Raiffeisen Bank International Doubled Net Income
In the first quarter of 2012, RBI´s net interest income was stable at € 875m (down 1.0% y-o-y), the operating income decreased slightly to € 1,295m (down 3.4% y-o-y). RBI´s Core Tier 1 ratio was up to 10.2%.
Raiffeisen Bank International AG (RBI) posted a consolidated profit of € 541m 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: € 270m). "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 tax increased by 69.1 per cent to € 685m (Q1: € 405m) and its profit after tax rose by 87.9 per cent to € 574m (Q1 2011: € 305m). Earnings per share increased from € 1.13 in the first quarter of 2011 by € 1.39 to € 2.52.
RBI's comprehensive income developed positively despite a slight decrease in operating income, which amounted to € 1,295m in the first quarter of 2012 (Q1 2011: € 1,341m). On the one hand, this was due to significantly lower net provisioning for impairment losses, which fell by 26.5 per cent to € 153m (Q1 2011: € 208m), 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 € 159m from further sales of the Group headquarters' securities portfolio were realized. In addition, a profit before tax of € 113m was earned on the buyback of € 358m of hybrid bonds (hybrid tier 1 capital).
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 (€ 9m) to € 875m, 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.
In total, RBI's operating result amounted to € 542m, which represents a decline of 7.8 per cent compared to the first quarter of 2011.
Net provisioning for impairment losses further decreased compared to the previous year, by 27 per cent or € 55m to € 153m, 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 € 283m to € 7,338m in the first quarter of 2012, with € 71m due to foreign exchange movements. By country, the growth is mostly split between Hungary, Southeastern Europe and Austria. Therefore, the NPL ratio increased 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.
At € 753m, 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 € 2m to € 381m. 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 € 3m to € 284m.
As of 31 March 2012, the total assets of RBI amounted to € 148.8bn, up 1 per cent or € 1.8bn 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 € 82.5bn, 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 € 0.9bn to € 30.1bn; the largest growth came from Central Europe and Russia. Deposits from corporate customers fell by € 0.3bn to € 35.3bn, 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.
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 € 538m to € 11,474m compared to the end of 2011. In total, this results in an excess cover ratio of 83.5 per cent or € 5,759m, 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.
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 Österreich 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.
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 14m 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.