Net profit more than doubled. Equity capital increased by one third.Return on equity at a record high of 27.4 per cent. Balance-sheet totalplus 21 per cent. Market share gains in Austria and Central and EasternEurope.
The group of Vienna-based Raiffeisen Zentralbank Oesterreich AG (RZB)has continued its successful growth course in 2004 presenting arecord-result for the fifth consecutive year. Net income before tax roseby 105.5 per cent toˆ 706 million, according to IFRS as ratios increased at the same time. “The good strategic alignment is once again reflected in the results of a really successful business year 2004. RZB is not only effectively profitable but is growing faster than the market continuously, and by doing so we strengthen our market position in Austria as well as in Central and Eastern Europe”, says Walter Rothensteiner, Chairman of RZB''s Managing Board.
Balance sheet total approximatelyˆ 68 billion
RZB’s balance sheet total of ˆ 67.9 billion exceeds the year-end 2003 figure by 21 per cent. Loans to banks notably increased by 26 per cent as well as deposits from customers, which surged by 37.6 per cent. Within a pick-up of the economy in CEE, the acquisition of Banka eKursimeve in Albania and a certain undersupply of modern financial services in these countries, the growth of the group’s units consolidated in Raiffeisen International Bank-Holding AG (Raiffeisen International) exceeded the entire goup’s growth by 44 per cent.
Especially the bank’s network in the emerging markets of Central and Eastern Europe (CEE) was further deepened and expanded by the acquisition of the Savings Bank of Albania (Banka e Kursimeve, today’s Raiffeisen Bank Sh.a.). Additionally, leasing outlets were established in Bulgaria and Bosnia and Herzegovina. In spite of that, RZB’s determined expansion is focused on organic growth and the expansion of the branch network. RZB is now represented in 16 markets of the CEE region with 15 banking subsidiaries, numerous specialized companies and representative offices.
Earning power increased, net profit doubled
RZB’s profitability remains continuously high: net interest income before and after provision for possible loan losses as well as commission income all increased by one third or more. As financial investments results turned positive, trading profit, with an increase by 7 per cent, remained on a high level. As mentioned before, net income before tax rose by 105.5 per cent to ˆ 706 million. The group’s net income after taxes and minority interests soared by 107 per cent to ˆ 447 million.
“RZB has been outperforming the industry’s average for many years and continues to do so”, says Rothensteiner, who considers the improved operating results of almost every unit of the group, accountable for the boosting profits.
Significantly improved profitability ratios
Alongside with the striking rise in profit, all basicperformance-related ratios clearly improved, too, but they are stillaffected by strong investments in the group’s expansion which is designed to ensure the long-term business success. The Cost/Income-Ratio fell to 59.4 per cent (2003: 64.1 per cent) despite the high expenditures for building up and expansion of the CEE network. Return on Equity jumped to 27.4 per cent (2003: 15.5 per cent) as Return on Assets (RoA) climbed to 1.13 per cent from 0.67 per cent in 2003. Risk/Earnings Ratio improved from 23.4 per cent to 17.2 per cent at which RZB is consistently conducting a defensive risk policy. These ratios are the best among major Austrian banks.
Own funds atˆ 4.1 billion
RZB group’s total own funds increased by one third to ˆ 4.1 billion. This progression is mainly due to the plough-back of the group’s annual net profit, to a capital increase in November (by ˆ 147 million) and to the acquisitions of interests in Raiffeisen International by IFC and EBRD. At closing date, excess own funds was 34 per cent, the own funds ratio was narrowly 11 per cent and the core capital ratio was above 9 per cent. Equity capital endowment therewith is extraordinarily well, particularly in comparison to competitors.
Number of employees reflects dynamic expansion
The number of employees (in“full time equivalents”) increased by 20 per cent to 25,323, of which 22,707 account for CEE and 2,373 for Austria. Taking into account the roughly 1,000 employees which were brought into RZB Group by the former Albanian savings bank, the selling of SDS as well as newly consolidated affiliated companies, RZB has created about 3.500 jobs in 2004.
Raiffeisen International continues to grow fast
At year-end 2004, Raiffeisen International– RZB’s holding bundling most of its business in CEE – had a balance sheet total of ˆ 28.9 billion. This is an increase of 44 per cent, whereas the acquisition of Banka e Kursimeve accounts for ˆ 1.5 billion of which. ˆ 27 billion of Raiffeisen International’s balance sheet total account for its network banks, which grew by 48 per cent, compared with the last day of the fiscal year 2003.
Pre-tax-profit of Raiffeisen International wasˆ 342 million which – in spite of strong investments in the further expansion of the branch network and related acquisition efforts in the retail segment – is an increase of 24 per cent. The profit increase is mainly due to expansion, but is also a result of a highcost awareness and ongoing process improvements. Raiffeisen International’s ROE (before tax) decreased due to the significant advance of equity capital to 22.3 per cent from 24.1 per cent at year-end 2003.
The number of business outlets in CEE was raised by 194 to a total of916. The number of customers, serviced by the network banks, was aboutfive million which is a solid gain compared with year-end 2003 (3.2million customers). In the retail segment RZB clearly reached theprofit-zone which is remarkable as RZB operates this business only since1999 and has predominantly concentrated on organic growth ever since.
You will find an extensive description of RZB''s business segments aswell as detailed information regarding the consolidated balance-sheetand income statement in RZB''s annual report. You can download it fromhttp://ar2004.rzb.ator order a printed copy there (available at full functionality by 6May). In the meantime please find an English pdf-file athttp://gb2004.rzb.at/rzb/downloads/AnnualReport_RZB_2004_en.pdf.
Raiffeisen International’s online annual report is available athttp://ar2004.ri.co.at.