Regional News:
Stable earnings and decreasing risk provisions
17.4.2012 11:03:00 | Author/Source Limun.hr
The Raiffeisen Zentralbank Österreich AG (RZB) Group again achieved respectable results in 2011, making it Austria's best performing large banking group: operating income remained almost unchanged, while general administrative expenses only increased modestly, resulting in profit before tax which was 12 per cent lower than in the previous year. "2011 was marked by extraordinary regulatory burdens and a weaker economic environment as a whole. Considering that, RZB was once again able to post a good result. Our success is based on our tried and trusted, crisis-proof business model and our strong customer base," explained RZB CEO Walter Rothensteiner upon presentation of the consolidated balance sheet.
"One of the main pillars of our success is our set of solid fundamental values, which we share with the entire Raiffeisen Banking Group. We are proud to look back on more than 125 years of business success in Austria. The name Raiffeisen and the age-old protective sign of the gable cross have come to stand for security and reliable partnership throughout Europe," Rothensteiner added,
EBA capital ratio in reach for the RZB Group
At the end of October, the European Banking Authority (EBA) presented a target core tier 1 ratio, according to the EBA's definition, of 9 per cent for systemically relevant banks in Europe. In Austria, this group of banks includes RZB as the superordinate financial institution of the RZB Group.
The new minimum capital ratio must be reached by 30 June 2012. Based on balance sheet data per 30 September 2011, the RZB Group's calculatory EBA capital requirement amounted to around € 2.1 billion according to the EBA's standards and methodology. To address this, RZB – with the inclusion of RBI – launched some 20 projects aimed at generating a total of around € 3 billion towards meeting the target ratio. At this point in time, the RZB Group has already implemented measures totalling € 1.9 billion, while an additional € 800 million are about to be implemented and measures with a targeted value of € 300 million have been prepared. Already at the end of 2011, the RZB Group's core tier 1 ratio stood at 9.12 per cent according to Basel 2.5/CRD III.
Profit before tax € 1,144 million; consolidated profit € 472 million
RZB’s profit before tax for 2011 declined by 12 per cent to € 1,144 million. Significant differences were seen in the development of the individual components of the income statement, and such varying trends were seen at the regional level as well. In several countries, substantial increases were registered in income – in particular in Russia (+63 per cent to € 434 million) and in Slovakia (+51 per cent to € 185 million), as well as in Austria and Asia. In Hungary, by contrast, a pre-tax loss of € 373 million was reported. The situation in Hungary resulted partly from measures taken at the political level such as the early repayment of foreign currency mortgage loans and partly from a further decline in the quality of the loan portfolio due to the difficult economic environment.
A disproportionately large increase was registered in income taxes, which rose to € 415 million, up € 291 million on the previous year. As a result, profit after tax amounted to € 728 million, declining by 37.6 per cent. After deducting profit attributable to non-controlling interests, the consolidated profit accounted for by RZB's shareholders amounted to € 472 million, up 34 per cent or € 241 million on the previous year.
Slight decrease in operating income
Operating income declined by 1.5 per cent or € 80 million to € 5,416 million. Net interest income decreased by 1.2 per cent or € 44 million to € 3,585 million, accounting for almost 66 per cent of operating income. Net interest income was burdened by the negative earnings contribution of UNIQA Versicherungen AG (around € 100 million) and the Italian leasing companies (around € 27 million). Net fee and commission income was reported at € 1,493 million (+0.1 per cent) and net trading income came in at € 356 million (+7.1 per cent).
Positive trend in net provisioning
With the exception of Hungary, net provisioning for impairment losses declined in most countries, dropping by 8 per cent overall to € 1,099 million. This resulted from improved economic conditions and actively managed measures to stabilize the loan portfolio. While significantly lower loan loss provisions had to be allocated in many countries, net provisioning for impairment losses in Hungary rose by 70 per cent to € 478 million, as a result of the economic and political situation. Consequently, the position in Hungary accounts for almost half of the total net provisioning throughout the Group.
The NPL ratio (ratio of non-performing loans to total loans) developed positively, falling for the first time in several years, namely by 16 basis points to 8.58 per cent.
Equity increases by 2 per cent to € 11.5 billion
Equity (including non-controlling interests) increased by 2 per cent or € 238 million to € 11,489 million compared to the beginning of the year. An increase from other comprehensive income of € 520 million and contributions of non-controlling interests of € 180 million were offset against reductions totalling € 462 million for dividend distributions for 2010. Of this, € 160 million was paid to the shareholders of Raiffeisen Zentralbank and € 200 million was paid to the Republic of Austria and private shareholders for participation capital subscribed in 2009. RZB services this participation capital every year, paying a total of € 600 million in 2009, 2010 and 2011, with the Republic of Austria alone receiving € 420 million.
The Tier 1 ratio (total risk) increased by 0.6 percentage points to 9.9 per cent. The own funds ratio rose by 0.2 percentage points to 12.8 per cent. The Core Tier 1 ratio (without taking hybrid capital into account) improved from 8.5 per cent to 9.1 per cent.
Liquidity-related rise in total assets of 10 per cent
From the beginning of 2011, total assets increased by 10 per cent or € 13.6 billion to € 150.1 billion, with currency effects reducing total assets by around 1 per cent. Increases due to liquidity reasons resulted, among others, from higher short-term loans to banks and higher deposits at central banks. Furthermore, loans to customers, due to lending to major customers, increased by € 5.5 billion after risk provisioning.
Solid indicators
Owing in particular to the 5 per cent increase in general administrative expenses, the cost-income ratio increased by 3.4 percentage points to 59.2 per cent. Due to the results, the return on equity before tax decreased by 2.0 percentage points to 10.5 per cent.
About
Raiffeisen Zentralbank Österreich AG (RZB) is the central institution of the Austrian Raiffeisen Banking Group (RBG), head of the RZB Group and the service unit for the Raiffeisen Group in Austria. RZB also performs central services for RBG. As an organizer of synergies and joint solutions, RZB functions as the key link between RBG and Raiffeisen Bank International (RBI).
RZB holds approximately 78.5 per cent of the shares in its listed subsidiary RBI. It owns the largest international banking network in Central and Eastern Europe via RBI. Subsidiary banks, leasing companies and a range of other financial service providers cover the 17 markets in this region. Around the world, some 59,000 employees serve approximately 13.8 million customers at around 2,900 offices.
"One of the main pillars of our success is our set of solid fundamental values, which we share with the entire Raiffeisen Banking Group. We are proud to look back on more than 125 years of business success in Austria. The name Raiffeisen and the age-old protective sign of the gable cross have come to stand for security and reliable partnership throughout Europe," Rothensteiner added,
EBA capital ratio in reach for the RZB Group
At the end of October, the European Banking Authority (EBA) presented a target core tier 1 ratio, according to the EBA's definition, of 9 per cent for systemically relevant banks in Europe. In Austria, this group of banks includes RZB as the superordinate financial institution of the RZB Group.
The new minimum capital ratio must be reached by 30 June 2012. Based on balance sheet data per 30 September 2011, the RZB Group's calculatory EBA capital requirement amounted to around € 2.1 billion according to the EBA's standards and methodology. To address this, RZB – with the inclusion of RBI – launched some 20 projects aimed at generating a total of around € 3 billion towards meeting the target ratio. At this point in time, the RZB Group has already implemented measures totalling € 1.9 billion, while an additional € 800 million are about to be implemented and measures with a targeted value of € 300 million have been prepared. Already at the end of 2011, the RZB Group's core tier 1 ratio stood at 9.12 per cent according to Basel 2.5/CRD III.
Profit before tax € 1,144 million; consolidated profit € 472 million
RZB’s profit before tax for 2011 declined by 12 per cent to € 1,144 million. Significant differences were seen in the development of the individual components of the income statement, and such varying trends were seen at the regional level as well. In several countries, substantial increases were registered in income – in particular in Russia (+63 per cent to € 434 million) and in Slovakia (+51 per cent to € 185 million), as well as in Austria and Asia. In Hungary, by contrast, a pre-tax loss of € 373 million was reported. The situation in Hungary resulted partly from measures taken at the political level such as the early repayment of foreign currency mortgage loans and partly from a further decline in the quality of the loan portfolio due to the difficult economic environment.
A disproportionately large increase was registered in income taxes, which rose to € 415 million, up € 291 million on the previous year. As a result, profit after tax amounted to € 728 million, declining by 37.6 per cent. After deducting profit attributable to non-controlling interests, the consolidated profit accounted for by RZB's shareholders amounted to € 472 million, up 34 per cent or € 241 million on the previous year.
Slight decrease in operating income
Operating income declined by 1.5 per cent or € 80 million to € 5,416 million. Net interest income decreased by 1.2 per cent or € 44 million to € 3,585 million, accounting for almost 66 per cent of operating income. Net interest income was burdened by the negative earnings contribution of UNIQA Versicherungen AG (around € 100 million) and the Italian leasing companies (around € 27 million). Net fee and commission income was reported at € 1,493 million (+0.1 per cent) and net trading income came in at € 356 million (+7.1 per cent).
Positive trend in net provisioning
With the exception of Hungary, net provisioning for impairment losses declined in most countries, dropping by 8 per cent overall to € 1,099 million. This resulted from improved economic conditions and actively managed measures to stabilize the loan portfolio. While significantly lower loan loss provisions had to be allocated in many countries, net provisioning for impairment losses in Hungary rose by 70 per cent to € 478 million, as a result of the economic and political situation. Consequently, the position in Hungary accounts for almost half of the total net provisioning throughout the Group.
The NPL ratio (ratio of non-performing loans to total loans) developed positively, falling for the first time in several years, namely by 16 basis points to 8.58 per cent.
Equity increases by 2 per cent to € 11.5 billion
Equity (including non-controlling interests) increased by 2 per cent or € 238 million to € 11,489 million compared to the beginning of the year. An increase from other comprehensive income of € 520 million and contributions of non-controlling interests of € 180 million were offset against reductions totalling € 462 million for dividend distributions for 2010. Of this, € 160 million was paid to the shareholders of Raiffeisen Zentralbank and € 200 million was paid to the Republic of Austria and private shareholders for participation capital subscribed in 2009. RZB services this participation capital every year, paying a total of € 600 million in 2009, 2010 and 2011, with the Republic of Austria alone receiving € 420 million.
The Tier 1 ratio (total risk) increased by 0.6 percentage points to 9.9 per cent. The own funds ratio rose by 0.2 percentage points to 12.8 per cent. The Core Tier 1 ratio (without taking hybrid capital into account) improved from 8.5 per cent to 9.1 per cent.
Liquidity-related rise in total assets of 10 per cent
From the beginning of 2011, total assets increased by 10 per cent or € 13.6 billion to € 150.1 billion, with currency effects reducing total assets by around 1 per cent. Increases due to liquidity reasons resulted, among others, from higher short-term loans to banks and higher deposits at central banks. Furthermore, loans to customers, due to lending to major customers, increased by € 5.5 billion after risk provisioning.
Solid indicators
Owing in particular to the 5 per cent increase in general administrative expenses, the cost-income ratio increased by 3.4 percentage points to 59.2 per cent. Due to the results, the return on equity before tax decreased by 2.0 percentage points to 10.5 per cent.
About
Raiffeisen Zentralbank Österreich AG (RZB) is the central institution of the Austrian Raiffeisen Banking Group (RBG), head of the RZB Group and the service unit for the Raiffeisen Group in Austria. RZB also performs central services for RBG. As an organizer of synergies and joint solutions, RZB functions as the key link between RBG and Raiffeisen Bank International (RBI).
RZB holds approximately 78.5 per cent of the shares in its listed subsidiary RBI. It owns the largest international banking network in Central and Eastern Europe via RBI. Subsidiary banks, leasing companies and a range of other financial service providers cover the 17 markets in this region. Around the world, some 59,000 employees serve approximately 13.8 million customers at around 2,900 offices.
