Raiffeisenbank earned RUR 19 bn in the first-half of 2019 according to IFRS results

Raiffeisenbank announces financial results for the first half of 2019. All indicators are shown in accordance with International Financial Reporting Standards (IFRS) and may differ from the Russian data in the financial report of Raiffeisen Bank International AG (RBI) due to the difference arising from the consolidation and recalculation of indicators in Euro.

• Net profit growth by 9.9% to RUR 19,066.1 mln for the first-half of 2019
• Net interest income showed growth by 9.4% to RUR 27,150.6 mln
• Net fee and commission income grew by 10.6% to RUR 8,901.9 mln
• High profitability ratios: ROE after taxes was 25.1% (-0.6 percentage points compared to the end of 2018).
• Loan portfolio growth: the loan portfolio before deducting allowances showed 10.5% increase in the first half of 2019. The retail loan portfolio showed 9.1% increase to RUR 291,150.9 mln; large corporate business grew by +9.4% to RUR 375,423.6 mln, the growth of medium-sized businesses amounted to +21.8% to RUR 69,865.3 mln, small and micro businesses grew by +14.7% to RUR 25,261.7 mln, compared with the beginning of the year.
• Customer accounts increased by 1.5% to RUR 885,516.2 mln, compared with 2018, the growth of funds on accounts and deposits of legal entities amounted to 2.9% to RUR 417,329.0 mln, the growth of funds on accounts and deposits of individuals amounted to 0.3% to RUR 468 187.2 mln.

KEY FINANCIAL RESULTS

INCOME STATEMENT

In the first half of 2019, profit before tax increased by 9.9% compared with the same period of the last year and amounted to RUR 24 294.9 mln. Net profit of the Bank reached RUR 19,066.1 mln. (+ 9.9% compared with the first half of 2018). The main factors for profit growth were: net interest income growth, net fee and commission income growth, as well as trading result growth.

Return on equity ratio (ROE before and after tax) of the Bank was 32.0% and 25.1%, respectively, for the first 6 months of 2019, having decreased by 4.0 and 3.1 percentage points compared to the same period of the last year.

During 6 months of 2019, the Bank created additional provisions in total amount of 1 093.0 mln RUR compared with release in amount of RUR 107.2 mln for the same period of 2018. Cost of risk in first-half 2019 amounted to 0.3% annualized.

Net fee and commission income increased by 10.6% to RUR 8 901.9 mln due to the growth of fee and commission income on plastic cards, the growth of income on settlement transactions and documentary business.

Net interest income before provisioning loan impairment showed increase by 9.4% compared with the 1st half of 2018 and amounted to RUR 27 150.6 mln. Growth was driven by increase in interest income on securities and loan portfolio due to growth in business volumes.

Trading result¹ for the first 6 months of 2019 amounted to RUR 5 444.4 mln, having increased by 66.6% compared with the same period of 2018 due to positive income from FX revaluation, as well as the growth of unrealized income from derivative transactions.

Operating income before provisions for loan impairment² in first half 2019 amounted to RUR 42 246.5 mln, having increased by 13.7% compared to the same period of 2018, against net interest and net fee and commission income growth.

Operating expenses increased by 10.2% and amounted to RUR 16 681.4 mln due to growth of deposit insurance expenses, as well as office expenses. The cost to income ratio (CIR) was low: at half year-end of 2019, CIR was 39.5%.

Share of liquid assets at the end of June 2019 amounted to 29.0%. Obligatory liquidity ratios prescribed by CBR were outperformed: H2 as of 01.07.2019 amounted to 81.988% (with a regulatory minimum of 15%), H3 at the same date was 150.4% (with a regulatory minimum of 50%), H4 was 49.3% (with a regulatory maximum of 120%).

Gross loan portfolio increased by 10.5% and amounted to RUR 761 701.5 mln in first half of 2019. Growth dynamics was observed in the following segments: middle business (+21.8% to RUR 69 865.3 mln) small and micro business (+14.7% to RUR 25 261.7 mln), retail business (+9.1% to RUR 291,150.9 mln). Main driver of retail loan portfolio growth was unsecured consumer lending, which increased over 6 months of 2019 by 9.0% to RUR 139 107.6 mln and mortgage portfolio, which increased by 9.6% to RUR 129 767.2 mln.

Share of impaired loans in total loan portfolio in the first -half of 2019 was 2.8%. The share of overdue loans (for a period of more than 90 days) was 1.7% of the loan portfolio before provisions.

As of June 30, 2019, customer accounts amounted to RUR 885 516.2 mln, with an increase of 1.5% compared with the end of 2018. Retail customer accounts showed a slight increase of 0.3%, mainly due to growth in retail term deposits by 8.2% to RUR 122 401.6 mln. Share of current accounts in retail customer accounts amounted to 73.9%.
Corporate customer accounts increased by 2.9% to RUR 417 329.0 mln driven by growth in term deposits (+2.4%) and current accounts by (+3.3%).

The loan-to-deposit ratio as of June 31, 2019 was 86.0%.

The term-borrowed funds received from the Parent Bank decreased over six months of 2019 by 9.3% because of FX revaluation and amounted to RUR 33,502.0 mln.

Equity increased by 8.5% compared with the end of 2018 and amounted to RUR 157 931.8 mln due to rise in net profit in 1H 2019.

Capital adequacy ratios H 1.1. and H 1.2.³ as of July 1, 2019 were 10.8% and 11.5%, respectively (with regulatory minimums of 4.5% and 6.0%). H 1.0 ratio was 13.0% as of the same date (with a regulatory minimum of 8.0%). The total capital adequacy according to Basel III as of 30.06.2019 was 23.4% with a regulatory minimum value of 8.0%.