-Net interest income increases 4.6 per cent year-on-year to € 2,519 million (1-9/2017: € 2,407 million)
-Operating income increases 4.8 per cent to € 4,003 million (1-9/2017: € 3,821 million)
-General administrative expenses stable at € 2,228 million (1-9/2017: € 2,213 million)
-Strong positive development in impairment losses on financial assets: € 56 million (1-9/2017: minus 191 million)
-Profit before tax increases 22.0 per cent to € 1,587 million (1-9/2017: € 1,301 million)
-Profit after tax increases 25.7 per cent to € 1,271 million (1-9/2017: € 1,012 million)
-Consolidated profit increases 28.9 per cent to € 1,173 million (1-9/2017: € 910 million)
-Non-performing loan ratio decreases 1.2 percentage points to 4.4 per cent compared to year-end 2017
-Common equity tier 1 ratio at 12.8% (fully loaded) including YTD results
-Earnings per share increase to € 3.43 (1-9/2017: € 2.74)
On 1 January 2018, the new accounting standard for financial instruments (IFRS 9) took effect. In addition to the adoption of IFRS 9, RBI has also changed the presentation of its statement of financial position, which is now aligned with the financial reporting standards (FINREP) issued by the European Banking Authority (EBA). With the adoption of the standards, it was also necessary to adjust the figures of the comparable period and comparable reporting date.
Raiffeisen Bank International AG (RBI) posted consolidated result of € 1,173 million for the first three quarters of 2018.
“I am satisfied with the result of the first nine months. The main driver for this very good result is the development of risk costs. The earnings trend is pleasing as well. We were able to improve our net interest income by almost five per cent compared with the previous year in what continues to be a very difficult interest rate environment”, said Johann Strobl, CEO of RBI.
Operating income was up 5 per cent year-on-year, or € 182 million, to € 4,003 million. Net interest income rose 5 per cent to € 2,519 million, driven by the 3 per cent increase in the Group’s interest-bearing assets.
General administrative expenses showed a small € 16 million year-on-year increase to € 2,228 million. The cost/income ratio improved 2.2 percentage points to 55.7 per cent.
“We got off to a good start in the fourth quarter and have successfully completed an important project with the sale of the core banking business of Raiffeisen Bank Polska”, said Strobl.
Net release of € 56 million
There was a net release under impairment losses on financial assets of € 56 million in the reporting period, whereas impairment losses on financial assets of € 191 million were required in the same period of last year. This positive development was driven by a good macroeconomic environment with regard to inflows and the facilitation of successful recoveries totaling € 416 million.
The improvement in the NPL ratio also continued; since the start of the year it fell 1.2 percentage points and stood at 4.4 per cent at the end of September. Nevertheless, the NPL coverage ratio rose a further 7.9 percentage points to 75.0 per cent, primarily due to sales of highly collateralized loans and the first-time application of IFRS 9.
“Regarding the development of risk costs, we are benefiting from the very good economic situation and from our restructuring strategy aimed at preserving the value of non-performing loans”, said Strobl.
Total capital ratio (fully loaded) of 17.0 per cent
Taking into account the expiry of the transitional provisions, the common equity tier 1 ratiowas 12.3 per cent (no effects), the tier 1 ratio was 13.8 per cent and the total capital ratiowas 17.0 per cent (caused by tier 1 capital, which is no longer eligible for regulatory purposes). Including interim profit from the third quarter these capital ratios would be around 45 basis points higher.
Comparison of results with the previous quarter
Net interest income increased 3 per cent, or € 22 million, to € 856 million, the net interest margin rose 3 basis points to 2.51 per cent.
In the third quarter of 2018, general administrative expenses were € 734 million, down € 20 million quarter-on-quarter.
Impairment losses on financial assets amounted to € 28 million in the third quarter, whereas in the previous quarter no net impairment losses on financial assets were reported.
Consolidated profit improved € 60 million to € 417 million after the expected loss from the sale of the core banking operations of Raiffeisen Bank Polska posted in the second quarter reduced consolidated profit by € 121 million.
RBI will pursue loan growth with an average yearly percentage increase in the mid-single digit area.
Impairment losses on financial assets (risk costs) in 2018 are expected to be below the 2017 level.
RBI anticipates that the NPL ratio will further reduce in the medium term.
The bank aims to achieve a cost/income ratio of below 55 per cent in the medium term.
In the coming years RBI targets a consolidated return on equity of approximately 11 per cent.
The bank targets a CET1 ratio of around 13 per cent post dividend in the medium term.
Based on this target, RBI intends to distribute between 20 and 50 per cent (dividend payout ratio) of the consolidated profit.