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14.05.09

Raiffeisen International posts solid profit from operating activities, consolidated profit considerably lower on account of higher provisions for impairment losses



  • Profit from operating activities rises by 7.1 per cent compared to Q1 2008 to reach 536 million euros
  • Provisions for impairment losses up 379 per cent year-on-year to 445 million euros; non-performing loan ratio rises by 2.5 percentage points to 4.8 per cent
  • Consolidated profit decreases by 78 per cent to 56 million euros
  • Cost/income ratio improves by 2.1 percentage points to 51.7 per cent
  • Return on equity before tax declines by 17.2 percentage points to 5.3 per cent
  • Balance sheet total shrinks by 6.5 per cent to 79.9 billion euros
  • Earnings per share 1.28 euros lower at 0.37 euros

All figures are based on International Financial Reporting Standards (IFRS).

During the first quarter of 2009, Raiffeisen International Bank-Holding AG, a member of the RZB Group headed by Raiffeisen Zentralbank sterreich AG (RZB), posted a consolidated profit (after tax and minorities) of 56 million euros, which represents a decline of 77.9 per cent compared to the same period a year earlier (Q1 2008: 254 million euros). The most significant cause for this decline in consolidated profit lies in the fact that provisions for impairment losses rose by 379 per cent year-on-year to 445 million euros (Q1 2008: 93 million euros).

Profit before tax declined by 77.4 per cent to 84 million euros (Q1 2008: 370 million euros), while the groups profit after tax was 77.2 per cent lower at 64 million euros (Q1 2008: 279 million euros).


Profit from operating activities rises by 7 per cent despite global economic crisis

During the first quarter of 2009, the groups profit from operating activities stood at 536 million euros, marking a 7.1 per cent rise on the same period a year earlier (Q1 2008: 501 million euros). Operating income rose by 2 per cent, or 24 million euros, on the comparable period last year to 1.1 billion euros. This relatively small increase was due not only to currency influences, but also to several effects of the global financial crisis, including considerably increased funding costs.

In light of the economic downturn, we have raised our provisions for impairment losses considerably in a number of the countries in which we operate. Nevertheless, in the first quarter, our business model and earning power made it possible for us to once again absorb the impact of the global recession, whose reach now also fully extends to our home market Central and Eastern Europe, said Raiffeisen Internationals CEO Herbert Stepic.

Net interest income has remained the most important income component in 2009, with growth by 8 per cent on the comparable period last year from 711 million euros to 767 million euros. Because of higher funding costs, this was below the 11 per cent increase of the average balance sheet total. After a long period of growth, the group's net interest margin therefore fell for the first time by 12 basis points on the comparable period in 2008 to 3.71 per cent.

The economic downswing and currency fluctuations also weighed on net fee and commission income, which fell by 11 per cent to 294 million euros. Lower volumes of foreign exchange transactions (in Slovakia, Hungary, and Poland) and payment transfer business (especially in Ukraine, Russia, and Poland) led to lower fee and commission income. The introduction of the euro in Slovakia added another special effect. Net trading income developed better and, at 46 million euros, was 21 per cent above the comparable period last year. Particularly in interest-related business, the valuation losses that led to lower book values at the end of 2008 due to interest rate fluctuations were made up in part. Income from that business rose from minus 11 million euros in the first quarter of 2008 to 36 million euros.


Marked increase in provisions for impairment losses

In the wake of the economic downswing and the currency situation, there was a significant increase of overdue loans in the first quarter of 2009, especially in the case of foreign currency loans, which meant provisions had to be raised sharply. New allocations to provisions for impairment losses rose by 379 per cent, or 352 million euros, to 445 million euros. The non-performing loans mainly concerned Ukraine, Russia, Hungary, and Serbia. The non-performing loan ratio rose by 1.7 percentage points from the end of the year 2008 to 4.8 per cent.


Return on equity slightly above 5 per cent

The sharply decreased result is also reflected in the return on equity before tax, which came to 5.3 per cent and was thus significantly below the comparable period's level (22.5 per cent). The average equity underlying the calculation decreased by 3 per cent to 6.3 billion euros due to currency differences.

At 4.2 per cent, the consolidated return on equity (after minorities) was likewise far below past levels, after having still amounted to 17.7 per cent at the end of March 2008. Earnings per share for the period from the beginning of January to the end of March 2009 also fell by 1.28 euros to 0.37 euros.


Cost reduction program bears fruit: cost/income ratio below 52 per cent

The cost-cutting program, which was intensified when the crisis began, began to show effects by March, although the figures are influenced to some extent by exchange rates. General administrative expenses declined by 2 per cent, or 11 million euros, on the comparable period last year to 574 million euros.

The number of employees declined by 1,485 persons compared with the end of 2008 to 61,891. The decrease in number of employees occurred particularly in Ukraine (448), Russia (376), and Bulgaria (252), whereby in Russia and Bulgaria vacancies caused by the natural departure of employees were not subsequently filled. On the other hand, the average number of employees increased by 6 per cent compared with the first quarter of last year.

Because of the slight increase of operating income by 2 per cent, the cost/income ratio came to 51.7 per cent, which represents an improvement by 2.1 percentage points on the comparable period last year. The ratio for the full year 2008 was 54.0 per cent.

The significantly improved cost/income ratio shows that the measures we implemented over the past months in order to improve our cost efficiency have taken hold. Together with an even firmer approach to risk management, these measures will provide an important contribution to our success in crisis management, said Raiffeisen International CFO Martin Grll.


Customer number continues to rise

The number of business outlets was 3,208 at the end of the quarter. This means a net increase of 174 compared with the same period in 2008. Since the beginning of 2009, a net total of 23 outlets has been closed in Raiffeisen International as a result of efficiency-enhancing measures.

The number of customers stood at 14.9 million at the end of quarter, marking a slight rise against the 14.7 million customers Raiffeisen International had as per 31 December 2008.

The financial report for the first quarter of 2009 is available at qr012009.ri.co.at


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 groups nearly 62,000 employees service 14.9 million customers via more than 3,200 business outlets. Raiffeisen International is a fully-consolidated subsidiary of Raiffeisen Zentralbank sterreich 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 countrys largest banking group.

For further information please contact Michael Palzer (+43-1-71 707-2828, michael.palzer@ri.co.at) or Peter Klopf (+43-1-71 707-1930, peter.klopf@ri.co.at).

www.ri.co.at,
www.rzb.at


 

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