Raiffeisen Bank International Ag · VIE:RBI
Raiffeisen Bank International — Q3 2018 Earnings Presentation
54 slides from Raiffeisen Bank International's earnings presentation, Nov 14, 2018
Slide 1: Raiffeisen Bank International Q3/2018 Results
Raiffeisen Bank International Q3/2018 Results Confidential
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
Slide 3: Table of Contents
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . 3 Financials . . . . . . . . . . . . . . . . . . . . . . . 12 Risk Management . . . . . . . . . . . . . . . . . . 22 Appendix . . . . . . . . . . . . . . . . . . . . . . . 26 Group Investor Relations 14 November 2018 3
Slide 4: Executive Summary 1-9/2018
Executive Summary 1-9/2018 Consolidated profit of EUR 1,173 mn (up 29% year-on-year), including EUR 121 mn loss from sale of Polish core banking operations booked in Q2/2018 Operating income up 5% year-on-year supported by net interest income Very positive development of risk costs driven by high re
Slide 5: Financial Highlights
Financial Highlights In EUR mn Q3/2018 Q2/2018 q-o-q 1-9/2018 1-9/2017 y-o-y Net int erest income 856 834 2.6% 2,519 2,407 4.6% Net fee and commission income 455 460 (1.0%) 1,325 1,271 4.2% Net trading income and fair value result 4 18 (78.7%) 20 27 (24.8%) Operating income 1,334 1,379 (3.2%) 4,003
Slide 6: Development of Financial Ratios
Development of Financial Ratios RoE (Consolidated)1 Cost/Income Ratio 16.6% 15.6% 14.0% 14.6% 12.2% 62.5% 59.1% 55.9% 57.3% 54.7% 55.0% 8.9% Q3/2017 Q4/2017 FY/2017 Q1/2018 Q2/2018 Q3/2018 Q3/2017 Q4/2017 FY/2017 Q1/2018 Q2/2018 Q3/2018 Net Interest Margin1 Provisioning Ratio1 0.63% 0.48% 0.41% 2.47
Slide 7: Update on Russia
Update on Russia Key Developments Strategy 1-9/2018 profit after tax at EUR 368 mn (up 3.1% y-o-y) despite RUB We will look to grow across all business segments while maintaining depreciation our prudent risk approach RUB depreciated 9% YTD, y-o-y average rate down 11% Retail market: expanding the p
Slide 8: Update on Poland
Update on Poland Impact of Sale Remaining Polish Portfolio The sale of core banking operations in Poland was successfully The remaining Raiffeisen Bank Polska S.A. operations are transferred completed on October 31 2018. For Q3/2018, assets of EUR 7.9 bn and to a Polish branch of RBI AG by way of me
Slide 9: Growth across the Group
Growth across the Group 1-9/2018 Loans1 Projected Loan Growth2 Projected Loan Growth2 1-9/2018 Loans1 Albania Kosovo EUR 683 mn EUR 601 mn Belarus EUR 1,017 mn Romania EUR 5,445 mn Bosnia & Herzegovina EUR 1,242 mn Russia EUR 8,587 mn Bulgaria EUR 2,515 mn Serbia Croatia EUR 1,287 mn EUR 2,350 mn Sl
Slide 10: Macro Outlook
Macro Outlook Development of Real GDP (%) General Market Trends Country 2017 2018e 2019f 2020f Growth dynamics in Central Europe (CE) have peaked but remain strong with GDP growth above 4% expected in 2018. Labor CE Czech Republic 4.5 3.1 3.0 2.5 scarcity in the region increasingly becoming a bottle
Slide 11: Outlook and Targets
Outlook and Targets We will pursue loan growth with an average yearly percentage increase in the mid-single digit area Impairment losses on financial assets (risk costs) in 2018 are expected to be below the 2017 level We anticipate that the NPL ratio will further reduce in the medium term We aim to
Slide 12: Table of Contents
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . 3 Financials . . . . . . . . . . . . . . . . . . . . . . . 12 Risk Management . . . . . . . . . . . . . . . . . . 22 Appendix . . . . . . . . . . . . . . . . . . . . . . . 26 Group Investor Relations 14 November 2018 12
Slide 13: Overview of Key Financials
Overview of Key Financials In EUR mn Q3/2018 Q2/2018 q-o-q Q3/2017 y-o-y Development (q-o-q) Net interest income 856 834 2.6% 814 5.2% Net interest income up EUR 22 mn mainly from Russia (higher volume of central bank bonds and loans to Div idend income 3 48 (92.9%) 6 (46.8%) customers), Romania (vo
Slide 14: Distribution of Profit before Tax – 1-9/2018
Distribution of Profit before Tax – 1-9/2018 In EUR mn (0.0%) 44.2% (0.1%) 62.0% 3.9% 22.0% ∆ y-o-y 427 (384) 690 1,587 448 406 Central Europe Southeastern Eastern Europe Group Corporate Center RBI Group Europe Corporates & Markets & Reconciliation 1 Czech Republic Albania Belarus Corporates Vienna
Slide 15: Revenue Composition
Revenue Composition Split of Operating Income Development (q-o-q) In EUR mn 13 52 85 23 Net interest income up EUR 22 mn mainly from 28 Russia (higher volume of central bank bonds and 429 446 410 460 455 loans to customers), Romania (volume and margin driven) and Czech Republic (higher customer volu
Slide 16: Expense Base Breakdown
Expense Base Breakdown Development of General Administrative Expenses Development (q-o-q) In EUR mn General administrative expenses down EUR 20 798 754 710 740 734 mn mainly driven by lower staff expenses and a 75 71 70 71 74 positive impact from FX movements of EUR 4 mn 315 286 287 280 271 365 409
Slide 17: Balance Sheet Overview
Balance Sheet Overview Balance Sheet (30/09/2018) In EUR mn 30/09/2018 30/06/2018 q-o-q 30/09/2018 31/12/2017 YTD Total assets 146,177 143,556 1.8% 146,177 135,146 8.2% EUR 146 bn 8% 25% Loans to banks 9,655 9,774 (1.2%) 9,655 10,741 (10.1%) 17% 14% Loans to customers 80,056 77,895 2.8% 80,056 77,74
Slide 18: Regulatory Capital Overview
Regulatory Capital Overview Regulatory Capital Structure Changes in Regulatory Capital (YTD) 30/09/2018 31/12/2017 CET1 capital up by EUR 0.16 bn driven by half year results In EUR mn IFRS 9 impact of minus 19bps including IRB shortfall effect Common equity tier 1 (before deductions) 10,206 9,955 To
Slide 19: Capital Ratios well above Requirements
Capital Ratios well above Requirements Regulatory Capital Requirements Further Details (RBI Group) Including 2018 SREP P2R of 2.25%, and P2G of 1.0% (unchanged from Q3 results 2017) 17.5% Combined buffer requirement in 2018 of 3.08%: Including Regulatory 17.1% − 1.875% capital conservation buffer Q3
Slide 20: Funding and Liquidity
Funding and Liquidity Funding Structure (30/09/2018) NSFR and Loan/Deposit Ratio 59% of Group funding from customer deposits (households and non-financial corporations). Customer deposit inflow remains 113% 113% 113% 113% 112% strong in 2018 with high stickiness despite low interest rates 17% of Gro
Slide 21: MREL Update and Resolution Strategy
MREL Update and Resolution Strategy RBI Resolution Strategy Implementation of amended version of Article 108 BRRD in Austria by amendments of § 131 BaSAG applicable as of 30 June 2018 RBI aims for a Multiple Point of Entry (MPE) resolution strategy, Before implementation After implementation with ea
Slide 22: Table of Contents
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . 3 Financials . . . . . . . . . . . . . . . . . . . . . . . 12 Risk Management . . . . . . . . . . . . . . . . . . 22 Appendix . . . . . . . . . . . . . . . . . . . . . . . 26 Group Investor Relations 14 November 2018 22
Slide 23: 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 3,589 mn 30/09/2018 30/09/2018 30/09/2018 Change (YTD) 30/09/2018 RWA (YTD) • Non-retail RWA up by EUR 2,911
Slide 24: NPL and Provisioning Ratio Development
NPL and Provisioning Ratio Development NPL as % of Customer Loans and NPL Coverage Ratio Comments (YTD) Strong improvement YTD in risk costs and NPL ratio driven by NPL sales 73.5% 75.0% of EUR 416 mn (Q3: EUR 54 mn) and recoveries (incl. writebacks) of 69.4% 67.0% 69.7% EUR 760 mn (Q3: EUR 241 mn)
Slide 25: 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 down EUR 941 mn driven by recoveries (EUR 760 30/09/2018 30/09/2018 30/06/2018 31/12/2017 30/09/2018 30/06/2018 31/12/2017 mn), NPL sales (EUR 416 mn) and Polish core banking
Slide 26: Table of Contents
Table of Contents Executive Summary . . . . . . . . . . . . . . . . . 3 Financials . . . . . . . . . . . . . . . . . . . . . . . 12 Risk Management . . . . . . . . . . . . . . . . . . 22 Appendix . . . . . . . . . . . . . . . . . . . . . . . 26 Group Investor Relations 14 November 2018 26
Slide 27: Geographic Footprint
Geographic Footprint Austria, #3 Central Europe (CE) Eastern Europe (EE) Loans: EUR 30.1 bn Southeastern Europe (SEE) Branches: 19 Leading regional player with Czech Republic, #5 Russia, #9 CEE presence of over 30 years Loans: EUR 11.0 bn Loans: EUR 8.6 bn servicing approx. 16 million Branches: 133
Slide 28: Country and Segment Overview
Country and Segment Overview 1-9/2018 Total Assets2 Share of Loan/deposit Net Interest Provisioning NPL NPL Coverage 2 (EUR mn) Total Assets Ratio Margin Ratio Ratio Ratio Czech Republic 16,459 11.3% 91.0% 2.06% 0.16% 2.1% 95.2% Hungary 7,150 4.9% 66.7% 1.93% (0.81%) 6.3% 82.6% Poland 11,304 7.7% –
Slide 29: RBI Group
RBI Group In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 856 834 2.6% 829 818 814 2,519 2,407 4.6% 3,225 Net fee and commission income 455 460 (1.0%) 410 446 429 1,325 1,271 4.2% 1,718 Net trading income and fair v alue result 4 18 (78.7
Slide 30: Country Financials (CE) – Czech Republic
Country Financials (CE) – Czech Republic In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 84 80 6.0% 82 76 70 246 204 20.4% 280 Net fee and commission income 34 36 (5.8%) 33 36 30 102 96 6.6% 132 Net trading income and fair v alue result 3
Slide 31: Country Financials (CE) – Hungary
Country Financials (CE) – Hungary In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 33 33 (0.5%) 34 33 35 99 104 (4.9%) 137 Net fee and commission income 33 34 (2.8%) 31 34 32 98 96 2.3% 130 Net trading income and fair v alue result 7 (3) –
Slide 32: Country Financials (CE) – Poland
Country Financials (CE) – Poland In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 57 62 (8.6%) 64 66 67 183 194 (5.4%) 260 Net fee and commission income 34 36 (6.2%) 32 35 35 102 103 (0.6%) 138 Net trading income and fair v alue result 13
Slide 33: Country Financials (CE) – Slovakia
Country Financials (CE) – Slovakia In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 75 71 6.7% 68 68 73 214 206 4.2% 274 Net fee and commission income 41 41 0.1% 40 40 40 122 117 4.3% 157 Net trading income and fair v alue result 1 2 (39.4
Slide 34: Country Financials (SEE) – Albania
Country Financials (SEE) – Albania In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 14 13 4.7% 13 14 14 41 42 (2.8%) 56 Net fee and commission income 5 4 12.0% 4 4 4 13 11 11.6% 15 Net trading income and fair v alue result 2 (2) – (1) (1)
Slide 35: Country Financials (SEE) – Bosnia & Herzegovina
Country Financials (SEE) – Bosnia & Herzegovina In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 17 16 6.0% 16 17 16 50 50 1.1% 66 Net fee and commission income 11 9 18.8% 10 10 10 30 29 0.8% 39 Net trading income and fair v alue result 0
Slide 36: Country Financials (SEE) – Bulgaria
Country Financials (SEE) – Bulgaria In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 26 25 4.6% 25 24 25 76 77 (0.8%) 101 Net fee and commission income 12 12 3.3% 11 11 12 35 34 4.5% 45 Net trading income and fair v alue result 1 1 (7.9%)
Slide 37: Country Financials (SEE) – Croatia
Country Financials (SEE) – Croatia In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 30 31 (2.4%) 30 30 31 91 96 (5.3%) 126 Net fee and commission income 21 18 16.9% 15 16 21 54 55 (1.6%) 71 Net trading income and fair v alue result 1 (1) –
Slide 38: Country Financials (SEE) – Kosovo
Country Financials (SEE) – Kosovo In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 11 10 7.2% 10 10 10 30 28 7.1% 38 Net fee and commission income 3 3 36.7% 2 3 4 8 10 (18.6%) 13 Net trading income and fair v alue result (0) (0) 169.2% 0 (
Slide 39: Country Financials (SEE) – Romania
Country Financials (SEE) – Romania In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 89 82 9.7% 75 71 65 246 192 27.9% 263 Net fee and commission income 49 48 1.8% 44 49 43 140 128 9.9% 176 Net trading income and fair v alue result 4 9 (51.
Slide 40: Country Financials (SEE) – Serbia
Country Financials (SEE) – Serbia In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 21 21 2.8% 21 21 21 63 60 4.5% 81 Net fee and commission income 12 14 (16.6%) 8 11 11 34 30 11.2% 41 Net trading income and fair v alue result 2 (1) – 5 (0)
Slide 41: Country Financials (EE) – Belarus
Country Financials (EE) – Belarus In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 23 23 2.0% 22 22 24 68 85 (19.9%) 107 Net fee and commission income 12 13 (5.5%) 11 13 13 36 39 (7.2%) 52 Net trading income and fair v alue result 2 1 70.7
Slide 42: Country Financials (EE) – Russia
Country Financials (EE) – Russia In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 181 171 6.0% 176 182 166 528 506 4.3% 688 Net fee and commission income 82 76 7.1% 73 82 77 231 234 (1.6%) 317 Net trading income and fair v alue result 6 (0
Slide 43: Country Financials (EE) – Ukraine
Country Financials (EE) – Ukraine In EUR mn Q3/2018 Q2/2018 q-o-q Q1/2018 Q4/2017 Q3/2017 1-9/2018 1-9/2017 y-o-y 1-12/2017 Net interest income 57 56 1.0% 49 48 48 163 140 16.5% 188 Net fee and commission income 24 22 9.3% 20 24 25 67 69 (2.8%) 93 Net trading income and fair v alue result (2) 3 – 3
Slide 44: Bank Levies and Resolution Fund
Bank Levies and Resolution Fund Impact in EUR mn FY 2017 1-9/2018 FY 2018e Bank levy based on total assets (excluding derivatives) and 1 Austria including a one-off payment (spread over 4 years) of EUR 163 mn 57 53 ~56 from 2017 on Bank levy of 0.15% (for up to HUF 50 bn of total assets) and 0.21% H
Slide 45: 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 6,496 (2,553) 9,937 660 645 11,241 Impact of adopting IFRS 9 0 0 (223
Slide 46: 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 30/09/2018 30/06/2018 30/09/2018 30/06/2018 30/09/2018 30/06/2018 30/09/2018 30/06/2018 Czech Republic 1.6% 1.6% 67.2% 67.4% 2.1% 2.1% 95.
Slide 47: 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 EUR 286.0 bn as of 31/12/2017 Solid funding profile of RBG based on a domestic market share of ~1.7 mn1 members (mainly private individuals) around
Slide 48: 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 region
Slide 49: Maturity Profile
Maturity Profile Maturity Profile at 30/09/2018 (in EUR mn) 1,781 1,530 500 152 1,158 471 290 292 914 739 751 717 681 44 97 546 520 990 409 515 866 907 495 650 575 285 201 500 357 85 218 158 55 36 37 40 102 11 89 7 43 10 20 96 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 203
Slide 50: 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 98.6% XS1756703275 4.500% MidSwap + EUR 500 mn 17 Jan 2018 25 Jun 2025 S
Slide 51: 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 1,944 subject to sufficient distributable items1 1,894 Distributable items based on RBI AG's unconsolidated 1,602 494 5
Slide 52: 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 ISIN: AT0
Slide 53: Sustainable Ratings, Indices and Awards
Sustainable Ratings, Indices and Awards Ratings, Indices and Certification Awards “C+” Prime status in sustainability rating by oekom research (June 18 2018) Austrian Sustainability Reporting Award (ASRA 2018) for the third best report (2017) by a large corporation Overall ESG score 72 – Outperforme
Slide 54: Contact and Financial Calendar
Contact and Financial Calendar Contact Details Financial Calendar Susanne E. Langer 30 January 2019 Start of Quiet Period1 06 February 2019 Preliminary Results 2018 Head of Group Investor Relations Spokesperson 13 February 2019 Start of Quiet Period1 13 March 2019 Annual Report 2018, Conference Call
Raiffeisen Bank International — Q3 2018 Earnings Presentation on 6ix