Market environment
After a moderate GDP increase of just over 3% in 2003, economic growth will slightly accelerate in 2004, benefiting from a more favourable international environment. However, a decline in the inflow of international aid after the reconstruction phase will have a dampening effect. On the other hand, this will reduce imports and thus improve the current account. In view of the structural problems the country is facing, the current account will continue to show a deficit. The currency board, which helped to keep the inflation rate down at an annual average of only 1% in 2003, and a cautious fiscal policy contribute to a stable operating environment for the business sector.

Profile
The agreement to purchase a majority interest in Central profit banka d.d. Sarajevo (CPB) was signed on 11 June 2003, and the closing took place on 6 October 2003. In 2004, the International Finance Corporation (IFC), a member of the World Bank Group, will increase its equity interest of currently 10% to 19% by way of a capital increase. Together with HVB Banka Bosna i Hercegovina d.d. Sarajevo (HVB BiH), which was opened in September 2002, Bank Austria Creditanstalt became the fourth largest bank in the country, with a market share of about 7%.

Business development in 2003
HVB Banka Bosna i Hercegovina has total assets of € 42 m and 71 employees. Its activities focus on international and export-oriented local companies and on the upper segment of private customers. At present the bank serves about 3,500 customers. In addition to a wide array of deposit products, the bank offers a comprehensive product range, from retail products such as car loans, home loans and consumer loans all the way to e-banking for corporate customers.

Central profit banka has about 435 employees and total assets of € 242 m. With 27 branches (including smaller business units), the bank serves over 60,000 retail and corporate customers. It has a strong deposit base and is the leading provider of payment services in the country.

In coordination with the existing network of Central profit banka, HVB Banka Bosna i Hercegovina opened two new branches in Sarajevo and Mostar. Another branch is planned to be opened in Banja Luka – in the Serbian part of the country – in 2004.