• Operating result climbs 3.9 per cent compared to first half of 2008 to 1,072 million euros
• Profit after tax for H1 2009 of 119 million euros (down 82% compared to H1 2008)
• Provisioning for impairment losses in H1 2009 rises 380.9 per cent year-on-year to 969 million euros; non-performing loan ratio increases by 3.7 percentage points to 6.8 per cent
• Consolidated profit of 78 million euros is 86 per cent below comparable period in 2008
• Cost/income ratio improves by 3.2 percentage points to 51.6 per cent
• Return on equity before tax declines to 4.9 per cent (minus 20.6 percentage points)
• Core capital ratio (Tier 1), credit risk improves by 0.7 percentage points to 10.4 per cent
• Balance sheet total decreases by 8.8 per cent to 77.9 billion euros
• Earnings per share 3.17 euros lower at 0.51 euros

All figures are based on International Financial Reporting Standards (IFRS).

During the first six months of 2009, Raiffeisen International Bank-Holding AG, a member of the RZB Group headed by Raiffeisen Zentralbank Österreich AG (RZB), posted a consolidated profit (after tax and minorities) of 78 million euros, which represents a decline of 86.2 per cent compared to the same period a year earlier (H1 2008: 566 million euros). The principal cause for this decline in consolidated profit lies in the fact that provisioning for impairment losses rose sharply; provisioning during the period was up 380.9 per cent year-on-year to 969 million euros (H1 2008: 201 million euros). Profit before tax declined by 81.7 per cent to 154 million euros (H1 2008: 843 million euros), while profit after tax was 81.6 per cent lower at 119 million euros (H1 2008: 646 million euros).

"Our results reflect the difficult economic conditions in Central and Eastern Europe, particularly in the CIS. The fact that we managed to improve our operating results is proof that we have implemented the appropriate measures in light of this challenging environment. The sustainability of our business model is underlined both by this achievement and the fact that we managed to grow our customer base by around 300,000 new clients during the first six months of this year," said Herbert Stepic, CEO of Raiffeisen International. "Our group is well-equipped in the event that the economic headwinds should continue to be strong and we are very well-positioned if the economic bad weather in the region actually begins to recede in 2010, as expected," Stepic added on an optimistic note.

Operating result rises by nearly 4 per cent

During the first six months of 2009, the operating result reached 1,072 million euros, a rise of 3.9 per cent against the same period a year earlier (H1 2008: 1,031 million euros). Operating income in the first half of 2009 amounted to 2,215 million euros, which was 66 million euros lower than in the comparable period in the preceding year.

At 1,496 million euros, net interest income was still the most important income component, and it remained stable. It was shaped by the effects of the global financial crisis in the form of volatile currencies and higher funding costs, as well as narrowing interest margins.

Provisioning for impairment losses rises significantly once again

Consequences of the recession such as declining demand and rising unemployment were already reflected in significantly increased provisioning for impairment losses in the first quarter of 2009, and that continued in the second quarter. Another influencing factor was currency devaluation, which caused arrears to climb particularly in the case of foreign-currency loans. Allocations to provisioning for impairment losses were made in a total amount of 969 million euros in the first half of 2009. That concerned mainly Ukraine, Russia, and Hungary. Compared with the end of 2008, the non-performing loan ratio rose by 3.7 percentage points to 6.8 per cent. Calculating non-performing loans based on total credit risk volume (loans and advances, securities, and off-balance-sheet items) yields a ratio of 4.1 per cent.

Return on equity before tax at 5 per cent

The burden on earnings, due mainly to sharply higher provisioning, had a negative effect on profitability. The return on equity before tax came to 4.9 per cent and was thus far below the comparable period’s level (25.5 per cent). The average equity underlying this calculation fell by 5 per cent to 6.2 billion euros under the influence of currency movements.

Cost/income ratio improves by 3.2 percentage points

General administrative expenses fell by 107 million euros, or 9 per cent, on the comparable period in the preceding year to 1,143 million euros, while operating income only declined by 3 per cent. The cost/income ratio thus improved by 3.2 percentage points to 51.6 per cent. The positive development of general administrative expenses is explained on the one hand by cost optimization measures and, on the other hand, by currency devaluations in the CEE countries compared with the preceding year’s period.

"During the first half of 2009, we managed to significantly slow down our cost dynamics. The measures we have introduced pave the way for a cost structure that is both sustainable and leaner," said Martin Grüll, CFO of Raiffeisen International.

At 48 per cent, staff expenses accounted for the largest share of general administrative expenses. They went down by 11 per cent, or 68 million euros, on the comparable period in the preceding year to 544 million euros.

Balance sheet total declines to 77.9 billion euros

Raiffeisen International’s balance sheet total amounted to 77.9 billion euros as of 30 June 2009, which represents a decline of 7.5 billion euros, or 9 per cent, compared with the end of 2008. On the one hand, currency devaluations in the CEE countries caused the balance sheet total to decrease. On the other, lending activities diminished under the influence of the recession. The huge currency devaluations registered already in the fourth quarter of 2008 continued in the first half of 2009, but with far less momentum.

Continued growth in customer numbers

The number of business outlets came to 3,167 as of 30 June 2009, which means a net increase of 90 business outlets compared with 30 June 2008. The new outlets were opened mainly in Southeastern Europe (156), and particularly in Romania (92) and Bulgaria (21). In the CIS other segment, the number of business outlets fell on balance by 86 due to further optimization measures. In the process, 96 outlets were closed in Ukraine. Since the beginning of 2009, the number of outlets on a group level has decreased by a net total of 64 as a result of efficiency-enhancing measures.

The overall number of customers rose during the second quarter of 2009 by around 100,000 and thus reached circa 15 million. 


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The financial report for the first half of 2009 is available atqr022009.ri.co.atbr>

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Raiffeisen International operates one of the largest banking networks in CEE, covering 17 markets across the region through subsidiary banks, leasing companies and a range of other financial service providers. The group's nearly 60,000 employees service around 15 million customers via more than 3,100 business outlets. Raiffeisen International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB), which owns about 70 per cent of the common stock. The remainder is in free float, with the shares listed on the Vienna Stock Exchange. RZB is a leading corporate and investment bank in Austria and the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group.


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Michael Palzer
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