The RZB Group of Raiffeisen Zentralbank Oesterreich AG has achieved excellent results overall and has improved the return on equity, the return on assets and the cost/income ratio in the first half of 2003. This is all the more remarkable as RZB has still had to cope with a persistently slack economy in Austria and the rest of Euroland this year as well as a weak equity market during the first quarter.

The RZB Group had a balance sheet total of EUR 50.5 billion, which was 8.7 per cent more than at year-end 2002. Its growth thus substantially exceeded the 3.2 per cent growth trend for all Austrian banks.

Earning power remains unbroken

RZB’s earning power remains unbroken: Net interest income after provisioning for possible loan losses and net commission income grew very powerfully (by 19.7 per cent to EUR 312.4 million and by 32.9 per cent to EUR 168.6 million respectively), and RZB’s trading profit also still grew by all of eight per cent to EUR 134.7 million. However, RZB posted a small net loss on its financial investments in the first half (EUR -14.8 million from € 4.2 million in the first half 2002).

First-half profit further increased starting from high level

RZB’s first-half profit before tax was roughly 40 per cent up on 2002 to EUR 165.9 million. That resulted in a 45.5 per cent advance in consolidated first-half profit after tax and allowance for minority interests of EUR 102.9 million, whereas the average profit from ordinary activities of all Austrian banks applying Austrian financial reporting standards rose by 12.5 per cent.

All ratios clearly improved

RZB’s cost/income ratio, which clearly mirrors the high level of expenditure of the development and enlargement of the network in Central and Eastern Europe, fell to 70.9 per cent compared to 73.4 per cent in the first-half 2002. The return on equity (ROE) before tax came from 12.3 per cent to 14.9 per cent, and its return on assets (ROA) before tax came to 0.69 per cent (from 0.54 per cent).

Expansion in CEE continues

"RZB has continued to expand its banking network in the growth-markets of Central and Eastern Europe. Our Network Banks are among the fastest growing banks in their individual markets", says Walter Rothensteiner, Chairman of RZB's Board of Management. The Group's resolute high-intensity growth strategy is based primarily on organic growth and the development of the branch network. RZB now has a presence in 15 markets in the region, where it has 14 banking subsidiaries, numerous specialized companies and two representative offices, giving it practically unbroken coverage of Central and Eastern Europe.

In addition to entering the Belarus market and embedding Priorbank into its existing network in Central and Eastern Europe, RZB is also pressing ahead with the integration process in other markets. In Kosovo, the American Bank of Kosovo, acquired last year, was renamed Raiffeisen Bank Kosovo. The change in name also made the ongoing integration process clearly apparent to outside parties. The merger of RZB’s two banks in Bosnia and Herzegovina was completed at the beginning of the year, creating by far the biggest bank in the country.

Balance sheet total in CEE plus 13 per cent

The balance sheet total of RZB’s Network Banks in Central and Eastern Europe came to EUR 16.1 billion on 30 June 2003, having grown by 13.1 per cent since year-end 2002. The increase was almost entirely due to organic growth. Priorbank did not have a significant impact on the overall absolute growth figure of just under EUR 1.9 billion.

Further expansion of the branch network

The number of outlets in the region increased by 95 to 699, which translates into growth of nearly 16 per cent. Priorbank accounted for the bulk of those new outlets, namely 68. There was further rapid growth in the workforce, which increased by 24 per cent to 16,603. That too was primarily due to the integration of Priorbank, which employs a workforce of 2,261.

Remarkable growth in the RIB's ROE

Raiffeisen International Beteiligungs AG (RIB) is the holding company for Raiffeisen Zentralbank's interests in Central and Eastern Europe. The Network Banks’ investment outlay remained high during the first half of 2003. That was above all due to continued rapid progress in the development and enlargement of the sales network for the Retail Banking segment. Despite its heavy capital expenditure, RIB achieved a substantial increase in its return on equity before tax, which came to 24.4 per cent. That was significantly up on the first half of 2002, when it came to 17.7 per cent, and remained one of the best ROEs of any bank operating in Central and Eastern Europe.

More than 2.6 million retail customers

The dynamic growth of the Retail Customers segment, which is one of RZB’s strategic segments in Central and Eastern Europe, continued unbroken during the first half of 2003. In addition, the launch of operations in Belarus opened up and integrated a market in which Priorbank has already occupied this segment with great success. At mid-year, RZB was already serving 2.6 million retail customers. That was 700,000 more than at year-end 2002. Some 400,000 customers were added by Priorbank.