralbankOsterreich AG (RZB), presented its official result for the business year2004 today. The group earned profit before tax of 342.2 million, which is a record result and an increase of 65.5 million or 23.7 per cent compared with year-end 2003. Profit after tax amounted to 271.3 million ( 227.4 million in 2003). All figures are based on International Financial Reporting Standards (IFRS).

"Raiffeisen International is well-positioned in all important growthmarkets of Central and Eastern Europe. This result proves that wecontinue to be on the right track", says Herbert Stepic, CEO of RI andDeputy Chairman of RZB.

Significant expansion of business volumes, balance-sheet total grows by44 per cent

RI has made use of the dynamic growth environment in Central and EasternEurope (CEE) and expanded its business significantly. Loans and advancesto customers increased by 38.7 per cent to 16.2 billion, while deposits from customers grew by 50.4 per cent to 18.2 billion. The Group''s balance-sheet total amounted to 28.9 billion at year-end 2004, an increase of 44.1 per cent. Four fifths thereof relate to organic growth. This development makes RIone of the fastest growing banking groups in the region.

Improvement of operating results

Operating income increased by 280.5 million or 27.6 per cent to 1,298.8 million. Net interest income amounted to 805.8 million or 62 per cent thereof. Net commission income grew by 39.9 per cent to 298.1 million, while trading profit declined by 8.6 per cent to 220.9 million.

In spite of high investments, a tight cost management kept the increaseof general administrative expenses well below the growth ofbalance-sheet total: 823.3 million was spent for staff expenses and other administrative outlay in 2004, which corresponds to an increase of one fourth compared with 2003.

Resulting profit from operating activities grew by 32.2 per cent to 475.5 million. The cost/income ratio, which expresses general administrative expenses in relation to operating income, improved from 64.7 to 63.4 per cent, reflecting the advance in profit from operating activities.

Equity base significantly improved, very solid core capital ratio

On the reporting date, equity inclusive of consolidated profit andminority interests came to a total of 2,177 million (2003: 1,379 million). That translates into a year-on-year increase of 57.9 per cent. Return on equity (ROE) before tax, measuring profit before tax as a percentage of average equity, came to 22.3 per cent, compared with 24.1 per cent in 2003. The reason for the decrease in ROE was the substantial increase in the Groups equity base. ROE after tax declined by 2.1 percentage points to 17.7 per cent.

The Group''s core capital ratio came to 10.1 per cent (2003: 9.4 percent)."Raiffeisen International is very well equipped with a solidcapital base", says Martin Grull, Raiffeisen International''s CFO.

Most extensive market coverage in CEE

Via its subsidiary banks, RI is active in 15 Central and EasternEuropean markets. That is the most extensive coverage among banksoperating in the region. In seven markets, the so called Network Banksrank among the local top-three banks. In 2004, the network was againexpanded by an acquisition, namely Albanian Banka e Kursimeve, renamedRaiffeisen Bank Sh. a. in October, which significantly boosted theGroup''s presence in Southeastern Europe. Stepic:"The markets ofSoutheastern Europe are still in a rather early stage of development,compared with the new EU-member states. There is a huge potential to tapand we want make good use of it." RI''s subsidiary banks in Belarus,Russia and the Ukraine are the leading international banks in theirrespective countries.

Via its sub-group Raiffeisen-Leasing International, RI operates 14leasing companies in 12 countries of the region, servicing corporatecustomers and retail customers. Further specialized companies are activein the sectors of asset management and pension funds.

56 per cent more customers, major reinforcement in the sales system

Following the addition of 194 outlets to the network, the Group had 916business outlets in CEE at year-end 2004. In total, almost 23,000employees serve approximately 5 million retail customers, 56 per centmore than at year-end 2003. Stepic:"Our strategy to invest early intonew markets, products and customer segments, is paying off. We have won1.8 million customers last year alone, and more than 80 per cent of thatgrowth was organic."

Segment reporting

RI''s business activities are portrayed both by customer groups and bygeographical segments.

Customer Segments

The Retail Customers segment encompasses all private individuals, theself-employed and small and medium-sized enterprises with annualrevenues of less than 5 million. The segment was profitable for the first time in the year under review and contributed 42.5 million to the Group''s result. 2003 it still showed a loss of 23.8 million. Pre-tax ROE was 11.4 per cent, cost/income ratio was 83.5 per cent.

The Corporate Customers segment comprises business with large corporatesand middle market companies from CEE as well as companies from othercountries that are active in the region, including especiallymultinationals. The segment reached profit before tax of 229.6 million (2003: 221 million). Pre-tax ROE was 29.4 per cent, cost/income ratio was 41.8 per cent.

The Treasury segment encompasses the Treasury departments trading for their own account as well as investment banking activities, which are only carried out by a few Group units. The segment earned profit before tax of 111.9 million (2003: 87.4 million). Pre-tax ROE was 33.2 per cent, cost/income ratio was 23.2 per cent.

Participations and Others recorded a loss of 41.8 million. Besides non-banking activities, this segment also encompasses the management of equity participations. In addition, the segment encompasses other cross-segment activities, including in particular those carried out by parent company Raiffeisen International Bank-Holding AG.

Geographic Segments

Central Europe encompasses the Czech Republic, Hungary, Poland, Slovakiaand Slovenia. The segment recorded a profit before tax of 162.8 million (2003: 136.2 million). Pre-tax ROE was 19.1 per cent and cost/income ratio was 65.5 per cent.

Southeastern Europe contains Albania, Bosnia and Herzegovina, Bulgaria,Croatia, Romania, Serbia and Montenegro (including Kosovo). The segmentrecorded a profit before tax of 100.8 million (2003: 59.7 million). Pre-tax ROE was 21.7 per cent and cost/income ratio was 67.4 per cent.

Commonwealth of Independent States comprises the members of theCommonwealth of Independent States where RI is active, namely Belarus,Russia and the Ukraine. This segment recorded a profit before tax of 78.7 million (2003: 80.9 million). Pre-tax ROE was 36.0 per cent and cost/income ratio was 46.9 per cent. As of January 2005, RI is active in Kazakhstan, when its sub-group Raiffeisen-Leasing International set up a finance leasing company in Almaty. Furthermore, RZB has had a presence in Kazakhstan by way of a non-consolidated stake in Bank TuranAlem since the end of 2001. That stake was increased to 12.8 per cent in 2004 and taken over by RI in December 2004. Bank TuranAlem is Kazakhstans second-largest bank with a balance-sheet total of 3.7 billion.

Disclaimer: The information contained herein is not for publication ordistribution to United States persons or to publications with a generalcirculation in the United States. These materials are not an offer forsale of the securities in the United States. No public offering of thesecurities will be made in the United States. The securities referred toherein have not been and will not be registered under the US SecuritiesAct of 1933, as amended, and may not be offered or sold in the UnitedStates without registration thereunder or pursuant to an availableexemption therefrom.

You can access the web-version of RI''s annual report onhttp://ar2004.ri.co.at.The English printed version will be available on or about 19 April andcan be subscribed to on that site.

For further information please contact Michael Palzer (+431-71 707-1504,michael.palzer@ri.co.at)or Andreas Ecker-Nakamura (+43-1/717 07-1753,andreas.ecker@rzb.at).

www.ri.co.at,www.rzb.at

 

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