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20.08.15

Raiffeisenbank shows 15% net profit growth in 1H2015

AO Raiffeisenbank announces today its unaudited financial results for the first half of 2015. AO Raiffeisenbank results are provided in accordance with International Financial Reporting Standards (IFRS) and may differ from the «Russia» segment data in Raiffeisen Bank International AG (RBI) financial report as a result of the difference arising from consolidation and translation to Euro.
Net profit rose 15% to RUB 11 765.5 million in the first six months of 2015.

Total loan portfolio before provisioning dropped by 9.7% to RUB 540 940.1 million due to a decrease in loan portfolios in the following business segments: retail business — down 8.0% to RUB 193 347.3 million, large business — down 10.6% to RUB 310 387.0 million, small and micro business — down 20.7% to RUB 16 799.3 million.

Return On Equity (ROE before tax) reached 29.2% in the first half of 2015 (up 7.4 percentage points compared to the same period of 2014). ROE after tax rose 6.0 percentage points year-on-year reaching 23.8%.

«Financial results for 1H2015 reflect the healthy dynamics of our business development despite turbulent economic environment, — said Sergei Monin, Chairman of the Board of Raiffeisenbank.- The bank is persistent in its pursuit of RBI strategy for reducing the risk weighted assets (RWA) which allow us to constantly increase the efficiency of our business, thus remaining among the leaders of banking industry in terms of return on assets and capital».

Share of liquid assets was up 1.4 percentage points compared to the end of 2014 reaching 27.2%. The Bank has sufficient liquidity buffer exceeding the CBR liquidity requirements: as of 01.07.2015, the H3 ratio was 254.4% compared to the minimum requirement of 50%, and the H4 ratio was 53.4% versus the maximum requirement of 120%.

«Historically, we`ve built a solid liquidity cushion and managed to retain high capitalization rate. Besides that, the bank concentrates on cost-to-income ratio which we improved by more than 8.0 pp., — said Arndt Roechling, Head of Financial Directorate of Raiffeisenbank. — We managed to maintain an optimal ratio level by implementing efficient cost optimization policy, as well as improving existing business processes and technologies».

Customer accounts remained nearly unchanged from the end of 2014 (down 1.7%) at RUB 522 787.3 million rising 13.0% year-on-year.
H 1.1 and H 1.21 ratios were at a high level of 9.5% and 10.2%, respectively, as of 01.07.2015. The H 1.0 ratio increased by 1.1 percentage points compared to the end of 2014 reaching 13.2%.

1H 2015 HIGHLIGHTS

  • Operating income before provisioning for impairment losses2 increased by 23.2% and reached RUB 33 603.0 million at the end of the 1st six months of 2015 due to a positive trend in all main components: net interest income before provisioning for impairment losses, net fee and commission income, and trading result.
  • Net interest income before provisioning for impairment losses rose 7.1% reaching RUB 21 862.1 million on the back of the higher net interest income from currency and interest rate swaps (which in the aggregate increased more than 2 times due to the higher transaction volume and market interest rates), loans and advances to corporate customers (up 45.1% or RUB 4 743.3 million reaching RUB 15 256.0 million primarily due to currency effects from rouble depreciation), and retail loans (+10.0% or RUB 1 384.0 million to RUB 15 225.9 million) on the back of the higher interest rates and average loan portfolio.
  • Net fee and commission income increased 7.2% to RUB 5 537.6 million due to the higher net commission from settlement transactions (up more than 2 times reaching RUB 576.7 million driven by the reduced expense component resulting from the lower commission paid to car dealers), documentary business and guarantees that rose 65.9% reaching RUB 748.8 million due to the higher volume of issued guarantees and letters of credit, and net income from fiduciary activities (+38.4% reaching RUB 402.4 million) and consulting service (up more than 2 times reaching RUB 219.6 million).
  • Trading result3 increased more than 4.5 times compared to the first half of 2014 reaching RUB 5 767.3 million primarily due to the higher net income from the securities transactions4 (RUB 1 170.1 million vs. the loss of RUB 1 147.6 million in the first six months of 2014) driven by the higher market value of the securities in the first half of 2015 and by items of income attributed to foreign exchange transactions and revaluation5 (increase from RUB 1 714.4 million to RUB 4 065.9 million).
  • Administrative and other operating expenses remained nearly unchanged at RUB 11 653.5 million (down 0.97% from the first half of 2014) due to a reduction in staff costs and rent expenses resulting in the lower cost-to-income ratio that reduced by 8.4 percentage points compared to the same period of 2014 and reached 34.7%. An optimal value of the Bank’s cost/income ratio is based on the cost optimisation policy and improvement of existing business processes and technologies.
  • During the 1st six months of 2015, the Bank created additional provisions for impairment losses in the amount of RUB 7 516.6 million compared to RUB 3 133.7 million in the same period of 2014 due to the rising economic risks. A major share of additional provisioning (RUB 4 822.4 million) fell on the retail loan portfolio.
  • Profit before tax came to RUB 14 458.3 million, which was 15.3% up on the same period of 2014. Net profit rose 15% to RUB 11 765.5 million in the first six months of 2015.
  • Total loan portfolio before provisions dropped by 9.7% to RUB 540 940.1 million due to a decrease in loan portfolios in the following business segments: retail business — down 8.0% to RUB 193 347.3 million on the back of amortisation of consumer and car loans, large business — down 10.6% to RUB 310 387.0 million, small and micro business — down 20.7% to RUB 16 799.3 million, middle business — down 1.8% to RUB 20 403.8 million.
  • The share of loans individually determined to be impaired in the total loan portfolio was 7.8% at the end of the 1H 2015. At the same time, the risk costs demonstrated a moderate growth reaching 2.6% (annualized) in the second half of 2015 vs. 1.4% for 2014.
  • Customer accounts remained nearly unchanged from the end of 2014 (down 1.7%) at RUB 522 787.3 million rising 13.0% year-on-year. The following customer accounts components demonstrated growth from the end of 2014: retail deposits (+3.4% to RUB 179 645.8 million) and term deposits of state and public organisations (from RUB 13.1 million to RUB 14 611.8 million).
  • Loan-to-deposit ratio was 103.5% at the end of the first half of 2015.
  • Term borrowings from parent bank were RUB 65 537.3 million, up 5.7% compared to RUB 61 993.2 million at the end of 2014 due to a subordinated loan in U.S. dollars. The share of the term funding from parent bank in total bank’s liabilities was 8.8% as of 30.06.2015.
  • The Bank’s equity contracted by 3.2% or RUB 3 234.5 million compared to the end of 2014 following the payment of dividends for the second half of 2014 in the amount of RUB 15 000.0 million, and reached RUB 97 423.9 million. At the same time, compared to the 1st quarter of 2015 the Bank’s equity rose 5.3% driven by the Bank’s net profit. The payment of dividends was accompanied by the subordinated loan from parent bank, which is included in the calculation of equity as required by the CBR Provisions 395-P (additional capital).
  • Basel III total capital adequacy ratio was up 2.2 percentage points to 20.5% comparing to the end of 2014. Tier I capital adequacy ratio was 15.9%.

INCOME STATEMENT

6 months 2014,
RUB million
6 months 2015,
RUB million
Change, %
Net interest income before provisioning for impairment losses6 20 418.8 21 862.1 7.1%
Additional provisioning 3 133.7 7 516.6 139.9%
Net fee and commission income 5 166.2 5 537.6 7.2%
Trading result 1 252.0 5 767.3 360.6%
Administrative and other operating expenses 11 767.4 11 653.5 -1.0%
Profit before tax 12 537.0 14 458.3 15.3%
Net profit 10 233.3 11 765.5 15.0%
Cost-to-income ratio 43.1% 34.7% -8.4 п.п.
ROE before tax 21.8% 29.2% 7.4 п.п.
ROE after tax 17.8% 23.8% 6.0 п.п.

STATEMENT OF FINANCIAL POSITION

31.12.2014,
RUB million
30.06.2015,
RUB million
Change, %
Assets 893 279.8 842 772.9 -5.7%
Liquid assets 230 784.9 228 824.5 -0.8%
Loans and advances to customers before provisioning: 599 343.6 540 940.1 -9.7%
Retail customers 210 110.1 193 347.3 -8.0%
Small and micro businesses 21 172.9 16 799.3 -20.7%
Medium businesses 20 773.8 20 403.8 -1.8%
Large businesses 347 282.5 310 387.0 -10.6%
Customer accounts 531 900.5 522 787.3 -1.7%
Funds obtained from parent bank 61 993.2 65 537.3 5.7%
Equity 100 658.4 97 423.9 -3.2%
Share of loans individually determined
to be impaired in total loan portfolio
5.8% 7.8% 2.0 п.п.
Total Basel III capital adequacy ratio 18.3% 20.5% 2.2 п.п.
H1.0 capital ratio
(calculated in accordance
with the CBR methodology)
12.1% 13.2% 1.1 п.п.

1 Basel III calculated in accordance with the methodology of the Central Bank of the Russian Federation.

2 Calculated by subtracting from «Operating income» the following items: «Provisions for loan impairment», «Provisions for credit related commitments», «Provisions for investment securities held to maturity».

3 Trading result includes: losses net of gains from trading securities, gains less losses from other securities at fair value through consolidated profit or loss, gains less losses/(losses, net of gains) from redemption of investment securities available for sale, gains less losses from trading in foreign currencies, unrealized gains less losses/(losses, net of gains) from derivative financial instruments, realized gains less losses from derivative financial instruments (excluding realized result from derivative financial instruments — cross-currency interest rate swaps, currency swaps, and interest rate swaps), foreign exchange translation (losses, net of gains)/gains, net of losses, ineffectiveness from the hedge accounting.

4 Total net income from transactions in trading securities and securities at fair value through consolidated profit or loss.

5 Including following items: gains less losses from exchange operations, unrealized gain excluding derivatives business, losses net of gains from foreign currency revaluation, inefficiency of hedge accounting and other derivative instruments.

6 Including the net realised result from derivative financial instruments (cross-currency interest rate swaps, currency swaps, and interest rate swaps).

 

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