romania – riding the convergence wave by steven van...

Capital Markets Day, September 2008 Slide 1

Romania – Riding the Convergence Wave

bySteven van Groningen

CEO Romania


6.6%

14.1%

9.3% 8.6%

4.9%

0%

5%

10%

15%

20%

2003 2004 2005 2006 2007

Inflation Increased in 2007, But Under Control

Source: Raiffeisen RESEARCH

Real GDP Growth

The GDP growth rate gained speed in Q2 on the back of acceleration of activity in all the sectors: services, industry, construction and agriculture.

Net exports had also a lower negative contribution to the GDP growth rate following the acceleration of the exports and the deceleration of imports in the last months

Real GDP Development

CPI Development, End of Period

Downward Inflation Trend Broken

Disinflation trend since 2000 broken in 2007 as the RON (Romania Leu) started to depreciate and food prices increased

Inflation should start to decline in 2nd half of 2008, but the persistence of the aggregate demand excess (fuelled by the rapid increase in wages and credit) might slow down the disinflation process

6.0%5.2%

8.5%

4.2%

7.9%

0%

2%

4%

6%

8%

10%

12%

2003 2004 2005 2006 2007

Investor Handbook Romania - Riding the Convergence Wave Page 53


Current Account Deficit Stabilized For the Moment

Source: National Institute of Statistics, Eurostat, Raiffeisen RESEARCH

Imports and Exports (% yoy) Exports, Imports and Trade Balance (Seas. Adjusted)

Foreign trade deficit and current account deficit remained almost unchanged in last quarters when expressed as % of GDP

FDI inflows amounted to € 1.6 bn in April: coverage of current account deficit by FDI inflows stood at 66.5% in January-April 2008

The risk remains that the current account deficit might increase

0%

10%

20%

30%

40%

May/04 Nov /04 May/05 Nov /05 May/06 Nov /06 May/07 Nov /07 May/08

Exports (% yoy, 3 months moving average)

Imports (% yoy, 3 months moving average)

0%

6%

12%

18%

24%

30%

36%

42%

48%

Q1/2001 Q1/2002 Q1/2003 Q1/2004 Q1/2005 Q1/2006 Q1/2007 Q1/2008

-18%

-12%

-6%

0%

6%

12%

18%

24%

30%

Trade balance (% of GDP, right hand side)Exports (% of GDP, left hand side)Imports (% of GDP, left hand side)

14.8%


Raiffeisen Bank; 6.1%

Alpha bank; 4.9%

Volksbank; 4.9%

UniCredit; 4.9%Banc Post (EFG Eurobank); 5.1%

Banca Transilvania;

5.3%

CEC; 4.0%

Others; 25.4%

BRD (SocGen); 15.0%

BCR; 24.4%

6.9%

9.5%10.5% 10.3%

10.0%

0%2%4%6%8%

10%12%

2003 2004 2005 2006 2007

Raiffeisen Number 3 in Increasingly Tough Market

Market Share of Romanian Banks in 20071 Market Share Development of Assets2

Market Share Development of Deposits2Market Share Development of Loans2

1 Based on total assets. 2 Based on local books (not including externalised assets).

7.2%

6.1%9.1% 9.3%

8.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

2003 2004 2005 2006 2007

€ m

n

0%

2%

4%

6%

8%

10%

Total Assets Externalised Assets Market Share

7.1%

9.7%10.7% 10.0%

5.6%

0

1,000

2,000

3,000

4,000

2003 2004 2005 2006 2007

€ m

n

0%

2%

4%

6%

8%

10%

12%

Loans Externalised Loans Market Share Loans



Strongly Customer Focused Strategy

Segments

Products

Distribution

Operations

Strategic GoalConsolidate position as one of the leading banks on the Romanian market while keeping a high profitability

Retail: expansion in all segmentsCorporate: focus on mid-market corporates for lendingTreasury and Investment Banking: tap into large potential of Romanian market

Provide universal banking products with increasing focus on moreadvanced products (asset management, insurance and investment banking)

Large network due to the expansion of last few years Strengthen alternative distribution channels: internet banking, mobile phone banking, call center and direct sales agents

Controlled end-to-end processes for increased quality and efficiencyHigh degree of centralization


Mid-Market Customers Offer Great Potential

Focus on maximising share of wallet through institutionalized customer account planning

75% of volume growth by adding depth to existing relationships

25% of volume growth by new client acquisitions (especially in real estate, construction, trading and services)

Market Share Development of Corporate Loans

Market Share Development of Corporate Deposits

Mid-market segment is becoming the main driver for revenue increase at corporate division level

Increase fee-based revenues from multinational and large local customers

7.4%

10.4%11.6% 11.8% 12.3%

0%

2%

4%

6%

8%

10%

12%

14%

2003 2004 2005 2006 2007

10.2%8.9% 9.4%

6.4%

5.3%

0

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007

€ m

n

0%

2%

4%

6%

8%

10%12%

14%

Loans Externalised Loans Market Share Loans



Retail Customers Offer Good Risk/Return

Focus on high level of service standards

Match product expertise and financial discipline of specialist single product companies (monoliners)

Market Share Development of Retail Loans

6.4%

8.6% 9.1%7.9%

8.4%

0%

2%

4%

6%

8%

10%

12%

2003 2004 2005 2006 2007

Market Share Development of Retail Deposits

Introduction of affluent customer products

Capture future growth of the insurance sector to further increase fee based revenues

8.2%

15.1%

11.1%

5.9%

7.7%

0

400

800

1,200

1,600

2003 2004 2005 2006 2007

€ m

n

0%2%4%6%8%10%12%14%16%

Loans Externalised Loans Market Share Retail Loans


FX Lending: A Racehorse Under Control

Euro is the de facto reference rate in real estateNational bank regulations stimulate Euro lendingEuro loans seen as cheaper by clientMany believe the RON will appreciate over time

Development of Romanian RON vs Euro

Currency Structure of Retail Loans

Why does the market demand FX Lending?

Risk Mitigation Factors for FX Loans

FX lending is mainly collateralised i.e. for own home mortgages (not speculative buy-to-let) and has low loan to value ratios Mortgage loans have a long maturity and this mitigates the risk of higher repayments in the event of a devaluationRegular stress testing takes place

LCY

49%FCY

51%

3.0

3.5

4.0

Jul/0

7

Aug/07

Sep/0

7

Okt/0

7

Nov/07

Dez/07

Jän/

08

Feb/0

8

Mär/0

8

Apr/08

Mai/0

8

Jun/

08

+5%

-5%

Avg.



Dynamic Branch Network Catch-Up

After completing turnaround projects in 2006 Raiffeisen kicked-off branch expansionDirect sales agents developing well, but the branch network still accounts for more than 90% of clients home bank relationship business

Network Bank Branch Expansion in Romania(1)

Urban concentration of branches is now near to the most developed EU countries4 full time employee units turn profitable in 6-7 months. Each branch costs € 100-150,000 to establishMost rural areas are not banked. The state savings bank and post office are the only banks consistently represented in rural areas

Population per Branch

0

2,000

4,000

6,000

8,000

10,000

12,000

Aus

tria

Ge

rma

nySw

itze

rland

Ne

the

rland

sBe

lgiu

mFi

nla

ndSw

ed

en

De

nma

rkIta

lySp

ain

Port

uga

lIre

land

Turk

ey

Russ

iaH

ung

ary

Cze

ch

Slo

vaki

aPo

land

Cro

atia

Serb

iaKo

sosv

oB&

HRo

ma

nia

/200

6Ro

ma

nia

/200

7

Source: McKinsey & Co., based on 2006 country data (1) Network bank only.

190 205 216

433467

266

2003 2004 2005 2006 2007 30/06/2008


Country Financials I

Revenues in € mn Total Expenses in € mn

Risk/Earnings Ratio Profit Before Tax in € mn

Cost/Income Ratio in %

ROE before tax*

* Based on NWB figures.

426

257

1-12/2007 1-6/2008

140

266

1-12/2007 1-6/2008

62.6%54.3%

0%

20%

40%

60%

80%

1-12/2007 1-6/2008

13.0%15.2%

0%

5%

10%

15%

20%

1-12/2007 1-6/2008

124

98

1-12/2007 1-6/2008

30.8%

42.8%

0%

20%

40%

60%

1-12/2007 1-6/2008

Investor Handbook Romania - Riding the Convergence Wave 7


31/12/2007 30/06/2008

Country Financials II

Total Assets in € mn Loans to Customers in € mn

Number of Employees Number of Branches

Deposits from Customers in € mn

Number of Customers

2,168,026 2,136,271

5,603 5,803

31/12/2007 30/06/2008

3,5324,188

31/12/2007 30/06/2008

3,538 3,407

31/12/2007 30/06/2008

5,9486,608

31/12/2007 30/06/2008

435472

31/12/2007 30/06/2008


Raiffeisen Bank S.A. Romania - Management Team

Successfully managed the turn around of the former state owned bank into Raiffeisen Bank S.A. Romania, the third largest Romanian bankVice-President of the Romanian Association of BanksHas over 22 years of experience in reputed international banks

Steven van Groningen, CEO

Under his management, Raiffeisen Bank became the “Best Bank for Corporations in Romania” (2007) Senior Member of the Romanian Banking InstituteHas over 30 years of experience working in/with top Romanian banks and companies

Marinel Burduja, First Vice-President, Corporate Banking

Runs the consumer and SME businessManages a complex mix of products (from sales finance to investments, including full range of SME financing products)Has over 10 years of experience in managerial positions in reputed banks and companies

Razvan Munteanu, Vice-President, Retail Banking

Vladimir Kalinov, Vice-President, Risks

In charge with developing risk policies and monitoring the risk activities of the BankCoordinates all activities related to Basel II implementationHas over 13 years of experience in banking lending and risk activities, all spent as member of the Raiffeisen team

Successfully manages Raiffeisen Bank’s Operations and IT DivisionHe is an expert in managing banking redesign and development processes in CEE Has over 23 years of experience in consultancy and banking

Carl Rossey, Vice-President, Operations and IT

Under his management Raiffeisen intermediated the largest IPO on the Romanian market, Transgaz SAHas over 30 years of experience in treasury and capital markets in US, Asia and CEEMember of New York Futures Exchange

James D. Stewart, Jr., Vice-President Treasury & Capital Markets


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