Bancherul - BANCI / ENGLISH / Raiffeisen Bank International posts nine-month consolidated profit of € 783 million

Raiffeisen Bank International:
- Consolidated profit in the first nine months of 2010: € 783 million (pro forma)
- Provisioning for impairment losses: € 913 million (pro forma)
Return on equity before tax: 14.1 per cent (pro forma)

Raiffeisen International:

- Consolidated profit in the first nine months more than doubled to € 318 million (1-9/2009: € 156 million)
- Provisioning for impairment losses decline by 38.7 per cent year-on-year to € 837 million (1-9/2009: € 1,365 million)
- Return on equity before tax improves by 3.7 percentage points year-on-year to 9.8 per cent (1-9/2009: 6.1 per cent)

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

Results for Raiffeisen Bank International

Raiffeisen Bank International AG (RBI) officially launched its business activities on 11 October – and thus after the end of the third quarter. For this reason, the financial results provided for RBI remain on a pro forma basis, despite the fact that the founding of the new bank is retroactively effective as of 1 January 2010. RBI would have posted the following results (on a pro forma basis) for the first three quarters of 2010:

RBI's nine-month profit before tax would have stood at € 997 million, while its consolidated profit (after tax and minorities) would have amounted to € 783 million. The bank's provisioning for impairment losses would have been € 913 million during the period.

"Our results for the first three quarters reflect the friendlier overall macro-economic environment, but also underline the vigour that our new organisational set-up provides us. This strengthens my conviction, that the merger we undertook allows us to make optimal use of the economic upswing that is starting to take place – this will benefit our customers and is also in our investors' interest," said Herbert Stepic, CEO of Raiffeisen Bank International.

RBI would have posted a net interest income of € 2,707 million. The bank's general administrative expenses would have amounted to € 2,153 million, while its operating result would have been € 1,897 million. RBI's cost/income ratio would have come to 53.2 per cent.

The bank's total assets would have stood at € 143.1 billion as per 30 September 2010, which would have represented a decline of 1.8 per cent since the end of 2009 (31 December 2009: € 145.6 billion).

RBI's return on equity before tax would have come to 14.1 per cent.

The bank's core capital ratio (tier 1), credit risk would have stood at 12.2 per cent (up 0.4 percentage points against the end of 2009), its core capital ratio (tier 1), total would have come in at 9.7 per cent (up 0.3 percentage points against the end of 2009). RBI's core tier 1 ratio (core Tier 1 capital less hybrid capital based on total risk) would have been 8.8 per cent (up 0.3 percentage points against the end of 2009).

"We are comfortably capitalised. If the profit we generated over the first nine months were to be included, then our core tier 1 ratio would have stood at 9.7 per cent," CFO Martin Grüll said, commenting on current developments.

As per 30 September 2010, RBI would have had 59,339 employees servicing around 15 million customers through 2,964 business outlets.

Third-quarter's consolidated profit (on pro forma basis) more than doubled compared to preceding quarter

Raiffeisen Bank International would have posted a consolidated profit of € 311 million for the third quarter of 2010, which would have represents an increase of 125 per cent against the second quarter of 2010. The main driver for this increase came from valuation results for financial investments and derivatives.

The bank's third-quarter operating result would have come in at € 636 million, a slight decrease of 1 per cent compared to the preceding quarter.

RBI's net interest income after provisioning in the third quarter of 2010 would have been € 621 million, which would have represented an increase of 1 per cent against the second quarter.

The third quarter's provisioning for impairment losses would have amounted to € 306 million; which would have represented a rise of 8 per cent against the preceding quarter.

"Our non-performing loan (NPL) ratio stood at 8.8 per cent at the end of September. This quarter-on-quarter increase of 0.3 percentage points was largely attributable to developments in Central Europe – above all in Hungary and the Czech Republic. We assume that NPL volumes have already reached a peak in some countries, but that we will only reach that peak at the Group level during the course of next year. At the moment, it's not possible to tell whether that development will take place at the middle of the year or only in the second half of 2011," said Johann Strobl, Chief Risk Officer for RBI as well as for the RZB Group.

Results for Raiffeisen International

For the first three quarters of 2010, Raiffeisen International Bank-Holding AG posted a consolidated profit (after tax and minorities) of € 318 million, which represents an increase of 104.5 per cent compared to the same period a year earlier (1-9/2009: € 156 million). This development was supported by a quarterly profit of € 148 million, the highest since the outbreak of the financial and economic crisis. The period's earnings were also positively impacted by the 38.7 per cent year-on-year decline in provisioning for impairment losses, which amounted to € 837 million during the first three quarters of 2010 (1-9/2009: € 1,365 million). Raiffeisen International's profit before tax rose by 82.6 per cent to € 524 million (1-9/2009: € 287 million), while its profit after tax increased by 78.5 per cent to € 385 million (1-9/2009: € 216 million).

Operating result for the first three quarters down due to lower net interest income

Until the end of September, the operating result fell by 16 per cent, or € 249 million, to € 1,354 million on the comparable period last year. The main reasons were lower net interest income, increased general administrative expense, and negative other net operating income.

Net interest income declined overall by 3 per cent or € 63 million, to € 2,161 million. The main influences were refinancing costs and lending volume, which developed very differently in the various countries. The net interest margin at the Group level improved by 3 basis points on the third quarter of 2009 and has remained at nearly the same level for eight quarters.

Net fee and commission income improved by 2 per cent, or € 15 million, on the comparable period of last year to € 921 million.

Net trading income reached € 133 million and was 10 per cent below the value of the comparable period last year, with income dropping from both interest-related and currency-related business.

Other net operating income turned from a profit of € 3 million to a loss of € 39 million primarily due to a new special levy on banks introduced in Hungary

Return on equity before tax rises to 9.8 per cent

Operating business declined in the reporting period, but the sharp reduction of net allocations to provisioning for impairment losses led to a significant recovery of earnings and hence to improved rates of return. The average underlying equity increased by 11 per cent on the comparable period of last year to € 7.1 billion due to participation rights capital and positive currency effects.

At 83 per cent, the rise of earnings before tax was far above that of average equity. Return on equity increased by 3.7 percentage points on the comparable period last year to 9.8 per cent. The consolidated return on equity (after tax and minorities) improved by only 3.1 percentage points to 6.9 per cent owing to a somewhat higher tax rate. Earnings per share rose to € 1.78, representing an increase of € 1.06.

General administrative expenses up 9 per cent year-on-year

General administrative expenses rose by 9 per cent, or € 144 million, year-on-year to € 1,822 million. That was partly because of currency revaluations in the CEE countries.

Due to the decline of operating income by 3 per cent and the increase of general administrative expenses by 9 per cent, the cost/income ratio rose by 6.3 percentage points on the comparable period of last year to 57.4 per cent.

The average number of employees in the reporting period amounted to 56,362 and was thus 4,564 below the figure of the comparable period of last year. The number of employees as of 30 September 2010 stood at 56,650, which represents a rise of 120 employees on the end of 2009.

As per 30 September 2010, Raiffeisen International serviced more than 14.7 million customers through a total of 2,952 business outlets.

Other administrative expenses amounted to € 759 million as of 30 September 2010, which represents a rise of 6 per cent, or € 44 million.

Total assets volume hardly changed

Raiffeisen International’s total assets fell by less than 1 per cent, or € 0.5 billion, compared with the end of last year to € 75.8 billion. Currency effects led to a rise of total assets by almost 2 per cent, or € 1.3 billion. Viewed organically, however, they declined by more than 2 per cent.

Capitalisation impacted by exchange rate developments

In the reporting period, consolidated own funds as defined by the Austrian Banking Act (BWG) amounted to € 8,394 million, which represents an improvement of 1 per cent, or € 66 million. This does not include the reporting period’s current profit, since Austrian law prohibits it from being taken into account yet.
Core capital (tier 1) decreased by 1 per cent, or € 60 million, compared with the end of last year and amounted to € 7,012 million. Devaluation of the Serbian dinar by 11 per cent, the Hungarian forint by 2 per cent, and the Romanian leu by 1 per cent had negative effects, while Tier 1 capital was positively influenced by the appreciation of the Czech koruna by 7 per cent, the Ukrainian hryvnia by 6 per cent, and the Russian rouble and the Polish zloty by 3 per cent each. The core capital ratio based on credit risk declined by 0.5 percentage points to 13.6 per cent. The core capital ratio based on total risk came to 10.7 per cent, which represents a decline of 0.3 percentage points versus the end of last year. The own funds ratio fell by 0.2 percentage points to 12.8 per cent. The core tier 1 ratio (core tier 1 capital less hybrid capital based on total risk) amounted to 8.9 per cent.

Raiffeisen International's third-quarter consolidated profit of € 147.6 million marks highest level since start of crisis

Raiffeisen International's consolidated profit in the third quarter of 2010 amounted to € 147.6 million, which represents an increase of 90.2 per cent compared to the same period a year earlier (Q3/2009: € 77.6 million) and marks the bank's highest quarterly profit since the start of the financial and economic crisis. Raiffeisen International's consolidated profit in the third quarter of 2010 was 108.8 per cent higher than in the preceding quarter (Q2/2010: € 70.7 million).

Raiffeisen International's operating result in the third quarter of 2010 was € 465 million, which represents a slight increase of 1 per cent compared to the preceding quarter of the current year.

Raiffeisen International's net interest income after provisioning in the third quarter of 2010 came in at € 454.0 million, which represents an increase of 36.7 per cent compared to the same quarter a year earlier (Q3/2009: € 332.2 million), but a decline of 4.4 per cent compared to the second quarter of 2010 (Q2/2010: € 475.1 million). The third quarter's provisioning for impairment losses amounted to € 277.4 million, a decline of € 119.1 compared to the same quarter in 2009, but an increase of 4.6 per cent compared to the second quarter of 2010, during which provisioning had amounted to € 265.1 million.