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Eng
13 Mar 2019

2018: Raiffeisen Bank International posts consolidated profit of € 1,270 million

Net interest income increases 4.2 per cent year-on-year to € 3,362 million
(2017: € 3,225 million)

Operating income increases 3.9 per cent to € 5,298 million
(2017: € 5,098 million)

General administrative expenses increase 1.2 per cent to € 3,048 million
(2017: € 3,011 million)

Impairment losses on financial assets decrease 46.9 per cent to € 166 million (2017: € 312 million)

Profit before tax increases 8.8 per cent to € 1,753 million
(2017: € 1,612 million)

Profit after tax increases 12.2 per cent to € 1,398 million
(2017: € 1,246 million)

Consolidated profit increases 13.8 per cent to € 1,270 million
(2017: € 1,116 million)

Non-performing loan ratio decreases 1.9 percentage points to 3.8 per cent compared to year-end 2017

Common equity tier 1 ratio at 13.4 per cent (fully loaded)

Earnings per share increase to € 3.68 (2017: € 3.34)

 

On 1 January 2018, the new accounting standard for financial instruments (IFRS 9) took effect. In addition to the adoption of IFRS 9, RBI has also changed the presentation of its statement of financial position and parts of the income statement, which is now aligned with the financial reporting standards (FINREP) issued by the European Banking Authority (EBA). With the adoption of the standards, it was also necessary to adjust the figures of the comparable period 2017 and comparable reporting date as at 31 December 2017. The figures for previous periods are only to a limited extent comparable.

In 2018, Raiffeisen Bank International (RBI) generated a consolidated profit of € 1,270 million.

“We significantly exceeded the previous year's very good result and are very satisfied with the 2018 financial year. We markedly improved our capital ratios and lowered our NPL ratio further. We can therefore propose a significantly higher dividend to the Annual General Meeting than in the previous year,” said Johann Strobl, CEO of RBI.

The Management Board has resolved to propose a dividend payment of € 0.93 per share for the 2018 financial year to the Annual General Meeting. This would correspond to a maximum dividend payout of € 306 million and a payout ratio of 24 per cent, respectively.

Operating income was up 4 per cent year-on-year, or € 199 million, to € 5,298 million. Net interest income rose 4 per cent to € 3,362 million driven by lending growth, with group average interest-bearing assets up 3 per cent.

General administrative expenses increased € 37 million year-on year to € 3,048 million. The cost/income ratio improved 1.5 percentage points to 57.5 per cent.

“Despite the sale of the Polish core banking business loans to customers rose by 4 per cent. Lending increased in almost all markets, most strongly in Austria, the Czech Republic, Romania, and Slovakia,” Strobl said.

Impairment losses on financial assets significantly down

 

Impairment losses on financial assets amounted to € 166 million in the reporting period, compared to € 312 million in the prior year.

 

The improvement in the NPL ratio continued in 2018: it declined 1.9 percentage points since

the start of 2018 and stood at 3.8 per cent at the end of December.

The NPL coverage ratio rose a further 10.6 percentage points to 77.6 per cent, primarily due to sales of highly collateralized loans and the first-time application of IFRS 9.

Total capital ratio (fully loaded) at 18.2 per cent

The CET 1 ratio (fully loaded) improved 0.6 percentage points to 13.4 per cent, with the sale of the Polish core banking operations accounting for 0.9 percentage points. The tier 1 ratio (fully loaded) improved by 1.3 percentage points to 14.9 per cent, and the total capital ratio (fully loaded) by 0.3 percentage points to 18.2 per cent.

Comparison of results with the previous quarter

Net interest income was down 2 per cent, or € 13 million, to € 843 million, reflecting a € 35 million decline in Poland due to the sale of the Polish core banking operations, partly offset by higher interest income in a large number of other countries on the back of higher volumes. Net interest margin increased 1 basis point to 2.52 per cent.

At € 819 million, general administrative expenses in the fourth quarter were up 12 per cent, or € 85 million, from € 734 million in the previous quarter.

“In the fourth quarter, we fully utilized the potential for recognition of additional risk provisions under the new IFRS rules. We are also well covered for extraordinary events which are not captured by the risk models,” Strobl said.

In the fourth quarter of 2018, impairment losses on financial assets amounted to € 222 million, compared with € 28 million in the previous quarter. The sharp rise in impairment losses derived mainly from provisions of € 105 million due to fine-tuning of the IFRS 9 models, and provisions of € 54 million for expected credit risks not fully captured by the model due to specific events (primarily potential sanctions relating to Russia).

Consolidated profit reduced by € 319 million to € 97 million. This mainly reflected a € 194 million increase in impairment losses on financial assets and a € 124 million reduction in the operating result, driven primarily by the sale of the Polish core banking operations and seasonal effects relating to general administrative expenses.


Outlook

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 around 45 basis points.

The bank anticipates that the NPL 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 annual report at http://ar2018.rbinternational.com, the German version is available at http://gb2018.rbinternational.com.

* * * * *

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 16.1 million customers through more than 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.

For further information please contact:

Ingrid Krenn-Ditz (+43-1-71 707-6055, [email protected]) or

Christof Danz (+43-1-71 707-1930, [email protected])

http://www.rbinternational.com