RBI: Semi-Annual Financial Report 2020

Core revenues stable; € 368 million consolidated profit negatively impacted by COVID-19

•             Core revenues stable year-on-year, with net interest income up 2 per cent and net fee and commission income unchanged (lower quarter-on-quarter due to lockdown)

•             Customer loans grew by 3 per cent year-to-date despite substantial depreciation of local currencies

•             Provisioning ratio of 0.67 per cent in the first half of the year; increase primarily driven by COVID-19 effects

•             Consolidated profit of € 368 million, negatively impacted by higher risk costs and impairments on companies valued at equity (other result)

•             Net interest margin declined by 22 basis points quarter-on-quarter to 2.21 per cent

•             NPE ratio and NPE coverage ratio improved slightly to 1.9 per cent and 63.3 per cent, respectively

•             CET1 ratio of 13.2 per cent (including year-to-date result)

In the first half of 2020, Raiffeisen Bank International (RBI) generated a consolidated profit of € 368 million. Consolidated profit declined € 203 million year-on-year. The result was negatively impacted by direct and indirect effects of the COVID-19 crisis. These are reflected in credit risk costs as well as in impacts relating to payment moratoriums and impairments on investments and goodwill.

“RBI is in solid shape. We have a good capital base and a strong liquidity position. We leave our outlook unchanged. We expect RBI to generate a consolidated return on equity in the mid-single digit range this year,” said CEO Johann Strobl.

General administrative expenses declined € 23 million year-on-year to € 1,474 million. The cost/income ratio decreased 5.0 percentage points to 54.8 per cent.

Recession most evident in impairment losses

The recession caused by the COVID-19 pandemic was most noticeably reflected by impairment losses on financial assets, which reached € 312 million compared to a very modest level of € 12 million in the previous year.

At 1.9 per cent, the NPE ratio was down 0.2 percentage points from the year-end level, mainly due to the increased lending volume. The NPE coverage ratio improved 2.4 percentage points to 63.3 per cent

Total capital ratio (fully loaded) at 17.5 per cent

On a fully loaded basis (each) and including the half-year result, the CET1 ratio stood at 13.2 per cent, the tier 1 ratio at 14.6 per cent and the total capital ratio at 17.5 per cent.

Quarterly comparison

“After a pleasing earnings development in the first quarter, we experienced a significant decline in the second quarter due to the lockdown. Meanwhile, we are observing a recovery of economic activity in many areas,” said Strobl.

Net interest income declined € 57 million quarter-on-quarter to € 825 million. The net interest margin was down 22 basis points to 2.21 per cent, mainly as a result of negative margin developments in many of the Group’s countries due to rate cuts relating to COVID-19.

General administrative expenses declined € 36 million quarter-on-quarter to € 719 million.

Impairment losses on financial assets were € 5 million above the level of the previous quarter at € 158 million.

At € 192 million, consolidated profit was € 15 million above the previous quarter’s level. In contrast, the operating result declined € 83 million, driven by a significant reduction in core revenues.

Outlook

We expect modest loan growth in 2020.

The provisioning ratio for FY 2020 is currently expected to be around 75 basis points, depending on the length and severity of disruption.

We aim to achieve a cost/income ratio of around 55 per cent in the medium term and are evaluating how the current circumstances will impact the ratio in 2021.

In the medium term we target a consolidated return on equity of approximately 11 per cent. As of today, and based on our best estimates, we expect a consolidated return on equity in the mid-single digits for 2020.

We confirm our CET1 ratio target of around 13 per cent for the medium term.

Based on this target we intend to distribute between 20 and 50 per cent of consolidated profit.

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You can access the online version of the quarterly report at http://qr022020.rbinternational.com, the German version is available at http://zb022020.rbinternational.com. You can also order printed copies there.

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RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 13 markets of the region are covered by subsidiary banks. Additionally, the RBI Group comprises numerous other financial service providers, for instance in leasing, asset management or M&A.

Around 46,000 employees service 16.7 million customers through 2,000 business outlets, the by far largest part thereof in CEE. RBI's shares are listed on the Vienna Stock Exchange. The Austrian Regional Raiffeisen Banks own around 58.8 per cent of the shares, the remainder is in free float. Within the Austrian Raiffeisen Banking Group, RBI is the central institute of the Regional Raiffeisen Banks and other affiliated credit institutions.

For further information please contact:

Ingrid Krenn-Ditz (+43-1-71 707-6055, [email protected]) or

Christof Danz (+43-1-71 707-1930, [email protected])

www.rbinternational.com