RBI doubled profit and increased capital ratio significantly

Publish date: Astazi, 24-05-2012
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  •  Net interest income stable at € 875 million (Q1 2011: € 884 million) 
  •  Operating income slightly down by 3.4 per cent to € 1,295 million (Q1 2011: € 1,341 million) 
  •  General administrative expenses remained unchanged at € 753 million (Q1 2011: € 753 million) 
  •  Net provisioning for impairment losses fell by 26.5 per cent to € 153 million (Q1 2011: € 208 million) 
  •  Profit before tax improved by 69.1 per cent to € 685 million (Q1 2011: € 405 million)  
  •  Consolidated profit strongly increased by 100.4 per cent to € 541 million (Q1 2011: € 270 million) 
  •  Non-performing loan ratio increased slightly to 8.9 per cent (up 0.2 percentage points compared to year-end 2011)  
  •  Coverage ratio declined to 66.8 per cent (down 1.6 percentage points compared to year-end 2011) 
  •  Core Tier 1 Ratio (total risk) significantly increased to 10.2 per cent (up 1.2 percentage points compared to year-end 2011) 
  •  Tier 1 ratio (total risk) increased to 10.7 percent (up 0.8 percentage points compared to year-end 2011)  
  •  EBA target ratio fulfillment for RZB Group as planned  

All figures are based on International Financial Reporting Standards (IFRS).

Raiffeisen Bank International AG (RBI) posted a consolidated profit of € 541 million in the first quarter of 2012, which represents an increase of 100.4 per cent compared to the first quarter of the preceding year (Q1 2011: € 270 million). "Despite the challenging environment, we were able to maintain the previous year's success with our first quarter results. Even deducting the one-off effects we can be very satisfied with the profit we have achieved," said Herbert Stepic, CEO of RBI. RBI's profit before taxincreased by 69.1 per cent to € 685 million (Q1: € 405 million) and its profit after taxrose by 87.9 per cent to € 574 million (Q1 2011: € 305 million). Earnings per shareincreased from € 1.13 in the first quarter of 2011 by € 1.39 to € 2.52. 

Good results due to lower provisioning and positive market movements RBI's comprehensive income developed positively despite a slight decrease in operating income, which amounted to € 1,295 million in the first quarter of 2012 (Q1 2011: € 1,341 million). On the one hand, this was due to significantly lower net provisioning for impairment losses, which     fell by 26.5 per cent to € 153 million (Q1 2011: € 208 million), as well as positive movements in the market. On the other hand, two one-off effects in connection with the requirements of the European Banking Authority (EBA) to achieve a total core tier 1 ratio of 9 per cent (applicable for the RZB Group) resulted in positive contributions to earnings: Pre-tax earnings of € 159 million from further sales of the Group headquarters' securities portfolio were realized. In addition, a profit before tax of € 113 million was earned on the buyback of € 358 million of hybrid bonds (hybrid tier 1 capital).  

Net interest income decreased slightly  

Although the net interest income for the first three months of 2012 was down compared with the previous year's first quarter by 1 per cent (€ 9 million) to € 875 million, it nevertheless made the most important contribution to operating income (68 per cent, up by two percentage points). 

The key driver of this trend was the net interest margin (the ratio of net interest income to average total assets), which fell by 25 basis points to 2.37 per cent year-on year. This decrease was caused mainly by the development in Central Europe, where the interest margin dropped from 3.36 per cent to 2.82 per cent. 

Net fee and commission income decreased compared to the first quarter of 2011 by 3 per cent or € 11 million to € 346 million. The net income from the loan and guarantee business showed a particularly sharp decline, decreasing by 19 per cent or € 14 million to € 60 million. This was mainly attributable to lower credit fees in Romania. 

Net trading income declined by 34 per cent or € 41 million to € 82 million year-on-year. The key factor here was the valuation income from capital guarantees which made a negative contribution of € 6 million due to the decline in long-term interest rates, compared to € 25 million in the first quarter of 2011. 

In total, RBI's operating result amounted to € 542 million, which represents a decline of 7.8 per cent compared to the first quarter of 2011. 

Net provisioning for impairment losses declined by 27 per cen

Net provisioning for impairment losses further decreased compared to the previous year, by 27 per cent or € 55 million to € 153 million, as the situation improved particularly in the CIS Other and Group Corporates segments. In Ukraine, the provisions for retail customers in particular were reduced significantly because of the improved quality of the portfolio and higher income from the collection of collateral. In the Group Corporates segment, provisions were released specifically in the Group headquarters' corporate customer business. In the other segments, allocations to provisioning also fell slightly or remained at the same level as in 2011. 

The net provisioning ratio fell by 34 basis points to 0.81 per cent, well below the 1 per cent mark. 

Non-performing loans to non-banks increased by € 283 million to € 7,338 million in the first quarter of 2012, with € 71 million due to foreign exchange movements. By country, the growth is mostly split between Hungary, Southeastern Europe and Austria. Therefore, the NPL ratioincreased by 25 basis points to 8.9 per cent. The coverage ratio fell by 1.6 percentage points  to 66.8 per cent due to a high level of well-collateralized non-performing loans in Southeastern Europe and Austria. 

ROE before tax increased to 25.1 per cent 

Return on equity before tax, which is crucial for an assessment of business performance, rose by 9.5 percentage points to 25.1 per cent, mainly because of the higher profit.  

General administrative expenses at the same level as in previous year 

At € 753 million, general administrative expenses remained at exactly the same level as in the comparable period of the previous year. Lower income, however, meant that the cost/income ratio increased by 2.0 percentage points to 58.2 per cent. 

The largest item under general administrative expenses was staff expenses which accounted for 51 per cent and which rose slightly overall by € 2 million to € 381 million. While it increased in Russia, Ukraine and Austria, it declined in Hungary, the Czech Republic and Romania. 

The average number of staff decreased by 815 to 59,027 year-on-year. The most significant declines were posted in Ukraine (minus 326), Hungary (minus 283), Romania (minus 232), Russia (minus 227) and Croatia (minus 113) as a result of staff reductions. This contrasts with growth in Poland (plus 120) and Slovakia (plus 108). 

As of 31 March 2012, RBI had 58,366 employees, which represents a decline of 895 in comparison to year-end 2011. 

Other administrative expenses remained virtually stable, falling by 1 per cent or € 3 million to  € 284 million.  

Total assets increased by 1 per cent compared to year-end 2011 

As of 31 March 2012, the total assets of RBI amounted to € 148.8 billion, up 1 per cent or € 1.8 billion on the end of 2011. Only a very small part of this was due to currency effects. The increase in assets resulted from higher loans and advances to customers and the higher cash reserve, while an increase in deposits from banks and customers led to an increase in liabilities. 

Loans and advances to customers accounted for the largest share of assets. These came to 52 per cent of total assets and rose by 1 per cent to € 82.5 billion, specifically due to higher loans and advances to the public sector at Group headquarters and growth in the credit business in Russia. 

Customer deposits from retail customers increased by € 0.9 billion to € 30.1 billion; the largest growth came from Central Europe and Russia. Deposits from corporate customers fell by € 0.3 billion to € 35.3 billion, with the biggest decline at Group headquarters in Vienna. 

The loan/deposit ratio remained virtually unchanged at 122 per cent because both deposits and loans and advances increased almost on par with each other.                                               

Tier 1 ratio increased to 10.7 per cent 

  RBI's balance sheet equity, consisting of consolidated equity, consolidated profit and the capital of the non-controlling interests, increased by 5 per cent or € 538 million to € 11,474 million compared to the end of 2011. 

In total, this results in an excess cover ratio of 83.5 per cent or € 5,759 million, an improvement of 14.8 percentage points. Based on total risk, the core tier 1 ratio was 10.2 per cent, with a tier 1 ratio of 10.7 per cent. The own funds ratio increased to 14.7 per cent. 

EBA target ratio fulfillment for RZB Group as planned  

At the end of October, the European Banking Authority (EBA) presented a target core tier 1 ratio, according to the EBA's definition, of 9 per cent for the systemically-relevant banks in Europe. In Austria, this group of banks includes Raiffeisen Zentralbank Osterreich AG (RZB) as the superordinate financial institution of the RZB Group (Kreditinstitutsgruppe), of which RBI is the largest sub-group. 

The new minimum capital ratio must be reached by 30 June 2012. Taking into consideration measures already completed or close to their conclusion, the RZB Group currently reaches a core tier 1 ratio according to the EBA's definition of 9.3 per cent and is therefore in line with the plan.  

Network of outlets further optimized 

Compared with year-end 2011, the number of business outlets decreased by 97 to 2,831, which is due to an optimization of the branch network in Ukraine. In total, RBI serviced around 14 million customers at the end of March. With the closing of the Polbank acquisition at the end of April 2012, the number of business outlets will increase by 320, and the number of customers by approximately 660,000. 

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You can access the interim report at http://www.rbinternational.com/ir/berichte. The English version is available at http://www.rbinternational.com/ir/reports.  

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Raiffeisen Bank International AG (RBI) regards both Austria, where it is a leading corporate and investment bank, and Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialised financial service providers in 17 markets.  

RBI is the only Austrian bank with a presence in both the world's financial centres and in Asia, the group's further geographical area of focus. 

In total, around 61,300 employees service about 14.6 million customers through around 3,100 business outlets, the great majority of which are located in CEE (these figures include Polbank).                                               

RBI is a fully-consolidated subsidiary of Raiffeisen Zentralbank österreich AG (RZB). RZB indirectly owns around 78.5 per cent of the common stock, the remainder is in free float. RBI's shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group, and serves as the head office of the entire RZB Group, including RBI. 

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