Raiffeisen Bank International Ag · VIE:RBI
Raiffeisen Bank International — Investor Day (March 2019)
51 slides from Raiffeisen Bank International's investor day presentation, Mar 14, 2019
Slide 1: Raiffeisen Bank International
Raiffeisen Bank International Investor Presentation London, 14/03/2019
Slide 2: Disclaimer
Disclaimer Certain statements contained herein may be statements of This presentation contains financial and non-financial professional experience in matters relating to investments falling future expectations and other forward-looking statements about information and statistical data relating to RB
Slide 3: Executive Summary
Executive Summary 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview JOHANN STROBL Group Investor Relations 14 March 2019 3
Slide 4: Executive Summary 1-12/2018
Executive Summary 1-12/2018 Consolidated Profit Operating income +14% +4% Driven by operating result Volume driven NII and fee and low cost of risk and commission income 1,116 1,270 increases 5,098 5,298 Stable net interest margin of 2.50% FY2017 FY2018 FY2017 FY2018 NPL Ratio Loans to customers -18
Slide 5: Anti-Money Laundering efforts
Anti-Money Laundering efforts Up-to-date transaction monitoring system Norkom (BAE Systems) One standard-system in the group External verification and optimization Full compliance with legal requirements Fully automated transaction-screening via All alerts are manually reviewed common-standard
Slide 6: Structural growth opportunities vs. the euro area
Structural growth opportunities vs. the euro area Real GDP growth differential to euro area Avg. 2019-2021 total loan growth in EUR yoy in % (2019 – 2021 average in bp) 210 206 200 186 170 156 150 146 138 126 120 110 53 16.7% 13 KO RS SK AL UA BG BiH HU CZ RO HR BY RU AT 11.4% 9.9% 7.4% 6.1% 6.5% 6.
Slide 7: Ongoing convergence in wages and productivity
Ongoing convergence in wages and productivity 100 10% AT 90 Hourly Wages as % of German 2018 8% 80 2021 7% 70 7% 7% 60 6% 5% 5% 5% 5% 5% 50 4% 40 4% HR SK 3% 30 RO 20 BG HUCZ PL 10 0 0 10 20 30 40 50 60 70 80 90 100 HR SK BG AT RO HU CZ Unemployment Real gross value added per hour worked as % of Ger
Slide 8: Strategic Focus in Retail and Corporate
Strategic Focus in Retail and Corporate FY/2018 Loans1 Business Strategic focus Households (y-o-y) mix2 Retail / Corporate Corporates3 Corporates Vienna Croatia EUR 18,163 mn (+25%) 100% EUR 2,361 mn (0%) 59% 38% Czech Republic Ukraine 12% EUR 11,131 mn (+10%) 55% 42% EUR 1,525 mn (+3
Slide 9: We believe in an evolving world
We believe in an evolving world Customers Ecosystem Innovation Partnerships Customer New business Product and Banks won’t be expectations are models and service innovation replaced by or fundamentally regulations are is increasingly become tech changing changing the important companies but playing f
Slide 10: RBI's five digitalization pillars
RBI’s five digitalization pillars We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL GROUP-WIDE & OPEN APIS WORKING CAPABILITIES EXCELLENCE INNOVATION …foster innovation and incorporate new business mod
Slide 11: Investment case
Investment case Positioned for growth in Central, Southeastern and Eastern Europe >> We aim for mid-single digit annual loan growth N W E Costs under control, despite inflation and investments in digital >> We target a 55 per cent cost/income ratio in 2021 S Substantially improved risk profile € >>
Slide 12: Outlook and Russia
Outlook and Russia 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview MARTIN GRÜLL Group Investor Relations 14 March 2019 12
Slide 13: Aiming for 55% cost/income ratio in 2021
Aiming for 55% cost/income ratio in 2021 Costs - since 2017 Income - since 2017 • Tight cost management with only a • 5% loans to customers increase in 2017 and 2018, modest increase in 2018 adjusted for NPL sales and write-offs • Stable NIM despite increasing pressure on asset • Peak in regulatory
Slide 14: Cost pressure in 2019 from wages, IT and digital
Cost pressure in 2019 from wages, IT and digital Czech Republic Russia • Wage inflation driven by • Staff expenses increase due to new FTEs (IT intense competition for insourcing) qualified employees • Increased deposit insurance costs • Investments in digital • Marketing expenses lower vs. 2018 ini
Slide 15: Well-positioned for growth and dividends
Well-positioned for growth and dividends Mid-single digit loan growth 11% RoE We aim to grow at a mid-single digit rate, while We look to consistently generate an 11% RoE maintaining a 13% CET1 ratio • Focus on efficiency • Good growth potential from our exposure to CE, • Improved portfolio quality
Slide 16: RBI in Russia: a robust business model
RBI in Russia: a robust business model Consistently strong shareholder return generation • Consistent performance against a difficult economic backdrop • Strong internal capital generation and a high payout ratio 26% RoE (after tax, 2014-2018 average) ~EUR 1.6 bn cumulative net income since YE/2014
Slide 17: RBI in Russia: a robust business model
RBI in Russia: a robust business model An efficient business with stable revenues Diversified revenues Brand premium Efficient business model 40% cost/income ratio (2014-2018 average) Net Fee Income (1-12/2018) 44%1 40% Payment Business 39% 41% Loan Business Asset Management FX & Securities, Other 1
Slide 18: IFRS9 and Risk Outlook
IFRS9 and Risk Outlook 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview HANNES MÖSENBACHER Group Investor Relations 14 March 2019 18
Slide 19: IFRS 9 impairment provisioning
IFRS 9 impairment provisioning Expected credit loss (ECL) model replaces portfolio loan loss provisions Performing: Stage 1 Stage 1 12 month ECL Significant increase in credit risk: Stage 2 lifetime ECL and qualitative approach Credit-impaired (defaults): Stage 3 lifetime ECL and individual provisio
Slide 20: Credit clock reduces risk cost volatility
Credit clock reduces risk cost volatility Credit cycle peak • Low inflow of new NPE • Reduction of stage 1 and stage 2 impairments Risk costs Credit cycle T1 T2 T3 T4 T5 Current Target Credit Impairment Impairment Credit cycle trough Cycle (LHS) Level (RHS) Level (RHS) • Higher inflow of new NPE • I
Slide 21: Annualized provisioning ratio since 2017
Annualized provisioning ratio since 2017 Provisioning ratio in bps 110 63 82 40 41 14 28 -2 -1 -43 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 • IFRS 9 model fine-tuning in Q4/2018 contributed 82 bps (annualized) to the provisioning ratio • Fine-tuning includes improved forecast
Slide 22: Improved risk profile
Improved risk profile 2018 EBA stress test shows RBI‘s resilience in an economic downturn scenario Toughened stress test parameters still reduced provisioning ratio 8.3% deviation of EU GDP versus baseline Baseline Adverse EBA stress test scenario scenario ~3.3PP increase in unemployment by 20
Slide 23: Provisioning ratio through the cycle
Provisioning ratio through the cycle 2018* • Low inflow of new NPE • High level of write-backs and recoveries Low • Lower concentration risk 2017 (-41bps) Through EBA stress test the cycle baseline scenario T1 T2 T3 T4 T5 High EBA stress test Stress adverse scenario • Higher inflow of new NPE • Low
Slide 24: Q&A
Q&A Group Investor Relations 14 March 2019 24
Slide 25: Digital Transformation
Digital Transformation 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview HANNES CIZEK Group Investor Relations 14 March 2019 25
Slide 26: Group-wide infrastructure and Open API platform
Group-wide infrastructure and Open API platform We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL GROUP-WIDE & OPEN APIS WORKING CAPABILITIES EXCELLENCE INNOVATION …foster innovation and incorporate ne
Slide 27: Merlin platform: integrating RBI Group
Merlin platform: integrating RBI Group DIGITAL CLOUDBASED PLATFORM Connecting Units Groupwide | Enabling Usage of Joint Products | Development of New Services EXTERNAL UX INTERNAL & Frontend Analytics Common Data Format RE-USABLE SERVICES PLATFORM Company Register Data MERLIN Customer Feedback Video
Slide 28: Merlin enables group solutions
Merlin enables group solutions 2018 2019 FIRST (Czech) CORPORATE FIRST RELEASE OF MOBILE NETWORK BANK DIGITAL BANKING SOLUTION CONNECTED SERVICES FIRST SERVICE ID&V INTEGRATED FRONT END CONNECT BOSNIA LIVE IN AT ANALYTICS IN RO SIGNIFICANT ADVANTAGES FOR THE FUTURE Scalable & Shorter Customer Cost-E
Slide 29: Open APIs: ready for future developments
Open APIs: ready for future developments Enabling RBI Group to build innovative products and services Develop new business models | Scale up innovation MAJOR UPCOMING TREND Opportunity for multi-bank account aggregation products Open APIs are boosting internal and external innovation DEFINE OPEN API
Slide 30: Implementation of an adaptive organization
Implementation of an adaptive organization We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL GROUP-WIDE & OPEN APIS WORKING CAPABILITIES EXCELLENCE INNOVATION …foster innovation and incorporate new bus
Slide 31: RBI develops towards an adaptive organization
RBI develops towards an adaptive organization while its digital transformation We have implemented Group-wide infrastructure to facilitate a collaborative working environment and encourage an agile process to become an adaptive organization Establish a culture of Focus on delivering collaborative wo
Slide 32: Advanced analytics methods to enhance customer satisfaction and profitability
Advanced analytics methods to enhance customer satisfaction and profitability We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL GROUP-WIDE & OPEN APIS WORKING CAPABILITIES EXCELLENCE INNOVATION …foster
Slide 33: Data and analytics to enhance customer business
Data and analytics to enhance customer business Key focus areas Use cases already live Personalized financial advice, contextual Open New marketing, cross-selling, dynamic pricing, REVENUE STREAMS Identify moments-of-truth,… Anti-money-laundering, credit card fraud, Automation Leading to back office
Slide 34: Introducing innovative banking in Central and Eastern Europe
Introducing innovative banking in Central and Eastern Europe We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL GROUP-WIDE & OPEN APIS WORKING CAPABILITIES EXCELLENCE INNOVATION …foster innovation and i
Slide 35: Efficiency improvements through Smart Automation
Efficiency improvements through Smart Automation 2016 2017 2018 Document Workflow / Business Automation Management Systems Process Management System Landscape Robotics Text / Document Augmented (RPA) Recognition Data Discovery CONSTANT SEARCH FOR INNOVATION CURRENT INITIATIVES COGNITIVE AUTOMATION S
Slide 36: Cloud approach and modularized IT architecture
With a cloud approach and a modularized IT architecture we are ready for the future We moved to the cloud in 2016… …and constantly shift services into it Designated community established Risk calcu- lations ID & V Advanced Analytics Micro- API services AWS selected as primary cloud vendor Manage- Fr
Slide 37: Striving for continous improvement
Striving for continous improvement We create an exceptional experience for our customers … INTEGRATION AGILE & STRONG DATA & DIGITAL EFFECTIVE GROUP- LAYER X-FUNCTIONAL ANALYTICS OPERATIONAL WIDE INNOVATION & OPEN APIS WORKING CAPABILITIES EXCELLENCE …foster innovation and incorporate new business m
Slide 38: Innovation vehicles facilitate new solutions and partnerships
Innovation vehicles facilitate new solutions and partnerships INNOVATION GARDEN ELEVATOR LAB EMPLOYEE-INITIATED IDEAS ACCELERATOR PROGRAM DEVELOPED IN A START-UP-LIKE PROCESS TO GLOBALLY SCOUT INNOVATIVE START-UPS WITHIN INTRAPRENEURSHIP TEAMS AND VALIDATE VIABILITY FOR RBI 3,269 1,300 9 Elevator La
Slide 39: Retail Overview
Retail Overview 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview ANDRII STEPANENKO Group Investor Relations 14 March 2019 39
Slide 40: RBI Retail at a glance
Retail Overview RBI Retail at a glance (year end 2018) Assets Liabilities Gross Income 15% Private Individuals 23% 27% 32% 50% Affluent & Private Banking 30% 55% 23% 45% SME Volume breakdown Gross Income Selected products Channels (FY 2018 in EUR bn) (FY 2018 in EUR mn) 1.0 164 Credit Cards • Severa
Slide 41: Expanding client base and digital sales
Expanding client base and digital sales Targeting 12.5 mn active retail clients Significantly increase Foster sales across channels in 2021 (500k new clients p.a.) mobile banking penetration with strong focus on digital lending across our 13 network banks (mobile banking users / (digitally initiated
Slide 42: Marked increase in mobile banking penetration
Marked increase in mobile banking penetration Achievements 2018 Outlook 2019 Active mobile banking penetration is steadily rising, New solutions planned across the group (e.g. reaching 22% at end-2018 RBRO, RBCZ, RBHR, RBBH) Increased focus on user experience across markets RBHU first to ben
Slide 43: Online lending already strong and increasing further
Online lending already strong and increasing further Achievements Achievements 2018 2018 Outlook 2019 2019 Outlook Group-wide digital sales of personal loans grew to 20% in 2018 Most NWBs will have online lending to TBSK, RBCZ, RBRU and RBHR with state-of-the art capabilities in existing custo
Slide 44: Enhancing customer experience through mobile payments
Strong focus on enhancing customer experience through mobile payments Achievements 2018 Outlook 2019 Dedicated digital payments strategy was developed Group solution for mobile wallet planned to focusing on customer convenience and improved go live in Q3/2019 for RBCZ, RBRO, RBBG, RBRS mobile pa
Slide 45: Selected Best Practices and Future Initiatives
Selected Best Practices and Future Initiatives Selected Best Practices from 2018 TBSK Online personalized real-time offers; end-to-end account opening RBRS Sales finance product with fast time-to-yes RBRU Increase in digital customer acquisition Selected Lighthouse projects for 2019 RBRO New state-o
Slide 46: Russian retail: resilient and diversified business
Russian retail: resilient and diversified business Balanced revenue Focus on Diversified revenues across contribution by products high income regions customer segments (gross income by products) (gross income by regions, approx.) (gross income by customer segments) Other regions Other SME 14% 13% Le
Slide 47: Clear competitive edge in sales & digitization
Clear competitive edge in sales & digitization Net Active Customer Acquisition1 Revenue per Active Customer (EUR)1 8.5% 406 197 2.8% RBI RU RBI RU Retail Market Retail Market Russia Avg. Russia Avg. 30-day Digital Banking Activity² Digital Product Sales / 1000 Active Customers² 51% 153 41% 128 RBI R
Slide 48: Retail Targets and digital priorities
Retail Targets and digital priorities #1 in Customer Satisfaction Engaged Employees Above Market Growth Customers Efficient Operating Model Balanced Digital Transformation Business Contribution Strategic Digitalization Priorities Digital Customer Branch Process Leveraging IT Agile and skilled Experi
Slide 49: Outro
Outro 01 02 03 04 05 06 Executive Outlook and IFRS9 and Digital Retail Outro Summary Russia Risk Outlook Transformation Overview JOHANN STROBL Group Investor Relations 14 March 2019 49
Slide 50: RBI's place in the future of banking
RBI’s place in the future of banking Digital transformation journey will go on… Fostering adaptive culture and collaboration Responsibility, sustainability and building on trust Seamless services for a ~270mn customer market Group Investor Relations 14 March 2019 50
Slide 51: Q&A
Q&A Group Investor Relations 14 March 2019 51
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