- Net interest income decreases 11.8 per cent to € 2,935 million year-on-year (2015: € 3,327 million)
- Operating income decreases 4.8 per cent to € 4,692 million (2015: € 4,929 million)
- General administrative expenses decrease 2.3 per cent to € 2,848 million (2015: € 2,914 million)
- Net provisioning for impairment losses decreases 40.3 per cent to € 754 million (2015: € 1,264 million)
- Profit before tax increases 24.6 per cent to € 886 million (2015: € 711 million)
- Profit after tax increases 31.9 per cent to € 574 million (2015: € 435 million)
- Consolidated profit increases 22.2 per cent to € 463 million (2015: € 379 million)
- Non-performing loan ratio decreases 2.7 percentage points to 9.2 per cent compared to year-end 2015
- Common equity tier 1 ratio (transitional) increases 1.8 percentage points to 13.9 per cent
- Common equity tier 1 ratio (fully loaded) increases 2.1 percentage points to 13.6 per cent
- Earnings per share of € 1.58 (2015: € 1.30)
All figures are based on International Financial Reporting Standards (IFRS).
In 2016, Raiffeisen Bank International AG (RBI) generated a consolidated profit of € 463 million.
“Considering the low-interest rate environment still putting pressure on our earnings, I am satisfied with the consolidated profit. We considerably improved our results in all regions. In particular, I would like to highlight Southeastern Europe, where the results could be increased by almost 40 per cent. On the country level, I am especially happy about the successful turnarounds in Hungary and Ukraine”, said RBI CEO Karl Sevelda.
In 2016, net interest income declined 12 per cent, or € 391 million, to € 2,935 million. This was primarily attributable to continuing low market interest rates in many of the Group’s countries, existing excess liquidity, and a reduction of € 215 million, particularly in Russia, in interest income from derivatives entered into for hedging purposes.
The Group’s general administrative expenses were down 2 per cent, or € 66 million, to € 2,848 million in the reporting period. The cost/income ratio, however, increased 1.6 percentage points to 60.7 per cent due to lower operating income.
“Cost reduction will remain a top priority for us. However, constantly increasing regulatory requirements make it difficult to fulfil this target”, said Johann Strobl, designated CEO of RBI.
Common equity tier 1 ratio (fully loaded) of 13.6 per cent
In 2016, RBI once again managed to improve its capital ratios significantly.
Based on total risk, the common equity tier 1 ratio (transitional) was 13.9 per cent, with a total capital ratio (transitional) of 19.2 per cent. Excluding the transitional provisions as defined in the CRR, the common equity tier 1 ratio (fully loaded) stood at 13.6 per cent, and the total capital ratio (fully loaded) was 18.9 per cent.
The pro forma common equity tier 1 ratio (fully loaded) of the combined bank was 12.4 per cent at the end of 2016. Without taking the transitional provisions into account its pro forma common equity tier 1 ratio (transitional) stood at 12.7 per cent.
“We have significantly overfulfilled our capital targets for both RBI and the combined bank already one year ahead of schedule. We can therefore conclude our strategic program early. I want to thank our employees, who have consequently implemented the most extensive transformation program in the history of our bank in an exemplary manner. In parallel, they mastered the merger with RZB. The closing of the transaction is planned for 18 March”, explained Karl Sevelda.
Net provisioning for impairment losses decrease 40 per cent
Net provisioning for impairment losses declined 40 per cent overall year-on-year, or € 509 million, to € 754 million.
The NPL ratio declined 2.7 percentage points year-on-year, to 9.2 per cent. Non-performing loans compared to loan loss provisions amounting to € 4,905 million. Despite the sales and write-offs, the NPL coverage ratio improved from 71.3 per cent to 75.6 per cent.
“We are very satisfied with the significant reduction in risk costs and the improvement of our NPL ratio. The reduction in risk costs could be achieved in almost all of our markets, which is especially pleasing”, said Johann Strobl.
Comparison of results with the previous quarter
Compared to the third quarter of 2016, net interest income rose 2 per cent, or € 16 million, to € 748 million in the fourth quarter.
At € 749 million, general administrative expenses in the fourth quarter were up 9 per cent, or € 62 million, from € 687 million in the previous quarter.
Compared to the third quarter, net provisioning for impairment losses rose € 151 million to € 251 million. The increase was mainly attributable to Russia, Asia, Croatia, and the Group Corporates segment.
The consolidated profit in the fourth quarter was € 69 million, which is a decrease of € 114 million compared to the third quarter 2016.
As a result of the merger with RZB, to be entered in the commercial register on 18 of March 2017, the following outlook applies to the combined bank.
RBI reached the 12 per cent CET1 ratio target one year ahead of schedule with a fully loaded CET1 ratio of 13.6 per cent at 31 December 2016 (12.4 per cent for the pro forma combined bank). In the medium term RBI strives to achieve a CET1 ratio (fully loaded) of around 13 per cent.
After stabilizing loan volumes, RBI looks to resume growth with an average yearly percentage increase in low single digit area.
RBI expects net provisioning for impairment losses for 2017 to be below the level of 2016 (EUR 754 million).
RBI looks to reach an NPL ratio of around 8 per cent by the end of 2017, and over the medium term RBI expects this to reduce further.
RBI further aims to achieve a cost/income ratio of between 50 and 55 per cent in the medium term, unchanged from its previous target.
RBI´s medium term return on equity before tax target is unchanged at approximately 14 per cent, with a consolidated return on equity of approximately 11 per cent.
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You can access the online version of the annual report at ar2016.rbinternational.com. The German version is available under gb2016.rbinternational.com. A printed version can also be ordered via this webpage.