AO Raiffeisenbank has announced its financial results for the first nine months of 2015. All figures are provided in accordance with International Financial Reporting Standards (IFRS) and may differ from the «Russia» data in Raiffeisen Bank International AG (RBI) financial report as a result of the difference arising from consolidation and translation to Euro.
Raiffeisenbank’s net profit for 9 months of 2015 rose 24.7% (y-o-y) to RUB 17 450.0 million resulting from the growth in all the components of operating income: trading result, net interest income before provisioning, and net fee and commission income.
The operating efficiency continued to grow: the cost-to-income ratio reduced by 7.8 percentage points compared to the same period of 2014 and reached 36.6%.
Return on Equity (ROE before tax) reached 28.2% in 9 months of 2015 (up 7.2 percentage points compared to the same period of 2014). ROE after tax rose 6.0 percentage points year-on-year reaching 22.8%.
«Growth of financial results in 3Q2015 demonstrates the efficiency of our business model, — mentioned Sergei Monin, CEO of Raiffeisenbank. — We confident that our traditionally conservative credit policy, ongoing activities aimed at increase of process efficiency and focus on service quality allow us to further demonstrate strong financial results and offer our clients exceptional level of service.»
The share of liquid assets was up 1.0 percentage point compared to the end of 2014 reaching 26.8%. The bank has sufficient liquidity cushion which is confirmed by overfulfilment of the CBR requirements: as of 01.10.2015, the H2 ratio was 112.4% (compared to the required minimum of 15%), H3 was 180.6% (compared to the required minimum of 50%), and H4 was 53.8% (compared to the required maximum of 120%).
Following the RBI Group’s strategy to reduce the risk-weighted assets, the bank’s loan portfolio before provisioning dropped by 5.4% to RUB 566 944.8 million compared to the end-2014 due to a decrease in loan portfolios in the main business segments: retail business (down 9.0% to RUB 191 245.2 million), large corporates (down 2.1% to RUB 340 004.5 million), small and micro business (down 26.5% to RUB 15 560.0 million), and middle business (down 3.1% to RUB 20 133.3 million).
Customer accounts rose 9.4% compared to the end of 2014 to RUB 581 867.8 million on the back of growing deposits from state and municipal organisations and retail customers, and higher corporate current account balances.
H 1.1 and H 1.21 capital ratios remain on the high level and as of 1 October 2015 were 9.5% and 10.4%, respectively (compared to the minimum requirements of 5.0% and 6.0%). The H 1.0 ratio increased by 2.1 percentage points compared to the end of 2014 reaching 14.2%.
Operating income before provisioning for impairment losses2 increased by 21.0% (y-o-y) and reached RUB 49 413.8 million at the end of 9 months of 2015 due to a positive trend in all main components: trading result, net interest income before provisioning for impairment losses, and net fee and commission income.
Trading result3 rose from RUB 784.7 to 7 421.2 million primarily due to the growing result from the income items related to foreign exchange transactions and revaluation 4 (up from RUB 2 129.7 to 6 171.1 million) resulting from the higher number of client FX transactions and positive revaluation of derivatives, as well as the net income from operations with securities 5 (RUB 1 250.2 million vs. the loss of RUB 1 345.0 million for 9 months of 2014) on the back of the higher market value of the securities.
Net interest income before provisioning for impairment losses rose 3.6% reaching RUB 32 591.6 million on the back of the higher interest income from loans and advances to corporate (up 40.6% or RUB 6 521.2 million to RUB 22 587.2 million) and retail customers (+6.4% or RUB 1 366.8 million to RUB 22 633.9 million) resulting from the growth in interest rates and average loan portfolio as well as the higher net interest income from FX and interest rate swaps, which nearly doubled (y-o-y) in the aggregate on the back of the growing number of transactions and market interest rates.
Net fee and commission income increased 9.2% to RUB 8 707.6 million primarily due to the higher net commission from payment transactions (up more than 2 times reaching RUB 969.5 million driven by the reduced expense component resulting from the lower commission paid to car dealers), and documentary business and guarantees that rose 43.6% reaching RUB 1 155.4 million due to the higher volume of issued letters of credit.
Administrative and other operating expenses remained nearly unchanged (down 0.3%) reaching RUB 18 063.6 million due to the lower staff and rent expenses resulting in the lower cost-to-income ratio that reduced by 7.8 percentage points compared to the same period of 2014 and reached 36.6%.
For nine months of 2015, the charge of provisions for loan impairment amounted to RUB 9 809.5 million compared to RUB 5 332.0 million in the same period of 2014 mainly due to the retail loan portfolio. In 3Q2015 charge of provisions slowed down (during third quarter 2015 charge of provisions amounted to RUB 2 292.9 million compared to RUB 3 784.3 million and 3 732.3 million in second and first quarter respectively).
Profit before tax amounted to RUB 21 572.6 million, which was 23.1% up on the same period of 2014. Net profit for 9 months of 2015 was RUB 17 450.0 million.
Gross loan portfolio dropped by 5.4% to RUB 566 944.8 million compared to the end-2014 due to a decrease in loan portfolios in all business segments: retail business (down 9.0% to RUB 191 245.2 million on the back of amortisation of consumer and car loans), large corporates (down 2.1% to RUB 340 004.5 million), small and micro business (down 26.5% to RUB 15 560.0 million), and middle business (down 3.1% to RUB 20 133.3 million).
The share of loans individually determined to be impaired in the total loan portfolio was 8.4% at the end of 9 months of 2015. The risk cost demonstrated a moderate growth reaching 2.2% p.a. at the end of 9 months of 2015 (down from 2.6% at the end of the first six months of 2015).
Customer accounts rose 9.4% compared to the end of 2014 to RUB 581 867.8 million on the back of growing deposits from state and municipal organisations (from RUB 13.1 million to 39 029.7 million), retail deposits (up 14.0% to RUB 197 888.6 million), and corporate current account balances (+14.6% to RUB 151 619.3 million).
Loan-to-deposit ratio was 97.4% at the end of 9 months of 2015.
Term borrowings from parent bank, amounted to RUB 66 783.0 million, up 7.7% compared to RUB 61 993.2 million at the end of 2014, due to the currency revaluation. The share of the term funding from parent bank in total bank’s liabilities was 8.5% as of 30.09.2015.
The bank’s equity rose by 2.4% or RUB 2 417.0 million compared to the end of 2014 reaching RUB 103 075.4 million primarily on the back of the bank’s net profit despite the payment of dividends in the amount of RUB 15 billion.
Total Basel III capital adequacy ratio rose 2.7 percentage points compared to the end of 2014 reaching 21.0%. The tier-1 capital adequacy was 16.1%.
|9 months 2014, |
|9 months 2015, |
|Net interest income before provisioning for impairment losses||31 462.4||32 591.6||3.6%|
|Charge of provision for loan impairment||5 332.0||9 809.5||84.0%|
|Net fee and commission income||7 970.9||8 707.6||9.2%|
|Trading result||784.7||7 421.2||845.7%|
|Administrative and other operating expenses||18 120.2||18 063.6||-0.3%|
|Profit before tax||17 521.3||21 572.6||23.1%|
|Profit after tax||13 989.3||17 450.0||24.7%|
|Cost-to-income ratio||44.4%||36.6%||-7.8 p.p.|
|ROE before tax||21.0%||28.2%||7.2 p.p.|
|ROE after tax||16.8%||22.8%||6.0 p.p.|
|Assets||893 279.8||891 145.8||-0.2%|
|Liquid assets||230 784.9||238 542.3||3.4%|
|Loans and advances to customers before provision:||599 343.6||566 944.8||-5.4%|
|Retail customers||210 110.1||191 245.2||-9.0%|
|Small and micro business||21 172.9||15 560.0||-26.5%|
|Middle business||20 773.8||20 133.3||-3.1%|
|Large corporates||347 282.5||340 004.5||-2.1%|
|Customer accounts||531 900.5||581 867.8||9.4%|
|Term borrowing from Parent bank||61 993.2||66 783.0||7.7%|
|Equity||100 658.4||103 075.4||2.4%|
|Share of loans individually determined |
to be impaired in total loan portfolio
|Total Basel III capital adequacy ratio||18.3%||21.0%||2.7 p.p.|
|H1.0 capital ratio (calculated in accordance |
with the CBR methodology)
1 Calculated on the basis of Basel III requirements 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 Includes the following items: gains less losses from trading in foreign currencies; unrealized gains less losses/(losses, net of gains) from derivative financial instruments; realized gains less losses/(losses, net of gains) from derivative financial instruments; foreign exchange translation (losses, net of gains)/gains, net of losses; ineffectiveness from the hedge accounting and other derivative instruments.
5 Total net income from transactions in trading securities and securities at fair value through consolidated profit or loss.