INTERIM REPORT SECOND QUARTER 2009

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INTERIM

REPORT

SECOND

QUARTER

2009

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In this Interim Report, "RZB" refers to the RZB Group and "Raiffeisen Zentralbank" is used whenever statements refer solely to the Raiffeisen Zentralbank Österreich AG. Adding and subtracting rounded amounts in tables and charts may have led to minor discrepancies.

RZB Group

* Retrospective conversion of participation capital into equity (see page 9 of the Management Report)

Overview

Monetary values are in € million 2009 2008 +(-) Change

Income Statement 1/1 – 30/6 1/1 – 30/6

Net interest income 1,792 1,733 3.4%

Provisioning for impairment losses (1,267) (200) 533.5%

Net fee and commission 689 843 (18.3%)

Net trading income 266 102 161.8%

General administrative expenses (1,391) (1,494) (6.9%)

Profit before tax 463 878 (47.3%)

Profit after tax 241 651 (62.9%)

Consolidated profit 168 393 (57.2%)

Earnings per share, € 11.1 73.1 (62.0 €)

Balance Sheet 30/6 31/12

Loans and advances to banks 35,122 29,115 20.6%

Loans and advances to customers 79,907 84,918 (5.9%)

Deposits from banks 53,499 54,148 (1.2%)

Deposits from customers 55,718 59,120 (5.8%)

Equity (including minorities and profit) 9,997 8,587. 16.4%

Balance sheet total 155,938 156,921 (0.6%)

Regulatory Information 30/6 31/12

Risk-weighted assets (credit risk) 80,716 89,040 (9.3%)

Total own funds 12,217 10,801 13.1%

Total own funds requirement 7,912 8,505 (7.0%)

Excess cover ratio 54.4% 27.0% 27.4 ppt

Tier 1 ratio (credit risk) 10.9% 8.4% 2.5 ppt

Own funds ratio 12.4% 10.2% 2.2 ppt

Performance 1/1 – 30/6 1/1 – 31/12

Return on equity before tax 10.1% 7.3% 2.8 ppt

Return on equity after tax 5.2% 5.3% (0.1 ppt)

Consolidated return on equity 5.0% 0.9% 4.2 ppt

Cost/income ratio 49.4% 52.8% (3.4 ppt)

Return on assets before tax 0.59% 0.40% 0.19 ppt

Net provisioning ratio (average risk-weighted assets, credit risk) 2.97% 1.19% 1.78 ppt

Risk/earnings ratio 70.7% 28.7% 42.0 ppt

Resources 30/6 31/12

Number of staff on the reporting date 62,974 66,651 (5.5%)

Business outlets 3,188 3,251 (1.9%)

Ratings Long-term Short-term Financial strength Outlook

Fitch ratings (since 14 August 2009) A F1 – Stable

Moody’s Investors Service A1 P-1 D+ Stable

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4 RZB’s Performance as of 30 June 2009

RZB GROUP – INTERIM REPORT 2n d_{QUARTER 2009}

Economic Conditions

The economy seems to have bottomed out…

The real economic effects of the global financial crisis came to a temporary head in the first half of 2009. In the first three months of the year, real gross domestic product (GDP) in the eurozone was down sharply on the previous year by around 4.9 per cent. While GDP contracted only slightly from April to June compared with the prior quarter (down 0.1 per cent after a 2.5 per cent fall in the first quarter), on an annualised basis the decline was still high at minus 4.6 per cent.

In Austria too, the economy stabilised in the second quarter. Compared with the first three months of 2009, annualised GDP fell by only 0.4 per cent. However the growth rate is significantly lower than the growth rate in the first half of 2008 with a differential of 4.4 per cent. The state sponsored scrapping premium for motor vehicles, low inflation and high wage settlements in the autumn of 2008 were reflected in growing domestic demand. Due to the fact that the bulk of motor vehicle sales in Austria are for imported motor vehicles the measures had greater impact in motor vehicle exporting countries such as Germany or Japan. The reduction of inventories also contributed to the slight decrease in Austrian economic performance in the second quarter.

The global recession also trickled through, as expected, into the economies of Central and Eastern Europe (the CEE region) during the first quarter of 2009. Both demand for exports from the region and direct investments in the region declined, and credit growth slowed substantially. Industrial output was down by more than 20 per cent in some CEE countries, while funding for short-term foreign debt became a major challenge for certain nations.

For the region and year as a whole, GDP is forecast to drop at a sharper rate than in the eurozone. However, the picture is very different from one individual country to the next: real GDP growth in Poland, for example, reached 0.8% for the first quarter of 2009, while economic output fell by 20% in Ukraine during the same period.

…but it is still too early to give the all-clear

The stabilisation and, in some cases, trend reversal of various leading indicators provided the first tentative signs that the global economic downturn may be coming to an end. In the second quarter these hopes were reinforced by a strong recovery on the global equity markets, which indirectly also propped up the financial markets, and especially the CEE currencies.

At the same time, the latest industrial production data would seem to indicate that the economic slump in the CEE region has bottomed out, although it is still too early to give a definitive all-clear. The recession in the export-oriented manufacturing industry is threatening to spill over into the service sector, while unemployment rates – which are usually subject to a time lag vis-à-vis economic output – are set to rise further over the coming months. What is more, due to unfavourable weather conditions the harvest could prove to be worse than in the previous year, which would deal a heavy blow to the more agriculture-dependent CEE economies.

RZB’s Performance

as of 30 June 2009

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RZB’s Performance as of 30 June 2009 5

International intervention strengthens market

confidence in the CEE economies

In November 2008 Ukraine and Hungary became the first two CEE countries to draw on financial support from the International Monetary Fund (IMF), followed at the end of December by Latvia and then other CEE countries in the first half of 2009. The European Union also provided additional funds to its Central and Eastern European member states alongside the financial rescue packages from the IMF.

At the G-20 Summit at the beginning of April, the IMF pledged to boost its lending resources to USD 750 billion and the EU committed to double its financial aid to CEE counties to €50 billion. This rapid, far-reaching and pragmatic support from the IMF coupled with the willingness shown by the EU to support its beleaguered member states strengthened confidence in the region's national currencies.

Alongside the measures initiated by the IMF and the EU, the World Bank together with the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) launched a support plan for Central and Eastern Europe with a total volume of €24.5 billion.

The combined effect of these measures helped restore the market's confidence that all CEE countries are still in a position to service their debt, which led to a significant reduction in risk premiums and a stabilisation – and in many cases even a recovery – in exchange rates.

Stringent requirements leave little room for manoeuvre

Nevertheless, the agreements made with the IMF also require the individual states to keep their budget deficits within specific limits. Now that the economy has contracted more sharply than originally anticipated, however, it will be more and more difficult for them to adhere to these budgetary constraints.

Against this backdrop it appears likely that some of the targets set will have to be renegotiated, which means that any room for manoeuvre for introducing measures to revive the CEE economies will – with few exceptions – remain limited. While over the medium to long term this may prove advantageous, the outlook for the current year still appears bleak.

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Developments in the Banking

Industry in RZB’s Principal Markets

European bank stocks on the road to recovery

The recovery in bank shares and bonds that had started to take hold at the end of the first quarter continued in the second quarter of 2009, fuelled by factors including the positive reception of the stress test results for US banks and the ensuing capital increase measures.

The lively global interest in bond issues and – to a growing extent – equity issues propped up business in investment banking, while the recovery in equity and bond prices saved banks from having to make further securities write-offs and thus bolstered their performance.

However, the increasing volume of non-performing loans in the retail and corporate customers division had an adverse impact on results. Parallel to this, the environment of low interest rates and more intense competition presented banks – especially European banks – in search of more favourable refinancing options with falling interest margins in the deposit business.

Growth rates in credit volumes in the European corporate customers segment continued to slide, while those in the retail customers segment began to stabilise on the back of the recovery in the area of mortgage financing. There is no evidence of a so-called credit crunch in the eurozone market when viewed as a whole.

Challenging conditions for the CEE financial sector

The drop in industrial production and rising unemployment rates in Central and Eastern Europe will result in an increased need for write-downs in the CEE financial sector. This will have an especially adverse impact on countries such as Ukraine, Romania and Hungary, which are sensitive to currency depreciations and have a high share of foreign currency loans in their portfolio. However, the picture is not the same throughout the entire CEE region; in contrast to the economies mentioned, countries such as Poland, the Czech Republic and Slovakia will fare significantly better, buoyed by the stabilisation and, in some cases, recovery in exchange rates in the second quarter.

The growth of aggregate bank assets had cooled off substantially in the second half of 2008. As outside funds were still scarce and expensive, the trend appears to have continued and, in part, worsened in the first half of 2009, a situation that has also been aggravated by banks’ reluctance to grant foreign currency loans.

In 2008, the decline in credit growth was less pronounced in those CEE countries where loan portfolios and deposit balances were in equilibrium or where the comparison favoured deposit balances. Deposit balances – having been less in the limelight in recent years compared with other business areas – grew significantly in importance in the first half of 2009.

Credit growth in Europe since 2000

Growth in credit to corporates Growth in credit to households 0 2 4 6 8 10 12 14 16% 00 01 02 03 04 05 06 07 08 09

S ou rce: E ZB, Raiffeisen Research

Growth in credit to corporates Growth in credit to households 0 2 4 6 8 10 12 14 16% 00 01 02 03 04 05 06 07 08 09

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Market sentiment towards Austrian banks significantly

improved

The IMF published its report on the stability of the global financial system in April, although in May it had to restate some of the estimated values for the CEE economies contained in the report to correct double counting and incorrect entries, including the overstatement of values in relation to the ratio of foreign debt to currency reserves. The resulting more optimistic market sentiment also substantially reduced the spreads of Austrian credit default swaps (CDS) – credit derivatives used to transfer credit risk between two market participants – over the course of the second quarter.

This applies especially to credit derivatives on large Austrian banks. Thus, following the record highs seen in March 2009, prices on the CDS market dropped sharply in the second quarter, with CDS spreads of large Austrian banks falling by 154 basis points on average between the beginning of April and the end of June.

Only a small amount of the government package of

measures has been used so far

In the autumn of 2008, the Austrian federal government announced a €100 billion package of measures to strengthen the Austrian financial market, which was subsequently implemented in the first quarter of 2009. Besides a 100 per cent guarantee for customer deposit balances (€10 billion), it includes a bank bond guarantee (€75 billion) and allocation of funds to strengthen the equity base of banks (€15 billion).

On this basis, the Republic of Austria subscribed €4.95 billion in participation capital of Austrian banks in the first half of 2009. In total, since the beginning of the financial market crisis in 2008 until the end of June 2009 the Republic of Austria had made available €5.85 billion for the purpose of strengthening banks' equity bases.

In the second quarter Austrian banks issued government-guaranteed bank bonds with a total volume of €4.85 billion, which – after €9.75 billion in the first quarter – amounts to a total issue volume for these bonds for the first half of 2009 of €15.82 billion.

Austrian banks sufficiently capitalised

Following the IMF's April report, international focus fell on Austrian banks' exposure to Central and Eastern European countries. An internationally recognised stress test conducted by the Austrian National Bank in the second quarter came to the conclusion that – even under the assumption that the economic crisis were to take a drastic downturn, especially in the countries of Central and Eastern Europe – the large Austrian banks would be in a position to satisfy the minimum core capital adequacy requirements.

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Results of Operations, Financial

Position and Assets

Consolidated profit reaches €168 million

RZB recorded a consolidated profit (after tax and minorities) of €168 million for the first two quarters of 2009, down €225 million on the same period of the previous year. This drop is primarily due to the increased valuation adjustment, which was €1,067 million greater than the prior year's value when results were significantly impaired by revaluation losses on securities and structured products. Profit after tax as at the end of June 2009 was €241 million, a year-over-year decline of 63 per cent.

Continued increase in provisioning for impairment

losses in second quarter

The fraught economic environment and negative exchange rate developments during the period under review fuelled the trend of rising non-performing loans, which began in the fourth quarter of 2008. This had an especially adverse impact on foreign currency loans and troubled financial institutions. Non-performing loans increased by €2,186 million from the beginning of the year to €4,501 million, affecting virtually all reporting segments of RZB.

Provisioning for impairment losses was ramped up substantially as a result, from €200 million in the same period of the previous year to €1,267 million in second-quarter 2009, which in turn also increased the risk/earnings ratio by 42.0 percentage points to 70.7 per cent. As mentioned above, non-performing loans affected all segments of the Group, with Ukraine, Russia, Hungary and Romania taking the hardest hit. The customer non-performing loan ratio was 2.50 percentage points up on the beginning of 2009 to 5.63 per cent.

Operating result up 17 per cent on the previous year

In spite of the recessive economic environment, RZB's operating profit in the first two quarters of 2009 was up 17 per cent, or €204 million year-over-year to €1,426 million. At €653 million, the second-quarter result was lower than that of the preceding quarter, when operating profit came in at €773 million.

The increase recorded over the previous year can be attributed mainly to the rise in net trading income, which improved by €165 million to €266 million overall, due primarily to revaluation gains on interest rate derivatives and write-ups of previously impaired financial instruments. In euro terms, net interest income was up 3 per cent on the same period of the previous year to €1,792 million. The main downside was the increase in funding costs caused by actions to gather customer deposits and the volatile interest rate markets.

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Operating income was adversely impacted during the period under review by the decrease in net fee and commission income, down by 18 per cent or €154 million to €689 million. The main factors that triggered this decline included weak economic data, especially the turbulence on the foreign currency markets, which resulted in lower volumes of foreign exchange transactions and of domestic and international transfers. Low demand also resulted in a drop in commission income from securities operations and from investment funds and other banking services.

Cost/income ratio sinks to below 50 per cent

When the crisis set in, the Group further intensified its cost optimisation program for a number of Group units in the CEE region. The measures taken began to show the first signs of success in the period under review, even if the figures were also severely distorted by movements in exchange rates. General administrative expenses were 7 per cent down on the same period of 2008 to €1,391 million as a result.

The number of staff employed by the Group fell by 5.5 per cent (3,677 employees) compared with the year-end 2008 to 62,974. Headcount was reduced in almost all CEE network banks, with the largest cuts recorded in Ukraine (946), Russia (1,072) and Bulgaria (359); in the case of Russia and Bulgaria, this was achieved exclusively through natural attrition. However, since these reductions were predominantly implemented from the fourth quarter of 2008 onwards, the year-over-year comparison reveals a slight decline in headcount by 3 per cent.

The cost/income ratio improved significantly both from the first half of 2008 (up by 5.5 percentage points) to 49.4 per cent, as well as compared with the figure for 2008 (52.8 per cent).

Participation capital strengthens equity base

RZB's equity increased by €1,410 million to €9,997 million since the end of last year. This figure includes the €1,750 million of participation capital received from the Republic of Austria’s subscription in April (valuta).

The global financial crisis led to local currency depreciations – some of them quite severe – in several CEE countries in the fourth quarter of 2008. This development had an adverse impact on the RZB balance sheet equity in the form of valuation losses. The Polish zloty, the Russian rouble and the Romanian leu again depreciated slightly in the first few months of 2009. However, some currencies recovered in the second quarter, resulting in positive effects from exchange rate fluctuations totalling €122 million from April 2009 onwards. Nevertheless, equity declined by €368 million in the first quarter of 2009, with the valuation loss for the first half of 2009 as a whole at €246 million.

In June original RZB shareholders, who – together with the Republic of Austria – accounted for €2.5 billion of the Group’s total participation capital, sold €500 million of their shares. By placing these shares outside the previous circle of shareholders, RZB has complied with a key prerequisite of the EU competition authorities, who had stipulated that in order for the Group to draw on the government participation capital at the predefined conditions, no more than 70 per cent of shares may be held by the public sector, while only 10 per cent of subscriptions by existing shareholders may be placed with third parties. For this reason, 20 per cent – above mentioned €500 million – of the participation certificates already held by shareholders were placed with new investors as part of a public offering.

While there are no clear guidelines governing recognition as equity under IFRS, the conditions for receiving the participation capital are structured in such a way that recognition as equity under IFRS is possible. On the basis of the current interpretation, RZB has therefore decided to change the way it presents its accounts compared with the first quarter.

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Return on equity just above 10 per cent

The drop in profit before tax was also reflected in the Group’s return on equity, which was substantially down on the same period in 2008 at 10.1 per cent (21 per cent). The average equity on which this figure is based rose by 10 per cent to €9.2 billion, mainly as a result of participation capital issues.

Consolidated return on equity (after tax and minorities) was also comparatively low at 5 per cent, although it was higher than the comparable figure at year-end 2008 (0.9 per cent).

Balance sheet total stagnates in first half

Currency depreciations have also had a perceptible impact of about €2 billion on RZB’s balance sheet total since the beginning of the year. The measures introduced to reduce and optimise the loan portfolio resulted in a further decline of 6 per cent or €5 billion.

Against this, RZB built up its short- to medium-term investment positions in top-quality securities – in particular government and government-guaranteed bonds – during the period under review. This increased the balance sheet total by around €6.2 billion, especially in financial investments. In net terms, the balance sheet total remained largely unchanged in the first half of 2009, falling only slightly from €156.9 billion to €155.9 billion.

On the liabilities side, deposits from customers shrank by 6 per cent or €3.4 billion, with the largest reductions – which, with the exception of a small number of Group units, were due largely to currency depreciations – recorded in Austria, Russia and Romania. Nevertheless, the intensive competition for customer deposits coupled with the economic developments in CEE countries also had an impact on deposit balances. In Slovakia, the transition to the euro led to an above-average level of deposit balances as at the end of 2008.

By contrast, liabilities evidenced by paper grew by €3 billion, owing chiefly to the government-guaranteed bond issues.

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Detailed Review of Items in the

Income Statement

Operating profit (periodic comparison)

Operating income up 4 per cent

Operating income was up 4 per cent or €101 million on the same period of the previous year to €2,817 million. The principal reason for the increase was the Group’s improved net trading income, whereas the effects of movements in foreign exchange rates, significantly higher funding costs, and lower fee and commission income resulting from the weak economy reduced earnings. Changes in the scope of consolidation did not have a significant effect during the period under review.

Net interest income hampered by higher funding costs

Net interest income rose by 3 per cent or €59 million to €1,792 million compared with the first half of 2008. The increase was smaller than that of the Group’s average balance sheet total (up 6 per cent), hampered by higher funding costs, particularly in the area of customer deposits and on the money and capital markets. RZB’s net interest margin was 5 basis points down year-over-year to 2.29 per cent.

The picture is different across the geographical segments. While the segments Austria (up 5 per cent), Southeastern Europe (down 1 per cent) and CIS Other (up 2 per cent) recorded very little change in net interest income, the rise in Russia was much more pronounced at 20 per cent, due largely to an improvement in margins on the assets side. Central Europe, by contrast, posted a decline in net interest income of 8 per cent, attributable mainly to competition for customer deposits and the higher funding costs involved.

€ million 1/1–30/6/2009 Change 1/1–30/6/2008 1/1–30/6/2007

Net interest income 1,792 3.4% 1,733 1,314

Net fee and commission income 689 (18.3%) 843 699

Net trading income 266 161.9% 102 109

Other net operating income 70 85.1% 38 74

Operating income 2,817 3.7% 2,716 2,196

Staff expenses (702) (8.5%) (768) (630)

Other administrative expenses (539) (7.6%) (584) (459)

Depreciation/amortisation/write-downs (149) 5.0% (142) (125)

General administrative expenses (1,391) (6.9%) (1,494) (1,214)

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Net fee and commission income down by 18 per cent

Net fee and commission income fell sharply by 18 per cent or €154 million to €689 million. The lower volumes of foreign exchange transactions and payment transfer business were the main drivers behind this fall. Income from the foreign currency, notes and coins and precious-metals business was down by 24 per cent to €182 million, the strongest decline in this area being recorded by Central Europe. Payment transfer business suffered a similar fate, with business volumes down by 16 per cent to €264 million. Income from payment transfer business in Ukraine was the hardest hit, while in Slovakia the switch to the euro triggered a decline.

The lower earnings from securities operations engendered by the market situation also caused a drop in profit in this area of 28 per cent or €21 million, stemming mainly from Austria and Hungary. The biggest decline – a drop of 43 per cent or €9 million – was in income from managing investment and pension funds, especially in Slovakia and Croatia. Income from arranging services for financial products, by contrast, doubled to €14 million.

Substantial increase in net trading income

Net trading income posted a very positive performance during the first six months of 2009, finishing the half at €266 million, significantly above the figure recorded for the same period of the previous year (€102 million). While in 2008 the financial market crisis resulted in substantial securities valuation losses, prices began to recover in the first half of 2009 and led to revaluation gains in some areas.

In the Austria segment, revaluation gains were also made on interest rate derivatives acquired to hedge against the risks associated with global open interest rate positions.

Overall, net income from interest-related trading improved from minus €58 million in the first half of 2008 to €163 million at the end of the second quarter 2009. Net income from foreign exchange-related transactions, by contrast, fell by €45 million to €75 million, stemming primarily from Russia (minus €35 million). Because of poor market conditions, net income from equity and index-related trading continued to decline, falling by over half to €19 million.

Other net operating income rose sharply in the first six months by €32 million to €70 million. This jump was due to several factors: net income from the allocation and reversal of other provisions rose by €13 million, while the disposal of tangible and intangible fixed assets and operating leasing each recorded an increase of €5 million.

Breakdown of Operating Income

64% 60% 64% 32% 31% 24% 5% 4% 9% 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 HY 2007 HY 2008 HY 2009 € million 2,196 2,716 2,817 3% 1% 2%

Net interest income Net commission income Net trading income Other operating profit

64% 60% 64% 32% 31% 24% 5% 4% 9% 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 HY 2007 HY 2008 HY 2009 € million 2,196 2,716 2,817 3% 1% 2%

Net interest income

Net interest income Net commission incomeNet commission income Net trading incomeNet trading income Other operating profit

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General administrative expenses

RZB's general administrative expenses fell by 7 per cent or €103 million year-over-year, while operating income was up 4 per cent, resulting in an improved cost/income ratio, by 5.5 percentage points to 49.4 per cent in annual comparison.

The decline in administrative expenses can be explained partly by the cost optimisation measures implemented in certain CEE Group units and partly by the depreciation of the CEE currencies compared with the same period last year. Based on average rates of exchange in the period under review, year-over-year the Ukrainian hryvna fell by 35 per cent, the Polish zloty by 28 per cent, the Russian rouble by 20 per cent, the Serbian dinar and the Romanian leu each by 15 per cent, and the Hungarian forint by 14 per cent.

Staff expenses account for the largest proportion of general administrative expenses at 50 per cent, albeit 9 per cent or €65 million down on the prior-year period to €702 million. Wages and salaries accounted for 76 per cent of staff expenses, statutory social security contributions for 20 per cent, and voluntary staff expenses for 4 per cent.

As at the end of June 2009, staff numbers had fallen by 3,677 compared with the end of 2008 to 62,974. The sharpest declines were recorded in Russia (down 1,072), Ukraine (down 946), Hungary (down 359) and Bulgaria (down 358); with staff leaving as a result of natural attrition in Russia and Bulgaria. The average number of staff working for the Group in the first half of 2009 came to 65,253, which – compared with the same period the previous year – still constitutes an increase of 3 per cent or 1,978 employees, since most of the headcount reduction did not take effect until the fourth quarter of 2008.

Other administrative expenses fell by 8 per cent or €45 million to €539 million. The biggest items of expenditure were premises costs at €167 million (up 10 per cent) and IT costs at €82 million (up 4 per cent). The decline in other administrative expenses was due primarily to cost reductions in the area of advertising, PR and promotional expenses (down 36 per cent), travel costs (down 33 per cent), office expenses (down 22 per cent), and legal and consultancy fees (down 13 per cent). The largest reductions in other administrative expenses were recorded by Albania (down 30 per cent), Slovenia (down 23 per cent), Ukraine (down 22 per cent), Poland (down 17 per cent), Serbia (down 12 per cent) and Russia (down 8 per cent).

Since the beginning of 2009, measures to improve efficiency have resulted in the closure of 63 business outlets. As at the end of June 2009, the number of business outlets stood at 3,188. This constitutes a net increase of 91 business outlets compared with the first half of 2008, with the majority of new openings in Southeastern Europe (153), in particular Romania (88) and Bulgaria (21). In the CIS Other Countries segment, the number of business outlets was reduced by a total of 86 thanks to further network optimisations, including 96 branch closures in Ukraine.

Depreciation/amortisation/write-offs of tangible and intangible fixed assets increased by 5 per cent to €149 million, of which depreciation/write-offs of tangible fixed assets accounted for €85 million, amortisation/write-offs of intangible fixed assets €48 million, and write-downs of assets acquired under operating leases €16 million. RZB Group made €246 million in investments during the period under review. Of this, 57 per cent (€141 million) was channelled into own tangible fixed assets and 30 per cent into intangible fixed assets, the majority of which was related to software systems. The remainder was invested into assets held within the scope of operating leases.

General Administrative Expenses

€ billion 50% 52% 51% 39% 39% 38% 11% 10% 10% 0 200 400 600 800 1,000 1,200 1,400 1,600 HY 2007 HY 2008 HY 2009 1,214 1,494 1,391

Staff expenses Other administrative expenses Depreciation € billion 50% 52% 51% 39% 39% 38% 11% 10% 10% 0 200 400 600 800 1,000 1,200 1,400 1,600 HY 2007 HY 2008 HY 2009 1,214 1,494 1,391 Staff expenses

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Consolidated profit

Consolidated profit (periodic comparison)

The development in consolidated profit in the first half of 2009 was hampered by the deteriorating economic conditions, which meant that provisioning for impairment losses amounted to €1,267 million – a six-fold increase on prior-year figure or an increase of € 1,067 million.

The allocations to individual loan loss provisions (including the reversal of provisions for impairment losses, direct write-offs and income received on written-off claims) amounted to € 1,109 million. Viewed in terms of segments, Austria made the highest provisions for specific impairment losses at €290 million, relating primarily to Western European financial institutions.

Individual loan loss provisions also had to be built up in Russia (€213 million) and Ukraine (€258 million) due to overdue and non-performing loans. While in Russia this chiefly affected the corporate customers business, in Ukraine it was mainly loans to retail customers that went into default. In the Central Europe segment, individual loan loss provisions were made in the amount of €162 million. Due to the unfavourable economic environment, Hungary was the hardest hit at €63 million, while in the Southeastern Europe segment Romania (retail customers) and Croatia (corporate customers) topped the list.

In contrast to the high individual loan loss provisions, provisions for portfolio impairments increased to a lesser extent, coming in at €160 million. The Central Europe segment accounted for most of this at €58 million.

In view of this development, the risk/earnings ratio increased by 42.0 percentage points to 70.7 per cent.

Other profit improved in the first half of 2009 to €304 million, due mainly to the net income from derivatives (€142 million) and the net income from financial investments (€162 million). The net income from derivatives was driven in particular by the increased book value of credit derivatives (CDS). The net income from financial investments, at €141 million, was comprised of book value increases from mark-to-market movements and net proceeds of €12 million from sales of securities.

Income taxes were practically unchanged at €222 million in spite of the sharp drop in profit before tax. Deferred taxes, which were formed last year due to valuation losses, had to be partially released through write-ups. In addition, deferred tax assets generated by tax loss carry-forwards, which on the basis of current medium-term forecasts can no longer be fully utilised, were reduced by € 95 million. The tax ratio was thus 22 percentage points above the prior year's level at 48 per cent.

Profit after tax was €241 million, down 63 per cent on the first half of 2008. The stake held by minority interests shrank by €185 million to €73 million as a result.

€ million 1/1–30/6/2009 Change 1/1–30/6/2008 1/1–30/6/2007

Operating profit 1,426 16.7% 1,222 982

Provisioning for impairment losses (1,267) 533.5% (200) (150)

Other profit/loss 304 – (144) 14

Profit before tax 463 (47.3%) 878 846

Income taxes (222) (2.4%) (228) (163)

Profit after tax 241 (62.9%) 651 683

Minority interests in profit (73) (71.7%) (258) (202)

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Consolidated profit attributable to the shareholders of Raiffeisen Zentralbank amounted to €168 million. Earnings per share was €11.1, compared with €73.1 as at 30 June 2008 (a drop of €62).

The Balance Sheet

RZB’s balance sheet total decreased slightly from the end of 2008 to €155.9 billion as at 30 June 2009. This was due, among other factors, to the depreciation of the CEE currencies, which began in the fourth quarter of 2008 and continued in the first half of 2009, although at a much more moderate pace. At the reporting date the worst-affected currencies were the Belarusian rouble (down 29 per cent from the end of 2008), the Polish zloty (down 7 per cent), the Russian rouble (down 6 per cent) and the Romanian leu (down 5 per cent).

Measures taken to slim down and optimise loan portfolios also reduced the balance sheet total. Against this RZB built up short- to medium-term investment positions in top-quality securities. Overall the balance sheet total therefore declined by just under 1 per cent. Changes in the consolidation group did not have a significant effect on the balance sheet total.

Assets

The assets side of RZB’s balance sheet is dominated by loans and advances to customers. These declined by 6 per cent (€5 billion) compared with the year-end to €79.9 billion. Loans and advances to customers represented 49 per cent of the balance sheet after

deductions for impairment losses. This share fell by 3 percentage points compared with 31 December 2008. The decline was caused by a fall in loans and advances to corporate customers, which were down by €3.8 billion or 6 per cent, and in loans and advances to retail customers, which were reduced by €1.2 billion. The ratio of customer loans to customer deposits improved by 1 percentage point compared with the end of 2008 to 143 per cent.

Loans and advances to banks rose by €6 billion or 21 per cent to €35.1 billion. Due to a reallocation of liquidity, deposits with central banks declined by €6 billion – particularly in Austria and Central Europe – while balances with international commercial banks increased by 56 per cent or €12.0 billion to €33.3 billion. The proportion of RZB’s assets accounted for by loans and advances to banks increased by 4 percentage points to 23 per cent.

Provisioning for impairment losses increased significantly to €3.4 billion at 30 June 2009 due to the unfavourable economic environment in RZB’s core markets; this represents a rise of €1.1 billion or 49 per cent on the figure for the end of the 2008 financial year.

The securities and equity investments portfolio increased by €5.9 billion to €28.8 billion. This was primarily due to an increase in the amount invested in public sector and government-guaranteed debt securities eligible for central bank refinancing. The proportion of the balance sheet total accounted for by securities and equity investments increased by 3 percentage points to 18 per cent at the end of the second quarter.

Balance Sheet Assets

€ billion 23% 23% 19% 49% 52% 52% 18% 15% 17% 10% 14% 8% 0 20 40 60 80 100 120 140 160 180 2007 2008 H1 2009 137,4 156,9 155,9

Loans and advances to banks Loans and advances to customers Securities Other assets € billion 23% 23% 19% 49% 52% 52% 18% 15% 17% 10% 14% 8% 0 20 40 60 80 100 120 140 160 180 2007 2008 H1 2009 137,4 156,9 155,9

Loans and advances to banks

Loans and advances to banks Loans and advances to customersLoans and advances to customers SecuritiesSecurities Other assets

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Other assets fell by €6.8 billion or 30 per cent to €15.6 billion. The fall was, above all, due to the decrease in cash and balances with central banks, balances with central banks having been reduced by €5.2 billion. The proportion of total assets accounted for by other assets fell by 4 percentage points to 10 per cent.

Equity and liabilities

There were only limited structural changes on the liabilities side of the balance sheet compared with the year-end 2008. Deposits from customers fell by 6 per cent or €3.4 billion to €55.7 billion compared with the year-end 2008. Declines were registered in all reporting segments, with Southeastern Europe worst affected with a fall of €1.4 billion. While deposits from corporate customers fell by 11 per cent or €3.4 billion to €28.6 billion, deposits from retail banking customers rose by 2 per cent or €0.6 billion to €24.3 billion. Time and sight deposits fell by 8 and 4 per cent respectively to a total of €54.6 billion, whereas savings deposits increased by 20 per cent to €1.2 billion. Deposits from customers represented 36 per cent of the balance sheet total, which was down 2 percentage points.

Deposits from banks fell only marginally by 1 per cent or €0.6 billion to €53.5 billion compared with the beginning of the year. There was a sharp decline of 11 per cent or €1.6 billion in long-term borrowing, which was almost exactly offset by the giro and clearing and money market businesses. The former increased by 11 per cent to €3.1 billion and the latter by 2 per cent to €37.2 billion. Funding from central banks fell by 15 per cent or €1.2 billion to €6.9 billion at 30 June 2009. The proportion of deposits from banks accounted for by commercial banks increased by 1 per cent or €0.3 billion to total €44.9 billion. Deposits from multilateral development banks rose by 16 per cent or €0.2 billion to €1.7 billion. The proportion of the balance sheet total accounted for by deposits from banks fell by 1 percentage point to 34 per cent compared with the year-end 2008.

Liabilities evidenced by paper, i.e. borrowing on the capital markets in the form of debt issues, rose by a net 14 per cent or €3.0 billion due to the issue of government-guaranteed bonds. As at 30 June 2009 liabilities evidenced by paper amounted to €23.7 billion.

Own funds on the balance sheet – comprising equity and subordinated capital – amounted to €14.5 billion at 30 June 2009, representing an increase of €1.5 billion. The figure for equity includes the participation capital of €1.75 billion subscribed by the Republic of Austria at the beginning of April. The depreciation of the CEE currencies had a negative impact of €246 million on the Group’s equity. However, the subordinated capital remained almost unchanged compared with the end of the 2008 financial year at €4.5 billion. The proportion of the balance sheet total accounted for by own funds increased by 2 percentage points compared with the end of 2008 to 9 per cent at the end of the second quarter. Other equity and liabilities accounted for 21 per cent of the balance sheet total (up 1 percentage point).

Equity and Liabilities

€ billion 35% 36% 34% 40% 38% 36% 15% 20% _21% 9% 7% 9% 0 20 40 60 80 100 120 140 160 180 2007 2008 H1 2009 137,4 156,9 155,9

Deposits from banks Deposits from customers Other liabilities Own funds € billion 35% 36% 34% 40% 38% 36% 15% 20% _21% 9% 7% 9% 0 20 40 60 80 100 120 140 160 180 2007 2008 H1 2009 137,4 156,9 155,9

Deposits from banks

Deposits from banks Deposits from customersDeposits from customers Other liabilitiesOther liabilities Own funds

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Equity on the balance sheet

At the end of the second quarter, equity on RZB’s balance sheet inclusive of consolidated profit and minority interests amounted to €9,997 million, representing an increase of 16 per cent or €1.4 billion from the 2008 level. Subscribed capital was unchanged at €444 million. In April Raiffeisen Zentralbank issued participation capital amounting to €1,750 million, which was subscribed in full by the Republic of Austria. In December 2008 €750 million of participation capital had already been issued in a first tranche. This was classified as subordinated capital in 2008. While there are no clear guidelines governing recognition as equity under IFRS, the conditions for receiving the participation capital are structured in such a way that recognition as equity under IFRS is possible. On the basis of the current interpretation, RZB has therefore decided to change the way it presents its accounts compared with the first quarter. As a result the participation capital contained in the Group’s equity now amounts to €2,500 million in total.

Retained earnings were reduced by €246 million due to currency depreciation among other factors. This was partly offset by the cash flow hedge, which led to an increase in retained earnings of €68 million. Changes in equity from associates reduced retained earnings by €103 million and deferred taxes on sundry income and expenses recognised directly in equity led to a further reduction of €12 million. The Group’s earned capital was reduced by dividend payments of €232 million. Retained earnings were reduced by €50 million due to effects arising from the acquisition of further shares in companies in which RZB already has a controlling interest.

Regulatory capital

Eligible own funds as defined by the Austrian Banking Act (Bankwesengesetz/BWG) increased by 13 per cent or €1,416 million compared with year-end 2008 to €12,217 million. Core capital increased by €1,279 million to €8,868 million. This includes the participation capital of €1,750 million subscribed by the Republic of Austria. The net profit earned in the first six months of 2009 is not

included in the figure for consolidated own funds because Austrian law does not permit its recognition in this line item during the financial year.

Additional own funds (tier 2) capital increased by €88 million to €3,691 million. This change resulted firstly from an extension of the maturity of a loan from the International Finance Corporation to Raiffeisen Bank Aval in Ukraine, which meant that a higher proportion of the bank’s capital could be recognised in subordinated capital, and on the other hand from the issuance of lower tier 2 instruments. Maturing tier 2 issues led to an increase in short-term subordinated own funds (tier 3).

Available own funds of €12,217 million at 30 June 2009 stood in comparison with a regulatory own funds requirement of €7,912 million, which was €593 million less than at the end of 2008. This decline was due to a

reduction in the business volume and the exchange rate movements. While these exchange rate movements reduced the eligible own funds from these regions, they also led to lower own funds requirements. The excess cover ratio doubled to 54 per cent compared with year-end 2008.

Own funds

4,463 7,491 5.652 8,505 7,912 5,199 7,614 10,297 10,801 12,217 16.5% 34.7% 37.5% 54.4% 27.0% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2005 2006 2007 2008 H1 2009

Excess cover ratio Regulatory own funds Total own funds

€ million 4,463 7,491 5.652 8,505 7,912 5,199 7,614 10,297 10,801 12,217 16.5% 34.7% 37.5% 54.4% 27.0% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2005 2006 2007 2008 H1 2009

Excess cover ratio Excess cover ratio Regulatory own funds

Regulatory own funds Total own fundsTotal own funds € million

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The detailed breakdown of the own funds requirement is as follows: credit risk accounted for 82 per cent (€6,457 million), market risk for 5 per cent (€433 million), operational risk for 8 per cent (€629 million) and open currency positions for 5 per cent (€393 million).

The core capital ratio improved by 2.5 percentage points and was 10.9 per cent at the end of the second quarter of 2009. The core capital ratio measured in relation to aggregate risk – i.e. including credit, market and operational risk – was 8.9 per cent. RZB’s own funds ratio rose by 2.2 percentage points to 12.4 per cent.

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Risk Management

Alongside numerous other activities, the principal focus of Risk Management in the first half of 2009 was on actively managing the loan portfolio. Specifically, credit risk management consisted of adapting lending policy and lending guidelines and (re-)assessing individual industries and countries and product and concentration limits.

The downturn in the global economy has affected a number of CEE countries, for instance as a result of depreciation of the local currencies. This impacted on RZB by increasing its charges for impairment losses on loans and advances and detrimentally affecting the foreign currency translation of elements of the equity of consolidated entities within the Group. In the affected countries, risks also arose from loans exposing the borrower to currency risk. This was particularly true of loans to retail customers. Depreciation of the local currency in this segment diminishes borrowers’ ability to repay loans and usually leads to increased default rates.

Thanks to continuous portfolio analysis and scenario simulations, Risk Management at Raiffeisen Zentralbank is well prepared to cope with the effects of the economic downturn. As a basic principle, risk management is carried out across many levels of the Group. As the main institute within the Group, Raiffeisen Zentralbank develops and implements the corresponding concepts in close coordination the individual Group units. Lending guidelines have been revised, and credit policy now focuses more closely on reducing limits on unrestricted loan lines, reducing loan-to-value ratios and tightening up minimum requirements for loan repayment capacity.

In addition, the country limit model has been updated, which is based on macroeconomic models and expert forecasts and is used to actively manage lending in different countries, sectors and product types, in order to avoid excessive risk concentration.

Finally RZB brought together its resources for ongoing control and monitoring of loans. These resources include:

an early warning system to identify customers potentially at risk of default;

measures and processes to proactively avoid loan defaults, e.g. by helping loan customers to make appropriate adjustments to their business model or increasing collateral levels;

the problem loan departments which have extensive resources to enable debt recovery and realisation of collateral, ensuring high recovery rates in the event of loan defaults;

the “Collections Excellence” programme tailored to private customers and small businesses in the retail client segment.

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20 Segment Reports

Segment Definitions

RZB has been applying the new IFRS 8 reporting standard since the end of 2008. In accordance with this standard the Group now reports on the basis of regional segments. The segment report was previously based on a breakdown by business segment and only provided a geographical breakdown at a secondary level. The data in this section is therefore not comparable with the segment reports published before 2009.

The RZB Group’s smallest controlling units (cash generating units or CGUs as defined by IFRS) are Austria, the individual countries in Central and Eastern Europe and the other countries in which RZB operates. Countries expected to exhibit comparable long-term economic developments and that have comparable long-term economic structures are grouped together into regional segments. Taking the thresholds required by IFRS into account, RZB has defined a total of six regional segments to ensure transparent and clear reporting. In each case, the quantitative threshold laid down by IFRS 8 is 10 per cent of specific variables, these being reported revenues, profit or loss (after tax) and segment assets.

At 30 June 2009, this resulted in the following segments. The location of the individual branches or business outlets determines the segment in which they are classified:

Austria

The results of business carried out by Raiffeisen Zentralbank from its Head Office and the results posted by the many subsidiaries in Austria are reported under Austria.

Central Europe

This segment encompasses the five countries that jointed the EU on 1 May 2004, these being the Czech Republic, Hungary, Poland, Slovakia and Slovenia. These are not just, for the most part, the CEE region’s most mature banking markets. They are also the markets where RZB has been operating longest.

Southeastern Europe

Southeastern Europe includes Albania, Bosnia and Herzegovina, Croatia, Kosovo, Moldova, Serbia and the two countries that joined the EU on 1 January 2007, namely Bulgaria and Romania. Moldova is included as a part of Romania because of its economic ties to that country and the way it is managed within the Group as a result.

Russia

This segment encompasses the results of the companies acting for RZB in Russia. The Group’s entities in Russia include a bank, a leasing company and an investment fund company.

CIS Other

This segment encompasses Belarus, Kazakhstan and Ukraine.

Rest of the World

This segment includes Raiffeisen Zentralbank's branches in London, Singapore and Beijing and the Group units located in other countries such as Germany, Malta, Sweden, Switzerland and the United States.

The figures contained in a Segment Report are taken from the separate financial statements prepared in accordance with IFRS. These were also used in the preparation of the Consolidated Financial Statements. Figures may differ from the figures published locally if they are based on different local measurement rules or different copy deadlines.

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Segment Reports 21

Segment Overview

Whereas Austria and the Rest of the World saw higher profits in the first half of 2009 compared with the first half of 2008, all of RZB’s CEE segments saw profits fall. This was primarily due to higher provisioning for impairment losses.

In Austria, pre-tax profit increased by 55 per cent from €296 million in the first half of 2008 to €459 million in the first half of 2009. The primary cause was a rise in net income from financial investments and net income from derivatives due to valuation gains on securities.

The Central Europe segment registered a profit before tax of €118 million. The operating profit declined by 10 per cent overall in this segment. Net trading income increased and made a positive contribution to overall profit. Balance sheet assets remained at last year’s level.

Southeastern Europe generated a profit before tax of €129 million. While the operating result was maintained at last year’s high level and had a positive impact on profit, this effect was more than counteracted by a significant increase in provisioning for impairment losses. Balance sheet assets fell 2 per cent compared with the first half of 2008.

Despite a sharp increase in net interest income, profit before tax fell to €29 million in Russia as a result of higher provisioning for impairment losses and a net trading loss. Balance sheet assets in this segment were down 5 per cent on a year ago.

In the CIS Other segment there was a pre-tax loss of €48 million, although the operating result remained at the previous year’s level. This was due to a rise in provisioning for impairment losses to €261 million, which had a sharp negative impact on profitability. Balance sheet assets in this segment were down 13 per cent compared with the first half of 2008.

Profit before tax in the Rest of the World segment rose to €126 million. This was predominantly due to an increase in net interest income and – in contrast to the same period a year earlier – positive net trading income. Balance sheet assets were up 7 per cent on a year ago.

In terms of the regional distribution of the Group’s assets, the Austria segment continues to account for the largest share with 52 per cent. The Central Europe segment accounted for the second-largest slice, namely 17 per cent, followed by Southeastern Europe, which accounted for 12 per cent; the Rest of the World, which accounted for 9 per cent; Russia, which accounted for 6 per cent; and CIS Other, which accounted for 4 per cent.

Profit before Tax by Segments (IFRS 8)

HY 2008 HY 2009 296 290 166 138 28 118 129 29 - 48 126 267 459 -100 -50 0 50 100 150 200 250 300 350 400 450 500 Austria Central Europe Southeastern Europe Russia Other CIS Countries Rest of the World € million HY 2008 HY 2009 HY 2008 HY 2008 HY 2009HY 2009 296 290 166 138 28 118 129 29 - 48 126 267 459 -100 -50 0 50 100 150 200 250 300 350 400 450 500 Austria Central Europe Southeastern Europe Russia Other CIS Countries Rest of the World € million

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22 Segment Reports

Austria

* Data as at 30 June

Monetary values in € million 1/1 – 30/6/2009 1/1 – 30/6/2008 Change

Net interest income 485 462 4.9%

of which current income from associates 58 16 264.6%

Provisioning for impairment losses (282) (3) 9,300%

Net interest income after provisioning 203 459 (55.8%)

Net fee and commission income 76 129 (41.4%)

Net income from derivatives 123 (71) –

Net income from financial investments 122 (92) –

General administrative expenses (285) (273) 4.6%

of which staff expenses (161) (164) (1.3%)

of which other administrative expenses (95) (84) 12.1%

of which depreciation/amortisation/write-offs (29) (25) 17.9%

Other net operating income 83 66 25.3%

Net income from disposal of group assets 1 – –

Profit before tax 459 296 55.1%

Income taxes (196) (28) 600.0%

Minority interests in profit (19) (83) (77.2%)

Consolidated profit 244 185 31.5%

Segment’s contribution to consolidated profit before tax 56.5% 25.0% 31.5 ppt

Segment’s contribution to consolidated profit after tax 47.1% 28.0% 19.1 ppt

Risk weighted assets (credit risk)* 34,503 49,339 (30.1%)

Own funds requirement* 3,212 4,391 (26.8%)

Total assets* 99,905 92,269 8.3%

Liabilities* 92,545 86,683 6.8%

Average equity 3,422 3,615 (5.3%)

Return on equity before tax 26.8% 16.4% 10.4 ppt

Average number of staff 3,155 2,939 7.3%

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Segment Reports 23

In the first half of 2009 the Austria segment registered a significantly higher profit than in the first half of 2008. Profit before tax rose by 55 per cent or €163 million to €459 million. The main reasons for this increase were positive market valuations of securities and financial instruments. However, a substantial increase in provisioning for impairment losses and a drop in net fee and commission income had a negative impact on profitability. The segment’s return on equity before tax improved by 10.4 percentage points to 26.8 per cent.

Net interest income rose by 5 per cent to €485 million. In spite of lower intra-group dividends this was largely due to a 14 per cent rise in net interest income at Raiffeisen Zentralbank. The Group’s assets in Austria grew by 8 per cent, which led the net interest margin to fall slightly by 9 basis points compared with the first half of 2008 to 0.99 per cent. Credit risk weighted assets fell by 30 per cent, from €49.3 billion at 30 June 2008 to €34.5 billion at 30 June 2009. This was attributable to the “Basel II effect” resulting from the first-time application of the IRB approach at Raiffeisen Zentralbank in December 2008.

Provisioning for impairment losses jumped from €3 million to €282 million. Most of the increase was due to provisioning for individual loan losses mostly in connection with Ifinancial institutions by Raiffeisen Zentralbank. Provisioning for portfolio impairments amounted to €10 million in the first half of the year. The segment’s risk/earnings ratio deteriorated significantly compared with the same period last year and was 58.2 per cent at 30 June 2009. The segment’s non-performing loan ratio increased by 96 basis points to 2.13 per cent.

Net fee and commission income declined by 41 per cent or €53 million to €76 million in the Austria segment. This was largely due to lower revenues from the loan administration and guarantee business and the securities business, which each fell by 25%.

Net trading income was substantially up on a year ago to €137 million. Net income from interest-related trading – all of which was generated at Raiffeisen Zentralbank – accounted for €83 million of this. RZB’s currency trading accounted for a further €25 million. Net income from equity-related trading fell by 68 per cent to €18 million, mainly as a result of a drop in profits at both Raiffeisen Zentralbank and Raiffeisen Centrobank.

Net income from derivatives amounted to €123 million, which was attributable to revaluation gains on hedging transactions, particularly hedging transactions using credit default swaps, which were entered into to minimise counterparty risk, and revaluation gains on interest rate swap transactions.

Net income from financial investments came to €122 million. This was primarily due to revaluation gains on securities, which saw a rise in their book value in the first half of 2009 as a result of a rise in securities prices.

General administrative expenses in the segment rose by 5 per cent or €12 million on the same period of 2008 to €285 million. Staff expenses fell by 1 per cent or €3 million to €161 million, mainly due to reduced variable compensation. Average staff numbers rose by 7 per cent compared with a year ago to 3,155. However, other administrative expenses rose by 12 per cent or €11 million to €95 million. Depreciation, amortisation and write-offs also rose by 18 per cent to €29 million. The segment’s cost/income ratio improved slightly by 0.6 percentage points to 36.6 per cent.

Other net operating income was €83 million. This line item is comprised largely of intra-group transfers and a number of smaller items of income and expenses.

After deducting taxes of €196 million and minority interests the segment recorded a profit after tax and minority interests of €244 million.

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24 Segment Reports

Central Europe

Net interest income 463 501 (7.5%)

of which current income from associates – 1 –

Provisioning for impairment losses (229) (76) 201.8%

Net income from derivatives 5 2 107.9%

General administrative expenses (402) (459) (12.3%)

of which other administrative expenses (175) (190) (7.7%)

of which depreciation/amortisation/write-offs (37) (42) (10.7%)

Other net operating income 1 (7) –

Income taxes (27) (54) (49.5%)

Segment’s contribution to consolidated profit before tax 14.5% 22.6% (8.0 ppt)

Segment’s contribution to consolidated profit after tax 16.3% 22.3% (6.0 ppt)

Total assets* 33,717 33,590 0.4%

Liabilities* 31,344 31,284 0.2%

Average equity 2,099 1,767 18.8%

Return on equity before tax 11.2% 30.3% (19.0 ppt)

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Segment Reports 25

Profit in the Central Europe segment was down significantly in the first half of 2009 compared with the corresponding period in 2008. Profit before tax fell by 56 per cent or €149 million to €118 million due to higher provisioning for impairment losses and lower fee and commission income. Return on equity before tax in the Central Europe segment was 11.2 per cent, representing a decline of 19.0 percentage points.

Net interest income fell by 8 per cent to €463 million. This resulted largely from an increase in funding costs for customer deposits – particularly at the Group’s unit in Poland – and adverse currency movements in Hungary. While the Group’s assets in Central Europe grew slightly by 0.4 per cent, the net interest margin fell sharply by 54 basis points compared with the first half of 2008 and was 2.70 per cent at the end of June 2009. Credit risk weighted assets fell by 12 per cent from €24.9 billion to €22.0 billion. Besides the effects of movements in foreign exchange rates, this was a result of partially introducing the IRB approach in Hungary, Slovakia and the Czech Republic in December 2008.

Provisioning for impairment losses jumped by 202 per cent to €229 million, mainly due to provisioning in Hungary. Provisioning for portfolio impairments relating to retail lending rose particularly sharply, again mainly as a result of the Group units in Hungary. Individual loan loss provisions, however, increased to a similar extent in all countries of the region, with the exception of Hungary, where they were again significantly higher due to the rapid depreciation in the forint in the first half of 2009. The non-performing loan ratio rose by 2.6 percentage points to 5.3 per cent.

Net fee and commission income fell by 26 per cent or €70 million to €200 million. The primary cause of this decline was the foreign exchange business, which registered a decline of 39 per cent to € 70 million, which was in turn caused by the fall in margins in the foreign exchange business in Poland as well as the introduction of the euro in Slovakia. Earnings from payment transfers and account services fell in all countries in the region and declined by 18 per cent to €81 million in the segment as a whole.

Net trading income in the Central Europe region was €58 million, a 49 per cent increase on the figure for the same period in 2008. Net income from currency-related transactions came to €31 million, with Hungary making a major contribution to this result. Net income from interest-related trading was €25 million in the region, most of which resulted from revaluation gains on interest rate swaps in Slovakia.

Net income from derivatives of €5 million came almost entirely from currency hedging transactions in the Czech Republic, which were used to adjust the currency structure.

Net income from financial investments came to €22 million. This figure comprised of revaluation gains on securities at all of the Group’s units in the region.

Administrative expenses in the Central Europe segment fell 12 per cent year-over-year, or by €57 million to €402 million. This was mainly due to a 17% fall in staff expenses to €190 million. Average staff numbers were up 4 per cent up on the same period of the previous year to 13,879. Other administrative expenses fell by 8 per cent compared with a year ago to €175 million and depreciation, amortisation and write-offs were down €5 million to €37 million. The number of business outlets increased by 37 or 7 per cent compared with 30 June 2008 to 583. Hungary accounted for a large part of this increase, with 18 new business outlets. The segment’s cost/income ratio improved by 1.5 percentage points to 55.7 per cent.

Other net operating income came to €1 million. This line item is comprised largely of other non-profit-related tax expenses incurred by the Group units in Hungary and Slovakia. Operating leases contributed €4 million to other net operating income.

Income taxes fell by 50 per cent compared with the same period of the previous year to €27 million. Profit after tax and minority interests came to €72 million.

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26 Segment Reports

Southeastern Europe

Net interest income 443 449 (1.3%)

Provisioning for impairment losses (227) (56) 302.5%

Net income from derivatives (3) – –

General administrative expenses (362) (363) (0.3%)

of which other administrative expenses (157) (161) (2.8%)

of which depreciation/amortisation/write-offs (48) (42) 12.9%

Other net operating income 14 14 (2.4%)

Income taxes (22) (46) (53.1%)

Segment’s contribution to consolidated profit before tax 15.8% 24.5% (8.6 ppt)

Segment’s contribution to consolidated profit after tax 19.2% 25.5% (6.3 ppt)

Total assets* 23,960 24,367 (1.7%)

Liabilities* 21,226 21,788 (2.6%)

Average equity 1,683 1,325 27.0%

Return on equity before tax 15.3% 43.8% (28.5 ppt)

INTERIM REPORT SECOND QUARTER 2009

INTERIM

REPORT

SECOND

QUARTER

2009

Contents

RZB Group

Overview

Economic Conditions

The economy seems to have bottomed out…

…but it is still too early to give the all-clear

RZB’s Performance

as of 30 June 2009

International intervention strengthens market

confidence in the CEE economies

Stringent requirements leave little room for manoeuvre

Developments in the Banking

Industry in RZB’s Principal Markets

European bank stocks on the road to recovery

Challenging conditions for the CEE financial sector

Credit growth in Europe since 2000

Market sentiment towards Austrian banks significantly

improved

Only a small amount of the government package of

measures has been used so far

Austrian banks sufficiently capitalised

Results of Operations, Financial

Position and Assets

Consolidated profit reaches €168 million

Continued increase in provisioning for impairment

losses in second quarter

Operating result up 17 per cent on the previous year

Cost/income ratio sinks to below 50 per cent

Participation capital strengthens equity base

Return on equity just above 10 per cent

Balance sheet total stagnates in first half

Detailed Review of Items in the

Income Statement

Operating profit (periodic comparison)

Operating income up 4 per cent

Net interest income hampered by higher funding costs

Net fee and commission income down by 18 per cent

Substantial increase in net trading income

Breakdown of Operating Income

General administrative expenses

General Administrative Expenses

Consolidated profit

Consolidated profit (periodic comparison)

The Balance Sheet

Assets

Balance Sheet Assets

Equity and liabilities

Equity and Liabilities

Equity on the balance sheet

Regulatory capital

Own funds

Risk Management

Segment Definitions

Austria

Central Europe

Southeastern Europe

Russia

CIS Other

Rest of the World

Segment Overview

Profit before Tax by Segments (IFRS 8)

Austria

Central Europe

Southeastern Europe