· Net interest income decreases 16.2 per cent to € 820 million year-on-year (Q1/2014: € 979 million)
· Operating income decreases 16.9 per cent to € 1,118 million (Q1/2014: € 1,345 million)
· General administrative expenses decrease 8.5 per cent to € 691 million (Q1/2014: € 755 million)
· Net provisioning for impairment losses decreases 7.4 per cent to € 260 million (Q1/2014: € 281 million)
· Profit before tax decreases 21.9 per cent to € 188 million (Q1/2014: € 240 million)
· Profit after tax decreases 42.1 per cent to € 100 million (Q1/2014: € 173 million)
· Consolidated profit decreases 48.1 per cent to € 83 million (Q1/2014: € 161 million)
· Non-performing loan ratio increases 0.5 percentage points to 11.9 per cent compared to year-end 2014
· Common equity tier 1 ratio (transitional) decreases 0.4 percentage points to 10.4 per cent compared to year-end 2014
· Earnings per share decrease 52.4 per cent to € 0.29 (Q1/2014: € 0.60)
All figures are based on International Financial Reporting Standards (IFRS).
“In the first quarter, our operative business developed in line with our expectations. The first months of this year, however, were driven by an extraordinary high FX volatility. In particular, the development of Swiss franc, rouble, hryvnia, and US dollar had a strong impact on our results. The significant devaluation of the hryvnia, for instance, had a strong negative effect on our net trading income. The appreciation of rouble, US dollar, and Swiss franc led to a rise in our RWA. At the same time, our tier 1 capital increased significantly due to the strong rouble resulting in an almost stable CET1 ratio. The implementation of our strategy adjustment is on track,†Karl Sevelda, CEO of Raiffeisen Bank International AG (RBI) commented on the first quarter.
Profit before tax was € 188 million, which represents a year-on-year decline of 22 per cent, or € 52 million.
Profit after tax fell 42 per cent year-on-year to € 100 million. Consolidated profit stood at € 83 million in the first quarter, which corresponds to a decline of 48 per cent, or € 77 million.
The average number of shares outstanding in the reporting period totaled 292.4 million (comparable period from the previous year: 268.1 million). This resulted in earnings per share of € 0.29.
Net interest income decreased 16 per cent
Operating income declined 17 per cent, or € 227 million, year-on-year to € 1,118 million. This was primarily attributable to valuation losses from strong currency fluctuations (notably in the Russian rouble and Ukrainian hryvnia).
In the first three months of 2015, net interest income fell 16 per cent, or € 158 million, to € 820 million year-on-year. Aside from being attributable to a reduced net interest margin, this was also due to currency-related declines in interest income in Russia and Ukraine and to loan defaults in Asia. Group head office also recorded a volume-based decline in net interest income.
Net fee and commission income fell 4 per cent, or € 16 million, to € 360 million year-on-year, largely due to currency-related effects.
Compared to the same period last year, net trading income declined € 43 million to minus € 62 million, largely due to a € 109 million decline in currency-based transactions to minus € 149 million. This was largely attributable to exchange rate-related valuation losses on foreign currency positions in Ukraine, where net trading income reduced due to the sharp depreciation of the Ukrainian hryvnia (down € 64 million) and to a valuation loss on a hedging transaction for dividend income in Russian roubles (down € 53 million) at Group head office.
General administrative expenses fell 9 per cent
Compared to the same period last year, general administrative expenses declined € 64 million to € 691 million. The cost/income ratio increased 5.7 percentage points to 61.8 per cent, notably due to the currency effects which reduced net trading income.
At 50 per cent, the largest component in general administrative expenses was staff expenses, which fell 11 per cent, or € 45 million, to € 345 million.
Net provisioning for impairment losses decreased 7 per cent
Compared to the same period last year, net provisioning for impairment losses fell by a total of 7 per cent, or € 21 million, to € 260 million. This was predominantly due to a € 50 million reduction in individual loan loss provisions to € 220 million, while portfolio-based provisioning increased € 29 million to € 42 million.
In the reporting period, the NPL ratio rose 0.5 percentage points to 11.9 per cent compared to year-end 2014. Non-performing loans were set against loan loss provisions of € 6,306 million, resulting in a NPL coverage ratio of 65.9 per cent compared to 67.4 per cent at the year-end.
Common equity tier 1 ratio (transitional) of 10.4 per cent
Total capital amounted to € 11,271 million as at 31 March 2015. This represents an increase of € 267 million compared to the 2014 year-end figure.
Based on total risk, the common equity tier 1 ratio (transitional) was 10.4 per cent, with a total capital ratio (transitional) of 15.3 per cent.
Comparison of results with the previous quarter
Compared to the fourth quarter of 2014, net interest income declined 8 per cent, or € 75 million, to € 820 million in the first quarter of 2015.
Net fee and commission income dropped 14 per cent, or € 58 million, to € 360 million compared to the fourth quarter of 2014. The decline was due to both currency-related and seasonal factors.
Compared to the previous quarter, net trading income improved € 6 million to minus € 62 million. This was triggered by an increase in net income from interest-based transactions in Russia and at Group head office, primarily as a result of valuation gains from securities positions and derivatives.
At € 691 million in the first quarter of 2015, general administrative expenses were down 5 per cent, or € 38 million, from € 728 million in the previous quarter.
Compared to the previous quarter, net provisioning for impairment losses fell 59 per cent, or € 373 million, to € 260 million. This was mainly attributable to developments in Asia, Ukraine, Hungary and Poland.
Consolidated profit for the first quarter 2015 was at € 83 million, which represents an increase of € 801 million compared to the fourth quarter of 2014.
Outlook
RBI is planning an aggregate gross risk-weighted asset (total RWA) reduction of € 16 billion in selected markets by the end of 2017 (based on RWA as at December 2014: EUR 68.7 bn). The bank intends to partly offset the reduction with growth in other business areas.
After the implementation of the new strategic measures, the cost base should be 20 per cent below the level of 2014 (at constant prices and foreign exchange rates; general administrative expenses 2014: € 3,024 million). RBI targets a cost/income ratio of between 50 and 55 per cent in the medium term.
RBI aims for a return on equity before tax of approximately 14 per cent and a consolidated return on equity of approximately 11 per cent in the medium term. The full year 2015 consolidated result may be negative as the majority of the restructuring costs (around € 550 million in total) are expected to be booked in 2015.
The bank expects net provisioning for impairment losses to remain elevated in 2015; however, RBI anticipates that the requirement will be below the level of the previous year (2014: € 1,716 million).
RBI targets a CET1 ratio (fully loaded) of 12 per cent and a total capital ratio (fully loaded) of 16 per cent by the end of 2017.
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You can access the online version of the annual report at http://qr012015.rbinternational.com. The German version is available under http://zb012015.rbinternational.com. Printed versions can also be ordered via that webpage.
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Raiffeisen Bank International AG (RBI) regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 15 markets of the region are covered by subsidiary banks. Additionally, the Group comprises numerous other financial service providers, for instance in the fields of leasing, asset management, as well as mergers and acquisitions.
In total, around 54,500 employees service 14.8 million customers through approximately 2,850 business outlets, the great majority of which are located in CEE.
RBI is a fully-consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB). RZB indirectly owns around 60.7 per cent of the shares, the remainder is in free float. RBI's shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group, and serves as the head office of the entire RZB Group, including RBI.
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, http://www.rzb.at
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