Raiffeisenbank earned RUR 18.8 bn in the first half of 2020 according to IFRS results

Raiffeisenbank announces financial results for 1H 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 decreased by 1.1% to RUR 18 849 mn at the end of 1st half of 2020
• Net interest income increased by 12.4% to RUR 30 530 mn compared to the 1st half of 2019
• Net fee and commission income grew by 7.1% to RUR 9 531 mn
• High profitability ratios: ROE after taxes was 20.3% (-3.1% compared to the end of 2019).
• Loan portfolio growth: the loan portfolio before provisions increased by 6.3% in the 1st half of 2020. Retail loan portfolio grew by 0.2% to RUR 311 325 mn, large corporate business grew by 13.1% to RUR 437 736 mn, middle business decreased by 2.5% to RUR 75 307 mn, small and micro businesses grew by 3.1% to RUR 28 216 mn, compared with the beginning of the year.
• Customer accounts as of June 30, 2020 amounted to RUR 997 052 mn, up by 4.4% year-on-year; the growth of funds in accounts and deposits of individuals to RUR 551 658 mn amounted to 14.8%; the decrease of funds on accounts and deposits of legal entities to RUR 443 126 mn amounted to -0.7, while the growth of current accounts of legal entities was +24.8% to RUR 286 265 mln.

KEY FINANCIAL RESULTS

INCOME STATEMENT

For the 1st half of 2020 profit before tax decreased by 1.7% compared to the same period of the last year and amounted to RUR 23 895 mn. The Bank’s net profit reached RUR 18 849 mn (-1.1% compared to the 1st half of 2019).

During the 1st half of 2020, the Bank created additional provisions for loan impairment in the amount of RUR 5 714 mn compared to RUR 1 093 mn for the same period of the last year due to the current macroeconomic situation. Cost of risk at the 1st half of 2020 amounted to 1.4% annualized.

The Bank’s return on equity ratio (ROE before and after tax) amounted to 25.7% and 20.3% respectively for the 1st half of 2020, down 6.3 and 4.8 percentage points compared to the same period of 2019.

Net fee and commission income increased by 7.1% to RUR 9 531 mn due to an increase in fee and commission income from settlement transactions, fiduciary activities and commissions on documentary business and guarantees.

Net interest income before provision for loan impairment showed an increase by 12.4% compared to the 1st half of 2019 and amounted to RUR 30 530 mn. The decrease of expenses for interest rate and foreign exchange swap contracts had a positive impact on dynamics of net interest income.

The trading result¹ for the 1st half of 2020 amounted to RUR 5 945 mn, up 9.2% compared to the same period of 2019, due to the growth of unrealized income from financial derivatives transactions as well as due to the growth of FX revaluation expense.

The Bank’s operating income before provisions for loan impairment² for the 1st half of 2020 amounted to RUR 46 168 mn, up 9.3% from the 1st half of 2019, due to the growth in net interest, net fee and commission income and trading result.

Operating expenses increased by 3.5% and amounted to RUR 17 273 mn due to the growth of staff costs and IT services. The cost-to-income ratio (CIR) was at a low level: at the end of the 1st half of 2020, CIR was 37.4%.

FINANCIAL STATEMENT

Share of liquid assets as of the end of the 1st half of 2020 was 30.5%. Obligatory liquidity ratios prescribed by CBR were outperformed: on July 1, 2020, H2 was 77.67% (with a regulatory minimum of 15%), H3 on the same date was 145.27% (with a regulatory minimum of 50%), H4 was 44.58% (with a regulatory maximum of 120%).

Gross loan portfolio increased by 6.3% in the 1st half of 2020 and amounted to RUR 852 584 mn. The positive dynamics was driven by loan portfolio growth in the following segments: large corporate business (+13.1% to RUR 437 736 mn), small and micro business (+3.1% to RUR 28 216 mn), retail business (+0.2% to RUR 311 325 mn). Key growth drivers of the retail loan portfolio were mortgage loans, which increased in the 1st half of 2020 by 5.2% to RUR 148 808 mn.

Share of impaired loans in total loan portfolio amounted to 3.1% at the end of the 1st half of 2020. Share of past due but not impaired loans (less than 90 days) amounted to 0.9% of the loan portfolio before provisions.

Customer accounts as of June 30, 2020 grew by 4.4% compared to the end of 2019 and amounted to RUR 997 052 mn. Retail customer accounts showed a growth of 14.8%, mainly due to the growth in retail current accounts by 30.9% to RUR 475 350 mn. Share of current accounts in retail customer accounts amounted to 86.2%.
Corporate customer accounts decreased by 0.7% to RUR 443 126 mn from the end of 2019 driven by growth in the share of current accounts (+24.8%) and the decrease of corporate term deposits (-27.8%).

The loan-to-deposit ratio as of 30.06.2020 was 85.5%.

Term borrowings from the Parent Bank increased in the 1st half of 2020 by 12.9% compared to the end of 2019 as a result of the FX revaluation and amounted to RUR 36 907 mn.

Equity at the end of the 1st half of 2020 increased by 10.8% compared to the end of 2019 and amounted to RUR 195 743 mn at the expense of the net profit received at the end of the 1st half of 2020.

Capital adequacy ratios of H 1.1. and H 1.2.³ as of July 1, 2020, amounted to 12.51% and 13.26%, respectively (with regulatory minimums of 4.5% and 6.0%). H 1.0 ratio was 16.86% as of the same date (with a regulatory minimum of 8.0%). Total capital adequacy ratio according to Basel III as of June 30, 2020 was 28.66% with a minimum value of 8.0%.