The Board of Managing Directors of Raiffeisen Bausparkasse presents the Annual Report 2007.

Transcription

1 Annual Report

2 The Board of Managing Directors of Raiffeisen Bausparkasse presents the Annual Report Vienna, June 2008

3 Bausparen is safe and secure 2007 started out on a brilliant note and all the experts assumed that the stable economic growth would continue at a high level until the end of the year. Although the U.S. subprime crisis had initially not seemed significant for Europe or Asia, its first effects began to become evident by the summer. In late autumn the upsurge of prices in a large number of raw materials accelerated the downturn in America s economy. Apart from that, there were several increases in charges in Austria, which had an impact on operating costs, particularly where electricity and water rates were concerned. This, in turn, had a dampening effect on real income and consumer demand. It is expected that the credit crisis will continue to leave its marks on the global economy throughout The recent turmoil on the financial markets quite plainly shows us something else too: the high level of safety and security of the domestic Bauspar system. The independent savings and financing cycle as well as the ceiling of six percent for Bauspar loans help to make Austrians immune to the repercussions of such phenomena as the sub-prime crisis. A carefully considered pricing policy, strict funding requirements and a cautious credit process protect both borrowers and the building societies (Bausparkassen). In times of turbulent market conditions, many customers (savers and borrowers) bank on reliability. As a result, Raiffeisen Bausparkasse achieved record results in new business and thus again managed to exceed the excellent figures of Growing needs of new housing space and the federal government s climate protection initiatives require intensified financing efforts in residential housing. To remain equipped to deal with robust demand, Raiffeisen Bausparkasse is calling for a swift increase in the basis for the Bauspar premium from 1,000 to 1,200. At the same time, this meas- ure is expected to stop a further threatening development that has a curbing effect on the Bau - spar kassen s financing power and thus, in the long run, on residential housing. Due to the high demand for low-interest Bauspar loans, a rapid meltdown of the deposit overhang is taking place and has reduced the difference between Bauspar deposits and loans. From a macroeconomic point of view, the extraordinary financing requirements for quality improvement in housing stock these maintain the demand for goods and labor should be supported and not prevented. The attractive conditions for savings along with the moderate interest adjustments for borrowers have made Bausparen an even more desirable financial service product. Newly introduced and very successful in 2007 was the so-called Relax Tarif with a fixed interest rate for the 6 year saving period. Another factor that contributed to the good start of the year 2008 was the rise in the Bauspar premium and in interest rates, which means a hefty increase in the rate of return on savings contracts. 2

4 Erich Rainbacher Chairman and Managing Director Johann Ertl Managing Director

5 New business achieved record high, financing in full flow The expansion in construction investments made a substantial contribution towards economic growth. The first half-year saw a 3.2 per-cent increase compared to the previous year. Particularly in the area of civil engineering, demand was very brisk, which had a favorable effect on production and employment. Nevertheless, high energy and raw material costs forced up prices. According to Statistics Austria, tradesmen jobs in residential housing construction rose by up to 11 % (e.g. roofing jobs). Besides the sharp increase in material costs that marked the start of a downturn in the domestic economy, the export-oriented economy started to suffer from the widening euro-dollar gap towards the end of the second half-year. In the course of the subprime credit crisis, the turbulences on the financial services sector had wider and wider repercussions, also shaking the confidence of the customers of major and renowned banking institutions. In the previous year, it once again became evident that the domestic Bausparkassen offered reliability even in volatile times. With 308,394 new Bauspar contracts in 2007, Raiffeisen Bausparkasse achieved the best results in its corporate history ( % compared with 2006). This helped them to expand their market share (32.7 %) in this segment Number of new contracts considerably. 350, , , , , , ,394 The upward trend continued in the volume of newly granted loans for residential housing. With 1.14 billion and a market share of 32.4 %, the exceptional year 2006 was once again exceeded by 8.3 %. The high popularity of Bausparen is also reflected in the fact that the financing volume has doubled in the course of five years. This was accompanied by a noticeable expansion of loans by 6.5 % compared with the previous year. By the end of 2007, no less than 5.4 billion worth of loans were outstanding, which is the equivalent of a market share of 34.3 %. 150, ,000 50, Bauspar loans offer especially attractive financing conditions that are secured over the long term, which makes them calculable. The ceiling of the interest rate of 6 % prevents borrowers from having to face intolerable installment increases. Every Bauspar contract constitutes the basic entitlement to a low-interest, long-term loan. But market research surveys regularly confirm that Bausparen is also regarded as an attractive form of saving with handsome rates of return, high security and versatile saving options. 5.5 million 4

6 Austrians have Bauspar contracts either in the savings phase or in the loan phase of which one in three commits their money to Raiffeisen Bausparkasse. With 1,658,831 savings contracts (market share 32.7 %) and 168,484 loan accounts (market share 37.2 %) Raiffeisen Bausparkasse yet again asserted its position as undisputed market leader in The financing demand is expected to be strong in As a result, the volume of loans will continue to rise, and in the foreseeable future it will equal that of deposits. In this context, the Bausparkassen are demanding a rise in the base value for government subsidies from currently 1,000 (as it has been over the last nine years) to 1,200 per person and year to compensate for inflation. The deposits overhang of the Bausparkassen that was generated from 2001 to 2005 shrank over the last years at an increasing pace, specifi cally from 4.0 billion to 1.65 billion. At Raiffeisen Bauspar - kasse, the deposits overhang at the end of 2007 was no more than 167 million. If the loan-deposit gap continues to close, the liquidity of the Bausparkassen will rapidly decline. This would entail a slowing of the residential housing boom, since the Bausparkassen are a major financial drive of private housing construction. Base value for the state premium to be increased At the end of 2007, the Bauspar deposit volume exceeded 5.5 billion. Here too, Raiffeisen takes the leading position with a market share of 32 %. Favorable conditions and innovative products fueled demand considerably. Despite the rising interest level, the interim loan interest rate was at moderate 3.2 % at the end of In the savings sector, the attractive conditions of the Saving Rate (Spartarif) and Youth Rate (Jugendtarif) for new contracts were extended. Customers who become Bausparers before their 25th birthday enjoy an interest rate of 4.5 % p.a. in the first year. Including the state-premium this is the equivalent to a savings book interest rate of 6.2 %. Additionally, if customers take up a loan before their 30th birthday, the first installment is credited to their account. In the case of the Saving Rate (Spartarif) the yield is comparable to a savings book interest rate of 5.7 %. Attractive product features stimulated demand The new Relax Tarif, especially designed for one-time payers, offers a guaranteed interest yield over the entire term. Added to that is the state premium which, depending on the New: The Relax product 5

7 interest development, may amount to up to 8 % of annual savings. The introduction of the Relax product is an important step towards strengthening liquidity in view of the drastically increased demand for Bauspar financing. Top topic energy efficiency The hugely increased energy costs make investments in quality improvements to existing residential housing more and more financially rewarding. Accordingly, over the last ten years, the loan grants for redevelopment and renovation trebled at Raiffeisen Bausparkasse. This trend is set to continue, as people are becoming more and more willing to install thermal insulation. Exactly how important energy saving is to people was also shown in a large-scale market research survey on the Austrians dream house which Raiffeisen Bausparkasse carried out in the summer of When asked the question How important is minimum energy consumption in your home? 96 % answered very important or important while only 0.5 % of those questioned considered low energy consumption as irrelevant. Financing volume for residential housing in m Loans in m 1,200 1,020 1,053 1,139 6,000 4,854 5,025 5,350 1,000 5, , , , ,

8 In February 2008, Raiffeisen Bausparkasse launched a socalled Eco-Loan campaign: It offered Prima-Klima Bauspar financing at an interest rate reduced by as much as 10 % for certain energy saving measures, providing an overall loan volume of 100 million. The Eco-Loan campaign was intended not only for energy-saving new constructions, but also for improvement measures taken in existing buildings. Prima-Klima Bauspar financing The rising interest rate level and a proactive pricing policy have given a new boost to the popularity of Bausparen. According to the latest survey conducted by GfK Group, one in two Austrians gives this form of investment top grades. Bausparen is not only regarded as an attractive and secure financial investment form, but is also a highly sought after financing instrument. Whether you wish to make your home dream come true or finance education or care measures, for long-term decisions, you need a solid foundation that withstands all turbulent times, whether past or future. Outlook 2008 Balance sheet total in m 7,000 6,162 6,211 6,238 6,000 5,000 4,000 3,000 2,000 1,

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10 Equity interests of Raiffeisen Bausparkasse Know-how provider in the CEE countries In the countries of Central and Eastern Europe (CEE) the whole Bauspar idea has turned out to be a real export hit. For a very long time the Bausparkassen were the only banks that offered the people of Slovakia, Hungary, the Czech Republic, Croatia and Romania long-term and stable construction finance, thus stimulating new construction along with the renovation of existing buildings. The Bauspar systems in these countries and the way public support is organized are based on the Austrian Bauspar model. Ever since its first commitment in the early nineties, Raiffeisen Bausparkasse has been continually strengthening its position in the CEE countries. The takeover of Hypo stavební sporitelna, a.s. (Hypo Bausparkasse, Prague) last year was a further step on the road to the top in the highly competitive Czech building society market. Bausparen is growing more and more popular in the other Central and Eastern European countries, too. With 363,000 contracts, i.e. a plus of almost 15 % compared with 2006, the subsidiaries new contracts even outperformed the Austrian parent company s record figures. The entire contract volume in CEE totaling about two million Bauspar contracts shows that the population is more than happy to take advantage of the benefits of Bausparen to accumulate capital and finance housing. Successful acquisition of Hypo stavební spořitelna, Prague. Johann Ertl and Christian Martell (middle), Raiffeisen Bausparkasse, with representatives of the former owners. Adresses Prvá stavebná sporitel ňa, a.s. Bajkalská 30, P.O.Box 48 SK Bratislava 25 Tel.: 00421/2/ Managing Directors: Imrich Beres Herbert Pfeiffer Erich Feix Raiffeisen stavební spořitelna, a.s. Konevova 2747/99 CZ Praha 3 Tel.: 00420/2/ Managing Directors: Jan Jenicek Hans-Dieter Funke Raiffeisen stambena štedionica d.d. Radnička cesta 47 HR Zagreb Tel.: 00385/1/ Managing Directors: Hans-Christian Vallant Franjo Franjic Raiffeisen Banca pentru Locuinţe, S.A. Nicolae Caramfil Str. 79 RO Bukarest 1 Tel.: 0040/21/ Managing Directors: Ionut Costea Luminita Manolache Heribert Kailbach 9

11 Slovakia When, in the early nineties, initial thought was given to taking the Bauspar idea into the countries of Central and Eastern Europe, Raiffeisen Bausparkasse chose Slovakia as its pioneer country. Meanwhile, Slovakia has become a forerunner in Bauspar matters. Of all the investments so far made in residential housing by the three Slovak Bauspar - kassen, the mortgage banks and the state-owned Slovak residential housing fund, the Bausparkassen provided 56 % of residential housing funds. Absolute market leadership of PSS In the year 2007, Prvá stavebná sporitel ňa a.s. (PSS) once again successfully defended its absolute leading position in the market. With close to 170,000 new contracts it was able to exceed last year s results by 9 %. Deposits rose by 8 % to SKK 44.1 billion ( 1.3 billion) while loans rose by 12.6 % to SKK 45.7 billion ( 1.4 billion). Due to the fact that there continues to be a high demand for low-interest Bauspar and interim loans among PSS s customers, the company issued its first housing bond in So alongside Bauspar de po - sits, a further refinancing source was provided for. Ever since Slovakia s accession to the European Union in Loans In SKK m 50,000 34,753 40,576 45, , PSS s ongoing projects have all centered on Europe. The preparations for the introduction of the Euro in the beginning of 2009 are in full swing. In September 2007, PSS was the first bank in Slovakia to have submitted a monthly report according to the standard rules of Basle II. Preparations were also underway to enter the SWIFT system. As part of their corporate social responsibility, PSS pur- 40,000 chased a plot of land in 2007 upon which 60 to 80 employee flats are to be built. 30,000 20,000 10,

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13 Czech Republic Even if the Czech Republic was not the very first country in Central and Eastern Europe to bear the fruit of the Bauspar idea, it can still be regarded as one of the Bauspar winners among the CEE countries. Of the 10.3 million Czechs as many as 55 % have a Bauspar contract, which makes it the country with the highest Bauspar density to be found throughout CEE. Bausparen is thus one of the vital pillars of the state s residential housing policy and represents the perfect financing instruments for the continuing construction boom in the Czech Republic. In 2007 RSTS set the course for the future To Raiffeisen stavební spořitelna, a.s. (RSTS) 2007 was a year of change. In sales the managing board set a strong example. Compared with 2006, new business was in - creased by 38.3 % and 109,000 new contracts were signed. In 2007 the market share of RSTS climbed from 10 % to 13 % a positive signal for the changes in sales. Bauspar deposits picked up by 8.2 % amounting to CZK 42.9 billion ( 1.6 billion) while there was also a powerful 37.4 % rise in loans amounting to CZK 16.2 billion ( 607 million). For Raiffeisen Bausparkasse, the actual highlight of the year Loans In CZK m 17,500 9,045 11,763 16, was the acquisition of one of the competitors in the Bauspar market, Hypo stavební spořitelna a.s. The acquisition and the planned merger of the two companies will set the course for the future. After the merger, the market share of the two Bausparkassen will be at 20 %, and their common customer base will have extended to 1 million, which will take Raiffeisen in the Czech Republic from fourth to third place in the Bauspar ranking. 15,000 12,500 10,000 7,500 5,000 2,

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15 Croatia In the southern Bauspar country of Croatia the Bauspar system established itself towards the end of the nineties. In the year 2007, the population s strong consumption orientation and the, until then, easy access to loans caused the Croatian national bank to take measures to control the indebtedness of its population. This will noticeably reduce credit growth (including that of the Bausparkassen) in Loans up 54.4 % despite difficult conditions Given these conditions, it is all the more pleasing to see that Raiffeisen stambena šte dionica d.d. (RSS) was able to increase its new business by more than 45,000 contracts, which is the equivalent of 5 % compared with Existing contracts thus increased by 3.6 % to 200,000. Loans rose too, despite the tightened National Bank regulations, from HRK 646 million ( 88 million) in the year 2006 to HRK 997 million ( 136 million), i.e. plus 54.4 % in the year Loans In HRK m The savings business in the year 2007 centered on the keyword Bubaspara, a made-up Croatian word that refers to RSS s successful savings scheme for children. The advertising campaign featuring a bee that remotely resembles wellknown Sumsi of the Raiffeisen Bank Group produced a brand image that was received very positively by parents and children alike and was also a huge success with RSS s sales partners. 1,

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17 Romania In the year 2007, Raiffeisen Bausparkasse s youngest Bau - spar country experienced its first year as a member of the EU. Known to be extremely consumption-oriented before entering the EU, the rising incomes that resulted from the high foreign investments in the course of the accession led to even higher spending. Given the fact that most Romanians are not yet ready to tie up their savings for more than one year, the achieved figures might be below plan, yet they are definitely satisfactory. Loans broke the 34-million-RON (9.4-million-EUR) ceiling In 2006, Raiffeisen Banca pentru Locuinţe (RBL) generated new business totaling almost 39,000 savings contracts, causing the existing overall volume to exceed 108,000 contracts (+ 7 %). So thanks to a product based on continuity and a long-term perspective, RBL was able to achieve remarkable results in its third full fiscal year. Following the year 2006 which saw loans at RON 5.0 million ( 1 million) at the end of the year, RBL exceeded the RON-34-million mark (EUR 9.4 million) in fiscal Loans In RON m

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21 Consolidated Balance Sheet at December 31, 2007 Assets Dec. 31, 2007 Dec. 31, 2006 EUR EUR T EUR T EUR 1. Cash on hand, balances with central banks 32,317, , Treasury bills eligible for refinancing with the central bank treasury bills 857,087, , Claims on credit institutions a) repayable on demand 25,764, ,318 b) other claims 308,889, ,653, , , Mortgage-backed loans a) Bauspar-loans 3,547,499, ,368,066 b) mortgage-backed interim loans 838,617, ,874 c) other mortgage-backed loans 333,190, ,719,307, ,984 4,376, Other loans a) Bauspar-loans 119,389, ,062 b) interim loans covered by savings deposits, less registered deposits for interim loans 172,174, ,776 c) other loans 585,787, ,351, , , Bonds and other fixed-interest securities a) issued by public bodies 70,096, ,495 b) issued by other borrowers (of which: own issues EUR 0.00; previous year: T EUR 494) 481,661, ,758, , , Shares and other non-fixed-interest securities 456,921, , Equity interests a) in associated companies valued at equity 81,753, ,626 b) in other companies 96, ,849, , Shares in group companies in other group companies 108, Intangible fixed assets (hereof goodwill under 254 (3) Austrian Commercial Code EUR 0.00; previous year: T EUR 0) 5,243, , Property, plant and equipment (of which: land and buildings occupied by the credit institution for its own activities EUR 14,447,656.20; previous year: T EUR 14,332) 17,893, , Other assets 121,202, , Prepaid expenses 35,162, ,018 8,090,856, ,013,845 Off-balance-sheet items 1. Foreign assets 1,888,109, ,747,383 20

22 Liabilities and Stockholders Equity Dec. 31, 2007 Dec. 31, 2006 EUR EUR T EUR T EUR 1. Liabilities to credit institutions a) repayable on demand ,006 b) with agreed terms to maturity or periods of notice 338,360, ,360, , , Liabilities to customers Bauspar-deposits less registered deposits for interim loans 7,151,405, ,242, Other liabilities 52,295, , Deferred income 36,745, , Accruals a) accruals for pensions 6,284, ,187 b) accruals for severance payments 7,902, ,838 c) accruals for taxes 883, ,635 d) other accruals 37,177, ,247, ,296 55, Net income after minorities 8,382, , Supplementary capital 167,000, , Subscribed capital 35,000, , Additional paid-in capital a) appropriated 62, b) unappropriated 8,029, ,091, ,030 8, Retained earnings a) statutory reserve 6,976, ,977 b) reserve under bylaws 10,523, ,523 c) other reserves 108,954, ,320 d) exchange differences 23,399, ,519 e) goodwill due to consolidation of investments 2,449, ,449 f) negative goodwill due to consolidation of investments 8,577, ,982, , , Minority interests 15,281, , Liability reserve under 23 (6) Austrian Banking Act 69,848, , Untaxed reserves valuation reserve due to special depreciation 215, ,090,856, ,013,845 Off-balance-sheet items 1. Credit risks 421,057, , Foreign liabilities 1,823,002, ,691,950 21

23 Consolidated Income Statement for the 2007 financial year EUR EUR T EUR 1. Interest and similar income 362,267, ,724 of which: a) income from Bauspar-loans 185,895, ,982 b) from fixed-interest securities 55,784, , Interest and similar expenses 270,919, ,589 of which: for Bauspar-deposits 194,600, ,658 I. NET INTEREST INCOME 91,347, , Income from securities and equity interests 31,863, ,290 a) income from non-fixed-interest securities 24,826, ,500 b) income from equity interests in other companies c) income from shares in group companies 199, d) income from equity interests in associated companies valued at equity 6,836, , Other operating income 56,088, ,390 II. OPERATING INCOME 179,299, , General administrative expenses 128,201, ,263 a) Personnel expenses aa) wages and salaries 22,722, ,231 ab) expenses for statutory social security and payroll-related taxes and compulsory contributions 6,729, ,393 ac) fringe benefits 464, ad) expenses for retirement benefits 1,237, ,288 ae) adjustments to accrual for pensions 97, af) expenses for severance payments accrual and statutory severance payment fund (BVK) 508, ,761, ,610 b) Other administrative expenses (operating expenditure) 96,439, , Depreciation of assets under items 10 and 11 3,109, , Other operating expenses 3,781, ,955 III. OPERATING EXPENSES 135,092, ,828 IV. OPERATING RESULT (= carry forward) 44,207, ,987 22

24 EUR T EUR IV. OPERATING RESULT (= carry forward) 44,207, , Balance of expenses and income from the disposal and revaluation of claims and securities and allocations to accruals for credit risks 12,094, , Balance of expenses and income from writedowns of securities valued as financial assets 400, V. RESULT FROM ORDINARY ACTIVITIES 32,513, , Taxes on income 5,837, , Other taxes not included in item , VI. ANNUAL NET INCOME 26,530, , Minority interests in profit 1,438, , Exchange differences 308, Movement of reserves 18,616, , Consolidated profit carried forward 1,599, ,241 VII. NET INCOME AFTER MINORITIES 8,382, ,600 The Board of Managing Directors Erich Rainbacher Chairman & Managing Director Johann Ertl Managing Director 23

25 Notes to the consolidated financial statements Consolidated group The consolidated group at December 31, 2007 comprises credit institutions, financial institutions and other companies. In addition to Raiffeisen Bausparkasse Gesellschaft m.b.h., Vienna, the following companies are fully consolidated: Raiffeisen stavební spořitelna, a.s., Prague (Raiffeisen Bausparkasse AG, Prague) Konevova s.r.o., Prague (Konevova Ges.m.b.H., Prague) Raiffeisen stambena štedionica d.d. Zagreb (Raiffeisen Bausparkasse AG, Zagreb) Raiffeisen Bausparkassen Holding GmbH, Vienna The following companies are consolidated using the equity method in accordance with 264 (1) 2 of the Austrian Commercial Code (UGB): Prvá stavebná sporitel ňa, a.s., Bratislava (Erste Bausparkasse AG, Bratislava) Raiffeisen Banca pentru Locuinţe, S.A., Bucharest (Raiffeisen Bausparkasse AG, Bucharest) Raiffeisen Wohnbaubank AG, Vienna Raiffeisen Wohnbauleasing Ges.m.b.H, Vienna Four companies were not included in the consolidated financial statements in accordance with 249 (2) UGB, as these companies are deemed not to be of material importance in presenting fairly in all material respects the company s net worth, financial and earnings position. These companies are: RBM Wohnbau Ges.m.b.H., Vienna RGS Wohnbau Ges.m.b.H., Vienna Raffeisen financni poradenstvi s.r.o, Prague (Raiffeisen Finanzberatungsges.m.b.H., Prague) Dobre Byvanie s.r.o., Bratislava Principles of consolidation The balance sheet date for the financial statements of fully consolidated companies is December 31, The latest available financial statements are taken for associated companies consolidated in accordance with the equity method. The book value was used in accordance with 254 (1) 1 and 264 (1) 1 UGB for consolidation of investments and consolidation at equity. The book value of the share in each of the companies included in consolidation is offset against the subsidiary s equity at an amount corresponding to the share. Initial inclusion in the consolidated financial statements was chosen as the accounting date of initial consolidation. In the 2007 financial year Raiffeisen nekretnine i financijsko savjetovanje d.o.o. Zagreb (Raiffeisen Immobilien- und Finanzberatungsges.m.b.H., Zagreb) was liquidated and deconsolidated. 24

26 In accordance with the Austrian Banking Act (BWG), the following balance sheet items constitute subsidiaries equity: Subscribed capital Additional paid-in capital Retained earnings Accumulated income/loss Negative goodwill resulting from the consolidation of investments relates to retained earnings prior to initial consolidation and is shown under reserves from retained earnings. There is no additional unrealized negative goodwill from the valuation of associated companies. The assets, liabilities, accruals and deferrals of the companies included in consolidation are consolidated using uniform principles of accounting and valuation. Loans and other claims, accruals and payables relating to transactions between consolidated companies including accrued and deferred items are offset in the course of debt consolidation. Intra-group income and expenditure are also offset in the course of consolidation of income and expenditure. The financial statements of foreign group companies are adjusted to Austrian accounting principles. Individual financial statements denominated in foreign currencies are translated at the reference rates published by the ECB on the consolidated balance sheet date. Income statements are translated at the monthly average reference rates for the financial year. Differences resulting from translating capital are offset against retained earnings without affecting income. Differences resulting from translating income are recognized and recorded in the consolidated income statement. Principles of accounting and valuation The consolidated financial statements of Raiffeisen Bausparkasse Gesellschaft m.b.h. are drawn up in accordance with the provisions of 244ff UGB and with 12 of the Austrian Bausparkasse Act in compliance with the relevant provisions of the Austrian Banking Act (BWG). All consolidated balance sheet items denominated in foreign currencies were translated at ECB reference rates prevailing on the balance sheet date, income statement items are translated at monthly average reference rates for the financial year. Claims on credit institutions are stated at their nominal value plus prorated interest. Writedowns are made and accruals set up for all identifiable risks associated with loans and other claims. Securities held as current assets are valued at the lower of cost or market. Securities held as long-term investments are recorded under non-current assets and are valued at the diluted lower of cost or market. Non-consolidated equity interests are stated at historical cost. Property, plant and equipment (land, buildings, office furniture and equipment) are stated at acquisition or production cost less scheduled depreciation. Rates of depreciation range between 2.0 % and 2.5 % for permanent plant and 10 % to 25 % for movable assets. Additions in the financial year are depreciated at full or half annual rates depending on whether the assets are acquired in the first or second half of the year, unless national regulations specify depreciation pro-rata-temporis. Liabilities are stated at their nominal amount or at the amount repayable, if higher. 25

27 Accruals are set up for statutory and contractual severance payment obligations. The accruals generally amount to 80 % of the claims and are in line with actuarial computations. The accrual for current pension commitments is set up in accordance with actuarial prin - ciples using the current value method and in line with the accounting guidelines of the Austrian Institute of Actuaries 1999-P, Pagler & Pagler, applying an interest rate of 3.5 %. There is no shortfall. Future obligations arising from pension commitments are covered by a pension fund. Other accruals take into account all identifiable risks and pending liabilities, the amount of which is not yet known. Notes to the consolidated balance sheet The item cash on hand, balances with central banks consists of a cash total of T EUR 395 (2006: T EUR 421), balances with central banks at T EUR 31,923 (2006: T EUR 29,927). The development ot the value of property, plant and equipment in 2007 is illustrated in the schedule of fixed assets in accordance with 226 (1) UGB. Acquisition/ Exchange Additions Disposals production costs at Jan. 1, 2007 differences EUR EUR EUR EUR I) INTANGIBLE ASSETS 1. Concessions, industrial property rights and similar rights and benefits as well as licenses derived therefrom 21,865, ,683 1,469, , Goodwill 246, ,111, ,683 1,469, ,606 II) PROPERTY, PLANT AND EQUIPMENT 1. Land and buildings including buildings on non-owned land 17,817, , ,427 9, Office furniture and equipment 11,608, , ,812 1,056,269 29,426, , ,239 1,065,748 III) FINANCIAL ASSETS 1. Shares in group companies 108, Equity interests in associated companies valued at equity 82,626, , Equity interests in other companies 81, , Long-term securities 887,234,572 23,759, ,607, ,379, ,050,188 23,759, ,627, ,252,092 1) TOTAL FIXED ASSETS 1,021,588,526 24,652, ,086, ,760,446 1) Transfer of share in accumulated net income at equity 26

28 Other claims on credit institutions consist of fixed-rate deposits with the following maturities: Dec. 31, 2007 Dec. 31, 2006 in T EUR in T EUR repayable on demand 82,014 0 up to 3 months 92, ,068 3 months to 1 year 16, to 5 years 90,243 71,654 over 5 years 28, , ,722 In the year 2007 no claims were ceded by way of security (2006: T EUR 55,392). Listed bonds and other fixed-interest securities do not contain any own issues (2006: T EUR 494); bonds totalling T EUR 25,635 (2006: T EUR 25,350) will mature in the following year. The bonds and other fixed-interest securities include securities with a balance sheet value of T EUR 4,032 (2006: T EUR 6,942) that are listed on Vienna Stock Exchange. The listed securities have a difference of T EUR 6 (2006: T EUR 18) between balance sheet value and higher market value. Securities with a nominal value of T EUR 0 (2006: T EUR 10,000) recorded under bonds and other fixed-interest securities were loaned short-term. The transactions of Nov. 6, 2003, Nov. 10, 2006 and of the year 2007 were closed out in the course of the financial year. Disposals Acquisition/ Cumulative Book value Book value Depreciation final production costs depreciation 2007 consolidation at Dec. 31, 2007 Dec. 31, 2007 Dec. 31, 2006 EUR EUR EUR EUR EUR EUR ,008,966 17,765,583 5,243,383 5,747,764 1,542, , , ,255,814 18,012,431 5,243,383 5,747,764 1,542,423 26,310 18,525,914 3,730,405 14,795,509 14,557, ,197 35,797 11,537,189 8,439,259 3,097,930 3,380,449 1,177,460 62,107 30,063,103 12,169,665 17,893,438 17,937,839 1,566, , , , ,753, ,753,430 82,626, ,727 5,173 96,554 76, ,222, , ,637, ,094,788 56, ,185, , ,595, ,905,230 56,919 62, ,504,164 30,771, ,732, ,590,833 3,165,999 Arithmetic differences may arise when totalling amounts rounded off due to automatic calculation. 27

29 Securities recorded under financial assets include securities with a book value amounting to T EUR 61,959 (2006: T EUR 79,491) and a present value amounting to T EUR 55,367 (2006: T EUR 73,194). As there is no permanent impairment of value, no depreciation was applied. Securities with a nominal value of T EUR 20,500 (2006: T EUR 37,280) were pledged as securities for liabilities to other credit institutions. Shares in investment funds are recorded under shares and other non-fixed-interest securities. The real estate value of developed land is T EUR 632 (2006: T EUR 612). Other assets mainly consist of claims on revenue authorities relating to government subsidies amounting to T EUR 102,437 (2006: T EUR 96,170). The option of creating an adjusting item for deferred taxes on the assets side of the balance sheet is not used. On the balance sheet date the deferred tax assets would amount to T EUR 3,746 (2006: T EUR 2,794). Interest rate swaps were concluded by the parent company with a total value of T EUR 1,468,000 (2006: T EUR 883,000) to hedge the interest rate risk. Interest rate swaps are denominated entirely in euros and were concluded with Raiffeisen Zentralbank Österreich AG (RZB), Raiffeisenlandesbank Niederösterreich-Wien AG (RLB NÖ-Wien) and with Deutsche Bank AG. Both payer (P) and receiver (R) swaps were concluded. Interest rate swaps were concluded by Raiffeisen stambena štedionica d.d., Zagreb, with a total value of T EUR 40,000 (2006: T EUR 40,000) to hedge the interest rate risk. Interest rate swaps are denominated entirely in euros and were only concluded with Raiffeisenbank Austria d.d. (RBA). Only payer (P) swaps were concluded. The bonds issued in 2001, 2002, 2004, 2005 and 2007 constitute supplementary capital in accordance with 23 (7) BWG or subordinated capital pursuant to 23 (14) 5 BWG. Raiffeisen Wohn Bauspar bonds Issue / / Securities number Interest rate % 5.75 % 5.25 % Total volume of issue EUR 22.0 m EUR 40.0 m EUR 34.5 m Issue price Denomination EUR 1, EUR EUR Coupon date, annually August 21 August 20 August 17 Maturity 10 years 10 years 10 years Redemption at nominal value (premature redemption not permitted) Aug. 21, 2011 Aug. 20, 2012*) Aug. 17, 2014 Stock market price at December 31, *) Redemption by issuer possible at August 20, 2009 T EUR 0 (2007: T EUR 36,336) of the bonds issued will mature in

30 All swaps were valued using internal valuation models, particularly present value models. The value of an interest rate swap is expressed as the difference between the value of the fixed obligation and the uncertain variable obligation. The following swaps exist at Dec. 31, 2007: P/ R volume maturity present value EUR EUR Raiffeisen Bausparkasse Gesellschaft m.b.h. 1,468,000, years 565, Raiffeisen stambena štedionica d.d. 40,000, years 908, Total 1,508,000, , On the balance sheet date, asset items in foreign currencies amount to T EUR 1,888,109 (2006: T EUR 1,747,383). Liabilities to credit institutions include refinancing loans for loans with the following residual maturities: Dec. 31, 2007 Dec. 31, 2006 in T EUR in T EUR repayable on demand 0 28,006 up to 3 months 0 3,634 3 months to 1 year 0 6,060 1 to 5 years 15,501 7,267 over 5 years 322, , , , AT0000A05DB6 5.3 % % 5 % EUR 5.5 m EUR 30.0 m EUR 35.0 m EUR 50, EUR EUR July 23 March 31 May years 12 years 11 years Jul. 23, 2016 March 31, 2017 May 23, 2018**) **) Redemption by issuer possible at May 23,

31 The valuation reserve due to special depreciation under 12 of the Austrian Income Tax Act (EStG) developed in 2007 as follows: Balance at Balance at January 1, Allocation Adjustment for December 31, 2007 scheduled depreciation 2007 EUR EUR EUR EUR Office furniture and equipment 324, , , Contingent liabilities arising from loan commitments are summarized under credit risks. The qualifying capital equaled % (2006: 9.53 %) of the base as defined in 22 BWG and is shown in the following table: Dec. 31, 2007 Dec. 31, 2006 in T EUR in T EUR Core capital 249, ,139 Qualifying supplementary capital 167, ,267 Deductions Qualifying capital 416, ,298 Base 4,168,198 3,685,084 On the balance sheet date, liability items in foreign currencies amount to T EUR 1,823,003 (2006: T EUR 1,691,950). Other financial liabilities amount to T EUR 4,242 (2006: T EUR 4,397) for the next year and to T EUR 21,210 (2006: T EUR 21,985) for the following five years. As the contracts were concluded for an indefinite period, the overall liabilities cannot be determined. Notes to the consolidated income statement The geographical breakdown of interest and similar income as well as of other operating income is shown in the following table: Austria CEE in T EUR in T EUR Interest and similar income 287,732 74,535 Other operating income 28,610 27,478 Expenditure for supplementary capital and subordinated capital amounts to T EUR 9,626 (2006: T EUR 10,646). 30

32 Other disclosures The average number of salaried employees in 2007 is (2006: 579). The composition of the Board of Managing Directors and the Supervisory Board is identical to that of Raiffeisen Bausparkasse Gesellschaft m.b.h. The amount of Bauspar-loans granted to Managing Directors and Supervisory Board members outstanding at December 31, 2007 after annual repayments of T EUR 29 (2006: T EUR 119) is T EUR 166 (2006: T EUR 189). Emoluments paid to Supervisory Board members amounted to T EUR 31 as for the previous year. Expenses for severance payments and pensions amounted to T EUR 541 (2006: T EUR 123) for the Board of Managing Directors and executives and to T EUR 1,284 (2006: T EUR 325) for other employees. The former managing directors and their surviving dependents received emoluments totalling EUR 320, (2006: T EUR 309). Information on the remuneration of the Board of Managing Directors may be omitted according to 241 (4) UGB. 31

33 Equity Interests in accordance with 265 (2) of the Austrian Commercial Code Nominal capital Share at Dec. 31, 2007 Fully consolidated companies Raiffeisen stavební spořitelna, a.s., Prague CZK 650,000, % Raiffeisen stambena štedionica d.d. Zagreb HRK 106,500, % Raiffeisen Bausparkassen Holding GmbH, Vienna EUR 10,000, % Konevova s.r.o., Prague CZK 10,000, % Associated companies Consolidation at equity Prvá stavebná sporitel ňa, a.s., Bratislava SKK 2,000,000, % Raiffeisen Banca pentru Locuinţe, S.A., Bucharest RON 96,000, % Raiffeisen Wohnbaubank AG, Vienna EUR 5,100, % Raiffeisen Wohnbauleasing Ges.m.b.H., Vienna EUR 36, % Non-consolidated companies Excluded due to immateriality in accordance with 249 (2) of the Austrian Commercial Code RBM Wohnbau Ges.m.b.H., Vienna EUR 37, % RGS Wohnbau Ges.m.b.H., Vienna EUR 36, % Raiffeisen financni poradenstvi s.r.o., Prague CZK 1,000, % Dobre Byvanie s.r.o., Bratislava SKK 200, % Development of the consolidated Equity for the 2007 financial year Subscribed Additional Minority capital paid-in capital Retained earnings interests EUR EUR EUR EUR At Jan. 1, ,000, ,091, ,467, ,646, Dividends Annual result Allocations ,514, ,634, At Dec. 31, ,000, ,091, ,982, ,281,

34 Consolidated Cash Flow Statement for the 2007 financial year 2007 T EUR 2006 T EUR Net cash flow from operating activities Annual net income 26,530 24,112 Depreciation of intangible fixed assets and property, plant and equipment 3,109 4,610 Depreciation of financial assets Adjustments to accruals for credit risks as well as valuation of securities held as current assets 12,094 4,849 Prorated annual net income from associated companies 6,837 8,551 Dividends received from associated companies 9,083 7,733 Gains from disposals of non-current assets 1 3,210 Other non-cash expenditure and income 0 4,484 44,035 34,072 Changes Claims on credit institutions 134, ,144 Claims on customers 506, ,975 Securities 490, ,068 Other assets from operating activities 28,500 24,467 Liabilities to credit institutions 128,858 53,091 Liabilities to customers 90, ,529 Supplementary capital 1,337 0 Other liabilities from operating activities 18,795 12,582 Exchange rate differences 18,074 42,006 61, ,808 Net cash flow from investing activities Investments in financial assets 458, ,832 Investments in intangible fixed assets and property, plant and equipment 2,458 4,591 Proceeds from sales of financial assets 531, ,937 Proceeds from sales of intangible fixed assets and property, plant and equipment 9 4,183 70, ,303 Net cash flow from financing activities Dividends 7,000 7,000 Reduction in subordinated liabilities 0 18,458 7,000 25,458 Change in cash and cash equivalents 1,970 7,047 Net income Liability reserve Untaxed reserves after minorities Total EUR EUR EUR EUR 67,006, , ,599, ,135, ,000, ,000, ,783, ,783, ,842, , ,883, ,848, , ,382, ,802,

35 Supervisory Board Elected members: Chairman: Walter Rothensteiner, Vienna 1 st Deputy Chairman: Ludwig Scharinger, Linz 2 nd Deputy Chairman: Karl Waltle, Bregenz Erwin Hameseder, Vienna (from June 20, 2007) Markus Mair, Graz Julius Marhold, Eisenstadt Klaus Pekarek, Klagenfurt Peter Püspök, Vienna (until June 20, 2007) Günther Reibersdorfer, Salzburg Hannes Schmid, Innsbruck Delegates from Employee Council: Gabriele Arzberger Johann Fahrner Erwin Haider Gerhard Pelzmann Kerstin Petrak State Commissioners Board of Managing Directors Arthur Winter Johann Palkovitsch Erich Rainbacher Johann Ertl 34

36 UNQUALIFIED AUDITOR S REPORT We have audited the consolidated financial statements including the underlying accounting records of Raiffeisen Bausparkasse Gesellschaft m.b.h., Vienna, for the fiscal year from January 1, to December 31, The maintenance of the accounting records and the preparation and contents of these financial statements including the management report in accordance with the Austrian Commercial Code are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit and to state whether the management report corresponds with the financial statements. We conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement and whether we can state that the management report is in accordance with the financial statements. In determining the audit procedures we considered our knowledge of the business, the economic and legal environment of the Company as well as the expected occurance of errors. An audit involves procedures to obtain evidence about amounts and other disclosures in the consolidated financial statements and underlying accounting records on a sample basis. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial statements are in accordance with legal requirements and present fairly, in all material respects the financial position and the results of its operations and its cash flows in accordance with Generally Accepted Accounting Principles in Austria. The management report is in accordance with the consolidated financial statements. Vienna, April 4, 2008 KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft Rainer Hassler Wirtschaftsprüfer Austrian Chartered Accountant ppa. Gerhard Feiler Steuerberater Austrian Certified Tax Advisor 35

37 Group Management report 1. General information The group was established in 1998 through the acquisition of a 75 % majority share in Raiff - eisen stavební spořitelna, a.s., Prague. Other important group companies are Prvá stavebná sporitel ňa, a.s., Bratislava, in which Raiffeisen Bausparkasse owns a 32.5 % equity interest, Raiffeisen stambena štedionica d.d., Zagreb, in which Raiffeisen Bau spar - kasse owns %, and Raiffeisen Banca pentru Locuinţe, S.A., Bucharest, % of which belongs to the group. 2. Economic development in 2007 In 2007, the Raiffeisen Bausparkasse Group registered a steady upward trend once again the highly satisfactory result of an ideal combination of tailored products, attractive conditions, high quality of service, close customer contact and individual advice. The number of Bauspar deposits within the group climbed to around 3.6 million contracts. Particularly where the core business housing financing was concerned, 2007 saw growth mainly due to the lively demand for low-interest construction funding that lasted the whole year round across the group. In the year 2007 as many as 671,400 new contracts were concluded groupwide. The new contracts in the group parent company, Raiffeisen Bausparkasse Gesellschaft m.b.h., reached a historic high in In total, 308,400 new contracts were concluded. This is the equivalent of a market share of 33 %. With a financing volume of EUR 1.14 billion the previous year s results were exceeded by 8.3 %. With close to 170,000 new contracts, Prvá stavebná sporitel ňa, a.s. topped the previous year s results by 9 %, achieving a market share of 84 %. Deposits rose by 8 % to SKK 44.1 billion while loans were up by 12.6 % reaching SKK 45.7 billion. Due to the great demand for low-interest Bauspar loans in the year 2007, the company issued its first housing bond. To Raiffeisen stavební spořitelna, a.s. the year 2007 was most importantly characterized by strong growth in sales. In 2007 around 109,000 contracts were concluded. This is the equivalent of a market share of 13 % and an increase of 38.3 % compared with the year previous. In 2007, the company s market share reached 13 %. Bauspar deposits were raised by 8.2 % and loans by 37.4 % in comparison to the previous year s figures. With more than 45,000 new contracts, Raiffeisen stambena štedionica d.d. increased new business by 5 % compared to the year 2006 and achieved a market share of 30 %. Contract volume was thus up by 3.6 % reaching 200,000. Loans rose to HRK 997 million matching an increase to the previous year of 54.4 %. With new business of almost 39,000 savings contracts, Romanian Raiffeisen Banca pentru Locuinţe, S.A. reached a market share of 92 %. This helped RBL to achieve remarkable results in its third full financial year. 3. Human resources Employees group-wide are offered an extensive training program. In addition to specialized courses, they also have the opportunity to attend courses geared to personal development. The training courses are held by internal and external lecturers. 36

38 4. Economic outlook on 2008 Due to the attractive terms and conditions of our financing products supported by our uncomplicated, efficient customer service and by a rise in demand, we expect the financing volume across the group to rise in comparison to The future earnings position of the Raiffeisen Bausparkasse Group thus looks set to develop positively in the coming year. 5. Risk report Overall risk management A financial institution group s ability to record and assess risks extensively, and to monitor and control them on a regular basis, is increasingly becoming a decisive factor in competition. Risk management and risk controlling in the Raiffeisen Bausparkasse Group is geared towards ensuring that credit, country, market, liquidity, investment and operational risks are dealt with carefully and managed professionally, in order to secure the group s long-term success and to achieve market growth. Risk management takes into account the national legislative environment, the requirements financial institutions have to meet with regard to limiting risks arising from banking trans - actions, particularly regarding the type and scope of the business and the principles of Basle II. The Raiffeisen Bausparkasse Group s managing directors are responsible for implementing a risk policy determined by each risk type. This risk policy is an integral part of the bank s overall system of control, in other words, managing risk is systematically linked to managing earnings in all segments of the business. Risk policies and any changes to them, their integration into the overall bank strategy and its control systems are documented and communicated throughout the Raiffeisen Bausparkasse Group to ensure that risks are managed in the same way across all business segments. Risk policy comprises the planned development of the business as a whole, separate asset and liability planning, and specific planning for the Bausparen and key account segments. Limits on all relevant risks, particularly cluster risks in the form of minimum and maximum limits for major investments, are set by the Board of Managing Directors. The Raiffeisen Bausparkasse Group s managing directors decide what methods to use to identify, assess and monitor risks and have drawn up guidelines to this effect. They are supported in these tasks by risk control and risk management units as well as by specific committees. These specific committees, which meet on a monthly basis, consist of the managing directors, the senior managers concerned and external specialists. They assess the current interest rate risk situation, taking risk-bearing capacity and corresponding risk limits into consideration. These committees support management in allocating the risk budget and in controlling liquidity risk and interest rate risk. These cross-segment committees are responsible for the ongoing development and implementation of risk assessment methods, for improving the accuracy of risk controlling instruments and for regularly updating risk management guidelines. The risk management department of the group parent operates as a group-wide service unit responsible for central risk controlling. At present it is focusing on the implementation of measures arising from Basle II. This department s tasks comprise drawing up and implementing uniform guidelines relating to risk management, assessing all risks (credit, country, investment, market and operational risks) and providing unbiased reporting on risk profile to the Board of Managing Directors. By aggregating these risks into one overall bank exposure and comparing this to the bank s risk-bearing capacity, the basis for risk-adjusted allocation of capital and performance measurement is determined. 37

39 Market risk The Raiffeisen Bausparkasse Group defines market risk as the potential loss due to market changes resulting from fluctuating or changing interest rates and prices. As Raiffeisen Bausparkasse Group companies do not keep commercial books of account, this only concerns the bank s own account positions. Risk exposures either arise from transactions with customers or are due to positions that have been intentionally taken and are managed by the staff units or departments asset-liability management and treasury. The Board of Managing Directors approves, monitors and controls all market risks by applying various limits. Overall exposure is determined by the Board based on risk-bearing capacity and earnings targets. The individual limits set at account level are dependent on the various risk factors. These limits include value-at-risk (VaR) limits, stop-loss limits, nominal limits and product-related nominal limits. Credit risk The Raiffeisen Bausparkasse Group s credit risk mainly relates to the default risk among private and corporate customers. Default risk is the risk of a customer not meeting agreed payment obligations. In addition to default risk, migration risks due to changes in credit ratings are treated as a separate category. There is no country risk in this business sector due to the fact that each Raiffeisen Bausparkasse Group company focuses solely on its domestic market. Credit risk is monitored and analyzed on the basis of individual credits and customers, as well as on a portfolio basis. The credit risk policy approved by the Board of Managing Directors forms the basis on which credit risk is controlled and credit decisions are made. Risk classification procedures to assess default risk are used to a certain extent in assessing credit worthiness. Rating models for corporate customers comprise several rating levels. Raiffeisen Bausparkasse, as parent company, has set up its own project group headed by an organizational risk management unit to implement the independent credit risk assessment required by Basle II and to enable it to calculate required equity funds in future by applying a standard method. Investment risk Risks relating to equity interests are also part of the bank s account positions. However, this type of risk does not extend to group subsidiaries controlled strategically and operatively by Raiffeisen Bausparkasse, as risks relating to these subsidiaries are identified and assessed specifically in the course of consolidation. 6. Other disclosures In March 2008, Raiffeisen Bausparkasse acquired Hypo Stavební Spořitelna, a.s. based in Prague via its holding company. This will help us to continue to expand our position in the Czech Bauspar market. The market share of both building societies together amounts to around 20 %. Research and development expenses were incurred by the group solely in connection with the further development of the Bauspar systems and the development and structuring of new tariffs. Vienna, April 4, 2008 Erich Rainbacher Chairman & Managing Director m. p. Johann Ertl Managing Director m. p. 38

40