RBI: 1-9/2021 results – consolidated profit jumps 76 per cent y-o-y

• Net interest income up 9 per cent quarter-on-quarter driven by volume growth and higher key rates
• Net fee and commission income up 8 per cent quarter-on-quarter to € 538 million
• Cost income ratio at 52.1 per cent in third quarter, general administrative expenses (up 3 per cent quarter-on-quarter) reflect first time consolidation of Equa bank and integration cost
• Year-to-date provisioning ratio at 0.21 per cent
• Consolidated profit improved 76 per cent year-on-year to € 1,055 million
• Loans to customers up 11 per cent (excluding Equa bank 9 per cent) year-to-date
• CET1 ratio at 13.2 per cent (fully loaded), including year-to-date result and Equa bank impact
• Moody’s rating upgrade to A2 from A3
• Extraordinary general meeting scheduled for 10 November to vote on proposed additional dividend of € 0.75 per share

After the pandemic-driven recession in the previous year, the current financial year is being marked by economic recovery. Consolidated profit increased by a substantial 76 per cent year-on-year to € 1,055 million. An expansion of business volumes allowed for net interest income, which had been impacted by key interest rate cuts and currency devaluations, to be largely stabilized. The recent rises in market interest rates in many group countries has already resulted in an increase in net interest income over the last quarter. Net fee and commission income has also regained its pre-pandemic level with an increase of 16 per cent. The increase in consolidated profit was also due to significantly lower loan loss provisions, which at € 152 million were € 345 million below the previous year’s period.

"We are very satisfied with the performance in the first nine months. We have significantly improved our consolidated profit compared to the prior-year period and successfully completed the acquisition of Czech Equa bank. The economic upturn in our markets gives us a tailwind, so we are optimistic about both the rest of the year and 2022," said Johann Strobl, CEO of RBI.

Operating income increased

Operating income rose 2.3 per cent to € 4,096 million year-on-year. Net interest income decreased € 31 million to € 2,445 million, due to the low interest rate environment in numerous markets of the group and currency devaluations. Despite currency devaluations in Eastern Europe, net fee and commission income increased € 198 million to € 1,470 million, primarily due to increased transactions during the reporting period in clearing, settlement and payment services and foreign exchange business, following COVID-19-related restrictions in the previous year.

Despite currency depreciations, general administrative expenses were up 2 per cent year-on-year, or €49 million, to €2,185 million.

Significant decrease in impairment losses on financial assets

Impairment losses on financial assets in the amount of € 152 million were recognized in the reporting period, compared with €497 million in the previous year’s period.

The NPE ratio decreased 0.2 percentage points to 1.6 per cent due to an increase in deposits at central banks and higher lending volumes. The NPE coverage ratio rose 0.7 percentage points to 62.2 per cent.

CET1 ratio (fully loaded) at 13.2 per cent 

Including the third quarter results, the (fully loaded) capital ratios are as follows: CET1 ratio 13.2 per cent, tier 1 ratio 15.0 per cent and total capital ratio 17.7 per cent.

Quarterly results

Consolidated profit was up 12 per cent, or € 47 million, to € 443 million quarter-on-quarter. Much of the rise was attributable to an increase of € 73 million in operating income, mainly due to higher net interest income and net fee and commission income.

General administrative expenses were up € 23 million quarter-on-quarter to € 758 million.

Impairment losses on financial assets increased € 11 million to € 42 million compared to the previous quarter.

Outlook

RBI now expects loan growth of around 11 per cent (excluding Equa bank) for 2021.

The provisioning ratio for 2022 is expected to be around 40 basis points.

RBI remains committed to a cost/income ratio of around 55 per cent.

RBI expects the consolidated return on equity to improve further in 2022, and targets 11 per cent in the medium term.

RBI confirms its CET1 ratio target of around 13 per cent for the medium term.

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

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The quarterly report is available at http://qr032021.rbinternational.com, the German version at http://zb032021.rbinternational.com.