RBI: Semi-Annual Financial Report 2023

Raiffeisen Bank International (RBI) achieved profit after tax from continuing operations of 1.327 billion euros in the first half of 2023, exceeding the figure for the same period last year (1.299 billion euros) by about 2 per cent. Consolidated profit amounted to 1.235 billion euros, 477 million euros lower than in the previous year. The main reason for this decline is the gain from the sale of the Bulgarian subsidiary bank of 453 million euros, which was recognized in the first half of 2022.

"We are very pleased with the first half of the year. RBI has once again proven the stability of its business model and its earnings strength. We are particularly proud of the performance of our colleagues in Ukraine. Despite the enormously difficult environment and very conservative risk provisioning, Raiffeisen Bank in Ukraine, including its subsidiaries, generated a profit after tax of 80 million euros in the first six months," said Johann Strobl, CEO of RBI.

Raiffeisen Bank is Ukraine's largest private bank and its largest foreign bank. The agricultural sector is one of its focus areas. "Raiffeisen Bank is doing an outstanding job in providing the Ukrainian population with a stable banking infrastructure despite the war. The average availability of our 1,460 ATMs is about 97 per cent, and that of our 293 active branches is 100 per cent," Strobl stated.

Significant reduction of business in Russia

RBI further reduced its business in Russia in the second quarter of 2023. Russia contributed 35.1 per cent to RBI's operating result in the second quarter. In the first quarter of 2023, the contribution was 45.1 per cent. Compared to the previous quarter, operating income in Russia declined by 270 million euros. Taking into account the negative equity effects due to the sharp depreciation of the ruble which are not recognized in the income statement but in the other comprehensive income, the contribution from Russia in the first half of the year amounted to minus 143 million euros. "We continue to work at full speed on two options for our business in Russia: a sale and a spin-off. While we are working on these complex options, we are consequently continuing to reduce the business in Russia. This reduction is now also reflected in declining earnings contributions from Russia," Strobl explained.

Since the outbreak of war, Raiffeisenbank Russia has reduced its loan volume measured in rubles by 35 per cent. The number of SWIFT transactions in euros is now lower than before the start of the war.

CET1 ratio (transitional) of 15.9 per cent

Taking into account the profit of the first half of the year, the CET1 ratio is 15.9 per cent, with the originally proposed dividend for 2022 deducted. The CET1 ratio in the event of deconsolidation of the Russian subsidiary bank without taking its equity into account would be 13.9 per cent, which would be significantly above the regulatory requirements.

Good result in the EBA stress test

RBI's stability was also confirmed in the most recent Europe-wide stress test conducted by the European Banking Authority (EBA). Capital depletion in the adverse scenario amounted to 361 basis points, which was below the average of the participating banks. It was assumed over a three-year period, starting from the reported CET1 ratio of 16.02 per cent at year-end 2022.

"We are pleased with the outcome of the stress test. It shows the strength of our balance sheet and the resilience of our business model. The results also confirm that RBI is equally resilient without the business in Russia. The result of this stress test as well as the recent rating affirmations by Moody's and S&P underline the RBI Group’s solidity," commented Hannes Mösenbacher, RBI’s Chief Risk Officer.

Outlook

The following guidance refers to RBI excluding Russia and Belarus, whereas the corresponding figures in brackets refer to the existing footprint. RBI will continue to progress potential transactions which would result in the sale or spin-off of Raiffeisenbank Russia and its deconsolidation from RBI.

In 2023, net interest income is expected between 3.8 and 4.0 billion euros (between 5.3 and 5.4 billion euros) and net fee and commission income around 1.8 billion euros (between 3.2 and 3.4 billion euros).

We expect customer loan growth to increase by around 2 per cent (~0 per cent).

We expect general administrative expenses around 3.1 billion euros (around 4.0 billion euros), resulting in a cost/income ratio between 51 and 53 per cent (43 and 45 per cent).

The provisioning ratio – before use of overlays – is expected to be around 45 basis points (up to 60 basis points).

The consolidated return on equity is expected to be around 10 per cent (around 17 per cent) in 2023.At year-end 2023 we expect a CET1 ratio above 13.5 per cent* (above 16 per cent).

Any decision on dividends will be based on the capital position of the Group excluding Russia.

Medium term return on equity and payout ratio targets are suspended due to current uncertainties in Eastern Europe.*

In a ‘P/B Zero‘ Russia deconsolidation scenario.

You can access the online version of the semi-annual report at https://qr022023.rbinternational.com, the German version is available at https://zb022023.rbinternational.com.