- Pressemitteilung BoxID 131746
Raiffeisen International posts solid nine-month results, including profit after tax of € 216 million
- Operating result of € 1,603 million for first three quarters of 2009 remains at same level as comparable period (1-9/2008: € 1,610 million)
- Provisioning for impairment losses in the first three quarters of 2009 rises 273 per cent year-on-year to € 1,365 million; provisioning in third quarter of 2009 lower quarter-on-quarter, namely € 397 million (down 24.2 per cent against Q2 2009)
- Profit after tax for the first three quarters at € 216 million (minus 77.7 per cent against 1-9/2008)
- Consolidated nine-month profit of € 156 million down 81.9 percent year-on-year; consolidated profit in third quarter reaches € 78 million, best quarterly performance in 2009 so far
- Cost/income ratio improves by 3.5 percentage points to 51.1 per cent
- Return on equity before tax lower at 6.1 per cent (down 19.3 percentage points against comparable period in 2008)
- Core capital ratio (Tier 1), credit risk improves by 3.3 percentage points against year-end 2008 to 13.0 per cent
- Balance sheet total of € 77.5 billion stable against preceding quarter (Q2 2009: € 77.9 billion), down 9.2 per cent against year-end 2008 All figures are based on International Financial Reporting Standards (IFRS).
Raiffeisen International Bank-Holding AG, a member of the RZB Group headed by Raiffeisen Zentralbank
Österreich AG (RZB), posted a consolidated profit (after tax and minorities) of € 156 million for the first nine months of 2009, which represents a decline of 81.9 per cent compared to the same period a year earlier (1-9/2008: € 861 million). Consolidated profit was heavily burdened by the period's provisioning for impairment losses, which rose 273.4 per cent year-on-year to € 1,365 million (1-9/2008: € 366 million). Profit before tax declined by 77.3 per cent to € 287 million (1-9/2008: € 1,261 million), while profit after tax was 77.7 per cent lower at € 216 million (1-9/2008: € 965 million).
"Despite a recent series of positive signals, the overall conditions for Central and Eastern Europe continue to bear the stamp of the global financial crisis. The crisis's continuing influence is also reflected in our results for the first three quarters of this year. However, a combination of effective cost-cutting measures and slower growth in provisioning has positively impacted the development of our results, particularly in the third quarter", said Herbert Stepic, CEO of Raiffeisen International.
Operating result remains stable The operating result appeared largely unaffected by the economic turbulence. It amounted to € 1,603 million at the end of the first nine months and was thus only € 7 million below the level of the comparable period of the preceding year. Operating income in the corporate customer division was down by € 133 million to € 1,072 million. A decline of net fee and commission income by € 81 million was responsible for that. Operating income from the retail customer division fell by 10 per cent, also due to a significant decline in net fee and commission.
Net interest income fell by 5 per cent, or € 118 million, on the comparable period of the preceding year, but is the Group's most important income component, accounting for 68 per cent, or € 2,224 million, of operating income. Interest income was down by € 109 million to € 4,315 million. Interest expenses increased by € 7 million to € 2,092 million.
Net fee and commission income fell by 17 per cent, or € 192 million, to € 906 million in the first three quarters of 2009. However, the € 322 million achieved in the third quarter was the best quarterly result to date in 2009. Net trading income rose by 15 per cent and amounted to € 147 million in the first nine months of 2009. The decisive contribution to improving net trading income came from interestrelated business, which increased by € 110 million.
Lower provisioning for impairment losses in the third quarter New allocations to provisioning for impairment losses increased on the comparable period of the preceding year and burdened earnings in the third quarter as well. Profit after tax at the end of nine months amounted to € 216 million and was thus 78 per cent below the preceding year's figure. A net total of € 1,365 million was allocated to provisioning for impairment losses in the first nine months of 2009, which signifies an increase by 273 per cent versus the same period in the preceding year.
Compared with the preceding two quarters, however, a significantly reduced need for provisioning for impairment losses was observed. The ratio of non-performing loans to the customer loan portfolio rose by 4.8 percentage points compared with the end of 2008 to 7.9 per cent. Its growth momentum thus declined in the third quarter. Comparing non-performing loans to total credit risk (loans and advances, securities, and off-balance sheet items) yields a figure of 4.6 per cent. Viewed regionally, Ukraine and Russia were the focal points of non-performing loans and provisioning for impairment losses, followed at some distance by Hungary.
Return on Equity before tax at 6 per cent High provisioning for impairment losses burdened Raiffeisen International's earnings and hence its profitability ratios. The return on equity before tax for the first nine months of 2009 came to 6.1 per cent, a level that was 19.3 percentage points lower than for the comparable period of 2008 (25.4 per cent). Relative to the comparable period of the preceding year, average equity underlying the calculation fell by 5 per cent to € 6.3 billion due to currency influences.
The consolidated return on equity (after minorities) fell from 17.4 per cent at the end of 2008 to 3.8 per cent. Earnings per share declined to € 1.01 (from € 5.61 in the preceding year). Adjusted for the computational compensation for the participation rights they amount to € 0.72.
Cost/income ratio improves by 3.5 percentage points General administrative expenses were reduced by 14 per cent, or € 262 million, to € 1,678 million at the end of the first three quarters of 2009. Since operating income, on the other hand, only showed a decline of 8 per cent, the cost/income ratio improved by 3.5 percentage points to 51.1 per cent. The largest declines in general administrative expenses were registered in Ukraine, Russia, and Hungary.
The reduction of general administrative expenses compared with the preceding year is attributable to strict cost management in the Group, which is not fully reflected in the figures yet, and to devaluation of currencies in the CEE countries.
"As soon as the crisis began, we started applying the breaks to our cost growth dynamics. The newest quarterly results underline just how successful our efforts have been. Becoming more efficient also provides us with additional vigour with which to face future challenges", said Martin Grüll, Raiffeisen International's Chief Financial Officer (CFO).
Staff expenses went down by 18 per cent, or € 167 million, on the comparable period of the preceding year to € 780 million. This is the largest item in general administrative expenses, with a share of 47 per cent. Measures to lower costs, such as personnel cuts and not hiring on natural turnover as well as bonus reductions, began to show noticeable effects.
The average number of employees amounted to 60,926 from January to September 2009, and was thus 214 employees less than the preceding year's comparable figure. While the average number of employees fell in the CIS other segment by 1,182 employees, or 6 per cent, it rose in Southeastern Europe by 497 employees, or 3 per cent, and in Central Europe by 325, or 2 per cent. It remained relatively constant in Russia.
The measures taken are reflected more clearly in the number of employees as of the reporting date in contrast to the average. The number of employees stood at 58,642 on 30 September 2009, while the comparable figure at the end of 2008 was 63,376. That represents a decline of 4,734, or 8 per cent.
Other administrative expenses fell by 12 per cent, or € 95 million, to € 716 million. The savings extended to nearly all types of expenses. Advertising and hospitality expense and legal and consulting expense were the most strongly affected. Ukraine and Russia showed the most significant reductions of other administrative expenses.
Balance sheet total of € 77.5 billion stable against preceding quarter Raiffeisen International's balance sheet total amounted to € 77.5 billion as of 30 September 2009.
That means a decline of € 7.9 billion, or 9 per cent, compared with the end of 2008. Two factors were responsible for the reduced balance sheet total. One was the devaluation of currencies in the CEE countries, and the other was measures to reduce and optimize the loan portfolio. Changes in the scope of consolidation had no significant impact on development of the balance sheet total. The balance sheet total as per 30 September was stable compared to the preceding quarter (Q2 2009: € 77.9 billion).
Comfortable capitalization levels Core capital (Tier 1) rose by € 971 million from the beginning of the year to € 6,817 million. The reasons for this increase are a capital enhancement in the form of participation rights amounting to € 600 million and an issue of hybrid capital amounting to € 650 million, which were both subscribed by RZB. Devaluation of currencies against the euro, particularly of the Russian rouble (7 per cent), the Ukrainian hryvnia (7 per cent), and the Belarusian rouble (31 per cent) burdened equity. On the other hand, the Czech koruna recovered, with a positive currency movement of 6 per cent.
The core capital ratio based on credit risk amounted to 13.0 per cent (plus 3.3 percentage points). The core capital ratio based on total risk improved to 10.5 per cent, which represents an increase of 2.4 percentage points compared with the end of the year. The ratio excluding hybrid capital (core Tier 1 ratio) came to 8.7 per cent. The own funds ratio came to 12.3 per cent, which means a plus of 2.6 percentage points on the year-end level.
Solid customer base of 15 million The number of business outlets was reduced by a net total of 23 compared with 30 September 2008 to 3,145. Further location optimization lowered the number in the CIS other segment by 103 outlets (exclusively in Ukraine) versus the preceding year's comparable quarter, and in Russia by 24 outlets.
The new openings took place in Southeastern Europe (72), including particularly Romania (29), Croatia (14), Serbia (13), and Bulgaria (10). In Central Europe, 32 business outlets were opened compared with the same time a year earlier.
The Group's overall number of customers (15 million) remained at the same level as the preceding quarter.
Third-quarter results provide best quarterly performance in 2009 Raiffeisen International's net interest income (after provisioning) during the third quarter stood at € 332.1 million, which represents a decrease of 51.2 per cent on a year-on-year basis, but is 61.7 per cent higher than in the second quarter of 2009 (Q2 2009: € 205.4 million). The principal cause of the year-on-year decrease was attributable to provisioning for impairment losses, which amounted to € 396.5 million during the third quarter and was thus € 232.3 million higher on a year-on-year basis.
However, the need for provisioning during the third quarter was noticeably lower than it had been during the two preceding quarters of 2009: provisioning during the first quarter had been € 445.2 million and € 523.3 million during the second quarter.
The 24.2 per cent quarter-on-quarter decline in provisioning during the third quarter had a correspondingly positive impact on the quarter's consolidated profit, which came in at € 77.5 million and was thus the best quarterly result so far in 2009. In comparison, the Group has posted a consolidated profit of € 56.2 million for the first quarter and € 21.9 for the second quarter. However, the third quarter's consolidated profit was 73.8 per cent below that of the same period a year earlier (Q3 2008: € 295.8 million).
Segment reporting Regional segments The regional segments of Raiffeisen International displayed very different economic developments. On the one hand, the mild recovery on the financial markets had a positive effect especially in Central Europe and Southeastern Europe particularly in respect to market value recoveries of securities, bonds, and other interest and money market products. On the other hand, significant burdens on earnings were registered primarily in Ukraine and Hungary due to continuing deterioration of the credit environment, which was reflected in the resulting increase of provisioning. The earnings of all Raiffeisen International segments declined in the first three quarters of 2009.
Despite a sharp decline of net fee and commission income, the region of Central Europe achieved the highest profit before tax of all the segments, which amounted to € 188 million. Earnings were burdened considerably by the increased provisioning for impairment losses. Balance sheet assets fell by 5 per cent year-on-year.
The region of Southeastern Europe achieved the second-highest profit before tax at € 178 million. That was based on good operating income, which was down only slightly, by 4 per cent, on the comparable period of the preceding year. Balance sheet assets fell by 8 per cent year on year.
Pretax earnings amounted to € 99 million in Russia. That represents a decline on the comparable period despite equally high operating income and was due to significantly increased provisioning for impairment losses. The segment's balance sheet assets fell by 20 per cent year-on-year.
Pretax earnings in the CIS other region were negative in the amount of € 75 million. Profit was heavily burdened - especially in Ukraine - by net allocations to provisioning for impairment losses amounting to € 392 million. The segment's balance sheet assets were down sharply, by 31 per cent year-on-year.
Central Europe continued to dominate in respect to consolidated assets, with a share of 44 per cent.
The Southeastern Europe segment had the second-largest share at 31 per cent, followed by Russia at 16 per cent and CIS other at 9 per cent.
Business divisions The corporate customer division registered an earnings decline in the period under review. Profit before tax fell by 69 per cent to € 217 million. The strong rise of net provisioning for impairment losses to € 534 million was mainly responsible for that development. The increase of provisioning for impairment losses was caused primarily by allocations in the amount of € 171 million in the Russian unit, whose business is strongly geared to corporate customers The cost/income ratio improved by 3.5 percentage points to 30.3 per cent Credit risk-weighted assets amounted to € 26.4 billion. That represents a sharp decline by 25 per cent on the comparable period in 2008, which was driven by volume and currency relations.
Profit before tax in the retail customer division remained negative as in the preceding quarters and amounted to minus € 143 million in the reporting period. A positive result of € 438 million was achieved in the comparable period of 2008. Due to the worsened risk situation, a substantially higher net provisioning for impairment losses of € 831 million became necessary, which was primarily responsible for the earnings decline. A significant increase of provisioning for impairment losses was made in Ukraine at € 253 million, where business with private individuals has a large share of the total. With € 371 million, the share of provisioning in Ukraine, Russia, and Hungary amounted to 45 per cent of the total for the retail division. The cost/income ratio improved further by 2.9 percentage points to 63.3 per cent. Credit risk-weighted assets dropped by 15 per cent year-on-year and amounted to € 16.9 billion at the end of the reporting period.
The treasury division made a profit before tax of € 155 million and thus registered a decline of 22 per cent on the comparable period. The result was achieved despite a sharp decline of net interest income due to a 21 per cent improvement of net trading income. Net interest income fell on the comparable period from € 160 million to € 11 million primarily because of higher funding costs, increased costs for the minimum reserve, and lower income from invested liquidity surpluses. Net trading income amounted to € 153 million and was largely influenced by appreciation of the securities portfolio in Croatia and Romania, which had suffered value losses primarily in the final quarter of 2008. Net income from derivatives came to € 0.7 million, to which the main contribution was made by valuation gains on interest rate swaps in Russia and Hungary. Net income from financial investments was positive in the amount of € 46 million in contrast to the comparable period. It mostly resulted from valuation gains on fixed-income securities in the Ukrainian and Romanian units. General administrative expenses were reduced by 16 per cent year-on-year. Operating income showed a comparatively sharp decline by 40 per cent to € 172 million. Consequently, the cost/income ratio increased by 10.5 percentage points to 37.2 per cent. Credit risk-weighted assets fell by 5 per cent to € 5.8 billion.
The participations and other segment's profit before tax came to € 57 million. Net interest income increased several times over on the comparable period to € 193 million. The result was positive mainly because it includes the computational results from the investment of equity, which rose sharply in the reporting period due to the high interest rate level in the CEE region.
The financial report for the first three quarters of 2009 is available at http://qr032009.ri.co.at
Raiffeisen International Bank-Holding AG
Raiffeisen International operates one of the largest banking networks in CEE, covering 17 markets across the region through subsidiary banks, leasing companies and a range of other financial service providers. The group's nearly 59,000 employees service around 15 million customers via more than 3,100 business outlets. Raiffeisen International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB), which owns about 70 per cent of the common stock. The remainder is in free float, with the shares listed on the Vienna Stock Exchange. RZB is a leading corporate and investment bank in Austria and the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group.
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