RBI: Semi-annual results – consolidated profit jumps 66 per cent y-o-y

• Net interest income up 5 per cent quarter-on-quarter
• Net fee and commission income significantly grew 15 per cent quarter-on-quarter to € 499 million
• General administrative expenses down 2 per cent year-on-year
• Provisioning ratio at 0.23 per cent due to releases and low inflows of stage 3 loans
• Consolidated profit improved 66 per cent year-on-year to € 612 million, supported by lower risk costs
• Loans to customers up 4 per cent year-to-date
• CET1 ratio at 13.3 per cent (fully loaded, incl. year-to-date result)

The positive earnings trend from the first quarter continued in the second quarter. Consolidated profit substantially increased by 66 per cent to € 612 million year-on-year. An expansion of business volumes, primarily in short-term lending, allowed for a stabilization of net interest income, which had been impacted by key interest rate cuts and currency devaluations. While net interest in-come showed the beginning of a positive trend in the second quarter, net fee and commission income already regained its pre-pandemic level with an increase of 11 per cent. The increase in consolidated profit was also due to significantly lower loan loss provisions, which at € 110 million were 65 per cent down on the comparable period.

"We are very satisfied with the development of the first half of the year. We have significantly improved our consolidated result compared to the same period of the previous year, successfully completed the acquisition of the Czech Equa bank and achieved great successes in the issuance and arrangement of green bonds," said Johann Strobl, CEO of RBI, continuing, "We have the top position in Austria and CEE in arranging green bond issues and have rolled out our own green bond program to RBI's subsidiary banks in CEE. Tatra banka in Slovakia, Raiffeisen Bank in Romania and Raiffeisenbank in the Czech Republic issued green bonds with a total volume of almost one billion euros in the first half of the year, making the RBI Group the largest green bond issuer in these countries."

General administrative expenses slightly decreasing

Operating income declined 3 per cent year-on-year to € 2,641 million. Net interest income decreased € 135 million to € 1,571 million as a result of interest rate cuts in numerous group countries as well as due to currency devaluations, in particular in Russia and Ukraine. Despite currency devaluations in Eastern Europe, net fee and commission income increased € 93 million to € 932 million, primarily due to increased transactions in clearing, settlement and payment services and in foreign exchange business during the reporting period following COVID-19-related restrictions in the previous year.

General administrative expenses were down 2 per cent year-on-year, or € 24 million, to € 1,427 million. Currency movements resulted in a € 54 million reduction.

Significant decline in impairment losses on financial assets

Impairment losses on financial assets in the amount of € 110 million were recognized in the reporting period, compared with € 312 million in the previous year’s period.

The NPE ratio was slightly down with a decrease of 0.1 percentage points on the end of the year to 1.7 per cent, mainly due to an increase in deposits at central banks, while the NPE coverage ratio was down 1.2 percentage points to 60.3 per cent.

CET1 ratio (fully loaded) at 13.3 per cent

Including the results of the first half of 2021, the (fully loaded) capital ratios are as follows: CET 1 ratio of 13.3 per cent, whereby the dividend originally proposed for 2019 remains deducted, tier 1 ratio of 15.2 per cent and total capital ratio of 18.1 per cent.

Quarterly results

Compared to the first quarter of 2021, operating income increased € 123 million to € 1,382 million – mainly due to net fee and commission income as well as net interest income.

General administrative expenses rose € 42 million quarter-on-quarter to € 735 million.

Impairment losses on financial assets decreased € 47 million to € 31 million.

Consolidated profit increased 83 per cent to € 396 million quarter-on-quarter.

Outlook

"We have adjusted our outlook due to the encouraging developments in credit demand and risk costs," Johann Strobl said.

New lending accelerated in the second quarter and we now expect mid- to high single digit percentage loan growth for 2021 (excluding Equa bank).

Barring renewed lockdowns, the provisioning ratio for 2021 is expected to be around 50 basis points.

We remain committed to a cost/income ratio of around 55 per cent – possibly as soon as 2022 depending on the speed of the recovery.

We expect the consolidated return on equity to improve in 2021, and we target 11 per cent in the medium term.

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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The quarterly report is available at http://zb022021.rbinternational.com, the German version at http://qr022021.rbinternational.com.