RBI: Consolidated Profit rises by 24.4 per cent y-o-y to € 344 million
- Net interest income increases by 6.4 per cent year-on-year to € 1,954 million (HY/2013: € 1,836 million)
- Operating income decreases by 2.4 per cent to € 2,747 million (HY/2013: € 2,813 million)
- General administrative expenses decrease by 6.1 per cent to € 1,519 million (HY/2013: € 1,617 million)
- Net provisioning for impairment losses increases by 21.1 per cent to € 568 million (HY/2013: € 469 million)
- Profit before tax increases by 10.9 per cent to € 518 million (HY/2013: € 467 million)
- Profit after tax increases by 19.1 per cent to € 371 million (HY/2013: € 311 million)
- Non-performing loan ratio of 10.7 per cent stable compared to year-end 2013
- Common equity tier 1 ratio (transitional) increases by 1.4 percentage points compared to year-end 2013 to 12.1 per cent
- Earnings per share decrease by 3.2 per cent y-o-y to € 0.88 (HY/2013: € 0.91)
All figures are based on International Financial Reporting Standards (IFRS)
"We look back on an intense first half of 2014, which was characterized by regulatory topics such as the Asset Quality Review, ECB's stress test as well as the geopolitical crisis in Ukraine. Despite these difficult circumstances we managed to achieve a solid semi-annual result," Karl Sevelda, CEO of Raiffeisen Bank International AG (RBI), summarized the developments of the first half of 2014.
In the first half of 2014, RBI generated a profit before tax of € 518 million, which corresponds to an increase of 11 per cent, or € 51 million, year-on-year. Operating result also increased, up 3 per cent to € 1,228 million, due to improved interest margins and lower general administrative expenses.
Profit after tax increased 19 per cent to € 371 million year-on-year, while the tax rate fell to 28 per cent. Profit attributable to non-controlling interests decreased € 8 million to minus € 27 million. This resulted in a consolidated profit of € 344 million.
"The most important conclusion we can conduct from our result: RBI is in principle well positioned. Our tried and tested business model proves its strength also in difficult times. Our common equity tier 1 ratio lies at above 12 per cent. This is three times the currently valid legal requirement. RBI does not generate its main business in investment banking, but is a classical universal bank, thus this is a very comfortable ratio," Sevelda summed up. With regard to the current situation in Russia he emphasized: "The impact of the sanctions on RBI's business is indeed very low. However, the further the run for sanctions progresses, the harder it gets to approach each other again. I am convinced that good economic relations represent an important precondition for a peaceful coexistence. Therefore, I do not see any reason to question our business in Russia. We still consider Russia to be an attractive banking market in the medium and long-term and therefore we will stay in this market."
Due to the capital increase, carried out at the beginning of 2014, the average number of shares outstanding rose to 278.5 million in the first half of 2014 (comparable period of the previous year: 194.9 million). This resulted in earnings per share of € 0.88. In the same period of the previous year, this figure was € 0.91 based on the lower number of shares outstanding.
Net interest income rose 6 per cent
Operating income declined 2 per cent, or € 67 million, to € 2,747 million year-on-year.
In the first half of 2014, net interest income rose 6 per cent, or € 117 million, to € 1,954 million year-on-year.
General administrative expenses declined 6 per cent - cost/income ratio improved to 55 per cent
General administrative expenses declined € 98 million to € 1,519 million, compared to the same period of the previous year. The cost/income ratio improved 2.2 percentage points to 55.3 per cent.
The largest component in general administrative expenses was staff expenses at 51 per cent, which decreased 5 per cent, or € 39 million, to € 776 million.
Increase in net provisioning for impairment losses mainly due to crisis in Ukraine
Net provisioning for impairment losses rose 21 per cent, or € 99 million, to € 568 million compared to the same period of the previous year, primarily as a result of higher net provisioning for individual loan loss provisions in Ukraine. Net allocations for portfolio-based loan loss provisions, however, were down € 6 million. This was set against reduced income from the sale of impaired loans.
In the reporting period, the NPL ratio, at 10.7 per cent, remained unchanged from the level at the end of 2013. Non-performing loans were set against loan loss provisions of € 5,642 million, improving the NPL coverage ratio to 65.3 per cent, compared to 63.1 per cent at the year-end.
Total capital rose to over € 13 billion
As of 30 June 2014, total capital of RBI under Basel III amounted to € 13,114 million. This corresponds to an increase of € 428 million compared to the year-end figure, calculated under Basel II, primarily due to the capital increase at the beginning of 2014. This was set against by the € 1,750 million repayment of state participation capital in June 2014. The development of the Ukrainian hryvnia, Russian rouble, and Hungarian forint, also had a negative impact.
The excess cover ratio was 110.4 per cent compared to 98.5 per cent as at year-end 2013, which was attributable to the capital increase carried out at the beginning of 2014. Based on total risk, the common equity tier 1 ratio (transitional) came to 12.1 per cent, with a total capital ratio of 16.8 per cent.
Consolidated profit rose 14 per cent q-o-q
Compared to the first quarter of 2014, net interest income remained virtually stable at € 975 million (down € 4 million) in the second quarter of 2014. Net fee and commission income was up € 14 million to € 389 million, compared to the first quarter of 2014.
Net trading income improved from minus € 19 million in the previous quarter to € 28 million. This was triggered by an increase in net income from currency-based transactions, predominantly in Ukraine, where lower valuation losses from foreign currency positions were recognized due to the sharp currency devaluation in the first quarter.
The consolidated profit for the second quarter 2014 was at € 183 million, which is an increase by 14 per cent compared to the previous quarter.
RBI expects loans and advances to customers in 2014 to remain at the approximate level of the previous year. The bank anticipates a net provisioning requirement of between € 1,300 million and € 1,400 million in 2014, however, results may be impacted by the ECB Asset Quality Review process and further deterioration of the situation in Ukraine and Russia.
In the course of RBI's cost reduction program, the bank plans to reduce general administrative expenses to below the level of 2012 by 2016. RBI aims to achieve a cost/income ratio of between 50 to 55 per cent by 2016. Costs in 2014 are expected to be below the level of 2013. RBI aims for a return on equity before tax of approximately 15 per cent and a consolidated return on equity of approximately 12 per cent in the medium term.
You can access the online version of the quarterly report at http://qr022014.rbinternational.com. The German version is available under http://zb022014.rbinternational.com. A printed version can also be ordered via that webpage.
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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. 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, more than 56,000 employees service 14.6 million customers through more than 2,900 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 60.7 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.