RBI: Third Quarter Report 2019 - Core revenues up 8 per cent, ongoing strong loan growth
Loans to customers up 14 per cent YTD mainly at head office, in Russia and Central Europe.
• Positive development of core revenues (net interest income and net fee and commission income up 8 per cent year-on-year, adjusted for revenues from Polish core banking operations sold in 2018)
• Loans to customers up 14 per cent YTD mainly at head office, in Russia and Central Europe
• Consolidated profit of € 874 million
• Net trading income impacted by fair value result on hedges and on liabilities which neutralize over lifetime of portfolios
• Net interest margin improved 5 basis points quarter-on-quarter to 2.46 per cent
• Risk costs remain very low (0.13 per cent provisioning ratio)
• NPE ratio further improved to 2.3 per cent
• CET1 ratio increased to 13.7 per cent including YTD results
In the first three quarters of 2019, Raiffeisen Bank International (RBI) generated a consolidated profit of € 874 million. The year-on-year decline must be seen in the light of the very good result of the comparative period, which had been supported by an exceptionally high net release under impairment losses on financial assets due to releases of loan loss provisions and gains from sales of non-performing loans. As expected, this result could not be achieved, but RBI continued its positive business development.
“We recorded very pleasing earnings growth during the first nine months of the year,” said CEO Johann Strobl. “Credit growth exceeded our expectations as well despite the economic slowdown,” Strobl continued.
Adjusted for revenues from the Polish banking operations sold in 2018, net interest income and net fee and commission income increased significantly, with these core revenues up 8 per cent year-on-year.
General administrative expenses increased € 17 million year-on-year to € 2,245 million. The cost/income ratio increased 4.0 percentage points to 59.6 per cent.
Moderate impairment losses on financial assets
“Risk costs remain at a very moderate level,” Strobl said.
Impairment losses on financial assets amounted to € 80 million in the reporting period. The NPE ratio decreased 0.4 percentage points since the start of the year to 2.3 per cent. The NPE coverage ratio improved 2 percentage points to 60.2 per cent.
Total capital ratio (fully loaded) at 17.4 per cent
The common equity tier 1 ratio (fully loaded) was 13.4 per cent, the tier 1 ratio (fully loaded) was 14.8 per cent and the total capital ratio (fully loaded) was 17.4 per cent. The capital ratios including the eligible interim profit of the third quarter would have been higher by 33 basis points than the ratios shown.
Net interest income was up 3 per cent or € 27 million quarter-on-quarter to € 866 million. The net interest margin rose 5 basis points to 2.46 per cent.
General administrative expenses amounted to € 748 million in the third quarter, a € 25 million decrease compared to the previous quarter.
In the third quarter, impairment losses on financial assets amounted to € 68 million, € 66 million higher than in the previous quarter.
Consolidated profit declined € 42 million to € 303 million due to higher impairment losses on financial assets.
RBI will pursue loan growth with an average yearly percentage increase in the mid-single digit area.
The provisioning ratio for FY 2019 is expected to be below 45 basis points.
The bank anticipates that the NPE ratio will further reduce.
RBI aims to achieve a cost/income ratio of around 55 per cent in 2021.
In the coming years the bank targets a consolidated return on equity of approximately 11 per cent.
It seeks to maintain a CET1 ratio of around 13 per cent in the medium term.
Based on this target, RBI intends to distribute between 20 and 50 per cent of the consolidated profit.
You can access the online version of the quarterly report at http://qr032019.rbinternational.com, the German version is available at http://zb032019.rbinternational.com. You can also order printed copies there.
RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 13 markets of the region are covered by subsidiary banks. Additionally, the RBI Group comprises numerous other financial service providers, for instance in leasing, asset management or M&A.
Around 47,000 employees service 16.5 million customers through approx. 2,100 business outlets, the by far largest part thereof in CEE. RBI's shares are listed on the Vienna Stock Exchange. The Austrian Regional Raiffeisen Banks own around 58.8 per cent of the shares, the remainder is in free float. Within the Austrian Raiffeisen Banking Group, RBI is the central institute of the Regional Raiffeisen Banks and other affiliated credit institutions.
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