Raiffeisen Bank International Ag · VIE:RBI

Raiffeisen Bank International — FY2018 Earnings Presentation

57 slides from Raiffeisen Bank International's earnings presentation, Mar 13, 2019

  1. Slide 1: Raiffeisen Bank International FY 2018 Results

    Raiffeisen Bank International FY 2018 Results Confidential

  2. Slide 2: Disclaimer

    Disclaimer Certain statements contained herein may be statements of future expectations and other forward-looking statements about Raiffeisen Bank International AG (“RBI”) and its affiliates, which are based on management's current views and assumptions and involve known and unknown risks and uncert

  3. Slide 3: Table of Contents

    Table of Contents  Executive Summary . . . . . . . . . . . . . . . . . 3  Financials . . . . . . . . . . . . . . . . . . . . . . . 14  Risk Management . . . . . . . . . . . . . . . . . . 25  Appendix . . . . . . . . . . . . . . . . . . . . . . . 29 Group Investor Relations 13 March 2019 3

  4. Slide 4: Executive Summary FY 2018

    Executive Summary FY 2018  Consolidated profit of EUR 1,270 million (up 14% year-on-year)  Operating income up 4% year-on-year driven by net interest income and net fee and commission income  Loans to customers up 4% despite sale of Polish core banking operations  Disposal of core banking operat

  5. Slide 5: Financial Highlights FY 2018

    Financial Highlights FY 2018 In EUR mn Q4/2018 Q3/2018 q-o-q 1-12/2018 1-12/2017 y-o-y Net interest income 843 856 (1.6%) 3,362 3,225 4.2% Net fee and commission income 467 455 2.6% 1,791 1,719 4.2% Net trading income and fair value result (3) 4 – 17 35 (52.4%) Operating income 1,294 1,334 (3.0%) 5,

  6. Slide 6: Development of Financial Ratios in FY 2018

    Development of Financial Ratios in FY 2018 RoE (Consolidated)1 Cost/Income Ratio 16.6% 15.6% 14.6% 12.2% 12.6% 59.1% 63.3% 57.3% 54.7% 55.0% 57.5% 3.5% FY/2017 Q1/2018 Q2/2018 Q3/2018 Q4/2018 FY/2018 FY/2017 Q1/2018 Q2/2018 Q3/2018 Q4/2018 FY/2018 Net Interest Margin1 Provisioning Ratio1 1.10% 2.48%

  7. Slide 7: Key Strategic Initiatives (1/2)

    Key Strategic Initiatives (1/2) FY/2018 Loans1 (y-o-y) Business mix2 Strategic focus Key initiatives Households Corporates3 Retail / Corporate Corporates Vienna EUR 18,163 mn (+25%) 100%  • Increase sales efficiency through digitalization (front and back end) • Data-driven sales approach • Aiming

  8. Slide 8: Key Strategic Initiatives (2/2)

    Key Strategic Initiatives (2/2) FY/2018 Loans1 (y-o-y) Business mix2 Strategic focus Key initiatives Households Corporates3 Retail / Corporate 12% • New PI and SME premium business model; increase credit card and Ukraine unsecured lending EUR 1,525 mn (+35%) 86%   • New corporate internet banking

  9. Slide 9: Five Pillars of Digitalization

    Five Pillars of Digitalization 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 Create synergies and Build a collaborative Artificial I

  10. Slide 10: Leveraging our Strong Position in Russia

    Leveraging our Strong Position in Russia Key Developments in 2018 Strategy  Profit after tax at EUR 455 mn (up 2.8% y-o-y) despite RUB  Resilient and diversified business model: 26% average ROE over the depreciation past 5 years, including 2015 recession and sanctions  Targeting core economic reg

  11. Slide 11: Update on Poland

    Update on Poland Impact of Sale Remaining Polish Portfolio  The sale of core banking operations in Poland was completed on 31  The remaining Raiffeisen Bank Polska S.A. operations were transferred October 2018 to a Polish branch of RBI AG by way of merger  The agreed price of PLN 3,250 mn (EUR 74

  12. Slide 12: Macro Outlook

    Macro Outlook Development of Real GDP (%) General Market Trends Country 2017 2018 2019f 2020f  Business cycle in Euro area slowed in H2/2018 due to fading CE Czech Republic 4.5 3.0 2.7 2.5 support from exports and transitory factors, while underlying growth dynamics are modest. In CE/SEE, the busin

  13. Slide 13: Outlook and Targets

    Outlook and Targets  We 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  We anticipate that the NPL ratio will further reduce  We aim to achieve a cost/income ratio of aro

  14. Slide 14: Table of Contents

    Table of Contents  Executive Summary . . . . . . . . . . . . . . . . . 3  Financials . . . . . . . . . . . . . . . . . . . . . . . 14  Risk Management . . . . . . . . . . . . . . . . . . 25  Appendix . . . . . . . . . . . . . . . . . . . . . . . 29 Group Investor Relations 13 March 2019 14

  15. Slide 15: Overview of Key Financials

    Overview of Key Financials In EUR mn Q4/2018 Q3/2018 q-o-q Q4/2017 y-o-y Development (q-o-q) Net interest income 843 856 (1.6%) 818 3.1%  Net interest income down EUR 13 mn: impact of Polish deconsolidation (negative EUR 35 mn) partly offset by Div idend income (9) 3 – 5 – volume driven increase in

  16. Slide 16: Distribution of Profit before Tax – FY 2018

    Distribution of Profit before Tax – FY 2018 In EUR mn (15.7%) 30.0% (2.0%) 89.9% 24.6% 8.8% ∆ y-o-y 488 (562) 855 1,753 525 447 Central Europe Southeastern Eastern Europe Group Corporate Center RBI Group Europe Corporates & Markets & Reconciliation 1  Czech Republic  Albania  Belarus  Corporates

  17. Slide 17: Revenue Composition

    Revenue Composition Split of Operating Income Development (q-o-q) In EUR mn  Net interest income down EUR 13 mn mainly from 85 23 12 52 Poland (down EUR 35 mn due to 447 410 460 455 467 deconsolidation) partly offset by volume driven increase in Czech Republic (up EUR 7 mn), Croatia (up EUR 3 mn) a

  18. Slide 18: Expense Base Breakdown

    Expense Base Breakdown Development of General Administrative Expenses Development (q-o-q) In EUR mn  General administrative expenses up EUR 85 mn 798 819 mainly driven by higher staff expenses and 740 754 734 79 75 70 71 71 seasonal uptick in other administrative expenses 315 286 287 280 325 409 41

  19. Slide 19: Balance Sheet Overview

    Balance Sheet Overview Balance Sheet (31/12/2018) In EUR mn 31/12/2018 30/09/2018 q-o-q 31/12/2018 31/12/2017 YTD Total assets 140,115 146,177 (4.1%) 140,115 135,146 3.7% EUR 140 bn 9% Loans to banks 9,998 9,655 3.6% 9,998 10,741 (6.9%) 21% 12% 14% Loans to customers 80,866 80,056 1.0% 80,866 77,745

  20. Slide 20: Regulatory Capital Overview

    Regulatory Capital Overview Regulatory Capital Structure Changes in Regulatory Capital (YTD) In EUR mn 31/12/2018 31/12/2017  CET1 capital up by EUR 0.44 bn due to full year profit and lower provision shortfall due to IFRS 9 Common equity tier 1 (before deductions) 10,436 9,955  Initial IFRS 9 imp

  21. Slide 21: Capital Ratios well above Requirements

    Capital Ratios well above Requirements 2019 Regulatory Capital Requirements Further Details (RBI Group)  2019 SREP P2R of 2.25%, and P2G of 1.0% (unchanged from 2018) 18.2%  Combined buffer requirement in 2019 of 4.75%: − 2.5% capital conservation buffer 14.9% − 2.0% systemic risk buffer / O-SII b

  22. Slide 22: Funding and Liquidity

    Funding and Liquidity Funding Structure (31/12/2018) NSFR and Loan/Deposit Ratio  59% of Group funding from customer deposits (households and non-financial corporations). Customer deposit inflow remains 114% 113% 113% 113% 113% strong in 2018 and into 2019, with high stickiness despite low interest

  23. Slide 23: MREL Resolution Strategy

    MREL Resolution Strategy RBI Resolution Strategy Implementation of amended version of Article 108 BRRD in Austria by amendments to § 131 BaSAG applicable as of 30 June 2018  RBI aims for a Multiple Point of Entry (MPE) resolution strategy, Before implementation After implementation with each networ

  24. Slide 24: MREL approach

    MREL approach Austrian Resolution Group Capital buffer in Austria  The first resolution group to issue non-preferred senior (NPS)  RBI has filled its Pillar 1 AT1 and Tier 2 requirements (1.5% and instruments is expected to be the Austria resolution group 2.0% respectively of RWA, or EUR 1.1bn AT1

  25. Slide 25: Table of Contents

    Table of Contents  Executive Summary . . . . . . . . . . . . . . . . . 3  Financials . . . . . . . . . . . . . . . . . . . . . . . 14  Risk Management . . . . . . . . . . . . . . . . . . 25  Appendix . . . . . . . . . . . . . . . . . . . . . . . 29 Group Investor Relations 13 March 2019 25

  26. Slide 26: RWA and Credit Portfolio Development

    RWA and Credit Portfolio Development RWA and Credit Portfolio Development Comments (YTD) In EUR mn Total Exposure Retail Non-Retail Total Exposure RWA Change  Credit risk RWA increased by EUR 1,034 mn: 31/12/2018 31/12/2018 31/12/2018 Change (YTD) 31/12/2018 RWA (YTD) • Non-retail RWA up by EUR 1,4

  27. Slide 27: NPL and Provisioning Ratio Development

    NPL and Provisioning Ratio Development NPL as % of Customer Loans and NPL Coverage Ratio Comments (YTD)  Strong improvement y-o-y in risk costs and NPL ratio driven by NPL 73.5% 75.0% 77.6% sales, recoveries (incl. write-backs) and lower NPL inflow 67.0% 69.7%  NPL ratio down by 1.9PP to 3.8%; lar

  28. Slide 28: NPL Distribution by Country

    NPL Distribution by Country NPL Ratio and Coverage Ratio Comments (YTD) In EUR mn NPL Stock NPL Ratio NPL Coverage Ratio  NPL stock down EUR 1,427 mn driven by recoveries and 31/12/2018 31/12/2018 30/09/2018 31/12/2017 31/12/2018 30/09/2018 31/12/2017 writebacks (EUR 925 mn), NPL sales (EUR 587 mn)

  29. Slide 29: Table of Contents

    Table of Contents  Executive Summary . . . . . . . . . . . . . . . . . 3  Financials . . . . . . . . . . . . . . . . . . . . . . . 14  Risk Management . . . . . . . . . . . . . . . . . . 25  Appendix . . . . . . . . . . . . . . . . . . . . . . . 29 Group Investor Relations 13 March 2019 29

  30. Slide 30: Geographic Footprint

    Geographic Footprint Austria, #3 Central Europe (CE) Eastern Europe (EE)  Loans: EUR 30.0 bn Southeastern Europe (SEE)  Branches: 19  Leading regional player with Czech Republic, #5 Russia, #8 CEE presence of over 30 years  Loans: EUR 11.1 bn  Loans: EUR 8.5 bn servicing approx. 16 million  Br

  31. Slide 31: Country and Segment Overview

    Country and Segment Overview 1-12/2018 Total Assets2 Share of Loan/deposit Net Interest Provisioning NPL NPL Coverage (EUR mn) Total Assets2 Ratio Margin Ratio Ratio Ratio Czech Republic 16,883 12.0% 87.0% 2.11% 0.31% 1.9% 99.0% Hungary 7,528 5.4% 64.9% 1.92% (0.77%) 5.6% 82.9% Poland 3,267 2.3% – 2

  32. Slide 32: RBI Group

    RBI Group In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 843 856 (1.6%) 834 829 818 3,362 3,225 4.2% Net fee and commission income 467 455 2.6% 460 410 447 1,791 1,719 4.2% Net trading income and fair v alue result (3) 4 – 18 (1) 9 17 35 (52.4%)

  33. Slide 33: Country Financials (CE) – Czech Republic

    Country Financials (CE) – Czech Republic In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 92 84 8.5% 80 82 76 338 280 20.6% Net fee and commission income 34 34 0.9% 36 33 36 136 132 2.9% Net trading income and fair v alue result (3) 3 – 1 0 6 2 31

  34. Slide 34: Country Financials (CE) – Hungary

    Country Financials (CE) – Hungary In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 34 33 3.0% 33 34 33 133 137 (3.0%) Net fee and commission income 36 33 7.2% 34 31 34 134 130 3.0% Net trading income and fair v alue result 1 7 (78.2%) (3) 5 0 11 3

  35. Slide 35: Country Financials (CE) – Poland

    Country Financials (CE) – Poland In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 22 57 (61.7%) 62 64 66 205 260 (20.9%) Net fee and commission income 13 34 (60.6%) 36 32 35 115 138 (16.1%) Net trading income and fair v alue result 3 13 (75.7%) (0

  36. Slide 36: Country Financials (CE) – Slovakia

    Country Financials (CE) – Slovakia In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 74 75 (1.3%) 71 68 68 289 274 5.4% Net fee and commission income 42 41 2.6% 41 40 40 163 157 4.1% Net trading income and fair v alue result 2 1 69.5% 2 2 4 8 7 21.

  37. Slide 37: Country Financials (SEE) – Albania

    Country Financials (SEE) – Albania In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 14 14 3.0% 13 13 14 55 56 (1.1%) Net fee and commission income 4 5 (21.5%) 4 4 4 17 15 7.8% Net trading income and fair v alue result (1) 2 – (2) (1) (1) (2) (2) 3

  38. Slide 38: Country Financials (SEE) – Bosnia & Herzegovina

    Country Financials (SEE) – Bosnia & Herzegovina In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 17 17 0.3% 16 16 17 68 66 2.1% Net fee and commission income 10 11 (5.2%) 9 10 10 40 39 1.5% Net trading income and fair v alue result 0 0 233.8% 1 (1

  39. Slide 39: Country Financials (SEE) – Bulgaria

    Country Financials (SEE) – Bulgaria In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 27 26 3.1% 25 25 24 103 101 2.0% Net fee and commission income 14 12 10.2% 12 11 11 49 45 8.1% Net trading income and fair v alue result 1 1 11.2% 1 0 1 4 3 47.1%

  40. Slide 40: Country Financials (SEE) – Croatia

    Country Financials (SEE) – Croatia In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 33 30 10.9% 31 30 30 125 126 (1.2%) Net fee and commission income 17 21 (19.8%) 18 15 16 71 71 0.6% Net trading income and fair v alue result (3) 1 – (1) 2 (0) (1)

  41. Slide 41: Country Financials (SEE) – Kosovo

    Country Financials (SEE) – Kosovo In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 12 11 14.0% 10 10 10 42 38 12.0% Net fee and commission income 2 3 (32.0%) 3 2 3 11 13 (21.2%) Net trading income and fair v alue result 0 (0) – (0) 0 (0) (0) 0 – O

  42. Slide 42: Country Financials (SEE) – Romania

    Country Financials (SEE) – Romania In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 90 89 1.1% 82 75 71 336 263 27.8% Net fee and commission income 49 49 0.1% 48 44 49 189 176 7.3% Net trading income and fair v alue result 6 4 33.2% 9 3 0 22 12 84

  43. Slide 43: Country Financials (SEE) – Serbia

    Country Financials (SEE) – Serbia In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 22 21 1.9% 21 21 21 85 81 4.7% Net fee and commission income 12 12 2.2% 14 8 11 45 41 10.1% Net trading income and fair v alue result 2 2 (5.3%) (1) 5 (0) 8 4 82.0%

  44. Slide 44: Country Financials (EE) – Belarus

    Country Financials (EE) – Belarus In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 22 23 (3.4%) 23 22 22 90 107 (15.2%) Net fee and commission income 13 12 5.4% 13 11 13 49 52 (5.7%) Net trading income and fair v alue result 2 2 (21.3%) 1 1 1 6 4

  45. Slide 45: Country Financials (EE) – Russia

    Country Financials (EE) – Russia In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 184 181 1.2% 171 176 182 712 688 3.4% Net fee and commission income 94 82 14.9% 76 73 82 324 317 2.4% Net trading income and fair v alue result 14 6 138.9% (0) 2 12

  46. Slide 46: Country Financials (EE) – Ukraine

    Country Financials (EE) – Ukraine In EUR mn Q4/2018 Q3/2018 q-o-q Q2/2018 Q1/2018 Q4/2017 1-12/2018 1-12/2017 y-o-y Net interest income 57 57 (0.6%) 56 49 48 220 188 17.0% Net fee and commission income 25 24 2.2% 22 20 24 92 93 (0.9%) Net trading income and fair v alue result 3 (2) – 3 3 (3) 7 3 149

  47. Slide 47: Bank Levies and Resolution Fund

    Bank Levies and Resolution Fund Impact in EUR mn FY 2017 FY 2018 FY 2019e Bank levy based on total assets (excluding derivatives) and including a one- Austria 57 57 1 ~56 off payment (spread over 4 years) of EUR 163 mn from 2017 on Bank levy of 0.15% (for up to HUF 50 bn of total assets) and 0.21% (

  48. Slide 48: Equity Overview

    Equity Overview Cumulative other Subscribed Capital Retained comprehensive Consolidated Non-controlling Additional Total In EUR mn capital reserves earnings income equity interests tier 1 Equity Equity as at 31/12/2017 1,002 4,992 6,812 (2,869) 9,937 660 645 11,241 Impact of adopting IFRS 9 0 0 (224

  49. Slide 49: NPL and NPE Distribution by Country

    NPL and NPE Distribution by Country In EUR mn NPE NPE NPE Coverage NPE Coverage NPL NPL NPL Coverage NPL Coverage Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio 31/12/2018 30/09/2018 31/12/2018 30/09/2018 31/12/2018 30/09/2018 31/12/2018 30/09/2018 Czech Republic 1.4% 1.6% 64.7% 67.2% 1.9% 2.1% 99.

  50. Slide 50: Raiffeisen Banking Group Structure

    Raiffeisen Banking Group Structure  Raiffeisen Banking Group (RBG) – largest banking group in Austria Raiffeisen Banking Group (RBG) with total assets of around EUR 300.0 bn as of 31/12/2018  Solid funding profile of RBG based on a domestic market share of ~1.7 mn members (mainly private individua

  51. Slide 51: The Institutional Protection Scheme (IPS)

    The Institutional Protection Scheme (IPS) Legal Background IPS in Raiffeisen Austria  IPS regulations are defined in the CRR Art. 113 (7); the IPS is subject to  There are regional IPS in place. Members are the Raiffeisen banks and the regulatory supervision incl. regular reporting requirements re

  52. Slide 52: Maturity Profile

    Maturity Profile Maturity Profile at 31/12/2018 (in EUR mn) 1,812 1,525 500 1,432 152 1,149 450 321 546 282 759 751 684 393 520 991 409 515 867 923 496 650 494 285 217 500 85 238 158 56 36 39 40 103 89 7 60 7 10 20 96 5 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

  53. Slide 53: AT1 and Subordinated Instruments

    AT1 and Subordinated Instruments Regulatory Capital Initial Reset Nominal Issuance First Call Issuer ISIN Call period Maturity Treatment1 Recognition2 Coupon Coupon outstanding date Date 5Y EUR Raiffeisen Bank Additional Tier 1 99.2% XS1756703275 4.500% MidSwap + EUR 500 mn 17 Jan 2018 25 Jun 2025 S

  54. Slide 54: Available Distributable Items (ADI) to Cover Discretionary Distributions

    Available Distributable Items (ADI) to Cover Discretionary Distributions Distributable Items Available Distributable Items (EUR mn)  Discretionary coupon payments on AT1 capital are 2,072 subject to sufficient distributable items1 1,944 1,894 332  Distributable items based on RBI AG's unconsolidat

  55. Slide 55: Shareholder Information Overview

    Shareholder Information Overview General Information Shareholder Structure1  Listed since 25 April 2005 on the Vienna Stock Exchange Prime Market  Indices: ATX, ATX Prime, ATX five, MSCI Standard Index Europe, EURO STOXX Banks RBI free float ~41.2%  328,939,621 ordinary shares issued Regional  I

  56. Slide 56: Sustainable Ratings, Indices and Awards

    Sustainable Ratings, Indices and Awards “C+” level and prime status Austrian Sustainability Reporting in sustainability rating by ISS Award (ASRA 2018) for the best oekom research report (2017) by a large corporation; (June 18 2018) The report was also awarded the overall ASRA winner; Overall ESG sc

  57. Slide 57: Contact and Financial Calendar

    Contact and Financial Calendar Contact Details Financial Calendar 13 March 2019 Annual Report 2018, Conference Call Group Investor Relations 14 March 2019 RBI Investor Presentation, London 01 May 2019 Start of Quiet Period1 Raiffeisen Bank International AG 15 May 2019 First Quarter Report, Conferenc

Raiffeisen Bank International — FY2018 Earnings Presentation on 6ix