RBI increased profit before tax to 746 million euros in the first three quarters of 2016

•  Net interest income decreases 12.3 per cent to € 2,187 million year-on-year (1-9/2015: € 2,495 million)
•  Operating income decreases 5.2 per cent to € 3,470 million (1-9/2015: € 3,660 million)
•  General administrative expenses stable at € 2,100 million (1-9/2015:
  € 2,101 million)
•  Net provisioning for impairment losses decreases 36.7 per cent to € 503 million (1-9/2015: € 795 million)
•  Profit before tax increases 5.3 per cent to € 746 million (1-9/2015: € 708 million)
•  Profit after tax decreases 6.9 per cent to € 480 million (1-9/2015: € 516 million)
•  Consolidated profit decreases 14.7 per cent to € 394 million (1-9/2015: € 461 million)
•  Non-performing loan ratio decreases 1.7 percentage points to 10.2 per cent compared to year-end 2015
•  Common equity tier 1 ratio (transitional) increases 0.5 percentage points to 12.6 per cent compared to year-end 2015
•  Common equity tier 1 ratio (fully loaded) increases 0.8 percentage points to 12.3 per cent compared to year-end 2015

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

“I am satisfied with the development of the first nine months. Important key figures like the capital ratios and the NPL ratio are developing in the right direction. Our transformation program makes good progress, and we are already now approaching our target figures, one year ahead of schedule”, explains Karl Sevelda, CEO of Raiffeisen Bank International AG (RBI).

In the first three quarters of 2016, Raiffeisen Bank International Group (RBI) generated a profit before tax of € 746 million, which represents a year-on-year increase of 5.3 per cent or € 38 million. Operating income was down 5 per cent year-on-year, or € 190 million, to € 3,470 million. Net interest income declined further, down 12 per cent to € 2,187 million, due to the aforementioned low interest rate level. This was primarily attributable to persistently low market interest rates in many of the Group’s countries and to existing excess liquidity, as well as to a reduction of € 171 million, particularly in Russia, in interest income from derivatives entered into for hedging purposes, which were impacted by market fluctuations in the first half of 2015.  Profit after tax decreased 6.9 per cent year-on-year to € 480 million. Consolidated profit in the reporting period was € 394 million, which corresponds to a decrease of 14.7 per cent or € 68 million.

“I would like to emphasize the turnaround in Hungary as well as the outstanding result in Ukraine in the light of the extremely difficult environment there. Russia, the Czech Republic, Slovakia and Bulgaria delivered very strong results, too”, said Sevelda.

Net interest income decreased 12 per cent

In the first nine months of 2016, net interest income fell 12 per cent, or € 308 million, to
€ 2,187 million.

“We cannot completely decouple from the sustaining low interest rate environment and notice this in net interest income. However, the interest rate environment continues to be more attractive in CEE than in Western Europe”, Sevelda stated.

Net fee and commission income fell 3 per cent year-on-year, or € 32 million, to € 1,097 million due to the currency devaluations in Eastern Europe as well as lower sales in Central Europe

Net trading income increased € 148 million year-on-year to € 136 million..

General administrative expenses stable

Compared to the same period in the previous year, general administrative expenses declined € 1 million to € 2,100 million. The cost/income ratio increased 3.1 percentage points to 60.5 per cent, predominantly due to the lower net interest income.

At 50 per cent, the largest component of general administrative expenses was staff expenses, which increased 4 per cent, or € 40 million, to € 1,048 million.

Net provisioning for impairment losses decrease 37 per cent

Compared to the same period of the previous year, net provisioning for impairment losses fell by a total of 37 per cent, or € 292 million, to € 503 million. This was due to a € 280 million reduction in individual loan loss provisioning to € 543 million. There was a net release of € 32 million of portfolio-based provisions in the reporting period, an improvement of € 14 million.

As a result, the NPL ratio improved 1.7 percentage points compared to year-end 2015 to 10.2 per cent. Non-performing loans compared to loan loss provisions of € 5,150 million, resulting in an NPL coverage ratio of 72.0 per cent, up from 71.3 per cent at year-end.

Common equity tier 1 ratio (fully loaded) of 12.3 per cent

Total capital amounted to € 11,039 million as at 30 September 2016. This represents an increase of € 52 million compared to the 2015 year-end figure.

Based on total risk, the common equity tier 1 ratio (transitional) was 12.6 per cent while the total capital ratio (transitional) was 17.8 per cent.

Excluding the transitional provisions as defined in the CRR, the common equity tier 1 ratio (fully loaded) stood at 12.3 per cent, and the total capital ratio (fully loaded) at 17.6 per cent.

Comparison of results with the previous quarter

Compared to the second quarter of 2016, net interest income fell 1 per cent, or € 6 million, to € 732 million in the third quarter of 2016.

Net fee and commission income rose 1 per cent compared to the second quarter, or € 5 million, to € 378 million.

Compared to the previous quarter, net trading income declined € 4 million to € 52 million.

At € 687 million in the third quarter of 2016, general administrative expenses were down 1 per cent, or € 7 million, on the previous quarter.

Compared to the previous quarter, net provisioning for impairment losses declined € 197 million to € 100 million. The decline was mainly attributable to Asia (down € 90 million), the Group Corporates segment (down € 65 million), Central Europe (down € 31 million) and Southeastern Europe (down € 23 million).

Other results fell € 136 million (from € 33 million in the second quarter of 2016) to minus € 103 million in the third quarter of 2016.

The consolidated profit for the third quarter was at € 184 million, which is an increase by 91.6 per cent or € 88 million compared to the second quarter 2016.

Outlook

“Our outlook remains unchanged. Basically, I am optimistic about RBI’s future development, but populist measures at the expense of banks are cause for concern. Against this background, it is all the more positive that the Romanian Constitutional Court recently stopped the retroactive interference with freedom of contract and partially repealed the so called Walkaway Law. I hope for a signal effect from this verdict”, Sevelda summed up.

RBI targets a CET1 ratio (fully loaded) of at least 12 per cent and a total capital ratio (fully loaded) of at least 16 per cent by the end of 2017.

After the implementation of the strategic measures defined at the beginning of 2015, the cost base should be approximately 20 per cent below the level of 2014 (general administrative expenses 2014: € 3,024 million).

RBI aims for a return on equity before tax of approximately 14 per cent and a consolidated return on equity of approximately 11 per cent in the medium term.

The bank further aims to achieve a cost/income ratio of between 50 and 55 per cent in the medium term.

RBI expects net provisioning for impairment losses for 2016 to be below the level of 2015 (€ 1,264 million).

General administrative expenses for 2016 should be slightly below the level of the previous year (2015: € 2,914 million).

* * * * *

You can access the online version of the quarterly report at http://qr032016.rbinternational.com. The German version is available under http://zb032016.rbinternational.com. Printed versions can also be ordered via that webpage.

* * * * *

Raiffeisen Bank International AG (RBI) regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 14 markets of the region are covered by subsidiary banks. Additionally, the Group comprises numerous other financial service providers, for instance in the fields of leasing, asset management, as well as mergers and acquisitions.

In total, around 51,000 employees service 14.2 million customers through around 2,600 business outlets, the great majority of which are located in CEE.

RBI is a fully-consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB). RZB indirectly owns around 60.7 per cent of the shares, the remainder is in free float. RBI's shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group, and serves as the head office of the entire RZB Group, including RBI.

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])

http://www.rbinternational.com, http://www.rzb.at