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    RZB Group Consolidated Balance Sheet and Income Statement 2003


    Record result and dynamic growth

    Balance-sheet total plus 21 per cent, profit before tax plus 42 per cent, ROE before tax 15.5 per cent. Market share gains in Austria and Central and Eastern Europe. Network in Central and Eastern Europe keeps growing fast

    The group of Vienna-based Raiffeisen Zentralbank Österreich AG (RZB) has continued its successful growth course in 2003 and presented a record-result for the third time in a row: Profit before tax increased by 41.6 per cent to € 343.6 million as of 31 December 2003. At the same time, the most important profitability ratios have improved again. RZB has grown again faster than the market both in Austria and Central and Eastern Europe, thereby gaining market shares.

    "2003 was again a really successful year for RZB, characterized by continuing growth and the further improvement of our market position. We have also laid the tracks that will give us the highest degree of flexibility and allow us to secure our achievements", said RZB General Manager Walter Rothensteiner. The necessary approvals have been obtained for RZB's 100 per cent subsidiary Raiffeisen International Bank-Holding AG (Raiffeisen International) to allow a capital increase by a stock exchange flotation and/or by inviting minority share holders. "In the long term, we cannot fuel our expansion in a market with a population of about 330 million people from Austria, which has a population of just eight million. Even though the largest part of capital requirement can be financed by retained earnings as until now."

    Balance-sheet total exceeds the € 50 billion mark

    Balance-sheet total has grown to € 56.05 billion, plus 20.8 per cent since year-end 2002. With this dynamic development, RZB has again moved to the third place among Austria's banks, a position it had lost in 2000, when two competitors had merged that were almost RZB's size only five years ago.

    Strong earning power and effective cost management

    All key items of the Group's income statement show double-digit growth rates, with earnings position growing significantly stronger than expenses. Provisions for possible loan losses went up by 33.8 per cent to € 202.2 million. This was partly due to provisions for loan engagements with two Western European groups which collapsed unforeseeably notwithstanding due diligence, and in part also reflected increased loan business in CEE.

    Profit before tax increased by 41.6 per cent, from € 242.6 million at year-end 2002 to € 343.6 million, which was primarily caused by RZB's alignment on the dynamically growing markets in CEE.

    Profitability ratios continue to improve

    The RZB Group's profitability ratios have again improved: Cost/income ratio declined by 3.1 percentage points to 64.1 per cent in spite of sustained high investments. Return on equity before tax reached 15.5 per cent, after 12.5 per cent in 2002, and is the best one among Austria's large banks. Return on assets also increased significantly from 0.53 to 0.67 per cent.

    Own funds at € 3.1 billion, excess cover of 27.4 per cent

    The RZB Group's total own funds increased by eight per cent to almost € 3.1 billion. The core capital ratio and own funds ratio remained almost unchanged at 7.5 and 10.2 per cent, respectively.

    More than 21.000 employees – 2,200 jobs created on balance

    Staff grew by 26.5 per cent to 21,119 at reporting date. "Our highly qualified staff is one of our most important assets. We are proud to create many high-grade jobs each year", says Rothensteiner. In 2003, 2,200 such jobs were created on balance, and as many employees were added to the group's workforce by the integration of Priorbank. More than four out of five employees work in CEE.

    Profit contribution of Raiffeisen International continues to be disproportionately high

    Herbert Stepic, Deputy General Manager of RZB and Chairman of Raiffeisen International, is more than satisfied with Raiffeisen International's business and profit development: "Not only do we show a strong growth in the region, we stay also true to our pioneer-role with the acquisitions in Belarus and Albania and keep tapping new markets. No competitor in CEE has a network as closely meshed as Raiffeisen's, which is also the one with the longest track-record and experience in the region and which keeps being awarded for its service quality."

    Raiffeisen International is the umbrella company for the so called Network Banks, the leasing companies as well as service providers for the Group in CEE. Its Balance-sheet total grew by almost 40 per cent to € 20.1 billion in 2003, more than 90 per cent of which are accounted for by the Network Banks. The increase in profit is even more striking: Profit before tax increased by 58 per cent from € 175.3 million to € 276.7 million. While accounting for 36 per cent of the Group's consolidated balance-sheet total, Raiffeisen International therefore contributes 69 per cent to profit (consolidation effects account for discrepancies, when trying to calculate this proportion directly).

    Network in Central and Eastern Europe keeps growing fast

    The majority take-over of Priorbank, the third-largest bank in Belarus, was finalized in January 2003, making RZB the only Western commercial bank with a strategic investment in the country to date. Including Savings Bank of Albania (Banka e Kursimeve), taken over at the beginning of 2004, RZB is currently present with subsidiary banks in 15 markets of the region, and covers 16 markets including its representative office in Lithuania.

    The number of banking outlets grew by 93 to 697, the branch offices of Savings Bank of Albania will add another 92 in 2004. All in all, that is including the 257 out of 95 leasing business outlets not located at a Network Bank's outlet, Raiffeisen International listed 722 business locations as of year-end 2003 (plus 20 per cent).

    Retail banking with upward trend

    The expansion of the business outlet network is also a key to winning new retail customers. Retail business, including the servicing of small and medium-sized enterprises, was commenced in 1999 and has since then consistently expanded, promising the highest growth rates. The number of retail customers serviced by the Network Banks increased substantially again in 2003 to reach 3.2 million at year-end. More than two thirds of the increase of 1.3 million relate to organic growth, some 400,000 customers were brought in by Priorbank. In 2004, 500,000 people will become Raiffeisen-customers following the integration of Savings Bank of Albania, organic growth is expected to account for another half a million, making the budgeted total at year-end 2004 4.2 million.


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