Raiffeisenbank earned RUR 38.1 bn in 2020 according to IFRS results

Raiffeisenbank announces financial results for 12M 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.

• Record-high earnings. The Bank’s net profit grew by 1.2% YoY and reached RUB 38.1 bn in 2020, which is a record-high for the Bank.
• 20%+ RoE for both FY20 and 4Q20. RoE was 21.7% for 2020 and 22.3% for 4Q20.
• Improving cost efficiency. The Bank’s CIR, adjusted for reclassification of deposit insurance fee from operating expenses to interest expenses, was 37.8% for 2020.
• Double-digit increase in large corporate loans. Gross total loans rose by 6.0% YoY driven by loans to large corporates (+10.3% YoY) and mortgages (+8.4% YoY), which were supported by the state subsidy program and the bank’s own refinancing facility.
• Significant growth in retail current accounts. Retail current accounts increased by 58.2% YoY and 8.7% QoQ, and now represent more than 50% of total customer accounts.

KEY FINANCIAL RESULTS

INCOME STATEMENT



The Bank’s net profit reached RUB 38.1 bn in 2020 (up 1.2% compared to FY2019), which is a record-high for Raiffeisenbank. In the fourth quarter, the bank earned RUB 10.1 bn (+11.9% YoY and +9.8% QoQ). RoE after tax was 21.7% for FY2020 (down by 170 bps YoY) and 22.3% in 4Q20 (up by 140 bps YoY and up by 309 bps QoQ). The quarterly improvement in the Bank’s RoE was driven by 10% earnings growth thanks to a strong rebound in fees and a lower cost of risk.

Net interest income grew by 7.0% YoY and reached RUB 61.5 bn in 2020. The annual growth was mainly due to lower expenses for interest rate and foreign exchange swap contracts as well as lower costs of term deposits. In 4Q20, NII was RUB 15.6 bn, up by 0.4% YoY and up by 1.4% QoQ.

NIM was 4.9% in 2020, down from 5.2% in 2019, as the Bank’s asset yield fell by around 270 bps YoY, while its cost of funding declined less — by 240 bps YoY. Adjusted for reclassification of deposit insurance fee from operating expenses to interest expenses, the NIM was 4.7% in 2020, down from 4.9% in 2019. In 4Q20, the NIM was 4.8% (4.6% if adjusted for reclassification of deposit insurance fee from operating expenses to interest expenses), down from 5.0% in 3Q20 (4.8% adjusted) mainly due to pressure on loan yields.

Net fee and commission income rose by 6.0% YoY in 2020. In 4Q20, fees posted a 34% QoQ increase driven by commissions on operations with cards (+50% QoQ). Fees grew by 13% in 4Q20 on a YoY basis despite that some lockdown measures were still in place.

Trading result¹ for the year was RUB 10.0 bn, up by 3.6% compared to the same period of 2019. In 4Q20, the trading result was RUB 1.6 bn.

Provision charge was R9.6 bn and R1.4 bn for FY20 and 4Q20 respectively. COR was 1.2% for 2020, which is although above the 2019 level of 0.5%, still close to the bank’s 10-year average COR of around 1%. In 4Q20, cost of risk fell by 52 bps QoQ on the back of lower provisions in the Retail segment and was 0.65%, which is the lowest quarterly result since the second quarter of 2019.

Operating expenses increased by 3.7% YoY in 2020. CIR, adjusted for reclassification of deposit insurance fee from operating expenses to interest expenses, was 37.8% for FY2020, which is the lowest since 2016 despite the pandemic. For the fourth quarter, CIR was 43.6% (adjusted for deposit insurance fee) as total operating expenses rose by more than 30% QoQ, mainly due to non-staff expenses, which were driven by marketing & advertising as well as IT services. Staff costs increased 18% QoQ but were up only 1.3% YoY in 4Q.

BALANCE SHEET



Total assets grew by 13.8% YoY and 1.9% QoQ as of YE20. Double-digit YoY asset growth was driven by cash & cash equivalents, in particular an increase in short-term placements with other banks. As a result, share of liquid assets rose to 39% in 4Q20, from 37% in 3Q20 and 34% in 4Q19.

Gross total loans increased by 6.0% YoY and 0.3% QoQ and reached R850.5 bn. The annual growth was supported by loans to large corporates (+10.3% YoY) and mortgages (+8.4% YoY), which were boosted by the state subsidy program and the bank’s own refinancing facility. Non-mortgage retail loans declined by 1.8% YoY mainly due to tighter underwriting standards introduced by the Bank. On a quarterly basis, non-mortgages lending showed positive growth in the fourth quarter.

Stage 3 + POCI ratio was 3.5% as of YE2020, up by 108 bps YoY and up by 22 bps QoQ. The increase in the total Stage 3 + POCI ratio was driven by unsecured retail lending, while the ratios in other segments remained broadly stable.

Customer accounts grew by 18.3% YoY and 2.5% QoQ and amounted to RUB 1130 bn. Deposit growth was driven by retail current accounts (58.2% YoY and 8.7% QoQ), which now represent more than 50% of total customer deposits.

Net LDR ratio was 73.3%, down from 82.4% in 4Q19 and 75.0% in 3Q20.

Equity reached R175.1 bn as of YE20, down by 0.9% YoY and by 5.8% QoQ as the bank paid R19.0 bn and R20.8 bn in dividends in September and December respectively.

Capital adequacy ratios of N1.1 and N1.2³ as of January 1, 2021, amounted to 11.7% and 12.5%, respectively (with regulatory minimums of 8.0%* and 9.5%*). N1.0 ratio was 16.1% as of the same date (with a regulatory minimum of 11.5%*).

¹ The following items are included in the trading result: gains less losses on trading securities; gains less losses on other securities at fair value through profit or loss; gains less losses on foreign exchange transactions; unrealized gains less losses/(losses less gains) from derivative financial instruments; realized gains less losses on derivative financial instruments; losses less gains on foreign currency revaluation; amortization of hedge adjustments and hedge inefficiencies; gains less losses from disposals of investment securities at fair value through other comprehensive income.

² Basel III in accordance with the CBR methodology.

* Minimum regulatory capital adequacy requirements for systemically important credit institutions.

Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank is one of the most reliable Russian banks, which creates financial solutions for private and corporate clients, residents and non-residents of the Russian Federation. According to Interfax-CEA, Raiffeisen Bank ranks 10th in terms of assets as of 2020, 7th in terms of funds of individuals and 9th in terms of loans to non-financial institutions. Forbes magazine acknowledged Raiffeisenbank as the most reliable bank in Russia in 2020.

Raiffeisen Bank International AG is the leading corporate and investment Bank in the financial markets of Austria and Central and Eastern Europe. In Central and Eastern Europe, Raiffeisen Bank International is represented in 13 markets and provides a wide range of financial services, including leasing, asset management and m&a support. Over 45,000 employees serve 17.2 mn customers in around 1,900 business outlets, most of which are located in Central and Eastern Europe. Raiffeisen Bank International shares are listed on the Vienna Stock Exchange.