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Central and Eastern Europe (CEE)
Record performance in 2005 …
2005 was another successful year for the CEE business segment
following the good results in 2004, fully confirming that
we are moving in the right direction. Net income before taxes
reached € 704 m, an increase of 93 %. Adjusted for one-off
income and special effects (capital gains of € 123.5 m in connection
with the acquisition of a majority interest in Banca Tiriac
via an exchange of shares, and allocation of € 7 m to provisions
for restructuring costs), net income before taxes rose by
65 %. The improvement resulted from a 28 % increase in
operating revenues after the provisioning charge, while costs
were 19 % higher than in the previous year. Exchange rate
effects and the inclusion of additional companies in the group
of consolidated companies had no major impact on the overall
positive picture. The main reason for these good results was
growth. Risk-weighted assets increased by more than onequarter;
margins, though declining, remained satisfactory. Feebased
business also made a strong contribution to revenues;
this reflects the growing use of products with no impact on
the balance sheet and increasing income from services – in
brief, the growing market maturity of numerous CEE countries.
The cost/income ratio fell significantly; the net charge
for losses on loans and advances absorbed 12 % of net interest
income, a figure that is lower than for the bank as a whole
(19 %). The ROE before taxes was 33.4 % (on an adjusted
basis, 28.6 %), exceeding the target of 25 % which we had set
ourselves when we launched the BA-CA shares on the stock
market in mid-2003.
Growth in Central and Eastern Europe
Net income before taxes of consolidated banking subsidiaries
€ m
700
600
500
400
300
200
100
0
209
2001
281
2002
*) after first-time application effects
76 Central and Eastern Europe (CEE)
+33% p.a.
321
2003
493 *)
2004
+32%
650
2005
The combined net income before taxes of the CEE banking
subsidiaries, excluding Vienna-related central items for the
business segment, (whose results were not distorted by the
special effects) reached € 650 m, an increase of 32 % (compared
with the previous year’s figure adjusted to reflect IFRS
first-time application). Thus it was twice as large as in 2003.
� The CEE subsidiaries improved their results by 33 % p.a. on
the average for the years since 2001.
The 2005 figures reflect mainly organic growth. Following the
acquisition of Hebros Bank in Bulgaria and Eksimbanka in Serbia
at the end of 2004, we acquired two more banks in South-
East Europe (SEE) in 2005. At the end of August 2005, we
acquired a majority interest in Banca Comerciala “Ion Tiriac”
S.A., Bucharest, by way of an exchange of shares; this bank
will be merged with HVB Bank Romania S.A. to form the
fourth-largest bank in Romania. With its focus on private customer
business, Banca Tiriac has a large customer base and a
country-wide network of branches, optimally complementing
the strength of our subsidiary HVB Bank Romania in corporate
banking. Bank Austria Creditanstalt also acquired 83.3 % of
Nova banjalucka banka, the third-largest bank in Republika
Srpska, which concentrates on serving small and mediumsized
businesses and private customers. On the basis of this
acquisition, BA-CA’s market share as fourth-largest bank in
Bosnia and Herzegovina rose from 8.5 % to 10.9 %.
� At the end of 2005, BA-CA was active in 11 countries, with
total assets of CEE operations reaching € 37.4 bn, more than
three times the 2001 figure.
… based on development and expansion over
many years
We are proud of the development of our business in CEE,
which we achieved together with our local banking subsidiaries
and also through acquisitions and mergers. Our investments
represent an accumulated book value of over € 3 bn.
Bank Austria Creditanstalt, like its predecessors Creditanstalt
and Bank Austria, is among the pioneers in CEE: the first rep-