INTERIM REPORT FIRST QUARTER 2010

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INTERIM

REPORT

FIRST

QUARTER

2010

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2 Contents

RZB GROUP – INTERIM REPORT FIRST QUARTER 2010 In this Interim Report, "RZB" refers to RZB Group and "RZB AG" is used whenever statements refer solely to the Raiffeisen Zentralbank Österreich AG.

Adding and subtracting rounded amounts in tables and charts may lead to minor discrepancies.

RZB Group

1_{Due to retrospective reclassification of participation capital into equity, the net interest income was adapted by the interest expense which was formerly shown for the} participation capital in this item.

Ratings Long-term Short-term Financial strength Outlook

Fitch Ratings A F1 – Stable

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

Standard & Poor´s A A-1 – Negative

Overview

Monetary values in € million 2010 Change 2009

Income statement 1/1-31/3 1/1-31/3

Net interest income 842 (7.5%) 9111

Provisioning for impairment losses (325) (45.5%) (596)

Net fee and commission income 337 (2.9%) 347

Net trading income 146 (11.4%) 164

General administrative expenses (719) 3.8% (693)

Profit before tax 374 217.4% 118

Profit after tax 342 285.1% 89

Consolidated profit (after minorities) 292 284.3% 76

Earnings per share in € 42.3 38.2 4.1

Statement of financial position 31/3 31/12

Loans and advances to banks 33,246 (1.9%) 33,887

Loans and advances to customers 78,404 4.7% 74,855

Deposits from banks 52,414 5.0% 49,917

Deposits from customers 54,698 (1.3%) 55,423

Equity (including minorities and profit) 11,018 6.9% 10,308

Total assets 150,091 1.5% 147,938

Key ratios 1/1-31/3 1/1-31/3

Return on equity before tax 14.3% 8.6 PP 5.7%

Return on equity after tax 13.0% 8.7 PP 4.3%

Consolidated return on equity (after minorities) 14.9% 9.6 PP 5.3%

Cost/income ratio 54.2% 6.9 PP 47.3%

Return on assets before tax 1.00% 0.70 PP 0.30%

Net provisioning ratio (average risk-weighted assets, credit risk) 1.73% (1.01 PP) 2.74%

Bank-specific information 31/3 31/12

Risk-weighted assets (credit risk) 75,550 0.7% 74,990

Total own funds 12,581 2.2% 12,308

Total own funds requirement 7,573 0.8% 7,516

Excess cover ratio 66.1% 2.4 PP 63.8%

Core capital ratio (Tier 1), credit risk 12.0% 0.2 PP 11.8%

Core capital ratio (Tier 1), total 9.6% 0.2 PP 9.4%

Core tier 1 ratio (without hybrid capital), total 8.8% 0.3 PP 8.5%

Own funds ratio 13.3% 0.2 PP 13.1%

Resources 31/3 31/12

Number of employees as of reporting date 59,322 (0.8%) 59,800

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4 RZB and Raiffeisen International plan merger

Milestone in company history

The first quarter of 2010 will most probably go down as a milestone in the history of RZB. On February 22, the public was informed for the first time about the strategic plan of a possible merger between RZB and Raiffeisen International.

By the time of the copy deadline for this report, significant developments had been made regarding these plans. On 19 April 2010, the Management Boards of both companies resolved to go ahead with the planned merger. The final company valuations and invita-tions to the Annual General Meeting, including documents required for passing a resolution, will be made available to the public within the statutory period at the company’s offices. Although the Annual General Meetings of both companies and the regulatory authorities have not yet approved the merger, it is becoming increasingly palpable.

Raiffeisen Bank International AG is born

At present, RZB holds 72.8 per cent of shares in Raiffeisen International via two intermediaries, the fully owned holding companies Raiffeisen International Beteiligungs GmbH (RI Beteiligung) and Cembra Beteiligungs AG (Cembra). In step one, the aim is to split the commercial customer business and investments connected with the operating commercial customer business from RZB with retroactive effect from 31 December 2009, and to integrate these business units in Cembra. Any functions of RZB connected with its position as the top company of Raiffeisen Banking Group Austria and all connected business units and RZB investments remain with the company. Shortly afterwards, in step two, Cembra and all its assets will be merged with Raiffeisen International as the incorporating company, which is to be renamed Raiffeisen Bank International AG (RBI). The shareholder of Cembra receives Raiffeisen International shares in return. These new shares were created as a result of RI increasing its share capital in order to carry out the merger. RBI is to receive an Austrian banking license after the merger and, like RI, is to take the form of a listed company.

The valuation ratios of the units included in the merger have been determined in the meantime; the underlying results are confirmed by reports from two renowned auditing companies, which were appointed as independent experts by both parties. On this basis, 21.5 per cent of Raiffeisen International shares will be in free float after the transaction has been completed (until now: 27.2 per cent; both figures include own shares held by Raiffeisen International). In turn, the merger would increase earnings per share in the first quarter of 2010 attributable to the hitherto existing Raiffeisen International shareholders from an actual €0.55 to €1.45 per share (based on a pro forma calculation).

RZB and Raiffeisen

International plan

merger

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The audit companies involved were appointed by the Management Boards of RZB/Cembra and Raiffeisen International to carry out company valuations on the basis of capitalized earnings value (calculated on the basis of a dividend discount model). The valuation method pursuant to the requirements for company valuations by the Board of Experts on Business Management and Organization (Fachsenat für Betriebswirtschaftslehre und Organisation) KFS BW1 therefore complies with widely recognized standards so as to take into consideration the interests of all shareholders in a transparent and fair process. In addition, an independent merger expert ap-pointed by the court – and likewise an audit company – will confirm the appropriateness of the exchange ratio on the basis of Austrian merger law.

The Management Board of Raiffeisen Bank International AG will comprise the following members: Herbert Stepic (CEO), Karl Sevelda (Deputy CEO, Corporate Banking), Martin Grüll (CFO), Johann Strobl (CRO), Aris Bogdaneris (Retail Banking), Patrick Butler (Global Markets), Peter Lennkh (Network Management) and Heinz Wiedner (COO). This would provide a high degree of continuity in per-sonnel and provide the new management team with a host of diverse experience from different sectors.

Good reasons for a merger

The business of RZB, which is to be integrated into Raiffeisen International’s own, focuses on growth markets and is going to be an excellent addition to Raiffeisen International’s business and income profile. By merging the two companies, the competitive position and financial situation of Raiffeisen in Central and Eastern Europe, including Austria, will improve significantly once the economic crisis has passed. It will also secure the future of the company in the long term. By building on a strong brand and a leading market position, the conditions are ideal for using all available growth opportunities.

All in all, the Management Board of RZB sees many good reasons for a merger:  To gain full capital market access across all capital market products

 To create a fully integrated corporate and retail banking group across Central and Eastern Europe (including top 1000 companies in Austria)

 To combine product offering and strong access to retail and corporate customers throughout the core region  To selectively reallocate resources to the most attractive market opportunities

 To fully integrate risk management and operational services resulting in long-term efficiency gains  Attractive financials of the Combined Bank

Prospective further developments

First steps and preparations for the merger were well under way in the first quarter. Important questions on strategy, organization, corporate law and other legal matters were answered. The business units included in the merger were valued and the results will be published on 30 May 2010. In the coming weeks, operations for the merger are going to be prepared and pushed forward. The Annual General Meetings that are decisive to the transaction will take place on 7 and 8 July 2010. Once the necessary resolutions have been passed by both Annual General Meetings and approval has been obtained from the regulatory authorities, the merger will be legally executed and entered in the commercial register. This last step is unlikely to be implemented prior to the fourth quarter.

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6 RZB's Performance during Q1 2010

Economic Conditions

Weak growth in the European Union

During the second half of 2009, economic conditions in Europe stabilised. But while other large economies such as the US, Asia and Latin America posted strong growth rates, Europe's performance was comparatively disappointing. Following declines in real GDP of 2.4 per cent in the first quarter and 0.3 per cent in the second quarter of 2009 (both over the previous quarter), the EU economy (average among the EU 27) registered minor gains of 0.3 per cent and 0.1 per cent respectively in the third and fourth quarters of 2009. Overall, GDP among the EU 27 declined year-on-year by 4.2 per cent.

Growth was also modest at the start of 2010 due to the weather, with cold winter conditions in Central Europe dampening construc-tion activity. Estimated GDP growth in the first quarter is likely to be accordingly slow.

Following inflation rates which fluctuated into negative territory during 2009, eurozone inflation was markedly positive at the start of 2010 due to higher oil prices. However, at an annual rate of 1.5 per cent, inflation remained modest.

Consumer consumption as a pillar of the Austrian economy

Over the course of 2009, Austria suffered its most precipitous decline in real GDP, at 3.6 per cent, since the 1950s. However, robust consumer spending paved the way for a strong final quarter of 2009. During the last three months of the year, the Austrian economy grew at 0.4 per cent over the previous quarter, which was above the European average. Given the export-driven nature of Austrian manufacturing, industry benefited from a rejuvenation of international trade. Exports grew 2.3 per cent quarterly in the fourth quarter. However, as manufacturing capacities remain seriously underutilised, this growth trend was countered by a decline in investment activity. Investments in plant and equipment declined by 2.0 per cent quarterly.

Preliminary indicators such as the Raiffeisen Export Index, produced by Raiffeisen Research, have gained significant momentum in recent months, pointing toward a growth trajectory for the Austrian economy in the first half of 2010. A positive business climate in Central and Eastern Europe made a substantial contribution to this trend. Climbing the growth curve of 2009, Austrian industry can now look forward to more new orders.

Nevertheless, it is only relative to the rest of Europe that Austria's growth can be called robust. By historical comparison, Austria's growth rates have been below average – a trend that seems likely to continue over the next few quarters.

RZB's Performance

during Q1 2010

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Economic stabilization in CEE

The economies of Central and Eastern Europe (CEE) had varying degrees of success in a very difficult economic environment. Poland, for example, did not experience declines in any quarter of 2009. In fact, it was the only country in the EU to achieve positive GDP growth during the year. Slovakia and Slovenia returned to positive territory by the second quarter, while it took the Czech Republic until the third quarter to register an upward trend. By contrast, Hungary and Romania were still suffering quarterly declines in real GDP in the fourth quarter of 2009.

In regional terms, the smallest decline in real GDP among the CEE countries was in the new EU member states of Central Europe (CE), at just 1.7 per cent for the year. By comparison, the countries of Southeastern Europe (SEE), including EU member states Romania and Bulgaria, recorded a drop of 5.6 per cent in real GDP. The European countries among the CIS states suffered an 8.3 per cent decline year-on-year. Overall, real GDP in CEE countries was down by an average of 5.9 per cent in 2009.

The stabilization and recovery of the CEE economies seems likely to have continued in the first quarter of 2010. While consumer consumption remained weak due to higher unemployment rates and lower demand for lending, industrial output staged a comeback thanks to increased demand for exports. In terms of an annual comparison, the base effect of extremely low production levels in the first quarter of 2009 also had a positive impact.

German government bonds a safe haven in the eurozone

While conditions on capital markets in the US have largely eased, the eurozone still has to overcome its greatest challenge to date, with overextended state budgets turning into a real-life stress test for the European currency zone. Apart from Greece, which is now on financial life support, the long-term viability of public-sector budgets in countries such as Portugal, Ireland, Spain and even Italy remain open questions.

One beneficiary of this situation is German government bonds, which dropped to their lowest ever yields. At the same time, market interest rates for bonds in other eurozone countries rose. Greek securities became untradeable in the interim, as Greece was forced to take an emergency infusion of liquidity from a rescue package provided jointly by the EU and the International Monetary Fund (IMF). By contrast, markets for corporate bonds have performed well in recent months. In the aftermath of the crisis in Greece, risk premiums for corporate bonds increased only slightly and maintained a solid standing relative to other assets associated with risk.

Substantial volatility on equity markets

At the start of 2010, equity markets were maintaining their positive momentum from the end of the previous year. However, in February, when budgetary issues among the above-mentioned eurozone countries became acute, the markets had an aggravated reaction. Positive economic data and indicators, along with a solid corporate reporting season, temporarily allayed concerns during the quarter. As a result, up to the end of March the equity markets were considerably less affected by the shockwaves from the Mediterranean than the fixed income or currency markets. Most European and US equity indexes actually reached their highest levels since the collapse of the US investment bank Lehman Brothers in September 2008.

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Euro loses ground to nearly every other important currency

The debate over public sector debt levels in a number of countries did not fail to have an impact on the foreign currency markets in the first quarter. Due to the events in Greece, the euro made concessions to most other currencies.

Losses were highest against the US dollar (a drop of 6.3 percent, to 1.35 €/USD) and against the yen (with a decline of 5.7 percent, to 125 €/JPY). With a drop of 3.4 per cent (to 1.43 €/CHF), the decline against the Swiss franc was more moderate. However, this was largely due to the intervention of the Swiss National Bank, which took action against its own currency. The euro has held up relatively well against the British pound, which is battling a massive increase in its own public debt. At the end of March, the euro was still at the same level as the start of the year at 0.89 €/GBP. Weakness in the euro was also unchanged at the start of the second quarter, as it continued to lose ground against all major currencies except the Swiss franc.

Developments in the banking industry in

RZB’s principal markets

Possible defaults among several countries in the eurozone loomed large on the horizon in the first quarter, along with the topic of regulation in the banking industry. However, the focus of the discussion was shifting from capital adequacy to potential regulations on financing and liquidity in the future. Tough competition for customer deposits led to negative margins on deposit business in some markets, which were only partially compensated by rising margins in lending business.

The banks' quarterly earnings were driven primarily by net trading income. Apart from bond trading, foreign currency and commodities, equity trading also made a renewed contribution to improved earnings. The outlook on risk in the banking sector be-came brighter, with provisions for impairment losses down significantly on earlier quarters. In some cases, a recovery from the earlier record highs was already apparent.

The CEE banking sector

The difficult situation in the real economy during 2009 led to a sharp increase in non-performing loans in the financial sector and a rise in provisioning for impairment losses. Together with support from the EU, speedy and comprehensive assistance from the Interna-tional Monetary Fund (IMF), along with funds provided by the World Bank, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) brought about stabilization by the start of the second quarter of 2009, resulting in a currency recovery and a significant reduction in risk premiums by the second half of 2009. By the end of the year, the latter had re-turned to levels similar to those before Lehman Brothers’ collapse.

The financial markets also continued on a positive trajectory in the first quarter of 2010. Currencies in the region appreciated across the board, risk premiums continued to decline and the international capital market showed renewed interest in bonds from Central and Eastern Europe.

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Market perception of Austrian banks stabilized

Following a fiscal year marked by enormous fluctuations in the spread of credit default swaps (CDS) traded by Austrian banks – credit derivatives designed to transfer credit exposure between two market participants – the first quarter of 2010 painted a relatively stable picture.

At the start of the year, greater risk aversion worldwide drove a sustained widening of CDS spreads. Because of their dealings in CEE, Austrian banks were particularly affected. On average, spreads for Austrian banks widened by 28 basis points in the first six weeks of the calendar year.

Over the quarter, as the mood lifted on the credit markets, CDS spreads narrowed again. But from a quarterly perspective, the market perception of Austrian banks scarcely changed from the end of 2009. The CDS spreads of the largest Austrian banks only narrowed by an average of 8 basis points.

Low levels of issuing activity

The €90 billion package of measures put together by the Austrian government to support the Austrian financial market has been in effect since the first quarter of 2009. Besides a 100 per cent guarantee for customer deposit balances (€10 billion), it includes a bank bond guarantee (€65 billion) and allocation of funds to strengthen the equity base of financial institutions (€15 billion). The Republic of Austria therefore subscribed approximately €5.4 billion in participation capital for Austrian banks.

The total volume of guarantees used by the end of 2009 was €20.42 billion. With a total issuing volume of €2.175 billion, which included a €1.0 billion government-guaranteed benchmark bond issue, the first quarter of 2010 saw relatively low levels of issuing activity by Austrian banks. Overall, this raised the volume of guaranteed issues by the Republic of Austria to €21.42 billion.

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Results of Operations, Financial Position

and Assets

Significant increase in consolidated profit thanks to positive

valuation gains

During the first three months of 2010, RZB recorded a consolidated profit (after tax and minority interests) of €292 million. This was €216 million above the previous year's figure, a quarter marked by the emerging financial crisis in the CEE region. Valuation gains contributed substantially to this improvement: provisioning for impairment losses declined by 46 per cent or €271 million, while net income from financial investments rose by €203 million to €142 million.

At the same time, operating profit was down year-on-year in the first three months of 2010 by 22 per cent or €166 million to €607 million, largely as a consequence of a 5 per cent year-on-year drop in business volume resulting from the financial crisis and selective lending, along with higher long-term refinancing costs.

Profit before tax was €374 million, more than triple the previous year's figure of € 118 million.

Outlook for impairment loss provisioning improved

Provisioning for impairment losses declined by €271 million year-on-year to €325 million. While provisioning was down in most segments – in some cases quite significantly, as for example in Austria (as per the definition of reporting segments, pg. 22) by 81 per cent (write-downs for Icelandic banks impacted the previous year's figure) while in Russia there was a decrease of 66 per cent or €37 million thanks to an improvement in the financial situation of some borrowers, but also slower growth in non-performing loans to retail customers – provisioning was up slightly, by 5 percent, in Central Europe. In Ukraine, provisioning was down by €51 million thanks to improvement in non-performing loans.

With quarterly growth of €596 million net (€376 million excluding currency effects), non-performing loans to non-banks increased to €6,031 million, largely impacting the CIS Other and Central European segments. The customer non-performing loan ratio was 7.69 percentage points, up by 0.40 percentage points on the start of the year. Relative to total outstanding exposure (including banks and off-balance-sheet business), the non-performing loan ratio rose from 3.77 to 4.01 percent.

Operating profit down by just under 10 per cent

RZB's operating profit fell by about 10 per cent or €139 million year-on-year to €1,327 million.

On a euro basis, net interest income declined by 8 per cent to €842 million due to lower volume along with higher costs for long-term institutional funding. The interest margin only declined slightly, by 6 basis points year-on-year, to 2.26 percent, which was primarily due to reduction of the interest margin in Russia, while some other segments notched significant improvements on this measure.

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There was a tangible slowing of the decline in net fee and commission income. While it fell by 20 per cent over the course of the entire previous year – when the crisis was at its height – it was only down 3 per cent during the period under review. Net fee and commission income increased for most product types in 2010: revenues from the securities business rose by 16 percent, while income from the loan and guarantee business was up by 9 percent. There was only a significant drop in the foreign exchange business due to lower volumes on foreign exchange transactions and foreign currency lending.

Net trading income continued to post a satisfactory performance, at €146 million. Net income from interest-related trading increased by €49 million to €178 million. This was offset by a net loss of €40 million on liabilities designated at fair value, which was mainly caused by changes in interest rates.

Other net operating income fell by €43 million to €2 million, primarily as a consequence of lower revenues from non-banking activities as well as provisions for ongoing court cases in Russia and Hungary.

Increase in general administrative expenses due to currency

effects

General administrative expenses increased year-on-year by 4 percent, to €719 million. This increase of €26 million was driven by appreciating CEE currencies as well as a higher level of depreciation/amortisation/write-downs on tangible and intangible assets. There was also an increase in legal and consultancy fees (25 percent) and IT expenses (13 percent).

This slight increase in general administrative expenses, with a simultaneous 10 per cent decrease in operating income, led to a 6.9 percentage point increase in the cost-income ratio, rising year-on-year to 54.2 percent.

The number of staff (in terms of FTEs) fell from the end of 2009 by 1 per cent or 478 employees, to 59,322, with reductions being made primarily in Russia (223) and Romania (196).

Equity exceeded €11 billion mark

RZB's equity, including minority interests, increased from the end of the previous year by €710 million to €11,018 million, half of which was attributable to the €342 million in accounting income after tax.

Additional changes in equity came about as a result of currency revaluations in the CEE region, which together with relevant hedging transactions resulted in valuation gains on equity of €305 million.

Return on equity before tax above 14 percent

While the 22 per cent drop in operating income had a dampening effect on RZB's consolidated profit – and profitability figures – the significant improvement in provisioning for impairment losses as well as good net income from financial investments brought about an increase in return on equity before taxes: in the first quarter, this was 14.3 percent, a gain of 8.6 percentage points over the same quarter in 2009 (5.7 percent). The average equity on which this figure is based rose by 26 per cent to €10.5 billion, mainly as a result of participation certificate issues.

The Group return on equity (after minority interests) also rose significantly, increasing by 5.3 per cent to 14.9 percent. Earnings per share for the first three months of the 2010 business year increased by €38.2 to €42.3, while the number of ordinary shares outstanding remained the same.

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Balance sheet total above €150 billion

Currency fluctuations had a noticeable effect on RZB's balance sheet, bringing about an increase of about €2.8 billion since the start of the year. This resulted from a 6 per cent appreciation on the US dollar since the end of the year, as well as in some CEE currencies. Organic growth experienced a slight drop of €0.7 billion.

On the asset side, there was an increase in loans and advances to customers, which grew by €3.2 billion to €73.8 billion after deducting provisions for impairment losses. Reclassifications also benefited financial investments, which increased by €1.8 billion to €20.7 billion.

On the liabilities side, deposits from banks rose by €2.5 billion, while deposits from customers – the most important item for funding purposes – were down slightly, by €0.7 billion to €54.7 billion. The loan-deposit ratio, the proportion of loans and advances to customers covered by deposits, increased over the end of the year by 8.1 percentage points, to 143.3 percent. As a result of redemptions, RZB's issues were down by € 1.4 billion net. As liquidity was sufficient, no capital market transactions were necessary.

Detailed Review of Items in the Income

Statement

In the first quarter of 2010, two subsidiary companies were included for the first time in the scope of consolidation, while 45 subsidiaries were deconsolidated; all but one on the basis of materiality thresholds. The basis of year-on-year comparison nevertheless remains valid since these changes did not have any material effect on the individual items in the income statement. However, currency fluctuations – especially in CEE countries – had a substantial impact on income statement items. Average rates of exchange, which are the basis of the income statement, were as follows: the Polish zloty appreciated by 11 percent, the Hungarian forint by 8 percent, the Russian rouble by 7 per cent and the Czech koruna by 6 percent. Meanwhile, the Belarussian rouble depreciated by 15 per cent, the Ukrainian hryvnia by 8 per cent and the US dollar by 5 per cent.

Operating profit (periodic comparison)

in € million 1/1-31/3/2010 Change 1/1-31/3/2009 1/1-31/3/2008

Net interest income 842 (7.5%) 911 809

Net fee and commission income 337 (2.9%) 347 398

Net trading income 146 (11.4%) 164 10

Other net operating income 2 (94.8%) 45 27

Operating income 1,327 (9.5%) 1,466 1,243

Staff expenses (357) 1.6% (351) (374)

Other administrative expenses (282) 5.6% (267) (262)

Depreciation/amortization/write-downs (81) 7.6% (75) (67)

General administrative expenses (719) 3.8% (693) (703)

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Operating income

Operating income was €1,327 million in the first three months of 2010, a decrease of 10 per cent or €139 million on the previous year's first quarter. However, this figure represented an increase of 1-6 per cent over quarters in the second half of 2009. Half of the decrease over the previous year's first quarter was attributable to lower net interest income.

Net interest income

Net interest income contributes 64 per cent of revenue, making it the most important component in this respect. Compared to the previous year's quarter, it fell by €69 million or 8 per cent to €842 million. The decrease in net interest income was higher than the decrease in average balance sheet total, which dropped by 5 percent.

Overall, interest income was down by €565 million or 26 per cent on the first quarter of 2009. The largest decline in interest income came from loans and advances to customers, which fell by €352 million or 23 per cent to €1,153 million due to reduced volumes and lower market interest rates. Revenue from loans and advances to banks also declined, primarily due to a fall in Austria (as per the definition of reporting segments, pg. 22), by €146 million or 61 percent, to €92 million. Interest expenses also registered a decline of €511 million or 41 percent, coming to €748 million in the first quarter of 2010. Interest expenses for deposits from banks and cus-tomers showed the most precipitous drop, falling by €238 million and €184 million respectively.

In Austria (as per the definition of reporting segments, pg. 22), net interest income rose by 32 per cent or €38 million to €155 million, primarily as a result of a sharp rise in interest income from derivative financial instruments at RZB AG.

In Central Europe, net interest income rose by 13 per cent or €29 million to €260 million year-on-year. In Poland there was an increase of €15 million attributable to lower refinancing costs and currency appreciation; in the Czech Republic the rise of €11 million came about thanks to improved retail customer conditions; and in Slovakia, an increase of €9 million was a result of higher customer margins. By contrast, Hungary experienced a decline of €9 million due to a drop in lending volume and lower interest income from derivative financial instruments.

In Southeastern Europe, interest income was up by 2 per cent or €5 million to €222 million year-on-year. The largest contributor to the rise came in the form of lower funding costs for banks as well as lower interest expenses for customer deposits, primarily in Romania. Net interest income in Russia fell by 43 per cent or €90 million to €119 million, making this one of the largest factors in the decline in net interest income overall. The primary reasons for Russia's

losses were a declining interest margin, as well as lower levels of retail and corporate customer business due to less new business.

In the CIS Other segment, net interest income declined by 9 per cent or €11 million year-on-year to €115 million, largely as a result of the depreciation of the Ukrainian hryvnia, a reduction in the customer portfolio and lower margins on restructured loans.

In the Rest of World segment, net interest income was down by €9 million year-on-year to €34 million, mainly as a con-sequence of transferring the business of the London branch to Vienna.

Operating income

0 200 400 600 800 1,000 1,200 1,400 1,600 Q1 2008 Q1 2009 Q1 2010

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

1,243 1,466 1,327 65% 32% 1% 2% 62% 24% 11% 3% 64% 25% 11% 0% € million 0 200 400 600 800 1,000 1,200 1,400 1,600 Q1 2008 Q1 2009 Q1 2010

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

1,243 1,466 1,327 65% 32% 1% 2% 62% 24% 11% 3% 64% 25% 11% 0% € million

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RZB GROUP – INTERIM REPORT FIRST QUARTER 2010 The net interest margin – i.e. the ratio of net interest income to average balance sheet total – was 2.26 per cent in the first quarter of 2010, a decline of 6 basis points over the previous year's first quarter. In the 2009 fiscal year, the net interest margin was 2.25 percent.

Net fee and commission income

Net fee and commission income was down 3 per cent or €10 million on the same period in the previous year to €337 million. Income from payment transfers of €133 million made the largest contribution (40 per cent) to net fee and commission income, but due to lower sales was €4 million or 3 per cent down year-on-year.

Net income from foreign exchange, notes and coins and precious metals showed the steepest decline, falling €28 million to €72 million. As a result of lower transaction volume, Russia showed the largest drop in net income from foreign exchange, notes and coins and precious metals (€10 million). The CIS Other and Southeastern Europe segments each reported a decrease of €7 million. Net income from the securities business grew 9 per cent to €67 million, largely as a result of currency effects.

Income from the foreign exchange and notes and coins business rose 16 per cent to €33 million. The biggest growth was €3 million in the Central Europe segment, due particularly to higher fee and commission income from local authority bonds in Hungary.

Net income from agency services for own and third party products rose €3 million to €9 million as a result of growth in insurance business in Southeastern Europe.

Net trading income

Net trading income fell 11 per cent or €19 million year-on-year to €146 million. Net income from interest-related trading rose 38 per cent or €49 million to €178 million. This was partly offset by net revaluation losses of €40 million on liabilities designated at fair value and recognized in the income statement, due almost entirely to interest rate changes. The decisive segments in the increase in interest-related trading were Austria (as per definition of reporting segments, p. 22), which grew €23 million as a result of improved net in-come from derivatives, and Russia, which grew €16 million, primarily from securities. Ukraine also showed growth from the market valuation of Ukrainian sovereign bonds due to an improved country credit rating.

Net income from currency trading rose 102 per cent or €10 million to €19 million. Trends varied between segments, with net income falling in Central Europe, Southeastern Europe and CIS Other, and rising in Russia and Austria (as per definition of reporting seg-ments, p. 22). The growth was due to revaluation gains on currency transactions.

The decrease in net income from credit derivatives and other business was due largely to the Austria segment (as per definition of reporting segments, p. 22).

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Other net operating income

Other net operating income in the first quarter of 2010 totalled €2 million, significantly down on the €45 million in the first quarter of 2009. Net income from non-banking services fell €10 million in the first three months of 2010 compared to the same period in 2009. Transfers from other provisions resulted in an expense of €6 million (a decrease of €8 million), primarily on provisions for current litigation in Russia and Hungary.

General administrative expenses

General administrative expenses rose year-on-year by 4 per cent or €26 million to €719 million. This increase is due on the one hand to currency appreciation in the CEE countries and slight cost increases in individual categories on the other.

As a result of the 10 per cent decrease in operating income and the increase in general administrative expenses, the cost/income ratio was 54.2 per cent in the period under review, an increase of 6.9 percentage points on the first quarter of 2009.

Staff expenses rose 2 per cent or €6 million over the same period last year to €357 million. At 50 per cent, staff expenses is the larg-est item in general administrative expenses. Measures such as staff cutbacks and natural attrition led to lower costs in the CEE coun-tries, largely offset by the appreciation of most CEE currencies. In the Austria segment (as per definition of reporting segments, p. 22), new staff were hired, leading to the slight increase year-on-year in staff expenses.

The average number of staff was 59,553, a decrease of 6,606 on the first quarter of 2009. The average number of staff fell signifi-cantly in Southeastern Europe (a decrease of 10 per cent or 1,915), in CIS Other (minus 10 per cent or 1,929), Russia (minus 16 per cent or 1,636), Central Europe (minus 8 per cent or 1,186) and Rest of the World (minus 10 per cent or 43). By contrast, in the Aus-tria segment (as per definition of reporting segments, p. 22), new staff were hired, leading to an increase of 3 per cent or 103 staff. The number of staff as at 31 March 2010 was 59,322, a decrease of 1 per cent or 478 on the number at the end of 2009. Broken down by segment, there was a decrease of 3 per cent or 223 in Russia and 1 per cent or 223 in Southeastern Europe. There were also changes in the number of staff at the reporting date in

CIS Other (a decrease of 39), Austria (as per definition of reporting segments, p. 22; plus 22 staff) and in Central Europe (an increase of 9 staff). The number of staff rose in the Rest of the World by 6 per cent or 24 staff.

Other administrative expenses rose year-on-year by 6 per cent or €15 million to €282 million. Office space expenses, the largest item in other administrative expenses, totalled €81 million. Despite some mitigating currency effects, this represents a reduction of 6 per cent, due to branch and business outlet closings in Russia and Ukraine. IT expenses rose (€5 million or 13 per cent), legal advisory and consul-tancy (€5 million or 25 per cent), office costs (€2 million or 28 per cent) and deposit insurance fees (€2 million or 10 per cent).

General administrative expenses

0 100 200 300 400 500 600 700 800 Q1 2008 Q1 2009 Q1 2010 € million 703 693 719 53% 37% 10% 51% 39% 11% 50% 39% 11%

Staff expenses Other administrative expenses Depreciation

0 100 200 300 400 500 600 700 800 Q1 2008 Q1 2009 Q1 2010 € million 703 693 719 53% 37% 10% 51% 39% 11% 50% 39% 11% Staff expenses

(16)

RZB GROUP – INTERIM REPORT FIRST QUARTER 2010 Compared to 31 March 2009, the number of business outlets was reduced by 231 to 2,998. Location optimization saw locations cut by 153 against the first quarter of the previous year in CIS Other (including 149 in Ukraine) and by 27 in Russia. As a result of con-solidation of branches, the number of business outlets also decreased in Central Europe (by 30) and Southeastern Europe (by 21). Depreciation, amortization and write-downs on tangible assets and intangible fixed assets rose 8 per cent or €6 million against the previous year to €81 million. Of this, €44 million related to tangible assets, €28 million was for intangible assets, and €9 million for assets acquired under operating leases. RZB Group invested €71 million during the period under review. Group-owned tangible assets accounted for 44 per cent or €31 million of this total. Investment in intangible assets – mostly software systems – made up 38 per cent. The remainder was invested in operating lease assets.

Consolidated profit

Consolidated profit (periodic comparison)

Provisioning for impairment losses

Net allocations for impairment losses totalled €325 million in the first quarter of 2010, significantly below the same period in 2009, when provisioning for nonperforming and late loans amounted to €596 million. As a result, net allocations to provisioning for impairment losses were 46 per cent or €271 million lower than the comparable period of the previous year. Of these provisions, €259 million was for specific impairment losses and €66 million for portfolio loan losses.

The highest net allocations to provisions for impairment losses were €111 million in the Central Europe segment, representing an increase of €6 million or 5 per cent compared with the first quarter of 2009. In Hungary, it was €40 million, €19 million less than in 2009. Provisioning for impairment losses in Slovakia increased by €8 million to €22 million, predominantly for loans and project financing for large customers. In the Czech Republic, provisioning totalled €25 million (first quarter 2009: €17 million), mostly due to increased transfers to provisioning for private individual customers.

In the CIS Other segment, provisions in the first quarter of 2010 amounted to €78 million. The year-on-year decrease of €40 million is due to the considerable improvement in the total for nonperforming loans compared to 2009. Ukraine accounted for €73 million of the provisioning volume in this segment, a decrease of €45 million.

In the Southeastern Europe segment, net allocations to provisioning for impairment losses fell €44 million or 39 per cent to €69 million. The sharpest declines were in Romania and Croatia, while the highest net allocations amounted to €18 million in Bulgaria, mostly for loans to corporate customers.

in € million 1.1.-31.3.2010 Change 1.1.-31.3.2009 1.1.-31.3.2008

Operating profit 607 (21,5%) 773 540

Provisioning for impairment losses (325) (45,5%) (596) (96)

Other results 93 (257,1%) (59) (226)

Profit before tax 374 217,4% 118 218

Income taxes (33) 12,2% (29) (101)

Profit after tax 342 285,1% 89 117

Minority interests in profit (49) 290,1% (13) (109)

(17)

In the Russia segment, net allocations to impairment loss provisioning were significantly reduced, falling from €110 million in the first quarter of 2009 to just €37 million in the first three months of 2010. Loan repayments and a smaller increase in late loans to retail customers led to the net release of €22 million of portfolio loan loss provisions. By contrast, net allocations to portfolio loan loss provisions totalled €59 million in the first quarter of 2009.

In the Austria segment (as per definition of reporting segments, p. 22) net allocations in the first three months of 2010 totalled €28 million. In the first quarter of 2009, provisioning amounted to €149 million, predominantly for loans to Icelandic banks.

The ratio of net allocations(provisioning for impairment loss compared to average credit-weighted risk assets) fell 1.01 percentage points year-over-year to 1.73 per cent.

Other results

In the first quarter of 2010, other results rose to €93 million, compared with the loss of €59 million in 2009. The partial results in this figure showed widely differing trends in the first three months of 2010.

Net income from financial investments was the decisive factor in the increase, with a particularly significant recovery in mark-to-market securities: Overall, net income from securities measured at fair value in profit or loss was €142 million, compared with the loss of €57 million year-on-year. Of this, €133 million was from revaluation gains and €9 million was net income from disposals.

By contrast, net income from derivatives swung from €3 million in the first quarter of 2009 to a loss of €54 million in 2010, predomi-nantly due to losses on interest rate derivatives.

Lower tax ratio

Profit before tax improved in the first quarter of 2010 to €374 million, an increase of 217 per cent or €256 million.

By contrast, income taxes rose only 12 per cent or €4 million to €33 million. This is due to latent tax assets, which were carried at €28 million in the first quarter of 2010. These in turn were due to valuation differences on securities and equity investments between the statement of financial position to IFRS and the equivalent statement for tax purposes. As a result, the tax ratio was only 9 per cent, down from 25 per cent in 2009.

Profit after tax was accordingly €342 million, an increase of 285 per cent or €253 million on 2009. The share in profit of non-controlling interests rose by €37 million to €49 million.

Earnings per share €42.3

Consolidated profit attributable to the equity holders of Raiffeisen Zentralbank amounted to €292 million (2009: €76 million). Earnings per share after interest on the participation capital accordingly rose sharply to €42.3, compared with €4.2 in the first quarter of 2009.

(18)

The statement of financial position

RZB's total assets were €150.1 billion as at 31 March 2010, 2 per cent or €2.2 billion above the year-end 2009 figure. Loans to customers rose 5 per cent or €3.5 billion, and investments in securities and equity investments grew 10 per cent or €1.8 billion. This was offset by a significant decrease in cash reserves, particularly balances with central banks, of 47 per cent or €3.9 billion. As at 1 January 2010, 45 subsidiaries were deconsolidated and two consolidated for the first time, although the changes had no significant effect on changes in total assets.

After the massive currency depreciations in the past two years, the majority of CEE currencies gained noticeably on the euro. Com-pared to the start of the year, the Russian rouble gained 8 per cent, the Ukrainian hryvnia 7 per cent, the Polish zloty 6 per cent and

the Czech krone 4 per cent. The US dollar gained 6 per cent. As a result of currency effects, total assets rose by €2.8 billion, which means that adjusted total assets fell by €0.7 billion.

Assets

After deducting provisioning for impairment losses, loans and advances to customers accounted for half of total assets, rising €3.1 billion (net) and increasing their share by 1 percentage point to 49 per cent. Loans and advances to customers (before loan loss provisions) rose 5 per cent or €3.5 billion to €78.4 billion, with the increase concen-trated in lending. This included new loans and advances of €3.4 billion to corporate customers, while lending to retail customers was virtually unchanged. Regionally, the in-crease came predominantly from the Rest of the World segment, and to a lesser extent from Central Europe and Austria (as per definition of reporting segments, p. 22). The ratio of customer loans to customer deposits improved by 8.1 percentage point compared with the end of 2009 to 143.3 per cent.

Provisioning for impairment losses as at 31 March 2010 was €4.6 billion, up 10 per cent or €0.4 billion on the end-2009 total. Of this provisioning, only €0.4 billion was for loans and advances to banks, while the larger part was for loans and advances to custom-ers.

Loans and advances to banks fell 2 per cent or €0.6 billion over the same period last year to €33.2 billion. Their share in total assets decreased by 1 percentage point to 22 per cent, predominantly due to a decrease of €0.5 billion in loans to central banks.

Since the start of 2009, excess liquidity has increasingly been invested in securities, and this trend continued in the first quarter of 2010. These investments were primarily in public sector and government-guaranteed debt securities eligible for central bank refinanc-ing. Total securities and equity investments as at 31 March 2010 amounted to €31.5 billion, an increase of 9 per cent or €2.7 billion. Their share in total assets increased by 2 percentage points to 21 per cent.

Other assets declined from year-end 2009 to €11.6 billion. The share in total assets of the item other assets accordingly dropped 2 percentage points to 8 per cent. This was the result predominantly of the €3.9 billion reduction in cash reserves, particularly in bal-ances at central banks.

Total assets

0 25 50 75 100 125 150 175 2008 2009 Q1 2010 19% 52% 15% 14% 23% 48% 19% 10% 22% 49% 21% 8% 156.9 147.9 150.1 € billion

Loans and advances to banks Loans and advances to customers Financial investments Other Assets

0 25 50 75 100 125 150 175 2008 2009 Q1 2010 19% 52% 15% 14% 23% 48% 19% 10% 22% 49% 21% 8% 156.9 147.9 150.1 € billion

Loans and advances to banks Loans and advances to customers Financial investments Other Assets

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Equity and liabilities

The structure of equity and liabilities showed only minimal changes from year-end 2009. The proportion of total equity and liabilities of deposits from banks rose 1 percentage point to 35 per cent, while the proportion of deposits from customers and equity remained constant at 37 per cent and 10 per cent respectively of total assets. The share of other liabilities fell 1 percentage point to 18 per cent. In absolute terms, deposits from banks rose since the start of the year by 5 per cent or €2.5 billion to €52.4 billion. Short-term deposits grew (by €2.9 billion), while long-term refinancing fell (by €0.6 billion), with short-term refinancing predominantly through international commercial banks (up €2.6 billion).

Deposits from customers decreased slightly on year-end 2009, falling 1 per cent or €0.7 billion to €54.7 billion. Despite intense com-petition, deposits from retail customers were stable at €24.0

billion, while deposits from corporate customers fell slightly by 3 per cent or €0.7 billion to €27.9 billion. Within these, time deposits fell 6 per cent or €2.0 billion, while sight de-posits rose 6 per cent or €1.3 billion. Savings dede-posits also increased by 4 per cent or €0.1 billion.

Other liabilities decreased slightly to €27.4 billion, so that their share in total equity and liabilities fell by 1 percentage point to 18 per cent. Due to repayments, debt securities issued fell 7 per cent or €1.4 billion from year-end 2009 to €18.5 billion. With sufficient liquidity, no transactions were needed in the capital market.

Own funds, comprising equity and subordinated capital, totalled €15.6 billion, representing growth of €0.7 billion, mostly due to strong profit and currency appreciations. Sub-ordinated capital was almost unchanged compared with the end of the 2009 financial year at €4.6 billion.

Equity and liabilities

0 25 50 75 100 125 150 175 2008 2009 Q1 2010

Deposits from banks Deposits from customers Other liabilities Own funds € billion 35% 38% 20% 7% 156.9 34% 37% 19% 10% 147.9 35% 37% 18% 10% 150.1 0 25 50 75 100 125 150 175 2008 2009 Q1 2010

Deposits from banks

Deposits from banks Deposits from customersDeposits from customers Other liabilitiesOther liabilities Own funds € billion 35% 38% 20% 7% 156.9 34% 37% 19% 10% 147.9 35% 37% 18% 10% 150.1

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Equity on the statement of financial position

As at 31 March 2010 RZB’s own funds, including consolidated profit and non-controlling interests, amounted to €11,018 million, 7 per cent or €710 million above the year-end 2009 figure.

Consolidated equity, comprising the components attributable to the shareholders of RZB AG excluding net income for the period, rose 10 per cent or €708 million to €8,009 million. This growth came from retained earnings, primarily due to the transfer to retained earnings of €433 million and other results of €278 million. However, part of the transfer to retained earnings will be used for divi-dends for the 2009 financial year, which the Managing Board recommended should be €360 million (including €200 million for participation capital), to be distributed in July 2010 after approval by the Annual General Meeting. The largest component in other results is the currency differences. As a result of the appreciation of most CEE currencies, this led to positive currency effects (including capital hedge) of €208 million. The cash flow hedge resulted in an increase of €53 million in other results. Changes in the equity of entities accounted for using the equity method boosted retained earnings by €15 million. Revaluation changes for available-for-sale assets generated the same amount.

Non-controlling interests rose 6 per cent to €2,717 million, primarily due to the prorata profit for the period of €49 million and cur-rency differences of €97 million.

Regulatory capital

The RZB Group uses the IRB approach to measure credit risk for the majority of all divisions of RZB AG and in its subsidiaries in Croa-tia, Malta, Romania, Slovakia, the Czech Republic, Hungary and the US; all other Group units still use the standardized approach to calculate credit risk. Retail business and market risk are calculated using the standardized approach, and operational risk for all Group units is now also calculated using the standardized approach.

Eligible own funds as defined by the Austrian Banking Act (Bankwesengesetz/BWG) increased by 2 per cent or €273 million com-pared with year-end 2009 to €12,581 million. Core (Tier I) capital rose €286 million or 3 per cent since the start of the year to €9,190 million. This increase was largely due to currency appreciations since the start of the year, specifically the Russian rouble (8 per cent), Ukrainian hryvnia (7 per cent) and Polish zloty (6 per cent). However, current profit is not included in consolidated own funds because Austrian legislative provisions do not allow its recognition in this line item during the fiscal year.

Tier 2 capital decreased slightly by €20 million or 1 per cent to €3,789 million. Maturing Tier 2 issues led to a reduction in Tier 2 capital, which was offset by the currency appreciation.

Available own funds compared with capital requirements which had increased by €57 million to €7,573 million, due largely to cur-rency appreciations. Own funds requirements for credit risk accounted for the largest portion at 80 per cent.

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The components of these own funds requirements showed differing trends. For example, requirements for credit risk rose €45 million to €6,044 million, and requirements for operational risks rose €40 million to €764 million. The requirements for market risk were virtually unchanged, growing only €3 million to €391 million. The

only decline was in the requirement for open currency posi-tions, which fell €30 million to €375 million.

This resulted in excess cover of €5,008 million, raising the excess cover ratio from year-end 2009 by 2.3 percentage points to 66.1 per cent.

The Tier 1 ratio measured in relation to credit risk was virtu-ally unchanged at 12.0 per cent. However, the Tier 1 ratio measured in relation to total risk improved by 0.2 percentage points to 9.6 per cent. RZB’s own funds ratio improved by 0.2 percentage points to 13.3 per cent. The core Tier 1 ratio (Tier 1 capital less hybrid capital in relation to total risk) was 8.8 per cent, an increase of 0.3 percentage points.

Own funds

0 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 2006 2007 2008 2009 Q1 2010

Excess cover ratio Regulatory own funds Total own funds

€ million 34.7% 37.5% 27.1% 63. 8% 66.1% 7, 614 5,652 7,491 10,297 8,505 10,801 7,516 12,308 7,573 12, 581 0 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 13,500 2006 2007 2008 2009 Q1 2010

Excess cover ratio Regulatory own funds Total own funds

€ million 34.7% 37.5% 27.1% 63. 8% 66.1% 7, 614 5,652 7,491 10,297 8,505 10,801 7,516 12,308 7,573 12, 581

(22)

22 Segment Reports

Segment Definitions

The RZB Group’s smallest controlling units (cash generating units or CGUs) are Austria, the individual countries in Central and Eastern Europe and the other countries in which RZB operates. Countries exhibiting comparable long-term economic developments and eco-nomic structures are grouped together into regional segments. Taking the thresholds required by IFRS into account, we have 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 certain specified variables, these being reported revenues, profit after tax and segment assets.

At 31 March 2010, 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 RZB AG 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 joined the EU on 1 May 2004, these being the Czech Republic, Hungary, Po-land, Slovakia and Slovenia. These are not just the CEE region’s most mature banking markets. They are also the markets where RZB has been operating longest.

• Southeastern Europe

The Southeastern Europe segment includes Albania, Bosnia and Herzegovina, Croatia, Kosovo, Moldova, Serbia and the two countries that joined the EU on 1 January 2007, Bulgaria and Romania. Moldova is included as 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 within the Russian Federation. The Group's entities in Russia include a bank, two leasing companies and an M&A consultancy.

• CIS Other

This segment comprises Belarus, Kazakhstan and Ukraine.

• Rest of the World

This segment includes RZB AG’s branches in London, Singapore, Beijing and Xiamen as well as the Group units located in other countries such as Germany, Malta, Switzerland and the United States.

The figures contained in the 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 Overview

Each of the regional segments in RZB apart from the Rest of the World registered an increase in profits in the first quarter of 2010, reflecting the continued moderate economic recovery. Both significantly lower levels of provisioning for impairment losses and write-ups on bonds and securities contributed to the improvement in profit before tax compared with the first quarter of 2009.

The effects of the financial crisis experienced in recent quar-ters continued to yield a rising proportion of non-performing loans and falling net interest income due to portfolio reduc-tions. However, through a combination of cost-cutting and efficiency-enhancing measures the conditions have been created for a sustained recovery in the Group's earnings. Most of the segments saw a marked fall in administrative expenses in local currency as well as further streamlining of their branch networks.

Austria (as defined in the reporting segment definitions, p. 22) contributed €147 million to profit before tax in the first quarter, the largest share of all the segments. This figure was positively impacted by net income from financial investments and lower provisioning for impairment losses in particular. Balance sheet assets in the segment fell by 4 per cent year-on-year to €95.8 billion.

The Southeastern Europe region contributed €98 million to profit before tax in the first quarter, the second-highest result among the segments. This was also based on significantly lower impairment loss provisioning as well as solid growth in net income from financial investments. Balance sheet assets in this segment were down 5 per cent on a year ago.

Profit before tax in Central Europe was €62 million. This reflected an increase in net interest income and in net income from financial investments, which boosted profit before tax. Balance sheet assets rose by 3 per cent compared with a year ago.

In Russia profit before tax amounted to €58 million. The sharp increase compared with last year was due to a substantial decline in impairment loss provisions along with positive net trading income. Balance sheet assets in this segment were down 13 per cent year-on- year.

The CIS Other segment reported profit before tax of €17 million. Lower levels of impairment loss provisioning were primarily responsi-ble for the year-on-year improvement in profit before tax. Balance sheet assets in this segment were down 14 per cent on the same period last year.

The regional structure of Group assets changed slightly compared with a year ago. Austria's share of Group assets (as defined in the reporting segment definitions, p. 22) rose to 52 per cent. Central Europe's share increased by 2 percentage points to 19 percent. The Southeastern Europe segment accounted for 13 per cent of Group assets, followed by Russia with 7 per cent and the Rest of the World with 6 per cent. The share of the CIS Other segment in Group assets remained unchanged at 4 per cent.

Profit before tax by segments

20 40 60 80 100 120 140 160 0 Austria Central

Europe SoutheasternEurope Russia CIS Other Rest of theWorld Q1 2010 Q1 2009 € million 8 147 43 62 55 98 19 58 1 17 50 43 20 40 60 80 100 120 140 160 0 Austria Central

Europe SoutheasternEurope Russia CIS Other Rest of theWorld Q1 2010 Q1 2009 € million 8 147 43 62 55 98 19 58 1 17 50 43

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24 Segment Reports

Austria

1_{as at 31 March}

In the first quarter of 2010 profit in Austria (as defined in the reporting segment definitions, p. 22) was well ahead of the same period a year ago. Profit before tax increased by €139 million to €147 million as a result of a sharp decline in provisioning on impairment losses and mark-to-market gains on securities and financial instruments. The segment’s return on equity before tax rose from 1.0 per cent a year ago to 14.3 per cent in the first quarter of 2010.

in € million 1/1-31/3/2010 1/1-31/3/2009 Change

Net interest income 155 118 31.9%

of which current income from associates (4) 10 –

Provisioning for impairment losses (28) (149) (81.3%)

Net interest income after provisioning 127 (32) –

Net fee and commission income 39 40 (3.3%)

Net trading income 79 127 (38.4%)

Net income from derivatives (43) 15 –

Net income from financial investments 83 (57) –

General administrative expenses (151) (134) 12.5%

of which staff costs (79) (77) 2.1%

of which other administrative expenses (57) (43) 32.6%

of which depreciation/offs/write-offs (15) (14) 8.0%

Other net operating income 14 49 (71.9%)

Net income from disposal of group assets 0 (1) –

Profit before tax 147 8 >500.0%

Income taxes 20 1 >500.0%

Profit after tax 167 9 >500.0%

Minority interests in profit 2 9 (76.1%)

Profit after minorities 169 18 >500.0%

Share of profit before tax 34.5% 4.4% 30.1 PP

Share of profit after tax 42.7% 6.1% 36.6 PP

Risk-weighted assets (credit risk)1 _{34,525 35,344 (2.3%)}

Total own funds requirement1 _{3,159 3,255 (2.9%)}

Total assets1 _{95,795 99,809 (4.0%)}

Liabilities1 _{88,211 95,170 (7.3%)}

Cost/income ratio 52.9% 40.2% 12.7 PP

Average equity 4,105 3,120 31.6%

Return on equity before tax 14.3% 1.0% 13.3 PP

Average number of staff 3,227 3,124 3.3%

(25)

Net interest income in Austria (as defined in the reporting segment definitions, p. 22) rose by 32 per cent to €155 million. This in-crease reflected a rise in net interest income from non-trading derivative financial instruments at RZB AG. Balance sheet assets fell by 4 per cent due to a fall in the volume of outstanding loans to banks. As a result the net interest margin rose by 17 basis points compared with the first quarter of 2009 to 0.65 percent. Credit risk-weighted assets fell by 2 per cent from €35.3 billion to €34.5 billion, mostly as a result of reduced lending to corporates and financial institutions and the growth of the repo portfolio, which has a lower risk-weighting requirement.

Provisioning for impairment losses fell by €149 million to €28 million. This decline reflected the high level of provisions for specific impairment losses required by RZB AG in the first quarter of 2009, mainly on lending to Icelandic financial institutions. Total net provi-sions for portfolio impairments, which mainly related to RZB AG's key accounts portfolio, amounted to €6 million. The non-performing loan ratio rose by 0.6 percentage points to 2.6 per cent.

Net fee and commission income in the region was down slightly by 3 per cent or €1 million to €39 million. Net income from the loan and guarantee business was €14 million. The securities business contributed net income of €21 million. Net income from foreign exchange, notes and coins and precious metals was a further €5 million in the first quarter. The segment result was dragged down by expenses of €9 million relating to an internal CDS transaction which is earnings-neutral at Group level.

Net trading income came to €79 million, a decline of 38 per cent on the first quarter last year. Net income from interest-related trading was €124 million, all of which was generated by RZB AG and derived from the derivatives business (€103 million) and mark-to-market gains on securities held in the trading portfolio (€23 million). This was offset by a net loss of €40 million on liabilities desig-nated at fair value. Currency trading at RZB AG accounted for a further €8 million of net income. Net income from equity-related trading, which derived solely from Raiffeisen Centrobank, fell by 41 per cent to €6 million. There was a net loss of €20 million on other trading transactions.

Net income from derivatives amounted to minus €43 million and reflected valuation losses on credit derivatives (mostly interest rate swap transactions).

Net income from financial investments was €83 million, following a loss of €57 million in the first quarter of 2009. This marked im-provement reflected write-ups of securities.

General administrative expenses were up 13 per cent or €17 million over the first quarter of 2009 to €151 million. Staff expenses were up by 2 per cent, or €2 million, to €79 million, reflecting the 9 per cent increase in average staff numbers to 3,227. Other administrative expenses rose by 33 per cent or €14 million to €57 million. Depreciation, amortization and write-downs rose by 8 per cent to € 15 million as a result of increased investment in software. As operating income fell 14 per cent in the Austria segment (as defined in the reporting segment definitions, p. 22), while general administrative expenses increased, the segment's cost/income ratio rose by 13 percentage points to 52.9 per cent.

Other net operating income was €14 million. This line item largely comprises intra-group allocations of head office costs and a number of smaller income and expense items.

The income tax expense was negative €20 million (i.e. income of €20 million) as a result of the recognition of deferred taxes. This resulted from temporary differences in the valuation of securities in 2009 between the financial statements under IFRS and the financial statements for tax purposes. Profit after tax and minority interests came to €169 million.

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26 Segment Reports

Central Europe

1_{as at 31 March}

In Central Europe, profit before tax was €62 million in the first quarter of 2010, up 45 per cent or €19 million over the previous year’s level. Although net allocations to provisions for impairment losses increased slightly, higher net interest income and net income from financial investments were primarily responsible for raising pre-tax profits. The segment’s return on equity before tax rose by 0.8 per-centage points to 9.9 per cent.

Net interest income in the region rose by 13 per cent in the first quarter to €260 million. Poland registered the largest increase, driven both by improved asset-side margins on loans as well as lower interest cost for customer deposits in the context of a gradual easing of competitive conditions on the money market. The Czech Republic also generated considerable growth in net interest income, primarily due to loans for retail customers and decreasing interest costs for customer deposits. Slovakia benefited from higher margins on the

in € million 1/1-31/3/2010 1/1-31/3/2009 Change

Net interest income 260 231 12.7%

of which current income from associates 0 0 –

Provisioning for impairment losses (111) (105) 5.4%

Net interest income after provisioning 149 126 18.9%

Net fee and commission income 108 99 8.7%

Net trading income 4 30 (85.2%)

Net income from derivatives (4) 1 –

Net income from financial investments 21 (10) –

General administrative expenses (214) (204) 5.3%

of which staff costs (103) (98) 5.0%

of which other administrative expenses (92) (86) 6.4%

of which depreciation/offs/write-offs (20) (19) 2.1%

Other net operating income (5) 2 –

Net income from disposal of group assets 4 0 >500.0%

Profit before tax 62 43 44.5%

Income taxes (14) (11) 27.5%

Profit after tax 48 32 50.3%

Minority interests in profit (25) (19) 32.3%

Profit after minorities 23 13 76.9%

Share of profit before tax 14.7% 24.3% (9.6 PP)

Share of profit after tax 12.4% 22.2% (9.8 PP)

Risk-weighted assets (credit risk)1 _{21,668 22,371 (3.1%)}

Total own funds requirement1 _{1,985 2,073 (4.2%)}

Total assets1 _{33,925 32,879 3.2%}

Liabilities1 _{31,163 30,599 1.8%}

Cost/income ratio 58.3% 56.3% 2.0 PP

Average equity 2,525 1,877 34.5%

Return on equity before tax 9.9% 9.1% 0.8 PP

Average number of staff 12,902 14,088 (8.4%)