Analyst Conference for the Annual Report 2005

Transcription

1 Analyst Conference for the Annual Report 2005 Herbert Stepic, CEO Martin Grüll, CFO 30th March 2006

2 Overview & Acquisitions Herbert Stepic, CEO

3 Highlights Record profit growth Acquisition of 93.5% stake in Bank Aval Acquisition of 100% stake in Impexbank (subject to closing) Number of customers have grown to 9.7 mn (end of 2005) by more than1.4 mn organically since the end of 2004 (Bank Aval contributes more than 3.3 mn customers); at the end of February 2006 we passed the 10 mn customer mark Branch expansion to 2,443 (including Impexbank ~ 2,633) in 2005 from 916 in 2004 Share price increase of over 70% in 2005 and ~120 % from IPO to present Inclusion of the RI shares into the ATX, ATX 5, and Dow Jones Euro Stoxx indices (as well as the MSCI in February 2006) 3

4 Financial Highlights of the Full Year 2005 Consolidated profit is up almost 83% to 382 mn in 2005 ( mn) Increasing profit before tax contribution from high growth regions: SEE with 33% and CIS with 27% Retail segment profit growth of 184% to 118 mn and contribution to total group profit of 21% Asset growth of over 40% in 2005 Customer related loan volume growth of almost 52% in 2005 (39% organically) Return on equity before tax of 21.8% Cost/income ratio further improved to 61.6% ( %) despite continued opening of new branches Improved risk/earnings ratio of 13.9% 4

5 Financial Highlights of the Full Year 2005 ROE before Tax Consolidated Profit in mn % 24.1% 22.2% 21.8% 83% Cost/Income Ratio Total Assets in mn 70.3% 64.7% 63.5% 61.6% 28,907 41% 40,695 20,063 14,

6 Profit Contribution from CIS and SEE Continues to Strengthen Segment Breakdown of Profit before Tax 2004 Segment Breakdown of Profit before Tax 2005* Commonwealth of Independent States (CIS) 23% Central Europe (CE) 47% Commonwealth of Independent States (CIS) 27% Central Europe (CE) 40% Southeastern Europe (SEE) 30% Southeastern Europe (SEE) 33% * Including Bank Aval and excluding Impexbank 6

7 Contribution from Retail Continues to Increase Segment Breakdown of Profit before Tax 2004 Segment Breakdown of Profit before Tax 2005 Treasury, Participations and Others 21% Retail Customers 13% Treasury, Participations and Others 20% Retail Customers 21% Corporate Customers 66% Corporate Customers 59% 7

8 Return on Equity before Tax on Segment Level Regional Segment Reporting Business Segment Reporting 36.0% 32.3% 43.8% 18.9% 17.5% 21.7% 22.6% 29.4% 26.9% 33.2% 11.1% 15.1% CE SEE CIS Corporate Retail Treasury

9 Aval and Impexbank Further Improve Our Strategic Position in CEE Market Position Top 1-3 No. of Countries 7 Bosnia & Herzogovina Leading Presence in Profitable Growth Markets Croatia Slovakia Leadership in Highest Growth Markets Serbia & Mont. Albania Ukraine Kosovo Romania Bulgaria Belarus Top 4 6 >6 5 3 Czech Republic Hungary Slovenia Poland Ukraine Russia Leading Foreign Bank in Russia Russia Ø EU % p.a. 0% 2% 4% 6% 8% 10% > 12% Average Nominal GDP Growth Rate E (p.a.) 9

10 Retail Growth Drives Branch Expansion Segment Breakdown of Branches 2004 Segment Breakdown of Branches 2005 Commonwealth of Independent States (CIS) 77 Central Europe (CE) 343 Commonwealth of Independent States (CIS) 1,455 Central Europe (CE) 422 Southeastern Europe (SEE) 496 Southeastern Europe (SEE) 566 Total Branches: 916 Total Branches: 2,443 10

11 Bank Aval Herbert Stepic, CEO

12 Bank Aval Acquisition Update Purchase of 93.5% of the Joint Stock Post Pension Bank Aval for US$ 1,028 mn completed and consolidated into group financial results (4th Quarter 2005) Fast growing banking sector with a total asset growth of approximately 58% in 2005 (in local currency terms) Uzhgorod Lutsk Lviv Ivano-Frankivsk Rivne Ternopil Chernivtsy Total branches as of December 2005: 1, Khmelnitsky 38 Chernigiv Sumy Zhitomyr Vinnitsa 40 Odessa Kyiv 38 Cherkassy Kirovograd 40 Mikolaev 38 Kherson Poltava 64 Dnipropetrovsk Simferopil Kharkiv Zaporizhzhya 41 Donetsk Lugansk One of the largest branch networks in the country A solid retail customer base of approximately 3.3 mn retail customers 12

13 Bank Aval Transformation On Track Project (Group) Strategic projects/ business building Restructuring and modernizing Legal merger Implementation of Bankmaster Operational merger 2006 Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 Organizational structure fixed Appointment of second level management 80 transformation projects set up Legal merger and core banking system top priority focus 2006 Full operational merger and restructuring top priority to follow Strategy Implementation 13

14 Bank Aval Board Members Vladimir Lavrenchuk CEO Lubomir Pokorny Retail Victor Gorbachev Corporate I Arthur Iliyav Corporate II 23 years in the banking industry Native Ukrainian Top management positions in Ukrainian banks Since 2002 board member of Raiffeisenbank Ukraine 12 years in the banking industry Previous jobs at McKinsey, Deutsche Bank and IFC MBA from a US business school Russian speaking retail specialist 12 years in the banking industry with Bank Aval Native Ukrainian Extensive experience in corporate banking Very well connected in Ukrainian industry 11 years in the banking industry Educated in Vienna Board member for corporate customers in Priorbank (Belarus) since 2003 Russian speaking corporate specialist Gerhard Bösch Treasury & IB Igor Volokh IT/Ops Grigoriy Sheludko Security Rainer Sichert Transformation 16 years in the banking industry Formerly Head of Global Treasury & Markets at RZB Russian speaking treasury specialist 13 years in the banking industry Operational and IT specialist with technical and legal education Board member for IT/Ops in Priorbank (Belarus) since 2000 Board member of Bank Aval since years in the banking industry Native Ukrainian Formerly worked for the Ministry of Internal Affairs 14 years in the banking industry Responsible for integration of Bank BPH and PBK in Poland Specialist in transformation Extensive experience in retail banking 14

15 Bank Aval Key Financials Purchase price for 93.5% of Bank Aval in October 2005 was 856 mn At the time of Consolidation (1st October 2005) the balance sheet total came to 3,058 mn and equity came to 468 mn (including intangibles) Raiffeisen International Group intends to maintain the Aval brand. The brand is not subject to amortisation (value mn) Other intangible fixed assets: - corporate customer base of 7.7 mn, to be amortised over a period of 7 years - retail customer base of 78.2 mn to be amortised over a period of 20 years Financials mn* Total Assets 3,381 Loans to Customers 2,138 Deposits from Customers 2,391 Q4/2005 Net interest income 44.3 Provisioning for possible loan losses -7.0 Net commission income 25.6 Trading profit/(loss) 7.0 General administrative expenses Profit before tax 20.0 Profit after tax 14.1 * According to IFRS accounting standards as consolidated into RI Group per and audited by KPMG 15

16 Impexbank Herbert Stepic, CEO

17 Impexbank Acquisition Overview Purchase of 100% of the JSC Impexbank for up to US$ 550 mn Impexbank has a strong focus on retail business (private individuals and SME) Nationwide ~190 branches/offices. Limited overlap with Raiffeisenbank Network Branches/Offices: ~190 Consumer Finance Outlets: ~350 4th bank in Russia in terms of regional coverage covering almost 70% of the Russian population (1) Magadan Kaliningrad Saint - Petersburg Petropavlovsk-Kamchatskiy Retail loans No. 7 in Russia; retail deposits No. 12 in Russia (2) Smolensk Cherepovets Kaluga Moscow Briansk Yaroslavl Surgut Orel Tula Zheleznogorsk Ivanovo Kirov Lipetsk Nizhni Novgorod Stary Oskol Belgorod Saransk Voronezh Perm Taganrog Saratov Kazan Izhevsk Ekaterinburg Volgograd Zlatoust Anapa Samara Krasnodar Rostov-on-the-Don Cheliabinsk Omsk Stavropol Essentuki Tomsk Novosibirsk Barnaul Krasnoyarsk Irkutsk Yakutsk Blagoveshchensk Khabarovsk Vladivostok Raiffeisen International will save at least 4 years versus organic branch expansion Raiffeisenbank and Impexbank together No. 7 bank in Russia (1H 2005) (1) Source: Central Bank of Russia (2) Source: Profile Magazine (3) In local currency terms Fast growing banking sector with a total asset growth of 36.6% (YoY) as per December 2005 (3) 17

18 Impexbank Achievements Signing date of the contract 31st January 2006 Appointment of all Russian-speaking observation team and head of transformation project office Final approval by regulatory authorities in Austria (FMA) Final approval by regulatory authorities in Russia expected in the next few days Closing expected not later than the 15th May 2006 New employment contracts for the top 30 managers to be completed in the next few weeks Quick wins expected in the area of procurement, centralisation of head and back office functions, cross selling of products, combination of cash transport, call centres and common clearing accounts with correspondents banks Full operational merger in

19 Impexbank Key Financials Income Statement in mn* 1-12/ / 2005 Growth in % Net interest income % Provisioning for possible loan losses % Net commission income % Trading profit/(loss) % General administrative expenses % Profit before tax % Profit after tax % Financial Ratios Impexbank showed a strong increase in net interest income (86% growth) and net commission income (69.3% growth) in 2005 Profit after tax rose 66.7% to 21 mn in 2005 ROE before tax improved by 1.1 percentage points to 22.7 % The cost/income ratio also improved by 1.6 percentage points to 69.3% despite massive branch expansion 1-12/ / 2005 Growth in % Return on equity (ROE) before tax 21.6% 22.7% 1.1 pp Return on equity (ROE) after tax 16.1% 18.3% 2.2 pp Cost/income ratio 70.9% 69.3% -1.6 pp * According to IFRS accounting standards 19

20 CEC Herbert Stepic, CEO

21 Romania: Unique Opportunity in a Dynamic Growth Market Romania has strong economic growth: Population approximately 21.7 mn Avg. real GDP growth rate of 5.9% in the period ; more than 3 x rate of the Eurozone Strong and increasing demand for financial products EU entry expected 2007 (pending positive commission report and approval of EU council) Overview of Romanian banking sector (2004): Ongoing privatisation process 23.0 bn total assets, 39 banks Market share of foreign owned banks ~62% Credits to households/gdp 5% (~50% Eurozone) Romania Bank assets/gdp only 38.3% Source: Raiffeisen Research 21

22 Romanian Savings Banks CEC Overview RI will continue to bid in the process of privatization for the Romanian savings bank Casa de Economii si Consemnatiuni` (CEC) CEC Head Office Window of opportunity: This is one of the last chances to participate in a privatization in SEE Good strategic fit: CEC is a truly nationwide savings bank (~1,400 branches) and strong in retail banking (~4 mn customers) Together the combined market share of Raiffeisen Bank and CEC would be ~13 % (Raiffeisen Bank S.A. ~9%; CEC ~4.3%) CEC is a traditional savings bank, with a strong focus on retail deposits, which is reflected by a market share of ~13% (Raiffeisen Bank S.A. ~9%) 22

23 Romanian Savings Banks CEC A Good Strategic Fit Cost synergies between Raiffeisen Bank S.A. and CEC are expected to be high (back office functions, systems, know-how etc) Raiffeisen S.A. Head Office Raiffeisen International could use CEC as a cost efficient distribution channel to sell standardized retail products for the low-end of the market Due to CEC s many outlets in rural areas RI could take advantage of the flow of Common Agricultural Policy (CAP) funds on accession to the EU Local restructuring know-how gained in the course of Banca Agricola acquisition It is expected that binding bids will have to be made by the end of April 2006 and a final decision on who will win the bid is expected by the end of the year 23

24 Outlook Herbert Stepic, CEO

25 Outlook We expect strong earnings growth for the medium term in the CIS countries and above all in Ukraine and Russia. However, restructuring measures in Ukraine and Russia, due to the acquisition of Bank Aval and Impexbank, will burden earnings in the short term We continue to judge the potential for the countries of Southeastern Europe (SEE) optimistically, but somewhat more cautiously because of restrictions on credit growth prescribed by supervisory authorities In Central Europe (CE), we are increasingly focusing on the fast-growing segment of asset management products in addition to traditional business By our estimates, the balance sheet total will grow by at least 20 per cent annually in the period to We see the strongest increases in the CIS countries, partly because of the acquisitions made there We expect an increase of more than 25% in consolidated profit for the Raiffeisen International Group in 2006 (consolidated profit was 382 mn in 2005) excluding the Impexbank results Raiffeisen International will raise non-dilutive hybrid Tier 1 capital in

26 Mid-Term Targets ROE before Tax Cost/Income Ratio 70.3% 19.9% 24.1% 22.2% 21.8% >25.0% 64.7% 63.5% 61.6% <60.0% Target Risk/Earnings Ratio Target 17.1% 12.6% 15.5% 13.9% <15.0% Target 26

27 Branch/Outlet Expansion by 2008 Slovenia 2005: 13 Czech Republic 2005: 50 Poland 2005: 83 Slovakia 2005: 136 Belarus 2005: 43 Hungary 2005: : : : : : : 132 Croatia 2005: 39 Russia 2005: : : 300 Bosnia & Herzegovina 2005: 68 Ukraine 2005: 1, : : 1,381 Serbia & Montenegro 2005: : 100 Romania 2005: : 250 Kosovo 2005: : 30 * Including leasing and other branches Albania 2005: : 100 Total Branches/Outlets* 2005: 2, : 2,970 Bulgaria 2005: :

28 Financials Martin Grüll, CFO

29 Solid Growth in 2005 Income Statement in mn Profit before Tax in mn Growth in % Net interest income , Provisioning for possible loan losses Net commission income Trading profit/(loss) General administrative expenses , Profit before tax Consolidated profit (after minorities) % Financial Ratios Return on equity (ROE) before tax 19.9% 24.1% 22.2% 21.8% Consolidated ROE 13.8% 19.4% 17.0% 17.2% Cost/income ratio 70.3% 64.7% 63.5% 61.6% Risk/earnings ratio 12.58% 15.54% 17.13% 13.91% Earnings per share CE SEE CIS 29

30 Balance Sheet Development (I) Assets in mn 31/12/2004 * 31/12/2005 Change in % Cash reserve 1,895 2, % Loans and advances to banks 4,779 5, % Loans and advances to customers 16,242 24, % Impairment losses on loans and advances % Trading assets 2,447 1, % Other current financial assets 650 1, % Financial investments 2,329 2, % Intangible assets % Tangible fixed assets % Other assets % Total 28,907 40, % * Due to amended and new IFRS rules 2004 figures are slightly different than those in the Annual Report

31 Balance Sheet Development (II) Equity and Liabilities in mn 31/12/2004 * 31/12/2005 Change in % Deposits from banks 6,620 10, % Deposits from customers 18,169 24, % Liabilities evidenced by paper % Provisions for liabilities and charges % Trading liabilities % Other liabilities % Subordinated capital % Equity 2,177 3, % Consolidated equity 1,631 2, % Consolidated profit % Minority interests % Total 28,907 40, % * Due to amended and new IFRS rules 2004 figures are slightly different than those in the Annual Report

32 Increasing Profit Contribution from CIS and SEE Central Europe (CE) Southeastern Europe (SEE) Commonwealth of Independent States (CIS) in mn 1-12/ / 2005 Change in % 1-12/ / 2005 Change in % 1-12/ / 2005 Change in % Interest income Provisioning for impairment losses Net interest income after provisioning Net commission income Trading profit Net income from financial investments and current financial assets General administrative expenses Other operating profit (loss) Profit before tax ROE before tax 18.9% 17.5% -1.4 pp 21.7% 22.6% 0.9 pp 36.0% 32.3% -3.7 pp Cost/income ratio 65.7% 66.2% 0.5 pp 67.4% 62.8% -4.6 pp 46.9% 50.9% 4.0 pp 32

33 Continued Dynamic Growth in Retail Corporate Customers Retail Customers Treasury 1-12/ 1-12/ Change 1-12/ 1-12/ Change 1-12/ 1-12/ Change in mn in % in % in % Interest income Provisioning for impairment losses Net interest income after provisioning Net commission income Trading profit Net income from financial investments and current financial assets General administrative expenses Other operating profit (loss) Profit before Tax ROE before tax 29.4% 26.9% -2.5 pp 11.1% 15.1% 4.0 pp 33.2% 43.8% 10.6 pp Cost/Income Ratio 41.8% 40.2% -1.6 pp 83.6% 78.6% -5.0 pp 23.2% 18.1% -5.1 pp 33

34 Quarterly Results Overview in mn Q1/2005 Q2/2005 Q3/2005 Q4/2005 Interest income Provisioning for impairment losses Net interest income after provisioning Net commission income Trading profit Net income from financial investments and current financial assets General administrative expenses Other operating profit (loss) Profit before Tax Consolidated Profit (after minorities) / / / /2005 Return on equity (ROE) before tax 24.7% 22.8% 22.1% 21.8% ROE Consolidated 20.3% 18.0% 17.2% 17.2% Cost/Income Ratio 59.9% 59.9% 59.5% 61.6% Risk/Earnings Ratio 11.0% 11.8% 14.2% 13.9% 34

35 Risk Management (I) Provisioning Ratio Non-performing Loans in % of Customer Loans 0.98% 0.86% 0.81% 0.69% 3.2 % 3.3 % 2.4 % 1.7% Non-performing Loans & Coverage Ratio* Risk/Earnings Ratio 17.1% Non-performing loans ( mn) % 15.5% 13.9% <15.0% Coverage ratio 72.0% 71.2% 96.9% 154.1% * Coverage Ratio = Total Risk Provisions/NPL Target 35

36 Risk Management (II) Development of Corporate Provisioning Ratio* Development of Retail Provisioning Ratio* 1.56% 1.56% 1.70% 0.79% 0.56% 0.88% 0.72% 0.86% * Not consolidated 36

37 Record IPO Largest ever IPO by volume in Austria ( 1.11billion) 12th largest IPO worldwide and 6th largest in Europe in 2005 Order book 22 times over-subscribed 27 % price gain on the first trading day More than 70 % price gain (IPO to year end 2005) Approximately 120 % from IPO to present 37

38 Share Price Development and Dividend Proposal 80 Index base = (issue price) Apr May Jun Jul Aug Sep Oct Nov Dec 05 Jan Feb Mar Raiffeisen International ATX (relative to RI) DJ Euro Stoxx Banks (relative to RI) Management is going to propose at the annual general meeting to distribute a dividend of 0.45 per common share from the financial year 2005 balance sheet profit of Raiffeisen International Bank- Holding AG, representing a total distribution of 64 mn 38

39 Contact Susanne E. Langer Head of Investor Relations Raiffeisen International Bank-Holding AG Am Stadtpark Vienna, Austria Tel.: +43 (1) Fax: +43 (1) susanne.langer@ri.co.at investor.relations@ri.co.at Internet: Prague Kiev 39

40 Financial Calendar March 30 March 26 April 10 May 7 June 13 June 27 July 10 August 13 October 26 October 9 November Start of Quiet Period Annual Report 2005, Analyst Conference, Conference Call Start of Quiet Period First Quarter Report, Conference Call Annual General Meeting, Austria Centre Vienna Ex-dividend date and dividend payment date Start of Quiet Period Semi-Annual Report, Conference Call Capital Markets Day, Kiev Start of Quiet Period Third Quarter Report, Conference Call 40

41 Disclaimer Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue and similar expressions identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events, and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Undue reliance should not be placed on these forward-looking statements. Many factors could cause the results of operations, financial condition, liquidity, and the development of the industries in which we compete to differ materially from those expressed or implied by the forward-looking statements contained herein. These factors include, among others: (i) our ability to compete in the regions in which we operate; (ii) our ability to meet the needs of our customers; (iii) our ability to integrate our acquisitions or to complete acquisitions or other projects on schedule; (iv) uncertainties associated with general economic conditions particularly in the CEE; (v) governmental factors, including the costs of compliance with regulations and the impact of regulatory changes; (vi) the impact of currency exchange rate and interest rate fluctuations; and (vii) other risks, uncertainties and factors inherent in our business. We do not intend, and do not assume any obligations, to update forward-looking statements set forth herein. This document does not constitute an offer of securities, nor a solicitation for an offer of securities, nor marketing or sales activity for such securities. 41