Raiffeisenbank earned record net profit of RUB 37.6 bn within 2019 according to IFRS results

Raiffeisenbank announces financial results for 2019. All indicators are presented 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 differences arising from the consolidation and conversion of indicators in Euro.

• Net profit growth of 11.5% to RUR 37 632 mn in 2019
• Net interest income increased by 9.4% to RUR 57 516 mn
• Net fee and commission income grew by 20.1% to RUR 21 327 mn
• High profitability ratios: ROE after taxes was 23.35%.
• Loan portfolio growth: the loan portfolio before provisions increased by 16.4% in 2019. Retail loan portfolio grew by 16.5% to RUR 310 710 mn, large corporate business grew by 12.8% to RUR 387 050 mn, middle business grew by 34.6% to RUR 77 213 mn, small and micro businesses grew by 24.2% to RUR 27 362 mn, compared with the beginning of the year.
• Customer accounts as of December 31, 2019 amounted to RUR 955 082 mn, up by 9.5% year-on-year; the growth of funds in accounts and deposits of legal entities to RUR 474 343 mn amounted to 16.9%; the growth of funds on accounts and deposits of individuals to RUR 480 739 mn amounted to 3.0%.

«The last year proved the efficiency of our business model. We keep going building long-term profitable business in Russia, offering high tech financial solutions to our clients, — said Sergei Monin, Raiffeisenbank’s CEO. — The NPS rate has risen in the 2019, which means that our services and financial products are in high demand in retail and corporate businesses. We plan to go on with creating solutions which simplify the financial part of our clients’ lives».

KEY FINANCIAL RESULTS

INCOME STATEMENT

For 2019 profit before tax increased by 13.6% compared to the same period of the last year and amounted to RUR 48 320 mn. The Banks net profit reached RUR 37 632 mn (+11.5% from 2018). The main factors of profit growth were: growth of net fee and commission income, growth of net interest income, as well as growth of trading result.

The Bank’s return on equity ratio (ROE before and after tax) amounted to 30.0% and 23.4% respectively for 2019, down 2.4 and 2.3 percentage points compared to the same period of 2018.

During 2019, the Bank created additional provisions for loan impairment in the amount of RUR 3 898 mn, which is 25.2% higher than the additional provisions for 2018 (RUR 3 113 mn). Cost of risk at the end of 2019 amounted to 0.5% annualized.

Net fee and commission income increased by 20.1% to RUR 21 327 mn due to an increase in credit facility fees, fee and commission income from settlement transactions and operations with plastic cards and documentary business and guarantees.

Net interest income before provision for loan impairment showed an increase by 9.4% compared to the end of 2018 and amounted to RUR 57 516 mn. The growth of interest income on securities and loan portfolio due to the increase in business volumes had a positive impact on dynamics of net interest income.

The trading result¹ for 2019 amounted to RUR 9 406 mn, up 12.2% form 2018 due to FX revaluation, as well as growth of realized income from financial derivatives transactions.

The Bank’s operating income before provisions for loan impairment² for 2019 amounted to RUR 89 523 mn, up 12.3% from 2018, due to the growth in net interest, net fee and commission income and trading result.

Operating expenses increased by 10.7% and amounted to RUR 36 216 mn due to the growth of deposit insurance fees, staff costs, as well as premises and equipment maintenance expenses and amortization of right-of-use asset. The cost-to-income ratio (CIR) was at a low level: at the end of 2019, CIR was 40.5%.

FINANCIAL STATEMENT

Share of liquid assets as of the end of 2019 was 33.0%. Obligatory liquidity ratios prescribed by CBR were outperformed: on January 1, 2020, H2 was 114.01% (with a regulatory minimum of 15%), H3 on the same date was 241.10% (with a regulatory minimum of 50%), H4 was 45.95% (with a regulatory maximum of 120%).

Gross loan portfolio increased by 16.4% in 2019 and amounted to RUR 802 335 mn. The positive dynamics was driven by loan portfolio growth in the following segments: middle business (+34.6% to RUR 77 213 mn), small and micro business (+24.2% to RUR 27 362 mn), retail business (+16.5% to RUR 310 710 mn). Key growth drivers of the retail loan portfolio were unsecured loans, which increased by 15.7% to RUR 147 669 mn during 2019 and mortgage loans, which increased by 19.5% to RUR 141 447 mn.

Share of impaired loans in total loan portfolio amounted to 2.4% at the end of 2019. Share of overdue loans (more than 90 days) amounted to 1.4% of the loan portfolio before provisions.

Customer accounts as of December 31, 2019 rose by 9.5% compared to the end of 2018 and amounted to RUR 955 082 mn. Retail customer accounts showed a growth of 3.0%, mainly due to the growth in retail current accounts by 2.7% to RUR 363 028 mn and the growth of retail term deposits by 4.0% to RUR 117 711 mn. Share of current accounts in retail customer accounts amounted to 75.5%.
Corporate customer accounts increased by 10.5% to RUR 446 464 mn from the end of 2018 driven by growth in the share of current accounts (+6.0% to RUR 229 298 mn) and growth of corporate term deposits (+15.8% to RUR 217 166 mn).

The loan-to-deposit ratio as of 31.12.2019 was 84.0%.

Term borrowings from the Parent Bank decreased by 11.5% during 2019 as a result of the FX revaluation and amounted to RUR 32 701 mn.

Equity at the end of 2019 increased by 21.3% compared to the end of 2018 and amounted to RUR 176 671 mn at the expense of the net profit received at the end of 2019.

Capital adequacy ratios of H 1.1. and H 1.2. ³ as of January 1, 2020, amounted to 10.75% and 11.35%, respectively (with regulatory minimums of 4.5% and 6.0%). H 1.0 ratio was 13.72% as of the same date (with a regulatory minimum of 8.0%). Total capital adequacy ratio according to Basel III as of December 31, 2019 was 27.09% with a minimum value of 8.0%.

CORPORATE BUSINESS

The input of corporate business into net profit continued to grow. Its net profit increased by 22.3% to RUR 12 600 mn. The growth was shown by all segments as Large Corporate, Middle Business and International Business Divisions.

The corporate business’s growth of assets and passives exceeded the average market rates: 16.2% against 2% and 11.5% against 1% respectively. The highest increase among products was shown by factoring (+73%), leasing (+72%), guarantees and uncovered letters of credit portfolio (+25%) and international trade flows served (+37%).

The client base grew in all segments by 10–15%. It’s the main priority of corporate business because just the attraction of new clients reflects the success of Raiffaisenbank’s strategy in corporate segment. The main factors of clients’ base and profit growth were: the deep expertise in financing companies representing different industries of economy, unique financial solutions which Raiffeisenbank develops with the leading Russian companies. The wide range of digital tools simplifies and speeds up possibilities of getting financial services for Russian and International companies notably.

RETAIL BUSINESS

Net profit of retail business grew by 5% to RUR 21 600 mn in 2019 with client base increased by 12% to 2 mn customers. The main factors of growth were segments of small enterprises and premium banking. Raiffeisenbank counts on the further dynamic growth of these segments due to remote services and high quality of services.

Gross loan portfolio in retail business increased by 16.5% to RUR 310 710 mn. This positive dynamics was driven by unsecured loans (+15.7% to RUR 147 669 mn) and mortgage loans (+19.5% to RUR 141 447 mn). At the same time the share of impaired loans stayed at one of the lowest rates in the banking sector. Raiffeisenbank also mentioned the increasing in retail passives: the high growth was shown in saving accounts, term deposits and current accounts nominated in RUR.

Raiffeisenbank’s goal in retail segment is to make the financial part of customers easier. Nowadays Raiffeisen Online application which is used by more than 1.2 mn customers monthly helps to reach this goal. Raiffeisenbank continues the development of digital service model in Russian regions which is available in more than 100 cities. We believe convenient financial products and digital channels let us increase the base of active customers further.