karta 2 www.rbb.bg www.rbb.bg 3 Financial Highlights Financial Highlights Monetary values in BGN Thousand 2006 Change 2005 2004 InInIncococommme StSte aaattteeemmmeeennnttt Net interest income after provisioning for possible loan losses 112,402 51% 74,306 48,293 Net commission income 27,121 40% 19,317 10,279 Trading profit (loss) 23,357 14% 20,542 7,795 Administrative expenses – 83,952 33% – 63,206 – 36,308 Profit before tax 78,533 49% 52,691 30,403 Profit after tax 66,970 50% 44,544 24,460 BalBalBalananance ShShce eeeeeettt Loans and advances to banks 856,467 56% 549,827 199,245 Loans and advances to customers 1,554,055 14% 1,362,877 971,767 Deposits from banks 479,506 24% 386,002 173,475 Deposits from customers 2,379,419 49% 1,597,311 1,325,223 Equity 248,025 28% 193,052 120,171 Balance–sheet total 3,907,957 39% 2,808,762 2,005,771 RRRegulegulegulaaatttooorrry ooy wn funfunwn dsdsds Total own funds 335,812 42% 237,017 155,237 Own funds requirement / According to Local Regulations 301,542 41% 214,583 128,967 Excess cover 34,270 53% 22,434 26,270 Core capital ratio 6,78% – 14% 7,89% 10,67% Own funds ratio 13,36% 1% 13,25% 14,44% PPPeeerrrfofoforrrmmmananancecece Return of equity (ROE) before tax 43,4% 19% 36,4% 40,8% Cost/income ratio 48,4% – 4% 50,2% 45,2% Return on assets (ROA) before tax 2,6% 6% 2,5% 2,6% Provisions for possible loan losses/risk– weighted assets/ According to Local Regulations 54,404 24% 43,858 33,085 RRResoesoesourcesurcesurces Number of staff on balance–sheet date 1,921 43% 1,342 823 Banking outlets on balance–sheet date 110 51% 73 51 Official Exchange Rate (BNB) EUR 1 BGN BGN BGN 1.95583 1.95583 1.95583 Source: Audited Financial Statements of Raiffeisenbank (Bulgaria) EAD as of 31 December 2006 2 www.rbb.bg General Information General Information Establishment of the Bank Raiffeisenbank (Bulgaria) EAD is the first greenfield foreign investment in the Bulgarian banking sector made in 1994. Main Shareholder Raiffeisenbank (Bulgaria) EAD is a 100% subsidiary of Raiffeisen International Bank-Holding AG, Vienna. Banking License Raiffeisenbank (Bulgaria) EAD has a full banking license for domestic and overseas banking and financial operations. Profile Raiffeisenbank (Bulgaria) EAD is a universal commercial bank with a focus on corporate and SME lending, retail banking, origination and trading of securities on the local and the international capital markets, bank provides services for institutional clients, etc. Correspondent Relations Raiffeisenbank (Bulgaria) EAD has established correspondent banking relations with more than 680 banks world-wide. The Bank maintains over 20 accounts in various currencies with first-class foreign banks. Branch Network As of 31 December 2005 the Bank operates through 110 branches; 20 outlets are located in Sofia. RBBG has a mobile bankers network – 147 consultants, operating in 13 towns in the country. www.rbb.bg 3 General Information Raiffeisen group in Bulgaria includes the companies as follows: Company Capital Raiffeisenbank (Bulgaria) EAD 100% ownership of Raiffeisen International Bank- Holding AG, Vienna, Austria Raiffeisen Services EAD 100% ownership of Raiffeisenbank (Bulgaria) EAD Raiffeisen Leasing Bulgaria OOD 24.5% ownership of Raiffeisenbank (Bulgaria) EAD 75.5% ownership of Raiffeisen Leasing International GmBH, Austria Raiffeisen Auto Leasing Bulgaria EOOD 100% ownership of Raiffeisen Leasing Bulgaria OOD Raiffeisen Asset Management (Bulgaria) EAD 100% ownership of Raiffeisenbank (Bulgaria) EAD Raiffeisen Inssurance Broker EOOD 100% ownership of Raiffeisenbank (Bulgaria) EAD Raiffeisen Real Estate EOOD 100% ownership of Raiffeisenbank (Bulgaria) EAD 4 www.rbb.bg Market Shares Market Shares Source: Official statistics published by the Bulgarian National Bank www.rbb.bg 5 Market Shares 6 www.rbb.bg Contents Contents Statement by the Chairman of the Supervisory Board 8 Vision and Mission 9 Statement by the Chairman of the Management Board 10 Management Report 11 The Bulgarian Economy in 2006 11 Key Figures 13 Operations and Key Projects 15 Human Resources 16 Segment Reports 17 Corporate Banking 17 Public Sector and Institutional Clients 17 Retail Banking 18 Branch Network and Alternative Distribution Channels 19 Treasury and Investment Banking 21 Financial Institutions 23 Auditor’s Report 24 Awards 63 Corporate Social Responsibility 64 The Bank’s Management 65 RZB Group and Raiffeisen International at a glance 66 Raiffeisen Leasing Bulgaria OOD 68 Raiffeisen Insurance Broker EOOD 69 Raiffeisen Asset Management (Bulgaria) EAD 70 Raiffeisen Glossary 72 Addresses 73 www.rbb.bg 7 Statement by the Chairman of the Supervisory Board Statement by the Chairman of the Supervisory Board Ladies and Gentlemen, On behalf of the Supervisory Board of Raiffeisenbank (Bulgaria) EAD, it is my pleasure to present the bank’s business results for 2006. Raiffeisenbank (Bulgaria) EAD significantly strengthened its position on the local market, once again achieving record results. It took good advantage of the favorable overall economic conditions and the fact that the Bulgarian economy noted significant growth in 2006, on the threshold of the future membership in the European Union in 2007. The improvement of all financial ratios of the bank, in comparison to the already very good year 2005 was possible thanks to the efficient and effective management of the Bank and the staff, as well as the strong cooperation and support from Raiffeisen International Bank-Holding AG and the whole RZB Group. The Supervisory Board highly judges Raiffeisenbank’s achievements. The accomplishment of the ambitious goals for 2006 has resulted in strengthening the bank’s position in all areas of its activities. Despite of significant investments, Raiffeisenbank (Bulgaria) Herbert Stepic Chairman of the Management Board of Raiffeisen International EAD posted a record growth clearly above the average of the Bank-Holding AG and Deputy Chairman of Raiffeisen market during the year under review. Its balance sheet total Zentralbank Österreich AG (RZB) amounted to 2,4 bln euros, up 39%. Its distribution network has expanded by 37 locations to 110 outlets. Raiffeisenbank (Bulgaria) EAD continued its dynamic growth, especially in the Retail Banking segment. As one of the country’s foremost banks, its full range of innovative products provided the basis for a 48% increase to 342,000 private customers. The Supervisory Board is very satisfied that the dynamic growth of the highly specialized companies of the Raiffeisen Group in Bulgaria allowed it to strengthen its positions on the leasing, asset management and insurance brokerage markets. Current market positions, client confidence and thriving business should ensure that both Raiffeisenbank (Bulgaria) EAD and the RZB Group will further develop favorably in the years to come. On behalf of the Supervisory Board, I thank and congratulate all the bank’s employees and its management for the excellent business results they delivered and count on their continual commitment. I also extend our thanks to the clients for choosing Raiffeisenbank (Bulgaria) EAD and other Raiffeisen Group members in Bulgaria as their partners. Herbert Stepic Chairman of the Supervisory Board 8 www.rbb.bg Statement by the Chairman of the SB Vision and Mission Statement by the Chairman of the MB Management Report Segment Reports Auditor’s Report Vision and Mission Vision and Mission Raiffeisenbank (Bulgaria) EAD is one of the leading universal banks in the country, offering bank services in all customer segments – corporate and investment banking, small and middle sized enterprises and retail banking. We seek long-term customer relationships. We provide contemporary financial services to our customers meeting the highest professional standards and effectively satisfying the customers’ needs. We seek to be seen as a friendly and constructive partner for our customers and we are pro-active and quick in delivering our services. As a member of the RZB Group, we cooperate closely with Raiffeisen Zentralbank, Raiffeisen International and its Network banks. We empower our employees to be entrepreneurial, to show initiative and we foster their development. We conduct our business with integrity and are committed to create a positive and stimulating working atmosphere. We want to attract and keep the best people whom we offer first class training and help to develop long term careers within our institution. We encourage initiative and reward concrete performance and success. Awards Corporate Social Responsibility The Bank’s Management RZB Group RLBG RIBG RAM Raiffeisen Glossary Addresses www.rbb.bg 9 Statement by the Chairman of the Management Board Statement by the Chairman of the Management Board Ladies and Gentlemen, 2006 was another record year for Raiffeisenbank (Bulgaria) EAD. The Bank achieved excellent results across all segments and continued to invest in product development, distribution network and personnel. In 2006 the Bank reported record profit after tax of BGN 66.97 mln, posting over 50% increase, compared to the end of 2005. In 2006 balance-sheet total went up by 39% to BGN 3,907.96 mln and the total loan portfolio grew by 14.3%, reaching BGN 1,608.46 mln. Total deposits increased dynamically (plus 49%), reaching BGN 2,379.43 mln. Despite of significant investments, Raiffeisenbank (Bulgaria) EAD continued to improve its efficiency ratios. Return on equity after tax reached 37% (2005: 30.8%). In 2006 the Bank maintained excellent cost/income ratio of 48.6%. In 2006 our distribution network was expanded by 37 new offices, bringing the total number of outlets to 110. We continued to expand our network of mobile bankers, who offer consumer and mortgage loans, as well as bank cards, deposits and services to small and medium enterprises. The number of mobile consultants reached more than 140, operating in 13 Momtchil Andreev Chairman of the Management Board and Executive Director Bulgarian cities. In 2006 we created 800 new permanent jobs.