OREANDA-NEWS. August 20, 2007. The Bank’s results for H1 2007: continued assets and income growth*

In the first half of 2007, Raiffeisen Bank Aval’s net profit increased by 55% (as compared to the same period of the last year) to UAH 290,6 million. This is the best financial result among Ukrainian banks in 2007. The Bank’s total assets grew by 26% to UAH 35, billion and the loan portfolio expanded by 34% to UAH 29,1 billion. Liabilities of Raiffeisen Bank Aval to its clients exceeded UAH 31,7 billion which demonstrates an increase of 22% in January-June 2007, reported the press-centre of Raiffeisen Bank Aval.

"We succeeded to underpin our leading position and achieve strong financial results for the first half of 2007", comments Volodymyr Lavrenchuk, CEO of Raiffeisen Bank Aval. "Our Bank continues its dynamic growth even in the environment of tighter competition in the Ukrainian banking market", adds the banker.

During the first half of 2007, the Bank significantly intensified its presence in the securities market. In January-February of the current year, Raiffeisen Bank Aval successfully placed unsecured domestic bonds of "B" and "C" series in the amount of UAH 400 million. Given the strong interest of investors, the offer was over-subscribed by more than 2 times thus leading to UAH 938,5 million of the collected orders for subscription. The largest share of the issue was allocated among foreign investors, including from Great Britain (50%), Austria (20%), Germany (13%) and Switzerland (8%). 5 % of the issue was placed in Ukraine. This is the first time when Raiffeisen Bank Aval gained a direct access to the end investors abroad and raised long-term funding outside the existing client base.

In addition, in April 2007 the Bank mobilized USD 500 million under the syndicated term loan facility. The loan is considered a benchmark transaction in the Ukrainian market as it was attracted at a record-low margin of 120 basis points, confirming the Bank’s outstanding reputation among domestic and international investors. Moreover, it is the largest transaction among Ukrainian banks in terms of size and the first two-year loan in the Ukrainian market.

Corporate banking
The first six months of 2007 were very successful and productive for the corporate banking activities of the bank. Amount of lending to the enterprises — bank’s customers expanded by 39,9% or by UAH 5,1 billion, while loans to the bank’s largest corporate customers increased by 44,7% and reached UAH 11,6 billion by the end of June 2007. Deposits of the Bank’s corporate customers rose by 27,3%.

In April 2007, Raiffeisen Bank Aval signed an unprecedented for Ukraine Loan agreement with the Ukrainian State Railway Company "UkrZaliznytsia" for the amount of UAH 500 million. Proceeds of the loan will finance modernization of the Ukrainian railway system which is of great importance for Ukraine. Among other sizeable loans, provided by the Bank in Q2 2007, was a USD 50 million loan agreement with the OJSC "Concern Galnaftogas" for the development of the network of OKKO gas stations throughout Ukraine.

SME business
The Bank’s SME business line continued to improve its product range in Q2 2007. Particularly, commercial mortgage loans can now be offered to clients for a maturity of 15-years. Also, SME customers have a possibility to open a revolving credit line. Investment Loan for Purchase of a Transport Vehicle can be on-lent to the Bank’s SME clients for 10 years with insurance payments covered by the loan proceeds in the second year of loan servicing. In addition, the Bank enhanced is deposit programs "SME-Leader" and "SME-Capital".

In 2007 Raiffeisen Bank Aval is integrating principally new service models for SME customers. The new approach focuses on a "personal financial adviser" concept for each SME customer. To better serve SME customers, the Bank recently established a Special call-center for SME clients.

Retail Banking
The Bank’s households loan portfolio grew rapidly during the first half of this year and reached UAH 13,5 billion or 12,8% of retail loan market. The household deposits grew by 20% in six months, owing to "flexible" products and attractive interest rates. Moreover, expansion of the Bank’s retail operations was also supported by the Bank’s high reputation and consumers’ trust.

In the first half of 2007, Raiffeisen Bank Aval continued to invest into new technologies to customize and make the access to banking services more user friendly and convenient for clients. New branches and self-service centers were launched into operation. By the end of June 2007, customers of the Bank were able to pay bills and receive receipts on the outstanding balances, transfer money, replenish deposit accounts, repay loans in more than 100 self-service outlets.

Human Resources of the Bank
In the first half of 2007, the Bank launched an important institutional reform aimed at improving the compensation system and enhancing personnel training and development. The Bank continued intensive personnel training to improve managerial skills of the Bank’s managers at different levels. More than 4,600 employees received training and participated in development programs. The training focused on management, leadership, performance management, sales techniques, service quality and the like. Another important step in further development of the Bank’s staff training program was the creation of a corporate training center — the Financial Academy of Raiffeisen Bank Aval (the so called FARBA).

Awards and recognition of excellence
In the recent past, the Bank’s accomplishments were recognized both domestically and internationally. The reputable British magazine Euromoney recognized Raiffeisen Bank Aval as the Best Bank in Ukraine as part of Awards for Excellence 2006.

At the annual meeting of the European Bank for Reconstruction and Development (EBRD) in May 2007, the Bank was recognized as The Most Active Trade Finance Bank in Ukraine in 2006. Reputable Ukrainian business magazine "The Business" recognized the Bank as The Most Professional Bank of Ukraine. In June 2007, the all-Ukrainian rating program "Brand Guard 2007" recognized Raiffeisen Bank Aval as the most valuable bank brand in Ukraine. Last month, Raiffeisen Bank Aval was acknowledged as the most capitalized Ukrainian bank in 2006.

Volodymyr Lavrenchuk, the Chairman of Raiffeisen Bank Aval, was among the winners of the "TOP-100. Best Top-Managers of Ukraine".

Raiffeisen Bank Aval, founded in March 1992 as Bank Aval, is the second largest bank in Ukraine in terms of assets. Headquartered in Kyiv, Raiffeisen Bank Aval reported total assets UAH 35.1 billion as of 30 June, 2007. It is a subsidiary of Raiffeisen International Bank-Holding AG, the holding company of the subsidiaries of Raiffeisen Zentralbank Osterreich AG (RZB) in Central and Eastern Europe.

The country-wide branch network of Raiffeisen Bank Aval comprised of the end of June 1,278 business outlets nation-wide. Most branches provide a full range of standard and advanced banking services to private, SME and corporate clients.

* All the date are provided in accordance with Ukraine’s national accounting standards and Natoional Bank of Ukraine requirements.