RBI: 1-9/2020 Results
- Net interest income down 2 per cent year-on-year due to the depreciation of several CEE currencies and key rate cuts; net fee and commission income down 3 per cent, largely due to the lockdowns in the second quarter
- General administrative expenses down 4 per cent year-on-year
- Loans to customers stable year-to-date in euro terms, while up in most countries in local currencies
- Provisioning ratio of 0.72 per cent in the first nine months; increase primarily driven by COVID-19 effects
- Consolidated profit of € 599 million, negatively impacted by higher risk costs and impairments on companies valued at equity (other result)
- Net interest margin declined by 20 basis points quarter-on-quarter to 2.00 per cent mainly due to key rate cuts
- NPE ratio and NPE coverage ratio slightly improved year-to-date to 1.9 per cent and 63.8 per cent, respectively
- CET1 ratio of 13.1 per cent (including result); 2019 initial dividend proposal remains deducted from CET1 ratio (41 basis points)
In the first three quarters of 2020, Raiffeisen Bank International (RBI) generated a consolidated profit of € 599 million. The negative impact on RBI from the recession caused by the COVID-19 pandemic is primarily reflected in impairment losses on financial assets in the amount of € 497 million (an increase of € 417 million). As a result, consolidated profit declined € 276 million year-on-year.
“We can be satisfied with the results for the first nine months considering the very difficult conditions,” said CEO Johann Strobl. “The interest rate cuts as well as the sharp decline in economic activity during the lockdown phases and, in particular, the depreciation of several CEE currencies weigh on our earnings. Strict cost discipline and the consistent implementation of our digitization strategy therefore have top priority.”
General administrative expenses declined € 81 million year-on-year to € 2,164 million. The cost/income ratio decreased 4.0 percentage points to 54.6 per cent.
At 1.9 per cent, the NPE ratio was down 0.2 percentage points from the year-end level, mainly due to the increased loan volumes, while non-performing loans remained more or less unchanged. The NPE coverage ratio improved 2.8 percentage points to 63.8 per cent.
Total capital ratio (fully loaded) at 17.8 per cent
Including the result for the period, the (fully loaded) ratios were as follows: The CET 1 ratio fell 0.9 percentage points to 13.1 per cent, the tier 1 ratio was 15.1 per cent (down 0.3 percentage points), and the total capital ratio was 17.8 per cent (down 0.1 percentage points).
Net interest income declined € 55 million quarter-on-quarter to € 770 million. Also in the third quarter, the development was affected by the measures taken due to the pandemic, especially the key rate cuts in several markets and excess levels of liquidity. The net interest margin was down 20 basis points to 2.00 per cent, mainly as a result of a significant increase in short-term investments and reduced margins due to interest rate cuts relating to COVID-19.
General administrative expenses declined € 29 million quarter-on-quarter to € 690 million.
Impairment losses on financial assets were € 27 million above the level of the previous quarter at € 185 million.
At € 230 million, consolidated profit was € 38 million above the previous quarter’s level.
“We will close this financial year with a profit and generate a consolidated return on equity in the mid-single digit range. Despite the renewed lockdown, we leave our outlook unchanged,” said Johann Strobl.
We expect modest loan growth in 2020.
The provisioning ratio for FY 2020 is currently expected to be around 75 basis points, depending on the length and severity of disruption.
We aim to achieve a cost/income ratio of around 55 per cent in the medium term and are evaluating how the current circumstances will impact the ratio in 2021.
In the medium term we target a consolidated return on equity of approximately 11 per cent. As of today, and based on our best estimates, we expect a consolidated return on equity in the mid-single digits for 2020.
We confirm our CET1 ratio target of around 13 per cent for the medium term.
Based on this target we intend to distribute between 20 and 50 per cent of consolidated profit.
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You can access the online version of the quarterly report at https://www.rbinternational.com/en/investors/reports/quarterly-reports.html.
The German version is available at https://www.rbinternational.com/de/investoren/berichte/quartalsberichte.html.
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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 46,000 employees service 16.8 million customers through approx. 2,000 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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