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Raiffeisen International raises its expectations for consolidated profit at CMD in Kiev

13 October 2006

Raiffeisen International raises its expectations for consolidated profit at CMD in Kiev

Raiffeisen International raises its expectations for consolidated profit at Capital Markets Day in Kiev

The second Capital Markets Day of Raiffeisen International Bank-Holding AG met with a very positive response from the financial community. More than 110 analysts and investors from the most important financial centers throughout the world attended the event in order to obtain information about Raiffeisen International. The Capital Markets Day took place in the Ukrainian capital Kiev and was thus the first such event in one of the 15 Central and Eastern European markets in which Raiffeisen International is represented by a bank. The choice of the venue underlined the top position of Raiffeisen International in the CIS, on the one hand, and emphasized the importance of the former Bank Aval, on the other hand. This bank is the biggest acquisition in the Group’s history. From now on it will appear on the market as OJSC Raiffeisen Bank Aval.

All members of Raiffeisen International’s Managing Board participated in the Capital Markets Day. For the first time, the local management also presented its progress in the transformation of Raiffeisen Bank Aval, as well as in the integration of JSC Impexbank in Russia. Moreover, management reported in depth on various projects of strategic importance.

Earlier than expected agreement on purchase price accelerates Impexbank integration

Raiffeisen International and the former owners of JSC Impexbank have agreed on the final payment for the acquisition of Impexbank earlier than expected. At the time of the acquisition, the agreement called for the payment of the purchase price in two tranches. The first payment of USD 500 million was made at the closing of the transaction in May 2006. The second payment of an amount of up to USD 50 million was to become due in 2007, on the basis of the audited financial results for 2006.

It has now been agreed that the second tranche will amount to USD 25 million. Furthermore, in accordance with the purchase agreement, signed in January 2006, the value of the head-office building was re-estimated by an independent appraiser, which raised the purchase price by an additional USD 30.2 million to a total of USD 555.2 million. The anticipated agreement on the purchase price enables Raiffeisen International to speed up the merger of Impexbank with ZAO Raiffeisenbank Austria. The legal merger is planned for 2007.

In addition, participants were also informed about the future branding and the new management of the bank. After the merger, the new bank will be named ZAO Raiffeisenbank Austria. The Management Board of the bank will consist of nine members. Johann Jonach, CEO of the current Raiffeisenbank, will also become CEO of the new bank.

Consolidated profit for 2006 expected to rise to € 550 million

Once again, the outlook given by the Management Board for the coming years was very positive. Raiffeisen International’s management expects strong earnings growth for the medium term in the CIS and above all in Ukraine and Russia. However, restructuring measures in Ukraine and Russia, due to the acquisition of Bank Aval and Impexbank, will burden earnings in the short term. Raiffeisen International continues to judge the potential for the countries of Southeastern Europe (SEE) optimistically, but somewhat more cautiously because of restrictions on credit growth prescribed by supervisory authorities. In Central Europe (CE), the company is increasingly focusing on the fast-growing segments of asset management and insurance products in addition to traditional business.

“We expect a consolidated profit of approximately € 550 million for 2006. This amount does not include the proceeds from the sale of Raiffeisenbank Ukraine and the proceeds from the sale of our minority stake in Bank TuranAlem in Kazakhstan,” said Herbert Stepic, CEO of Raiffeisen International, while commenting on the positive business development. Previously, Raiffeisen International had assumed that its consolidated profit for the year would amount to at least € 500 million.

Management estimates the balance sheet total will grow by at least 20 per cent annually in the period to 2008. The strongest increases will be seen in the CIS, partly because of the acquisitions made there. During the same period, the network of outlets in Central and Eastern Europe will grow by about 450 branch offices.

Raiffeisen International intends to achieve a return on equity (ROE) before tax of more than 25 per cent by the end of 2009. The cost/income ratio is set to fall below 58 per cent and the risk/earnings ratio should be about 15 per cent.

Every autumn, Raiffeisen International organizes a Capital Markets Day. This facilitates a continuing flow of information and exchange of opinions with the financial community at the highest level.