Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Raiffeisen Bank International AG (RAIFF, Financial) reported consolidated profits excluding Russia and Belarus of EUR856 million for the first nine months of 2024, with an ROE of 8.6%.
- The CET1 ratio for the group under a worst-case scenario in Russia improved to 15.3%, with guidance for the full year remaining at 14.7%.
- Operating expenses increased by 6% compared to the first nine months of 2023, with a cost-income ratio just under 51%.
- The bank's liquidity coverage ratios remained stable and at comfortable levels across the group.
- The bank's CET1 ratio is stable at 17.8% for the fully consolidated group, with expectations to be around 17.3% by year-end.
Negative Points
- Net interest income excluding Russia and Belarus decreased by 1%, with a clear downward trend.
- Operating expenses increased by 6% compared to the first nine months of 2023.
- The return on equity was revised down to 7.5% due to the risk of further provisions in Poland and an unexpected windfall tax in Ukraine in Q4.
- The bank faces significant challenges in exiting its Russian operations, with court proceedings delaying the timeline.
- Risk costs are expected to increase to 35 basis points for the full year of 2024, with further provisions anticipated in Poland.
Q & A Highlights
Q: Can you provide insights on the Polish FX litigation and its impact on profitability? How do you foresee this affecting charges in 2025?
A: Hannes Moesenbacher, Chief Risk Officer, mentioned that they are cautious about providing strong guidance but noted that they are confident in their coverage for active clients. They expect 2025 charges to be lower than 2024, as they have been positively surprised by the outcomes in previous years.
Q: What are the current options for Raiffeisen Bank in Russia, considering the ongoing court proceedings?
A: Johann Strobl, CEO, stated that the court proceedings are delaying their exit strategy. They are considering a sale of the majority or all of their Russian operations but are not yet ready to walk away without compensation. The focus remains on significantly reducing business activities to mitigate risks.
Q: Could you explain the increase in Russian Net Interest Income (NII) and its future outlook?
A: Johann Strobl explained that the increase in NII is due to moving excess liquidity to the Central Bank of Russia, which offers higher interest rates. This structural change has significantly impacted earnings, but future increases will depend on deposit outflows and surplus liquidity.
Q: What is the outlook for Raiffeisen's Additional Tier-1 (AT1) instruments, given the market rally?
A: Johann Strobl indicated that the bank plans to replace existing non-call instruments with new ones, but he did not provide specific details on timing or structure.
Q: How is Raiffeisen managing its loan book and deposits in Russia, and what are the implications if they reach zero?
A: Johann Strobl noted that reducing the loan book and deposits to zero would take several years. The bank is gradually reducing operations and employee numbers, but the significant equity in Russia still generates revenue. The long-term strategy remains uncertain, but they are committed to reducing risks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
