IAS-COMPLIANT CONSOLIDATED FINANCIAL STATEMENTS

Transcription

1 IAS-COMPLIANT CONSOLIDATED FINANCIAL STATEMENTS

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3 Income Statement in 1,000s Notes 1/1 31/12 1/1 31/12 Change in percent Interest income 1,993,874 2,210,002 (9.8) Interest expense (1,284,936) (1,675,439) (23.3) Net interest income (1) 708, , Provisioning for possible loan losses (2) (151,188) (112,097) 34.9 Net interest income after provisioning 557, , Commission income 369, , Commission expense (86,690) (67,874) 27.7 Net commission income (3) 283, , Trading profit/(loss) (4) 253, , Net income from financial investments (5) (22,378) (26,366) (15.1) General administrative expenses (6) (904,470) (702,489) 28.8 Other operating profit/(loss) (7) 98,051 84, Extraordinary profit/(loss) (8) (23,113) - - Profit before tax 242, , Income tax (9) (62,099) (20,890) Profit after tax 180, ,828 (14.4) Minority interests in profit (43,116) (47,194) (8.6) Consolidated profit 137, ,634 (16.0) in Notes Change in percent Earnings per share (10) (19.5) 96

4 Balance Sheet Assets in 1,000s Notes 31/12 31/12 Change in percent Cash reserve (12) 2,006,502 2,418,439 (17.0) Loans and advances to banks (13, 30, 31) 15,028,039 16,581,629 (9.4) Loans and advances to customers (14, 30, 31) 19,785,244 16,936, Provision for possible loan losses (15) (553,503) (475,630) 16.4 Trading assets (16, 30, 31) 2,512,832 1,874, Other financial assets available-for-sale (17, 30, 31) 3,129,201 3,167,434 (1.2) Financial investments (18, 21, 30, 31) 2,822,752 2,640, Intangible fixed assets (19, 21) 150, , Tangible fixed assets (20, 21) 466, , Other assets (22) 1,057, , Total assets 46,405,033 44,583, Liabilities in 1,000s Notes 31/12 31/12 Change in percent Deposits from banks (23, 30, 31) 23,471,353 24,915,021 (5.8) Deposits from customers (24, 30, 31) 12,673,091 10,261, Liabilities evidenced by paper (25, 30) 4,410,195 4,638,236 (4.9) Provisions for liabilities and charges (26) 292, , Other liabilities (27) 2,336,485 1,787, Subordinated capital (28) 946, , Minority interests 389, , Equity (29) 1,748,465 1,456, Consolidated profit 137, ,634 (16.0) Total liabilities 46,405,033 44,583,

5 Statement of Changes in Equity in 1,000s Subscribed Capital Retained of which Consolidated Total capital reserves earnings exchange diffs. profit 2001 Equity on 1 January , , ,041 (64,419) 133,053 1,330,893 Capital increases/(decreases) (12) 12 - Allocated to retained earnings 98,787 (98,787) - Dividends paid (34,266) (34,266) Consolidated profit 163, ,634 Effect of initial application of IAS , ,299 Exchange differences 20,625 20,625 20,625 Other changes 31,299 31,299 Own shares acquired (494) (494) Own shares disposed of Equity on 31 December , , ,051 (43,794) 163,634 1,620,484 in 1,000s Subscribed Capital Retained of which Consolidated Total capital reserves earnings exchange diffs. profit 2002 Equity on 1 January , , ,051 (43,794) 163,634 1,620,484 Capital increases/(decreases) 36, , ,213 Allocated to retained earnings 123,915 (123,915) - Dividends paid (39,719) (39,719) Consolidated profit 137, ,388 Exchange differences (58,311) (58,311) (58,311) Cash flow hedges 31,892 31,892 Other changes 47,906 47,906 Equity on 31 December , , ,453 (102,105) 137,388 1,885,853 The issued share capital of Raiffeisen Zentralbank pursuant to its Articles of Association came to 349,192 thousand. That total was subdivided into 4,805,173 no-par shares, comprising 4,289,513 registered ordinary shares and 515,660 registered non-voting preference shares. The other changes in retained earnings were due, among other things, to effects caused by hyperinflation economies. 98

6 Cash Flow Statement Profit 137, ,634 Non-cash positions in profit and transition to net cash from operating activities: Write-downs/write-ups of tangible fixed assets and financial investments 125, ,222 Net provisioning for possible loan losses and for liabilities and charges 116, ,792 Gains/(losses) from disposals of tangible fixed assets and financial investments (10,695) 5,158 Other adjustments (net) (230,286) (495,038) Subtotal 138,830 (41,232) Change in assets and liabilities arising from operating activities after corrections for non-cash positions: Loans and advances to banks and customers (4,459,952) (7,515,013) Trading assets (639,133) (450,625) Other assets 50,778 (552,389) Deposits from banks and customers 3,427,259 8,375,504 Liabilities evidenced by paper (346,374) (160,697) Other liabilities 459, ,626 Interest income and dividends 2,156,308 1,900,374 Interest expense (1,304,623) (1,412,877) Income tax (9,764) (11,886) Net cash from operating activities (527,218) 252,785 Proceeds from sales of: Financial investments and equity participations 975,480 1,809,654 Tangible and intangible fixed assets 63,772 58,524 Purchases of: Financial investments and equity participations (875,263) (874,244) Tangible and intangible fixed assets (248,194) (243,574) Acquisitions of subsidiaries (42,464) (59,766) Net cash from investing activities (126,669) 690,594 Inflows from capital increases 146,213 - Inflows/(outflows) of subordinated capital 174,023 (11,933) Dividends paid and other (39,719) (33,504) Net cash from financing activities 280,517 (45,437) Cash and cash equivalents at end of previous period 2,418,439 1,506,219 Net cash from operating activities (527,218) 252,785 Net cash from investing activities (126,669) 690,594 Net cash from financing activities 280,517 (45,437) Effect of exchange rate changes (38,567) 14,278 Cash and cash equivalents at end of period 2,006,502 2,418,

7 The cash flow statement shows the composition of and changes in cash and cash equivalents during the financial year. It is subdivided into three sections, namely operating activities, investing activities and financing activities. Net cash from operating activities comprises inflows and outflows associated with loans and advances to banks and customers, trading assets, other financial assets available-for-sale and other assets. Inflows and outflows associated with deposits from banks and customers, liabilities evidenced by paper and other liabilities are likewise a part of operating activities. Interest and dividend payments arising from operating activities are also shown as components of Net cash from operating activities. Net cash from investing activities shows inflows and outflows associated with financial investments and tangible and intangible fixed assets and outlay on the acquisition of subsidiaries. Net cash from financing activities relates to inflows from capital increases less dividend payments and inflows and outflows of subordinated capital. Cash and cash equivalents comprises the balance sheet item cash reserve, which consists of cash in hand and demand deposits at central banks. This item does not include loans and advances to banks that are due at call, which are classed as part of operating activities. Acquisitions of subsidiaries during the reporting period had the following effects on cash and cash equivalents: Assets 426,690 1,143,587 Liabilities (379,592) (1,029,905) Equity 47, ,682 of which RZB s share 43,917 89,616 Capital consolidation (19,514) (17,064) Effect on cash and cash equivalents: Purchase price (63,431) (72,552) Cash and cash equivalents of the companies concerned 20,967 12,786 Net cash used for company acquisitions (42,464) (59,766) 100

8 Notes The enterprise Raiffeisen Zentralbank Österreich AG (Raiffeisen Zentralbank) is the central institution of the Austrian Raiffeisen Banking Group. It is registered in the companies register at Handelsgericht Wien (Vienna Commercial Court) under companies register number FN t. The company s address is Am Stadtpark 9, A-1030 Vienna, Austria. cialized financial engineer. Its principal focus is on servicing multinationals, providers of financial services and major corporate customers both within Austria and abroad. The companies within the RZB Group (RZB) are also active in the private banking, capital investment, finance leasing, real estate, travel and banking-related IT service fields. Within Austria, Raiffeisen Zentralbank specializes in commercial and investment banking. It sees itself as a key corporate finance and export and trade finance bank in the country. Cash and asset management and treasury operations are further components of the product line. Raiffeisen Zentralbank is a highly spe- RZB is represented by 14 Network Banks and a regionwide network of branches in Central and Eastern Europe. In addition, it has branches, specialized subsidiaries and representative offices in the world s financial centres, at selected locations in Western Europe and in a number of key Asian markets. The principles underlying the consolidated accounts Policies The consolidated financial statements for financial year 2002 and the comparative values for financial year 2001 were prepared in accordance with the International Accounting Standards (International Financial Reporting Standards IFRS) published by the International Accounting Standards Board (IASB) including the interpretation by the Standing Interpretations Committee (International Financial Reporting Interpretations Committee IFRIC) as were already applicable. The consolidated financial statements also satisfy the requirements of 245a HGB (Austrian Commercial Code) and 59a BWG (Austrian Banking Act) regarding exempting consolidated financial statements that comply with internationally accepted accounting principles. The consolidated financial statements were drawn up on the basis of standards applied throughout the Group and the individual IAS-compliant financial statements of all the fully consolidated Group members. With the exception of three subsidiaries integrated as of 30 September and 31 October, the fully consolidated companies drew up their annual financial statements up to and including 31 December. Figures in the financial statements are stated in 1,000s of euros. Employed IAS standards and SIC interpretations We observed all the International Accounting Standards and SIC interpretations that were of relevance to the banking group and that were already mandatory

9 Starting with 1 January 2002, RZB also reports cash flow hedges in accordance with IAS 39. Interest swaps are applied that serve to hedge risks that may arise at some time in the future from changes in the cash flow from variable-interest positions. The hedging relation for these derivatives has been documented, and the effect of the hedging measure proven. The valuation results of these hedging derivatives are reported under a separate equity item without affecting profit. Consolidation methods Capital consolidation took place at carrying amounts, with the costs of purchasing stakes in subsidiaries offset against subsidiaries equity on a prorated basis at the time of acquisition. Differences remaining on the assets side of the balance sheet constituting goodwill are shown under intangible fixed assets and are being amortized over a period of ten years, affecting profit, in accordance with their expected useful lives. Differences remaining on the assets side of the balance sheet that had come into existence prior to 1 January 1995 were cleared against retained earnings in conformity with IAS 22. Negative goodwill arising from first-time consolidation that corresponded to a reliably measurable future loss or expense were recognized as income at the amount of the pertinent loss or expense. Negative goodwill that was not a consequence of future losses or expenses was captured at once, affecting profit. al losses under Net income from financial investments (net valuations of equity participations). The same rules as for subsidiaries were applied to companies accounted for using the equity method (date of first-time consolidation, offsetting of acquisition costs against equity on a prorated basis). The process was founded on the pertinent local financial statements of the associated undertakings. Shares in subsidiaries not integrated into the consolidated financial statements because of their minor significance and of interests in associated undertakings not accounted for using the equity method are shown under Financial investments and were carried at cost. Shares in other companies were recognized at fair value. If the fair value was not available or could not be reliably measured, they were recognized at amortized cost. Debt consolidation consisted of offsetting intra-group receivables and payables. Remaining temporary differences are shown under Other assets/other liabilities on the consolidated balance sheet. Expenses and income arising from transactions with fully consolidated entities were eliminated, and remaining differences were recorded in the consolidated income statement under Other operating profit/(loss) (Other operating income/other operating expenses). Significant interests in associated undertakings were accounted for using the equity method and recorded on the balance sheet under Financial investments. Annual profits from companies accounted for using the equity method were recorded in Net interest income and annu- Because of the minor significance of intercompany profits for the Group s consolidated result, such profits were not eliminated. Business between fully consolidated companies was normally transacted on terms in keeping with the market

10 Consolidated Group The fully consolidated members of RZB were all significant subsidiaries in which Raiffeisen Zentralbank held direct or indirect stakes of more than 50 percent and companies on whose business and financial policies Raiffeisen Zentralbank exercised a controlling influence. Material interests in associated undertakings companies on whose business and financial policies the Group exercised a significant influence were accounted for using the equity method. The national financial statements for companies that do not prepare their accounts according to IAS were not converted to this standard for reasons of inmateriality. The following companies were integrated for the first time during the 2002 reporting year: Name Share of equity Date Type Banks: Raiffeisen Bank Kosovo J.S.C. (American Bank of Kosovo), Pristina 76.0% 31/12 Acquisition Raiffeisen Krekova Banka d.d., Maribor 97.0% 1/4 Acquisition Financial institutions: Raiffeisen Investment AG, Vienna 100.0% 1/1 First-time consolidation Raiffeisen-Leasing Real Estate, s.r.o., Prague 78.6% 1/1 First-time consolidation Raiffeisen Compulsory Pension Fund Management d.d., Zagreb 75.0% 1/1 First-time consolidation Raiffeisen Leasing SRL, Bucharest 93.5% 1/7 Acquisition Bank-related ancillary services: CENTRO PROPERTY Holding AG, Vienna 100.0% 1/1 First-time consolidation Other: BL Syndikat Beteiligungs Gesellschaft m.b.h., Vienna 80.6% 1/1 First-time consolidation LUSCINIA Handels- und Beteiligungs-GmbH, Vienna 100.0% 1/1 First-time consolidation RZB Assekuranz Holding GmbH, Vienna 100.0% 1/1 First-time consolidation RZB BLS Holding GmbH, Vienna 100.0% 1/1 First-time consolidation RZB Kreditkartenbeteiligungs GmbH, Vienna 100.0% 1/1 First-time consolidation RZB Versicherungsbeteiligung GmbH, Vienna 100.0% 1/1 First-time consolidation UQ Beteiligung GmbH, Vienna 100.0% 1/1 First-time consolidation 103

11 The number of companies integrated into the consolidated financial statements has changed as follows: Fully consolidated Equity method As of 1 January First integrated in the year under review Merged in the year under review (2) (1) - - Excluded in the year under review (1) (1) - (2) As of 31 December The inclusion of the subsidiaries integrated for the first time during the year under review affected the consolidated financial statements as follows*: in 1,000s 2002 Assets 1,287,746 Profit after tax 26,256 *) As affecting the Group s aggregated balance sheet. Banca Agricola Raiffeisen S.A. was merged with Raiffeisenbank (Romania) S.A. in June 2002, and is now operating under the name Raiffeisen Bank S.A. A foreign investment company Raiffeisen Capital & Investment Polska S.A., Warsaw was deconsolidated effective 1 January 2002, and a further investment company Raiffeisen Capital & Investment Praha s.r.o., Prague was merged with Raiffeisenbank a.s., Prague, effective 1 January financial state and profit position. They were recognized at amortized cost under Financial investments as Interests in affiliated companies. The balance sheet totals of excluded companies came to less than two percent of the Group s aggregated balance sheet total. Three subsidiaries were excluded for cost/benefit reasons. They were accounted for in the consolidated financial statements using the equity method. 284 subsidiaries were excluded from the consolidated financial statements by reason of their minor importance in giving a view of the Group s assets, See Equity Participations on page 163ff for a list of fully consolidated companies, companies accounted for using the equity method and other interests

12 Foreign currency translation The financial statements of fully consolidated companies drawn up in foreign currencies were translated into euro employing the modified current-rate method in conformity with IAS 21, whereby equity was translated at a weighted historical exchange rate and all other assets and liabilities and declarations in notes were translated at the exchange rate ruling on the balance sheet date. Exchange differences arising from the translation of components of equity (applying weighted historical exchange rates) were cleared against retained earnings, not affecting profit. Items in income statements were translated at the average rate of exchange during the year calculated on the basis of end-of-month rates. Exchange differences between the rate on the balance sheet date and the average rate in the income statement were cleared against equity, without affecting profit. IAS 29 (Financial reporting in hyper-inflationary economies) was applied to three companies (ZAO Raiffeisenbank Austria, Moscow, Raiffeisen Bank S.A., Bucharest, OOO Raiffeisen-Leasing, Moscow) due to the macroeconomic conditions applying in these countries. For one foreign subsidiary (Raiffeisen Leasing SRL, Bucharest), the euro is the appropriate measurement currency because of the economic substance of the underlying events and circumstances. The following exchange rates were applied during foreign currency translation: Rates in units per Date Average Date Average Hungarian forint (HUF) Czech crown (CZK) Slovakian crown (SKK) Russian ruble (RUR) Polish zloty (PLN) Bulgarian leva (BGL) Ukrainian hryvna (UAH) Romanian lei (ROL) 35, , , , Croatian kuna (HRK) Bosnian marka (BAM) Slovenian tolar (SIT) US dollar (USD) Yugoslavian dinar (YUM) Swiss franc (CHF)

13 General accounting and valuation principles Receivables Trading assets Receivables were recognized at their nominal values without deductions for valuations. Accrued interest was only booked, affecting profit, if there was a high likelihood that it would actually be received. Provision for possible loan losses Allowance was made for credit risks by allocating specific and generalized individual loan-loss provisions. Instead of being charged against the corresponding receivables, they were disclosed on the balance sheet. Provisions were allocated at the amount of the expected loss applying homogeneous Group-wide standards for the borrower risks arising from loans and advances to banks and customers. A risk of loss was deemed to exist if (taking collateral into account) the discounted probable future repayment and interest payment was less than the claim s carrying value. The transfer risk (sovereign risk) associated with loans to foreign borrowers was measured employing an internal rating system that takes into account the economic, political and regional situation of the sovereign concerned. Trading assets serve the exploitation of short-term fluctuations in market prices. Securities and derivative instruments held for trading are reported at their fair market value. In the case of listed securities, fair value was based on stock-exchange prices. If such prices were not available, primary financial instruments and futures were internally priced on the basis of present value calculations and options were valued using appropriate option price models. Present value calculations were based on the zero-coupon curve. The employed option price formulas were Black-Scholes 1972, Black 1976 and Garman-Kohlhagen. Derivative instruments held for trading were also shown under Trading assets. Where market prices inclusive of interest deferrals (dirty prices) were positive, they were assigned to trading assets. Negative market values were recorded under Other liabilities on the balance sheet. Positive and negative market values were not reconciled. Changes in dirty prices were recorded under Trading profit/(loss), affecting profit. The entirety of the provision for possible loan losses arising from on-balance-sheet receivables was shown as a separate item on the assets side of the balance sheet, below receivables. The provision for possible losses arising from off-balance-sheet items was recorded as a provision

14 Other financial assets available-for-sale This item contains the following instruments, which were recognized as outlined below: 1. Securities neither held for trading nor held as financial investments (i.e. financial assets available-forsale): These securities are valued at their market value in accordance with IAS 39. They are shown under Other financial assets available-for-sale, and current income therefrom was reported under Net interest income. The effects of valuations and gains/losses upon their disposal are shown under Other operating profit/(loss) (Net income from other financial assets available-forsale). 2. Derivative instruments insofar as not held for trading: were recognized under Other financial assets available-for-sale at their fair values (dirty prices). Pursuant to the section of IAS 39 on Hedge Accounting, the carrying amount of the hedged item (asset or liability) must be adjusted by the amount of the gain or loss on the underlying hedged transaction attributable to the hedged risk. Both the effect of changes in the carrying values of positions requiring hedging and the effect of changes in the clean prices of the derivative instruments were recorded under Other operating profit/(loss) (Net income from other financial assets available-for-sale), affecting profit. b) Cash flow hedge within the meaning of IAS 39 Derivative instruments held to hedge against fluctuating cash flows from specific variable-interest items are reported as follows: the hedge is reported at fair value, and the changes in the clean price are reported under a separate equity item without affecting profit. a) Fair value hedges within the meaning of IAS 39 c) Other derivative instruments Interest rate swaps that satisfy the prerequisites for hedge accounting are contracted to hedge against the interest rate risks arising from issued bonds. Hedges are formally documented, continuously assessed and rated to be highly effective. In other words, throughout the term of a hedge, one can assume that changes in the fair value of a hedged underlying transaction will be nearly completely offset by a change in the fair value of the hedging instrument and that the actual result will lie within a band of 80 to 125 percent. Derivative instruments held to hedge the market values of individual balance sheet items in the banking book Derivative instruments held to hedge against market risks in the banking book that are based on an inhomogeneous portfolio do not satisfy the requirements for hedge accounting within the meaning of IAS 39. They were measured as follows: Positive dirty prices were recognized under Other financial assets available-for-sale and negative dirty prices were recorded under Other liabilities. The effect of remeasuring those derivative instruments on a cleanprice basis was shown under Other operating profit/(loss) (Net income from other financial assets available-for-sale); interest was recorded under Net interest income

15 Financial investments Financial investments includes all assets recognized at amortized cost, fair value or equity value: a) investments held to maturity b) assets that represent loans and receivables originated by the enterprise c) equity participations. Intangible fixed assets Intangible fixed assets were capitalized at cost less scheduled amortization. Useful life Years Buildings Office furniture and equipment 5 10 Hardware 3 5 Tangible fixed assets acquired in the first half of the year were written-down by the full annual amount. Such assets as were acquired during the second half were written-down by half the full annual amount. If a permanent impairment was to be expected, exceptional write-downs were carried out. In the event that the reason for the write-down no longer applies, a write-back will take place up to the amount of the asset s amortized cost. Self-originated intangible fixed assets consisted exclusively of software and were capitalized if it was likely that the Group could derive an economic benefit from them in the future and if their conversion costs could be reliably measured. Scheduled amortization is carried out on a straight-line basis. Useful life Years Software 4 6 Goodwill 10 Tangible fixed assets Tangible fixed assets were capitalized at cost of acquisition or conversion less scheduled depreciation. Depreciation is carried out on a straight-line basis and assumes the following useful lives: Investment property was recognized at amortized cost in accordance with IAS 40. Inventory Inventory was recognized at cost subject to the Niederstwertprinzip (principle of recognition at the lower of cost and market). Write-downs were carried out insofar as the acquisition cost on the balance sheet date was above the stock-exchange or market value or if limited usability or longer periods of storage had impaired the value of items of inventory. Payables Payables were recorded at amortized cost. Discounted debt securities and similar obligations were shown at present value

16 Provisions for liabilities and charges All provisions for so-called social capital (provisions for pensions, severance payments and anniversary bonuses) were measured using the projected unit credit method in accordance with IAS 19 Employee Benefits. The actuarial computation of pension commitments for active employees was based on an interest rate of 5.5 percent and an effective salary increase of 3 percent per annum or an individual career trend of 1.5 percent per annum. The parameters for pensioners were an interest rate of 5.5 percent and an assumed increase in pensions of 1.5 percent per annum. Our calculations were based on an assumed retirement age of 56.5 for women and 61.5 for men, subject to transitional statutory requirements and special arrangements contained in individual contracts. effect to be expected from discounting them, provisions for liabilities and charges were not discounted. Deferred taxes Income tax was recognized and calculated in accordance with IAS 12 applying the balance-sheet-oriented liability method. Deferred taxes were computed on the basis of all temporary differences in recognition and measurement between the consolidated balance sheet and the tax base that were going to balance out in subsequent periods under consideration of the tax scales applicable in the countries concerned. Deductible temporary differences were capitalized with respect to tax loss carryforwards insofar as taxable profits at the equivalent amount were to be expected within the same company in the future. Deductible temporary differences were offset against taxable temporary differences on a subsidiary-by-subsidiary basis. The computation of severance payments and anniversary bonuses was likewise based on an interest rate of 5.5 percent, an average salary rise of 3 percent per annum and an individual career trend of 1.5 percent per annum. The biometrical basis for the computation of all provisions for social capital was provided by AVÖ P-Rechnungsgrundlagen für die Pensionsversicherung (computational framework for pension insurance) Pagler & Pagler, using the variant for salaried employees. Other provisions were allocated for indefinite liabilities to third parties at the amount of the expected entitlement. Because of the insignificance of the interest Income tax credits and income tax obligations were recorded under Other assets or Tax provisions. Repurchase agreements Within the scope of genuine repurchase agreements (repo transactions), the Group sells assets to a counterparty and agrees at the same time to repurchase those assets at an agreed time and price. The assets remain on the Group s balance sheet and are measured applying the rules governing the particular balance sheet items. At the same time, the amount of the received payment is carried as a liability. In the case of a reverse repo transaction, assets are acquired subject to an obligation to sell them in the 109

17 future. They are shown on the balance sheet as Loans and advances to banks or Loans and advances to customers. Interest expense incurred in connection with repo transactions and interest income receivable in connection with reverse repo transactions were recorded under Net interest income on an accrual accounting basis. Trust activities In accordance with IAS 30, transactions based on the management or placement of assets for third parties were not recorded on the balance sheet. Commission arising from such transactions was recorded under Net commission income. Finance leases According to IAS, a finance lease exists if substantially all the risks and rewards incident to ownership of an asset are transferred to the lessee. In accordance with IAS 17, the present value of future lease payments and any residual values were recorded in the lessor s account under Loans and advances to banks or Loans and advances to customers. If the bank was the lessee, the assets were reported under the appropriate items of Tangible fixed assets

18 Notes to the Income Statement (1) Net interest income Interest income 1,918,090 2,124,467 from loans and advances to banks 467, ,782 from loans and advances to customers 1,058,992 1,047,385 from financial assets available-for-sale 103, ,962 from financial assets held-to-maturity 94, ,499 from receivables under finance leases 85,343 62,415 from derivative financial instruments (non-trading) 108, ,424 Current income 69,601 78,620 from shares and other variable-yield securities 5,116 32,198 from interests in affiliated companies 23,780 13,117 from companies accounted for using the equity method 31,077 14,458 from other interests 9,628 18,847 Other interest-like income 6,183 6,915 Interest and similar income, total 1,993,874 2,210,002 Interest expense (1,281,613) (1,673,308) on deposits from banks (647,829) (982,150) on deposits from customers (367,252) (398,585) on liabilities evidenced by paper (226,187) (247,409) on subordinated capital (40,345) (45,164) Other interest-like expenses (3,323) (2,131) Interest expense and similar charges, total (1,284,936) (1,675,439) Net interest income 708, ,

19 (2) Provisioning for possible loan losses The provision for possible loan losses arising from on-balance-sheet and off-balance-sheet transactions and sovereign risks broke down as follows: Allocated to provision for possible loan losses (387,821) (266,117) Released from provision for possible loan losses 243, ,295 Direct write-downs (18,219) (6,842) Income received on written-down claims 11,610 16,567 Total (151,188) (112,097) Detailed information on Provisioning for possible loan losses can be found under item 15. (3) Net commission income Payment transfers business 85,239 65,244 Loan administration and guarantees business 66,728 47,200 Securities business 63,819 57,952 Foreign exchange and precious metals business 16,482 8,444 Other banking services 51,013 34,879 Total 283, ,

20 (4) Trading profit/(loss) Trading profit/(loss) captures all interest and dividend income, refinancing costs, commissions and changes in the value of trading portfolios. Interest-rate-related contracts 62,744 35,722 Currency-related contracts 185, ,629 Share-/index-related contracts 2,795 4,998 Other contracts 2,854 3,169 Total 253, ,518 (5) Net income from financial investments Net income from financial investments captures gains and losses on valuations and sales of instruments in the portfolio of financial investments and of equity participations. This also includes interests in affiliated companies, companies accounted for using the equity method and other interests: Net valuations of financial instruments held-to-maturity (1,358) (5,385) Net proceeds from disposals of financial instruments held-to-maturity 1, Net proceeds from disposal of financial instruments originated by the enterprise 3,057 - Net valuations of equity participations (30,340) (22,218) Net proceeds from sales of equity participations 5,249 1,155 Total (22,378) (26,366) 113

21 (6) General administrative expenses The Group s consolidated general administrative expenses comprised staff expenses, general outlay and depreciation/amortization of tangible and intangible fixed assets. They broke down as follows: Staff expenses (443,590) (334,185) of which wages and salaries (338,584) (248,445) of which social security costs (78,546) (57,875) of which voluntary social expenses (15,914) (13,260) of which expenses on severance payments and pensions (10,546) (14,605) Other administrative expenses (356,342) (279,329) of which rental, maintenance and operating expenditure on buildings (97,803) (67,044) of which IT costs (71,145) (55,903) of which legal and consultancy costs (25,033) (26,973) of which advertising and entertainment expenses (48,164) (41,843) of which other general outlay (114,197) (87,566) Depreciation/amortization of tangible and intangible fixed assets (104,538) (88,975) of which of tangible fixed assets (68,760) (57,805) of which of intangible fixed assets (31,233) (29,199) of which of goodwill (4,545) (1,971) Total (904,470) (702,489) During the year under review, extraordinary write-downs were carried out at the amount of 2,544 thousand. (7) Other operating profit/(loss) Among other things, Other operating profit/(loss) captures revenues and expenses arising from non-banking activities and revenues and expenses arising from the disposal of tangible and intangible fixed assets. Net income from other financial assets available-for-sale, likewise included in this item, results from valuations of those instruments and any gains/(losses) upon their sale, whereas the interest component of other financial assets available-for-sale is recorded under Net interest income

22 Revenues from non-banking activities 568, ,590 Expenses arising from non-banking activities (478,366) (292,382) Net income from other financial assets available-for-sale ,464 Other operating income 98,903 76,433 Other operating expenses (91,832) (58,235) Total 98,051 84,870 Other operating income includes the sum of 8,682 thousand from the release of negative goodwill that arose within the scope of first-time consolidation. (8) Extraordinary profit/(loss) During the 2002 financial year, provisions were allocated for a fine in the amount of 23,113 thousand imposed due to purported violations against European competition regulations. (9) Income tax Expenditure on income tax broke down as follows: Current income tax (51,082) (38,628) of which in Austria (7,539) (2,725) of which abroad (43,543) (35,903) Deferred taxes (11,017) 17,738 Total (62,099) (20,890) The increase in income taxes can be attributed to two factors, namely to higher profits in our Group units and to the write-down of deferred tax assets

23 The following transitional account shows the connection between profit and the effective tax burden: Profit before tax 242, ,718 Theoretical income tax expense in the financial year based on a domestic income tax rate of 34 percent (82,485) (78,784) Effect of divergent foreign tax rates (374) 2,871 Reduction in the tax burden because of tax-exempt income from equity participations and other tax-exempt income 71,029 92,956 Increase in the tax burden because of non-tax-deductible expenses (35,062) (46,216) Other (15,207) 8,283 Effective tax burden (62,099) (20,890) No tax deferrals were capitalized for the tax loss carryforwards of 26,230 thousand because there was no reasonable expectation of realization. The consolidated financial statements contain capitalized benefits from unused tax loss carryforwards at the amount of 77,030 thousand. The greater part of tax loss carryforwards were capable of being carried forward for an unlimited period. (10) Earnings per share Profit ( in 1000s) 137, ,634 less preference dividend ( in 1000s) (10,116) (6,744) Earnings in the accounting period ( in 1000s) 127, ,890 Avg. number of ordinary shares outstanding during period 3,809,325 3,781,488 Earnings per share (in ) There were no conversion or option rights in circulation, so undiluted earnings per share were identical with diluted earnings per share

24 (11) Segment reporting RZB s internal management reporting system served as the foundation for primary segment reporting within the meaning of IAS 14, which was based on the following product segments: Corporate Business Treasury and Investment Banking Retail Banking Transaction Services Participations and Other for Austrian and international customers and the realization of commodity transactions and structured trade finance. Corporate Finance embraces project and investment finance (custom-tailored financing for clearly defined business plans) in the core market, Western Europe, the emerging markets and to a limited extent in Asia and North America, as well as all subsidized credit products. Transactions are also realized with the ERP Fund, the European Investment Bank (EIB) and Kreditanstalt für Wiederaufbau (KfW). Corporate Business is one of RZB s core business segments. It embraces the traditional credit business for commercial customers, corporate finance (project and investment finance, acquisition finance, real estate finance), trade and export finance, documentary business, leasing for corporate customers and financing services for regional authorities and financial institutions. Traditional credit business encompasses working funds, investment and trade finance, whereby a wide range of different financial instruments are used (such as current account credits, short-term loans, direct borrowings, factoring and venture capitalization). The Trade and Export Finance division handles export loans subsidized by the respective national export subsidizing agencies (such as Oesterreichische Kontrollbank AG OeKB), such as tied financial loans for purchasers, favourable finance for exporters. Additional areas of activity include the issue of guarantees and letters of credit The segment Treasury and Investment Banking embraces the operations of the corresponding departments of Raiffeisen Zentralbank, Raiffeisen Centrobank AG, the Network Banks and the investment subsidiaries in Central and Eastern Europe. Treasury operations comprise trading on behalf of customers and our own positions in on-balance-sheet (e.g. money market deposits, notes and coins) and off-balance-sheet interest-rate-based and exchangerate-based products (futures, options). In addition, Treasury operations include portfolio management (equities, bonds, funds), short- and long-term alternative investments (combinations of securities with derivative instruments) and hybrid financial instruments. Our Investment Banking activities include stock exchange launches of both equities and fixed-interest securities as well as dealing in financial instruments in the primary and secondary markets. As a market maker, we hold our own securities positions in our books. In addition, securities lending and repo trans

25 actions are carried out with international counterparties. The Retail Banking segment comprises retail banking in CEE, the retail business of Raiffeisen Leasing International and the activities of Viennese private banker Kathrein & Co. Because of the division of activities within the Raiffeisen Banking Group (RBG), Raiffeisen Zentralbank is not active in the Austrian retail banking segment but supports RBG in this segment by rendering central services. RBG operates a closely meshed network of banking outlets in Austria, where it is the preferred provider of banking services to 35 percent of all bank customers in the country. The target group includes all private persons, as well as small businesses and the self-employed. The segment s line consists primarily of standardized products such as passbooks and savings deposits, time deposits, giro and salary accounts, consumer loans, overdraft facilities for giro and salary accounts, mortgage loans and a variety of other earmarked loans. The Transaction Services segment includes all payment functions, including cash management, card operations, custody services and the back-office services provided by RSC Raiffeisen Daten Service Center GmbH. This includes all products for cross-border and domestic payments, accounts due at call that do not have the character of loans and all rate compensation transactions. Also reported here are the earnings from products such as Cash Management Accounts and foreign currency accounts due at call. Within the scope of our securities custody services, we offer proactive securities processing and securities custody services from a single source and sell these services in the marketplace. In addition, RZB acts as a depositary bank for retail investment funds and so-called special funds. In addition to non-banking activities, the Participations and Other segment especially embraces the extensive equity investment portfolio of RZB, as well as associated enterprises that are included in the balance sheet using the equity method. Other multi-segment functions are also included in this segment. In 2002, the results of this segment were affected by an extraordinary expense in the form of a fine imposed by the EU in the amount of approximately 30.4 million. The amount of this fine came as a total surprise, and was only partially covered by provisions. Raiffeisen Zentralbank has filed a nullity suit against this EU decision. RZB employs two central steering instruments: Return on equity states the relationship between profit before tax and average equity employed. It expresses the return on equity employed in the segment concerned. The cost/income ratio expresses the cost efficiency of the business segments. The cost/income ratio is calculated as General administrative expenses divided by the total of Net interest income, Net commission income, and Trading profit/(loss) (i.e. without Net valuations and Net provisioning for possible loan losses). Segment reporting is based on our internal profit-centre accounting system. That takes the form of a multistage contribution income statement. Income and ex

26 penses are allocated according to their causes. The income items are Net interest income, Net commission income, Trading profit/(loss) and Other operating profit/(loss), whereby net interest income is calculated using the market rate method. The interest reward from equity is assigned to individual segments on the basis of regulatory capital requirements and recognized under Net interest income. Provisioning for possible loan losses is made up of net allocations to valuation reserves for borrower risks and direct write-downs as well as amounts received on written-down claims and sovereign valuations. General administrative expenses include direct and indirect costs. Direct costs (staff costs and expenditure on materials) are incurred by individual business segments, whereas indirect costs are allotted on the basis of agreed ratios. Secondary segment reporting breaks down income components and assets/liabilities along geographical lines. Assignments to regions are based on the corporate domiciles of the Group members concerned. The results of each segment and a breakdown according to region can be found on the following pages

27 a) Business segments 2002 financial year Corporate Treasury & Retail Transaction Participations & Total Business Investment Banking Services Other in 1,000s Banking Net interest income 343, , ,272 92,205 2, ,938 Provisioning for possible loan losses (124,431) (8,023) (16,105) - (2,629) (151,188) Net interest income after provisioning for possible loan losses 218, , ,167 92,205 (324) 557,750 Net commission income 102,280 33,117 41, ,214 (1,039) 283,281 Trading profit/(loss) ,286 16,127 21,329 (10,183) 253,482 General administrative expenses (248,234) (220,101) (235,941) (169,338) (30,856) (904,470) Other operating profit/(loss) 12,567 19,845 (409) 8,657 35,013 75,673 Extraordinary profit/(loss) (23,113) (23,113) Profit before tax 86, ,195 (57,347) 60,067 (30,502) 242,603 Own funds requirement 1,229, , ,188 29, ,241 2,237,852 Basis of assessment under 22 BWG 15,362,890 7,578,875 1,539, ,516 3,128,013 27,973,150 Cost/income ratio 55.6% 56.1% 120.9% 76.7% % Average equity 1,033, , ,618 24, ,428 1,940,283 Return on equity (ROE before tax) 8.3% 36.1% (55.3%) 245.6% % Average number of staff 3,186 2,371 4,299 2,879 2,500 15, financial year Corporate Treasury & Retail Transaction Participations & Total Business Investment Banking Services Other in 1,000s Banking Net interest income 265,680 88,300 93,108 87,748 (274) 534,563 Provisioning for possible loan losses (104,728) (1,604) (9,578) (69) 3,882 (112,097) Net interest income after provisioning for possible loan losses 160,952 86,695 83,531 87,679 3, ,466 Net commission income 75,184 31,805 18,855 88,175 (300) 213,719 Trading profit/(loss) 6, ,621 10,376 16,385 3, ,518 General administrative expenses (185,129) (173,500) (156,595) (134,057) (53,207) (702,489) Other operating profit/(loss) 22,680 10,701 (147) - 25,270 58,504 Profit before tax 79, ,322 (43,979) 58,182 (20,642) 231,718 Own funds requirement 1,117, ,484 57,478 23, ,032 1,928,956 Basis of assessment under 22 BWG 15,089,898 6,985, , , ,911 24,111,954 Cost/income ratio 53.3% 53.8 % 128.0% 69.7% % Average equity 1,006, ,749 51,732 20, ,734 1,736,110 Return on equity (ROE before tax) 7.9% 34.0% (85.0%) 279.3% % Average number of staff 2,342 1,456 3,110 2,053 2,407 11,

28 b) Geographical markets A regional breakdown according to the registered domicile of the Group unit, taking the refinancing costs into account, results in the following distribution: 2002 financial year Austria CEE Other Total in 1,000s Net interest income 296, ,441 43, ,938 Provisioning for possible loan losses (83,746) (52,184) (15,258) (151,188) Net interest income after provisioning for possible loan losses 212, ,257 27, ,750 Net commission income 129, ,605 15, ,281 Trading profit/(loss) 43, ,844 8, ,482 General administrative expenses (348,309) (513,060) (43,101) (904,470) Other operating profit/(loss) 89,554 (10,524) (3,357) 75,673 Extraordinary profit/(loss) (23,113) - - (23,113) Profit before tax 104, ,122 5, ,603 Basis of assessment under 22 BWG 15,913,088 9,824,321 2,235,741 27,973,150 Average number of staff 2,511 12, , financial year* Austria CEE Other Total in 1,000s Net interest income 251, ,189 32, ,563 Provisioning for possible loan losses (69,184) (17,804) (25,109) (112,097) Net interest income after provisioning for possible loan losses 182, ,385 7, ,466 Net commission income 114,715 84,571 14, ,719 Trading profit/(loss) 46, ,539 18, ,518 General administrative expenses (297,520) (372,610) (32,359) (702,489) Other operating profit/(loss) 69,440 (3,479) (7,457) 58,504 Profit before tax 115, ,406 1, ,718 Basis of assessment under 22 BWG 15,032,349 6,539,145 2,540,460 24,111,954 Average number of staff 2,387 8, ,368 * The figures for financial year 2001 were adjusted by the refinancing costs. w w w. r z b. a t 121

29 Notes to the Balance Sheet (12) Cash reserve Cash in hand 266, ,600 Balances at central banks 1,739,989 1,983,839 Total 2,006,502 2,418,439 (13) Loans and advances to banks Giro and clearing business 713, ,702 Money market business 12,634,966 14,183,996 Loans and advances to banks 1,603,672 1,774,371 Purchased receivables 60,288 34,560 Receivables under finance leases 15,522 - Total 15,028,039 16,581,629 Purchased receivables in the amount of 60,288 thousand (2001: 31,242 thousand) consist of receivables that were classified as held-to-maturity. Loans and advances to banks broke down along geographical lines as follows: Domestic (Austria) 6,832,554 8,161,089 Abroad 8,195,485 8,420,540 Total 15,028,039 16,581,