Raiffeisenbank earned RUR 11 bn in the first quarter of 2020 according to IFRS results

Raiffeisenbank announces financial results for Q1 2020. 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 14.0% to RUR 11 009 mn at the end of 1st quarter of 2020 compared to the 1st quarter of 2019
• Net interest income increased by 15.7% to RUR 15 409 mn compared to the 1st quarter of 2019
• Net fee and commission income grew by 9.8% to RUR 4 619 mn
• High profitability ratios: ROE after taxes was 24.18%.
• Loan portfolio growth: the loan portfolio before provisions increased by 8.3% in the 1st quarter of 2020. Retail loan portfolio grew by 3.2% to RUR 320 564 mn, large corporate business grew by 13.8% to RUR 440 578 mn, middle business grew by 2.1% to RUR 78 848 mn, small and micro businesses grew by 4.5% to RUR 28 581 mn, compared with the beginning of the year.
• Customer accounts as of March 31, 2020 amounted to RUR 1 117 878 mn, up by 17.0% year-on-year; the growth of funds in accounts and deposits of legal entities to RUR 572 992 mn amounted to 20.8%; the growth of funds on accounts and deposits of individuals to RUR 544 885 mn amounted to 13.3%.

«Raiffeisenbank demonstrated high financial results in the first quarter of 2020, despite external turbulence. Net profit rose by 14% with ROE ratio remained on the last year level — more than 24%. Cost-to-income ratio improved as well and decreased to 36.9%. We got a significant increase in current accounts surplus what confirmed our status of the most reliable bank on Russian market again. — said Gert Hebenstreit, CFO of Raiffeisenbank. — We came up to this instability period prepared as much as possible in terms of both technical and financial sides. We have a high margin of safety, our N1 capital ratio exceeded 14% in the end of March 2020, and now it’s even higher. Our successful digital transformation let us transfer the majority of all staff to remote work even before quarantine had started. This enables us to provide increased safety for our employees and to service existing clients fully and onboard new customers during this uncertain time. We continuously offer the full range of services but also launch new products in order to further enhance our clients’ financial parts of life».

KEY FINANCIAL RESULTS

INCOME STATEMENT

For the 1st quarter of 2020 profit before tax incre ased by 13.6% compared to the same period of the last year and amounted to RUR 13 957 mn. The Bank’s net profit reached RUR 11 009 mn (+14.0% compared to the 1st quarter of 2019). The main factors of profit growth were: growth of trading result, net interest income and net fee and commission income.

The Bank’s return on equity ratio (ROE before and after tax) amounted to 30.7% and 24.2% respectively for the 1st quarter of 2020, down 2.7 and 2.1 percentage points compared to the same period of 2019. During the 1st quarter of 2020, the Bank created additional provisions for loan impairment in the amount of RUR 1 967 mn due to the current macroeconomic situation. Cost of risk at the 1st quarter of 2020 amounted to 1.0% annualized.

Net fee and commission income increased by 9.8% to RUR 4 619 mn due to an increase in fee and commission income from settlement transactions, fiduciary ctivities and commissions on documentary business and guarantees.

Net interest income before provision for loan impairment showed an increase by 15.7% compared to the 1st quarter of 2019 and amounted to RUR 15 409 mn. The growth of interest income on securities and loan portfolio due to the increase in business volumes, as well as the reduction of interest expenses on derivatives, had a positive impact on dynamics of net interest income.

The trading result¹ for the 1st quarter of 2020 amounted to RUR 3 993 mn, up 55.5% compared to the same period of 2019, due to the growth of unrealized income from financial derivatives transactions as well as the disposals of investment securities.

The Bank’s operating income before provisions for loan impairment² or the 1st quarter of 2020 amounted to RUR 24 170 mn, up 17.9% from the 1st quarter of 2019, due to the growth in net interest, net fee and commission income and trading result.

Operating expenses increased by 12.2% and amounted to RUR 8 924 mn due to the growth of staff costs, IT services, as well as advertising and marketing expenses. The cost-to-income ratio (CIR) was at a low level: at the end of the 1st quarter of 2020, CIR was 36.9%.

FINANCIAL STATEMENT

Share of liquid assets as of the end of the 1st quarter of 2020 was 34.9%. Obligatory liquidity ratios prescribed by CBR were outperformed: on April 1, 2020, H2 was 73.48% (with a regulatory minimum of 15%), H3 on the same date was 123.59% (with a regulatory minimum of 50%), H4 was 49.17% (with a regulatory maximum of 120%).

Gross loan portfolio increased by 8.3% in the 1st quarter of 2020 and amounted to RUR 868 571 mn. The positive dynamics was driven by loan portfolio growth in the following segments: large corporate business (+13.8% to RUR 440 578 mn), small and micro business (+4.5% to RUR 28 581 mn), middle business (+2.1% to RUR 78 848 mn), retail business (+3.2% to RUR 320 564 mn). Key growth drivers of the retail loan portfolio were mortgage loans, which increased in the 1st quarter of 2020 by 5.2% to RUR 148 734 mn.

Share of impaired loans in total loan portfolio amounted to 2.8% at the end of the 1st quarter of 2020. Share of overdue loans (more than 90 days) amounted to 1.5% of the loan portfolio before provisions.

Customer accounts as of March 31, 2020 rose by 17.0% compared to the end of 2019 and amounted to RUR 1 117 878 mn. Retail customer accounts showed a growth of 13.3%, due to the growth in retail current accounts by 20.0% to RUR 435 758 mn. Share of current accounts in retail customer accounts amounted to 80.0%.
Corporate customer accounts increased by 20.8% to RUR 572 992 mn from the end of 2019 driven by growth in the share of current accounts (+27.0% to RUR 291 158 mn) and growth of corporate term deposits (+26.3% to RUR 274 238 mn).

The loan-to-deposit ratio as of 31.03.2020 was 77.7%.

Term borrowings from the Parent Bank increased in the 1st quarter of 2020 by 25.5% compared to the end of 2019 as a result of the FX revaluation and amounted to RUR 41 044 mn.

Equity at the end of the 1st quarter of 2020 increased by 6.1% compared to the end of 2019 and amounted to RUR 187 529 mn at the expense of the net profit received at the end of the 1st quarter of 2020.

Capital adequacy ratios of H 1.1. and H 1.2. ³ as of April 1, 2020, amounted to 10.94% and 11.67%, respectively (with regulatory minimums of 4.5% and 6.0%). H 1.0 ratio was 14.36% as of the same date (with a regulatory minimum of 8.0%). Total capital adequacy ratio according to Basel III as of March 31, 2020 was 26.62% with a minimum value of 8.0%.