Raiffeisen Bank International with consolidated profit of € 411 million in the first three quarters 2013
- Net interest income increases by 7.0 per cent to € 2,776 million (Q3 2012: € 2.596 million)
- Net interest margin up by 48 basis points year-on-year to 3.08 per cent
- Net fee and commission income increases by 7.3 per cent to € 1,203 million (Q3 2012: € 1,120 million)
- Operating income up by 6.7 per cent to € 4,267 million (Q3 2012: € 4,000 million)
- General administrative expenses rise by 4.0 per cent to € 2,430 million (Q3 2012: € 2,336 million)
- Net provisioning for impairment losses up by 28.3 per cent to € 800 million (Q3 2012: € 623 million)
- Profit before tax declines by 37.6 per cent to € 696 million due to positive one-off effects in 2012 (Q3 2012: € 1,115 million)
- Consolidated profit decreases by 51.2 per cent to € 411 million (Q3 2012: € 842 million)
- Non-performing Loan Ratio increases to 10.3 per cent (up 0.5 percentage points compared to year-end 2012)
- Core Tier 1 Ratio (total risk) at 10.1 per cent (year-end 2012: 10.7 per cent)
- Earnings per share decrease from € 3.55 in the comparative period of 2012 to € 1.34
All figures are based on International Financial Reporting Standards (IFRS).
Despite the ongoing difficult market environment and subdued economic forecasts, Raiffeisen Bank International AG (RBI) generated in the first three quarters of 2013 a profit before tax of € 696 million. The fall of € 419 million versus the comparable period was primarily attributable to one-off effects in 2012 such as the sale of bonds and the hybrid tier 1 capital buyback totaling € 269 million. Profit after tax declined by 48.0 per cent to € 461 million (Q3 2012: € 889 million) due to the increased tax quota. The consolidated profit declined by 51.2 per cent to € 411 million (Q3 2012: € 842 million). Earnings per share declined by € 2.21 to € 1.34. In the same period last year it was € 3.55.
"Thanks to our substantially improved net interest margin, we were able to increase the operating income by almost 7 per cent within the first nine months. It is a great partial success that our income increased stronger than our expenses. But we want to become significantly better and we are therefore aiming at holding the 2016 cost base flat compared to 2012. In view of the herewith achieved inflation absorption this would correspond to savings of around € 450 million in the next three years. With "Fit for Future 2016" we have developed and started a comprehensive cost savings programme for the entire Group in order to reach this goal", said RBI CEO Karl Sevelda.
Return on Equity before tax declined by 5.4 percentage points to 8.6 per cent.
Operating income increased by 6.7 per cent
Operating income increased by 6.7 per cent or € 267 million to € 4,267 million year-on-year (Q3 2012: € 4,000 million). Thereby, net interest income also developed favourably:
The net interest margin (calculated on interest-bearing assets) improved by 48 basis points to 3.08 per cent due to an optimisation of liquidity and repricing measures. This resulted in a 7 per cent increase in net interest income to € 2,776 million.
Net fee and commission income rose 7 per cent, or € 82 million, to € 1,203 million year-on-year. Of this increase, € 53 million is attributable to a significant improvement in net income from payment transfer business. This resulted from a volume-driven increase in income from credit card business in Russia and the Polbank consolidation.
Net trading income rose 9 per cent, or € 20 million, to € 240 million year-on-year. Group head office recorded an improved net income from currency-based transactions, credit derivatives business and other transactions, which offset the decline in net income from interest-based transactions, amounting to € 61 million, due to valuation losses on derivatives.
In total, RBI's operating result amounted to € 1,837 million for the first three quarters of 2013, which represents a rise of 10.4 per cent compared to the same period of 2012 (Q3 2012: € 1,664 million).
Net provisioning for impairment losses increased
Net provisioning for impairment losses rose 28 per cent, or € 176 million, to € 800 million compared to the same period last year. This was due to the development in portfolio-based loan loss provisions, which in the previous year included a net release of € 90 million (mainly at Group head office and in Russia). However, in the reporting period, net allocations of € 28 million were made for portfolio-based loan loss provisions. Individual loan loss provisions rose € 62 million to € 781 million. The Group Corporates segment reported a significant increase in individual loan loss provisions, whereas the Central Europe segment recorded a decrease of 11 per cent.
In the third quarter of 2013, the portfolio of non-bank non-performing loans was up € 340 million to a total of € 8,478 million. On a currency-adjusted basis, the Group Corporates segment posted the largest increases (up € 371 million). Ukraine, on the other hand, reported net releases of € 50 million. The NPL ratio rose to 10.3 per cent whereas the NPL coverage ratio fell to 66.1 per cent.
Higher general administrative expenses
General administrative expenses rose € 94 million to € 2,430 million compared to the same period last year; most of which was attributable to the consolidation and integration of Polbank in May 2012. Due to the higher operating income, the cost/income ratio fell 1.5 percentage points to 56.9 per cent.
Staff expenses, at 50 per cent, provided the largest component in general administrative expenses: a 4 per cent increase, or € 48 million, to € 1,227 million. This increase mainly resulted from the Polbank consolidation, salary adjustments in Russia, and collective contractual wage increases at Group head office.
The number of employees (full-time equivalents) fell by 1,312 or 2.2 per cent to 58,772 since year-end 2012. The largest reductions occurred in Ukraine, Romania, Poland, Hungary and Bulgaria.
Other administrative expenses increased by 4 per cent, or € 36 million, to € 920 million. Although some countries posted reductions, the Polbank consolidation, higher IT expenses (mainly in Poland and Russia), and an increase in advertising campaigns in Russia, resulted in an overall increase.
Depreciation of tangible and intangible fixed assets rose 3 per cent, or € 9 million, to € 283 million. This is mainly attributable to the impairment of a software project in the Czech Republic.
As of September 30, 2013 the number of business outlets was 3,051 which equates to a reduction of 55 business outlets (1.77 per cent) compared to year-end 2012. In the same period the number of customers increased by 1.4 per cent or 200,000 customers to 14.4 million.
Total assets declined 4 per cent compared to the end of 2012
Compared to the end of 2012, RBI's total assets declined 4 per cent, or € 5.1 billion, to € 131 billion. The year-on-year decline was even more pronounced, down 11 per cent, or € 16.1 billion. This trend is primarily attributable to the ongoing optimization of liquidity.
Compared to the end of 2012, loans and advances to customers after deduction of loan loss provisions fell € 1 billion, to € 76.8 billion. The decline was due to a decrease of € 1.4 billion in receivables from repurchase and securities lending transactions. Credit business with corporate customers contracted by € 1.8 billion, notably in Austria, Malta and Russia. In contrast, business with retail customers increased € 0.5 billion and business with the public sector was up € 0.3 billion. Business with retail customers increased significantly in Russia whereas it fell in Poland due also to currency effects.
In contrast, deposits from customers rose € 1.2 billion to € 67.5 billion. Whereas deposits from corporate customers (notably at Group head office) grew € 2.0 billion and those from the public sector (predominantly in Russia) were up € 1 billion, deposits from retail customers fell € 1.8 billion. The largest declines occurred in Poland (down € 0.9 billion), Hungary (down € 0.4 billion) and the Czech Republic (down € 0.2 billion).
Core Tier 1 Ratio at 10.1 per cent
RBI's equity on the statement of financial position, consisting of consolidated equity, consolidated profit and capital of non-controlling interests, declined 5 per cent, or € 519 million, to € 10,354 million versus year-end 2012.
The excess cover ratio fell 9.3 percentage points to 85.2 per cent, representing an excess cover of € 5,637 million. Based on total risk, the core tier 1 ratio came to 10.1 per cent (including 9 months retained earnings 10.2 per cent), with a tier 1 ratio of 10.6 per cent (including 9 months retained earnings 10.8 per cent). The own funds ratio declined to 14.8 per cent.
Consolidated profit in Q3 rose by about 12 per cent compared to previous quarter
Compared to the second quarter of 2013, net interest income fell 3 per cent, or € 31 million, to € 940 million in the third quarter of 2013. The net interest margin (calculated on interest-bearing assets) was down 10 basis points quarter-on-quarter to 3.15 per cent. This was due in particular to lower interest income from derivative financial instruments, as well as in Asia.
The consolidated profit for the third quarter was at € 134 million, which is an increase by € 14 million or 12.1 per cent compared to the previous quarter.
In the context of the expected overall economic developments, particularly in CEE, RBI is aiming for a return on equity before tax of around 15 per cent in the medium term. This is excluding any capital increases, as well as unexpected regulatory requirements from today's perspective.
In 2013, RBI aims to maintain loans and advances to customers at the level of the previous year. In the current year RBI expects a slight increase in the net interest margin. From the customer standpoint, RBI plans to retain its Corporate Customers division as the backbone of its business and in the medium term to expand the proportion of business volume accounted for by its Retail Customers division.
In light of the economic prospects, the situation remains tense in several of RBI's markets. Therefore RBI expects an increase in the net provisioning requirement to between € 1,100 million and € 1,200 million for 2013.
In 2013, RBI is once again paying increased attention to cost development and has started a comprehensive program to increase efficiency. RBI expects a flat or slightly increasing cost base, particularly due to the first-time full year consolidation of Polbank.
Against the backdrop of a permanently changing regulatory environment and further strengthening of the balance sheet structure RBI is continuously evaluating the level and structure of its regulatory capital to be able to act promptly and flexibly. Depending on market developments, a capital increase also continues to be a possible option.
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. 15 markets of the region are covered by subsidiary banks, additionally the Group comprises numerous other financial service providers, for instance in the fields of leasing, asset management and mergers and acquisitions.
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 59,000 employees service about 14.4 million customers through more than 3,000
business outlets, the great majority of which are located in CEE.
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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