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12.11.09

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
  • Blance 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 Osterreich 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.


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 years 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 Internationals 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.


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 brakes 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 Grll, 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.


Balance sheet total of  77.5 billion stable against preceding quarter

Raiffeisen Internationals 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.


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 years 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 financial report for the first three quarters of 2009 is available at qr032009.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 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 Osterreich 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.

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).

Survey of key data

Raiffeisen International Group
Monetary values in  million
2009 Change 2008
Income statement 1/1-30/9
1/1-30/9
Net interest income 2,224 (5.0)% 2,342
Provisioning for impairment losses (1,365) 273.4% (366)
Net fee and commission income 906 (17.4)% 1,098
Net trading income 147 15.2% 127
General administrative expenses (1,678) (13.5)% (1,940)
Profit before tax 287 (77.3)% 1,261
Profit after tax 216 (77.7)% 965
Consolidated profit (after minorities) 156 (81.9)% 861
Balance sheet 30/9
31/12
Loans and advances to banks 11,213 24.1% 9,038
Loans and advances to customers 51,830 (10.5)% 57,902
Deposits from banks 21,017 (19.8)% 26,213
Deposits from customers 42,607 (3.6)% 44,206
Equity (including minorities and profit) 6,862 5.3% 6,518
Balance sheet total 77,522 (9.2)% 85,397
Key ratios 1/1-30/9
1/1-30/9
Return on equity before tax 6.1% (19.3) PP 25.4%
Return on equity after tax 4.6% (14.9) PP 19.5%
Consolidated return on equity (after minorities) 3.8% (16.1) PP 19.9%
Cost/income ratio 51.1% (3.5) PP 54.6%
Return on assets before tax 0.48% (1.65) PP 2.13%
Net provisioning ratio (average risk-weighted assets) 3.25% 2.40 PP 0.85%
Risk/earnings ratio 61.4% 45.8 PP 15.6%
Bank-specific information1 30/9
31/12
Risk-weighted assets (credit risk) 52,340 (13.3)% 60,388
Total own funds 7,980 14.1% 6,992
Total own funds requirement 5,206 (9.7)% 5,767
Excess cover 53.3% 32.1 PP 21.2%
Core capital ratio (Tier 1), credit risk2 13.0% 3.3 PP 9.7%
Core capital ratio (Tier 1), total2 10.5% 2.4 PP 8.1%
Own funds ratio 12.3% 2.6 PP 9.7%
Stock data 30/9
30/9
Earnings per share in   1.012 (4.60) 5.61
Price in   44.56 (10.8)% 49.97
High (closing price) in   44.56 (59.6)% 110.20
Low (closing price) in   13.00 (74.0)% 49.97
Number of shares in millions 154.67 - 154.67
Market capitalization 6,892 (10.8)% 7,729
Resources 30/9
31/12
Number of employees as of reporting date 58,642 (7.5)% 63,376
Number of business outlets 3,145 (2.7)% 3,231



1 Calculated according to the Austrian Banking Act (Bankwesengesetz, BWG). Raiffeisen International is a part of the RZB Group and thus not subject to the Austrian Banking Act.
2 Adjusted for the computational compensation for the participation rights, earnings per share amount to  0.72.

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