Quarterly Report • May 31, 2011
Quarterly Report
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| Raiffeisen Bank International Group Monetary values in € million |
2011 | Change | Pro forma 2010 |
|---|---|---|---|
| Income statement | 1/1-31/3 | 1/1-31/3 | |
| Net interest income | 884 | 3.0% | 859 |
| Net provisioning for impairment losses | (208) | (35.9)% | (325) |
| Net fee and commission income | 357 | 6.0% | 337 |
| Net trading income | 123 | (2.2)% | 126 |
| General administrative expenses | (753) | 7.6% | (700) |
| Profit before tax | 405 | 3.3% | 392 |
| Profit after tax | 305 | (14.9)% | 359 |
| Consolidated profit | 270 | (19.1)% | 334 |
| Statement of financial position | 31/3 | 31/12 | |
| Loans and advances to banks | 29,069 | 35.0% | 21,532 |
| Loans and advances to customers | 77,061 | 1.9% | 75,657 |
| Deposits from banks | 37,047 | 10.1% | 33,659 |
| Deposits from customers | 60,863 | 5.6% | 57,633 |
| Equity | 10,672 | 2.6% | 10,404 |
| Total assets | 139,463 | 6.3% | 131,173 |
| Key ratios | 1/1-31/3 | 1/1-31/3 | |
| Return on equity before tax | 15.6% | (0.9) PP | 16.5% |
| Return on equity after tax | 11.8% | (3.4) PP | 15.1% |
| Consolidated return on equity | 11.6% | (4.2) PP | 15.8% |
| Cost/income ratio | 56.2% | 3.0 PP | 53.1% |
| Return on assets before tax | 1.20% | 0.12 PP | 1.08% |
| Net provisioning ratio (average risk-weighted assets, credit risk) | 1.16% | (0.68) PP | 1.84% |
| Bank-specific information1 | 31/3 | 31/12 | |
| Risk-weighted assets (credit risk) | 74,987 | (0.8)% | 75,601 |
| Total own funds | 12,574 | (0.3)% | 12,608 |
| Total own funds requirement | 7,560 | (0.3)% | 7,585 |
| Excess cover ratio | 66.3% | 0.1 PP | 66.2% |
| Core tier 1 ratio, total | 8.9% | – | 8.9% |
| Tier 1 ratio, credit risk | 12.3% | 0.1 PP | 12.2% |
| Tier 1 ratio, total | 9.7% | – | 9.7% |
| Own funds ratio | 13.3% | – | 13.3% |
| Stock data | 31/3 | 31/3 | |
| Earnings per share in € | 1.13 | (0.33) | 1.46 |
| Price in € | 39.16 | 11.3% | 35.20 |
| High (closing prices) in € | 45.10 | 5.5% | 42.75 |
| Low (closing prices) in € | 38.16 | 25.0% | 30.52 |
| Number of shares in million | 195.51 | – | 195.51 |
| Market capitalization in € million | 7,656 | 11.3% | 6,882 |
| Resources | 31/3 | 31/12 | |
| Number of employees as of reporting date | 59,945 | 0.3% | 59,782 |
| Business outlets | 2,932 | (1.0)% | 2,961 |
1Calculated according to the Austrian Banking Act (Bankwesengesetz, BWG) for illustrative purposes. RBI, as part of RZB Group, is not subject to the Austrian Banking Act.
| Overview of RBI | 3 |
|---|---|
| RBI in the capital market | 5 |
| Business development | 9 |
| General economic environment | 9 |
| Performance and financials | 11 |
| Comparison of results year-on-year | 13 |
| Comparison of results with the previous quarter | 18 |
| Statement of financial position | 21 |
| Unchanged outlook | 27 |
| Segment reports | 28 |
| Division of the segments | 28 |
| Business divisions | 54 |
| Interim consolidated financial statements | 60 |
| Statement of comprehensive income | 60 |
| Profit development | 62 |
| Statement of financial position | 63 |
| Statement of changes in equity | 64 |
| Notes | 71 |
| Publication details, Disclaimer | 104 |
In this report RBI denotes the RBI Group. If RBI AG is used it denotes Raiffeisen Bank International AG. For reasons of transparency and comparison the pro-forma results for 2010 of RBI are shown.
Adding and subtracting rounded amounts in tables and charts may lead to minor discrepancies. Changes in tables are not based on rounded amounts.
Raiffeisen Bank International (RBI) is active as a universal bank in 17 markets in Central and Eastern Europe (CEE) through a close-meshed network of subsidiaries, leasing companies and specialist financial services providers. Approximately 57,000 staff in around 3,000 business outlets serve around 14 million customers in this region. In Austria RBI is one of the top corporate and investment banks. It is also the only Austrian bank to be represented not only in the world's financial centers, but also in the growth markets of Asia with its own branches and representative offices. In all, RBI has some 60,000 employees.
| In € million | Total assets | Change1 | Business outlets | Number of staff |
|---|---|---|---|---|
| Czech Republic | 8,358 | 5.7% | 114 | 2,988 |
| Hungary | 8,603 | 0.8% | 144 | 3,262 |
| Poland | 6,832 | (1.4)% | 116 | 3,153 |
| Slovakia | 8,940 | (0.4)% | 157 | 3,769 |
| Slovenia | 1,685 | 4.6% | 17 | 353 |
| Reconciliation | (25) | (0.8)% | – | – |
| CE segment | 34,393 | 1.4% | 548 | 13,525 |
| Albania | 2,008 | (0.1)% | 103 | 1,355 |
| Bosnia and Herzegovina | 2,143 | 4.4% | 98 | 1,606 |
| Bulgaria | 3,668 | (3.2)% | 190 | 3,223 |
| Croatia | 5,577 | (4.8)% | 84 | 2,174 |
| Kosovo | 703 | 4.4% | 52 | 702 |
| Romania | 6,120 | (1.7)% | 545 | 6,154 |
| Serbia | 2,060 | (3.2)% | 84 | 1,792 |
| Reconciliation | (31) | (26.0)% | 0 | 0 |
| SEE segment | 22,247 | (2.0)% | 1,156 | 17,006 |
| Russia segment | 12,464 | 0.2% | 196 | 8,638 |
| Belarus | 1,566 | 3.5% | 98 | 2,217 |
| Kazakhstan | 73 | (2.2)% | 1 | 11 |
| Ukraine | 5,226 | (5.7)% | 920 | 15,478 |
| Reconciliation | 0 | – | – | – |
| CIS other segment | 6,864 | (3.7)% | 1,019 | 17,706 |
| Group corporates segment | 20,602 | (12.2)% | 8 | |
| Group markets segment | 29,195 | 7.3% | 4 | 3,0702 |
| Corporate center segment | 41,809 | 53.8% | 1 | |
| Reconciliation | (28,112) | 22.8% | – | – |
| Total | 139,463 | 6.3% | 2,932 | 59,945 |
The markets of RBI
1 Change of total assets versus figures 31 December 2010. Change expressed in local currencies due to fluctuation in euro exchange rates.
2 Allocation of staff to Group corporates, Group markets and Corporate center is not possible.
RBI has been listed on the Vienna stock exchange since 25 April 2005 (until 12 October 2010 as Raiffeisen International). It is represented in several leading national and international indices, including the ATX and the EURO STOXX Banks. Raiffeisen Zentralbank Österreich AG (RZB) holds 78.5 per cent of RBI shares, the remaining shares are free float.
In the first half of the first quarter of 2011, good corporate figures and the positive global economic environment led to further gains in most equities markets. However, the worst earthquake in Japan in 140 years and the subsequent nuclear crisis led in mid-March 2011 to the steepest decline in prices for eight months. After it became clear that the consequences of these events would be manageable for the global economy, markets recovered again significantly by the end of the quarter.
Portugal's recourse to the European lifeboat continued the sovereign debt crisis in Europe. However, this no longer caused major turmoil in the financial markets. Conversely, there was uncertainty as a result of the steady rise in oil prices due to protests in the Middle East (particularly the Arabian peninsula) and political unrest in Libya.
Price performance since 25 April 2005 compared with the ATX and EURO STOXX Banks
The RBI share was relatively stable in the first quarter of 2011 despite the numerous negative influences. It reached its high for the quarter on 9 February at € 45.10. The low was at € 38.16 on 16 March. This reduction was mainly due to the increased volatility of the markets following the earthquake in Japan and the subsequent nuclear disaster.
With closing prices of € 41.00 on 31 December 2010 and € 39.16 on 31 March 2011, the RBI share lost 4.5 per cent overall in the first quarter of 2011. Over the same period, the ATX lost 0.8 per cent, while EURO STOXX Banks gained 7.0 per cent. After 31 March the RBI share decreased, ending at € 36.31 by the editorial deadline for this report on 23 May. This represents a decline of 11.5 per cent between the start of the first quarter and the editorial deadline.
Raiffeisen Bank International ATX (relative to RBI) EURO STOXX Banks (relative to RBI)
In the course of the first quarter of 2011, the Investor Relations team participated in roadshows in New York, Singapore, London, Zurich and Kitzbühel, to meet demand for information by numerous investors and analysts interested in RBI. Since the merger, Group Investor Relations has been responsible not only for serving equity investors and analysts but also for contacts with bond investors and analysts. As a result, the listed roadshows were also aimed at the latter target group, in the context of the two benchmark issues of € 1 billion each which were successfully placed in the first quarter.
Apart from direct meetings with analysts and investors, the first major event in the first quarter was a teleconference with around 130 participants on 4 February 2011 to explain the details of the acquisition of Polbank.
Another milestone in connection with the announcement of the results for the 2010 financial year was the RBI Investor Presentation in London on 11 April 2011. Members of the Management Board and the Investor Relations team answered numerous questions from over 110 equity, debt and rating analysts and equity and bond investors. This event was followed by further roadshows in Paris, Stockholm and Helsinki.
RBI strives to keep market participants well-informed. In the interest of ongoing optimization of its communications, it has added teleconference presentations and other important events since the start of 2010 as online webcasts. You can view these at any time at www.rbinternational.com Investor Relations Reports & Presentations Presentations & Webcasts.
| Price on 31 March 2011 | € 39.16 |
|---|---|
| High/low (closing prices) in first quarter 2011 | € 45.10 / € 38.16 |
| Earnings per share from 1 January to 31 March 2011 | € 1.13 |
| Market capitalization on 31 March 2011 | € 7,656 billion |
| Avg. daily volume (individual transactions) in first quarter 2011 | 245,842 shares |
| Stock exchange trading (individual transactions) in first quarter | |
| 2011 | € 648 million |
| Free float as of 31 March 2011 | 21.5% |
| ISIN | AT0000606306 |
|---|---|
| Ticker symbols | RBI (Vienna Stock Exchange) |
| RBI AV (Bloomberg) | |
| RBIV.VI (Reuters) | |
| Market segment | Prime Market |
| Number of shares issued as of 31 March 2011 | 195,505,124 |
| Rating agency | Long-term rating |
Short-term rating |
Outlook | Individual rating |
|---|---|---|---|---|
| Moody's Investors Service | A1 | P-1 | stable | D+ |
| Standard & Poor's | A | A-1 | negative | n/a |
| Fitch Ratings | A | F1 | stable | C |
| 8 June | Annual General Meeting |
|---|---|
| 16 June | Ex-dividend date and dividend payment date |
| 11 August | Start of quiet period |
| 25 August | Interim report for 1st half year, conference call |
| 10 November | Start of quiet period |
| 24 November | Interim report for first 3 quarters, conference call |
E-mail: [email protected] Internet: www.rbinternational.com Investor Relations Phone: +43-1-71707 2089 Fax: +43-1-71707 2138
Raiffeisen Bank International AG Group Investor Relations Am Stadtpark 9 A-1030 Vienna Austria
The economic recovery after the financial crisis continued in the first quarter of 2011. Large parts of Europe had already shown a return to growth in 2010 after a phase of recession. However, there were significant differences in trends both within the eurozone and in Central and Eastern Europe (CEE). A continuing improvement in growth is expected for both 2011 and 2012 in CEE, with a predicted difference of around 2 percentage points a year between CEE and the eurozone.
The most developed economies in CEE (Poland, Slovakia, Slovenia, the Czech Republic and Hungary) have already reported annualized growth of 3.0 per cent in 2010. While Poland, one of the few countries to report growth during the economic crisis, continued to act as a growth driver in Central Europe with annual growth of 4.0 per cent, growth was significantly weaker in Hungary, Slovenia and in part the Czech Republic. This was due to savings measures and continuing weak domestic demand. Continuing improvement can be expected in the economies of Central Europe in 2011 and 2012, with uniform growth across all the various countries.
Southeastern Europe as a region showed a decline of 0.4 per cent in economic output in 2010, with a continuing decline in Croatia and Romania and minimal growth in Bulgaria and Bosnia-Herzegovina. Albania, which had avoided a recession during the financial crisis, was alone in showing substantial annual growth of 3.9 per cent. According to forecasts, Southeast Europe should finally emerge from the recession in 2011, although growth of 1.8 per cent will be significantly below the potential. A further improvement to annual growth of 3.4 per cent is expected in 2012, with a return to convergence.
Thanks to rising oil and commodity prices, Russia reported a strong recovery in 2010 with annual economic growth of 4 per cent. The other CIS countries – Belarus and Ukraine – also reported growth of 7.6 per cent and 4.2 per cent respectively. However, growth in Ukraine includes a high baseline effect, following the contraction of 14.8 per cent in the economy in 2009. Growth in Belarus is also in context of the drop in foreign exchange reserves pose challenges to the country's solvency. Even so, the CIS is likely to see further robust growth of 4.5 to 5.0 per cent in 2011 and 2012.
The situation in the banking sector in CEE remains difficult in view of the continuing high default rate. While bank assets had grown rapidly during the boom before the crisis, they were static or declined slightly in 2010. This applied particularly to loans, with banks cutting back significantly on lending. Even so, the banking sector should also return to its long-term growth path in the coming years, although growth rates are likely to remain below the boom years. This is, however, a positive factor in terms of sustainable development in the medium to long-term, as it makes overheating less likely.
RBI enjoyed a positive start to the first full financial year in the new post-merger structure. For transparency and comparability reasons the pro forma comparative figures for the first quarter of 2010 are reported in this quarterly report. Against the backdrop of slightly stronger economic conditions in the core markets the result was once again marked by a significant reduction in provisioning for impairment losses combined with a slight rise in operating income. Net income from financial investments fell significantly in the first quarter of 2011 compared with the comparable period last year. The rise in general administrative expenses and the banking levies in Austria and Hungary also had a negative impact on profit. Taxes rose sharply in the first quarter compared with the same period last year due to deferred taxes.
Despite of a 2 per cent rise in operating income the operating result in the first three months of 2011 fell by 5 per cent or € 29 million from the comparable period last year to € 588 million. The main reasons for this were the rise in general administrative expenses, particularly as a result of wage increases in a number of markets, and the bank levies in Austria and Hungary totaling € 34 million, which were not yet included in the same period last year.
Provisioning for impairment losses was once again lower in the first quarter of 2011, falling by 36 per cent to € 208 million. In absolute terms the decline was greatest in Russia, Central Europe and CIS other. The impact of the improved economic conditions was particularly noticeable in the Corporate customers division, where provisions more than halved to € 75 million.
The growth rates of non-performing loans have slowed over recent quarters and the trend is now pointing in the right direction. Non-performing loans fell compared with the year-end in almost all segments, declining by a total of € 161 million to € 6,629 million. Croatia, where there were a number of NPL cases involving major clients, was an exception to this trend.
The non-performing loan ratio (ratio of non-performing loans to total customer loans) fell by 0.4 percentage points compared with the end of 2010 to 8.6 per cent. The coverage ratio (ratio of provisioning to NPL) rose by 2 percentage points to 68.3 per cent.
Overall, profit before tax year-on-year was up by € 13 million to € 405 million. As the fall in net income from financial investments and in net provisioning for impairment losses netted off, the slight increase was due to the higher net income from derivatives and designated liabilities.
Due to the rise in the effective tax burden, profit after tax fell from € 359 million in the comparable period of 2010 to € 305 million. The sharp rise in the effective tax burden to € 100 million was largely caused by the recognition of deferred taxes on valuation gains. After deducting the profit attributable to non-controlling interests the consolidated profit came to € 270 million, a fall of 19 per cent or € 64 million compared with the first quarter of 2010. Earnings per share amounted to € 1.13 in the first quarter of 2011, compared with € 1.46 in the comparable period last year.
Despite of a slight rise in profit before tax the return on equity figures were slightly weaker. Return on equity before tax was 15.6 per cent at the end of the first quarter, down by 0.9 percentage points from 16.5 per cent in the comparable period in 2010. This was due to the rise in the equity base compared to the first quarter 2010 as a result of retained earnings. Average equity underlying the return on equity calculation rose by 10 per cent to € 10.4 billion.
Total assets rose by 6 per cent or € 8.3 billion to € 139.5 billion since the beginning of the year, although currency effects reduced total assets by around 1 per cent. The growth in assets reflected a rise in short-term loans to banks as a result of repo transactions. Loans and advances to banks therefore rose by € 7.5 billion. Loans and advances to customers after provisioning rose by € 1.4 billion, largely as a result of loans to major customers. On the liabilities side the growth derived from three items: deposits from banks rose by € 3.4 billion as a result of short-term deposits and deposits from customers by € 3.2 billion. The increase was mainly due to short-term deposits of large corporates. In addition debt securities rose by € 2.4 billion as a result of two benchmark transactions issued as part of the RBI issuance program. The loan/deposit ratio, i.e. loans and advances to customers divided by customer deposits, fell by 4 percentage points compared with the end of 2010 to 127 per cent.
RBI's equity including non-controlling interests rose by 3 per cent or € 268 million compared with the beginning of the year to € 10,672 million. This figure includes the profit after tax of € 305 million for the first three months of the year. Equity was reduced by valuation losses on the cash flow hedge contained in other comprehensive income.
Four subsidiaries (Q1/2010: 40) were deconsolidated in the reporting period due to non-materiality. However, the data remains comparable between the two periods since these changes did not have a material effect on any of the items in the income statement. Currency fluctuations in the CEE countries had a less significant impact on the income statement than in recent quarters. The average exchange rates used in the income statement changed as follows: the Czech koruna appreciated by 6 per cent, the Russian rouble by 2 per cent and the Ukrainian hryvnia by 1 per cent, while the Serbian dinar lost 6 per cent in value, the Belarusian rouble 3 per cent and the Romanian leu and the Croatian kuna each lost 2 per cent.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change absolute |
Change in % |
|---|---|---|---|---|
| Net interest income | 884 | 859 | 26 | 3.0% |
| Net fee and commission income | 357 | 337 | 20 | 6.0% |
| Net trading income | 123 | 126 | (3) | (2.0)% |
| Other net operating income | (24) | (5) | (19) | 420.5% |
| Operating income | 1,341 | 1,317 | 24 | 1.8% |
| Staff expenses | (380) | (346) | (34) | 9.8% |
| Other administrative expenses | (287) | (279) | (8) | 2.9% |
| Depreciation | (86) | (75) | (11) | 14.8% |
| General administrative expenses | (753) | (700) | (53) | 7.6% |
| Operating result | 588 | 617 | (29) | (4.7)% |
Net interest income rose by 3 per cent or € 26 million compared with the same period last year to € 884 million. It was the largest contributor to operating income, accounting for 66 per cent of total operating income.
The net interest margin (ratio of net interest income to average total assets) rose by 25 basis points to 2.61 per cent. Interest margins rose in all segments with the exception of CIS other. Net interest income fell in Ukraine due to a change in the methodology for calculating interest on impaired loans and advances. Russia saw the biggest rise in margins due to an improvement in funding terms. Loans and advances to customers rose by 1 per cent or € 988 million across the Group compared with a year ago.
Net fee and commission income improved by 6 per cent or € 20 million on the comparable period of last year to € 357 million. The largest contribution to this increase came from net income from payment transfers, which rose by 6 per cent or € 8 million to € 141 million due to higher transaction volumes in the Czech Republic and Ukraine. Net income from the credit and guarantee business also
performed strongly, rising by 11 per cent or € 7 million. Net income from the foreign currency, notes/coins and preciousmetals business rose by 7 per cent or € 5 million due to stronger business activities. Net income from the management of investment and pension funds rose by 9 per cent. Net income from the sale of own and third-party products rose by 13 per cent or € 1 million, which was largely attributable to Hungary. Net income from the credit derivatives business fell by € 1 million due to lower commissions on securities business. Net income from other banking services rose by 29 per cent to € 20 million due to higher income from custodial and advisory services.
Net trading income fell slightly compared with the comparable period of 2010, declining by 2 per cent or € 3 million to € 123 million.
Net income from interest-based transactions fell by € 99 million due to weaker valuation income from currency and interest rate swaps as a result of the upward shift in the yield curve. The result in Russia was down on last year's level, which was unusually strong as a result of recoveries on interest-rate products. Net income from currency-based transactions moved in the opposite direction to interestbased transactions and rose by € 24 million or 136 per cent. Developments differed from country to country. Hungary and Russia saw the largest rise in net income from currency-based transactions. In Hungary the rise was caused by valuation gains on foreign currency instruments while in Russia it reflected valuation gains on currency transactions. Net income from the credit derivatives business fell by € 6 million due to valuation losses on credit default swaps. Net income from other business rose by € 46 million to € 25 million largely due to valuation gains on capital guarantees as a result of the higher interest rate level.
Other net operating income deteriorated from a loss of € 5 million in the first quarter of 2010 to a loss of € 24 million in the first quarter of 2011. The main reason was the banking levies totaling € 34 million imposed in Austria (€ 23 million) and Hungary (€ 11 million). Net income from non-banking activities made a positive contribution to results, rising from € 5 million to € 10 million.
General administrative expenses rose by 8 per cent or € 53 million compared with the first quarter of 2010 to € 753 million. The cost/income ratio rose by 3 percentage points to 56.2 per cent over the same period.
Staff expenses increased by 10 per cent or € 34 million on the comparable period last year. With a share of 51 per cent staff expenses are the largest single item in general administrative expenses. In the Czech Republic average staff numbers increased due to the expansion of the business outlet network, which inevitably led to higher staff expenses. Staff expenses also rose in Slovakia and Russia due to changes in social security laws. The average number of staff was 59,842, a rise of 856 compared to the first quarter of 2010.
Other administrative expenses rose by 3 per cent or € 8 million on the same period last year, with the biggest increases coming from IT expenses (up by 22 per cent), advertising, PR and promotional expenses (up 33 per cent) and office space costs (up by 4 per cent). Compared to 31 March 2010, the number of business outlets was reduced by 33 to 2,932. The largest reductions occurred in Ukraine (minus 18), Serbia (minus 15), Russia (minus 13) and Bulgaria (minus 7). The number of outlets increased in Romania (plus 3), the Czech Republic (plus 3), Belarus (plus 2) and Slovakia (plus 1).
Depreciation of intangible and tangible fixed assets rose by 15 per cent or € 11 million compared with the previous year to € 86 million. The rise in the amortization of intangible assets from € 6 million to € 34 million was largely due to the installation of new software, which led to a shortening of the useful lives of the systems they were replacing.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change absolute |
Change in % |
|---|---|---|---|---|
| Operating result | 588 | 617 | (29) | (4.7)% |
| Net provisioning for impairment losses | (208) | (325) | 117 | (35.9)% |
| Other results | 25 | 100 | (75) | (74.6)% |
| Profit before tax | 405 | 392 | 13 | 3.3% |
| Income taxes | (100) | (33) | (67) | 200.2% |
| Profit after tax | 305 | 359 | (53) | (14.9)% |
| Profit attributable to non-controlling interests | (35) | (25) | (10) | 40.1% |
| Consolidated profit | 270 | 334 | (64) | (19.1)% |
The net provisioning for impairment losses in the first three months of 2011amounted to € 208 million. This represents a significant decline of 36 per cent or € 117 million from the level in the first quarter of 2010 (€ 325 million). This item also includes € 2 million in gains from the sale of loans.
The main reasons for the fall in net provisioning for impairment losses were improved general economic conditions and an improvement in borrower ratings, leading to lower default rates. Moreover, active measures were already taken during the financial and economic crisis to stabilize and improve the quality of the loan portfolio, including loan restructuring where necessary.
Of the overall net provisioning for impairment losses, € 217 million were accounted for by individual loan loss provisions, representing a fall of € 42 million compared with the comparable period a year ago. In particular, lower provisions were needed for corporate customers than in the same period last year. € 6 million of portfolio-based provisions were released in the first quarter of 2011, mainly relating to retail customers. This compares with a net € 66 million allocation to portfolio-based provisions in the same period last year.
This positive trend was reflected in the net provisioning ratio (the ratio of net provisioning for impairment losses to average risk-weighted assets), which declined by 0.68 percentage points year-on-year to 1.16 per cent. The ratio at 31 December 2010 was 1.66 per cent.
Non-performing loans totaled € 6,629 million at 31 March 2011, marking the first decline since the outbreak of the financial and economic crisis, even after taking account of currency effects. The NPL ratio, the ratio of non-performing loans to total customer loans, improved by 0.4 percentage points since year-end 2010 to 8.6 per cent. Non-performing loans were matched by provisioning of € 4,530 million. This produced a coverage ratio of 68.3 per cent, an improvement of around 2 percentage points on the end of 2010.
Other results, which consist of the items net income from derivatives and designated liabilities, net income from financial investments and net income from disposal of group assets, was down sharply in the first three months of 2011, declining by 75 per cent compared with the first three months of 2010. The reason for this decline was net income from financial investments, which is dominated by a volatile component, valuation gains and losses on securities measured at fair value. After the crisis years the first quarter of 2010 saw a recovery on the financial markets. This led to valuation gains of € 132 million on securities measured at fair value, which accounted for the bulk of overall net income of € 141 million from financial investments. The first quarter of 2011, however, saw slightly higher spreads and as a result lower valuation gains. Overall net income was € 25 million. The valuation result on securities measured at fair value, which was affected by the rise in long-term interest rates, accounted for € 8 million of this.
Net income from derivatives and designated liabilities turned around from a loss of € 45 million to a profit of € 3 million over the same period. This turnaround resulted from valuation gains on derivatives held in the banking book.
Net income from the disposal of group assets – four subsidiaries ceased to be consolidated for immateriality reasons – was € 3 million in the first quarter of 2011. In the first quarter of 2010 the deconsolidation of 40 subsidiaries due to a change in the materiality thresholds generated net income of € 5 million.
There were taxes of € 100 million during the reporting period, compared with € 33 million in the first quarter of 2010. The sharp increase was largely due to deferred taxes. In the first quarter of 2010 deferred tax income was recognized on valuation differences of derivatives and own issues between IFRS and the tax accounts, while in the first quarter of 2011 a deferred tax expense was recognized on valuation gains, primarily from liabilities measured at fair value (fair value option).
| Q1/2011 | Pro forma | Change | Change in % | |
|---|---|---|---|---|
| In € million | Q4/2010 | absolute | ||
| Net interest income | 884 | 871 | 13 | 1.6% |
| Net fee and commission income | 357 | 403 | (46) | (11.3)% |
| Net trading income | 123 | 70 | 53 | 76.0% |
| Other net operating income | (24) | 11 | (35) | – |
| Operating income | 1,341 | 1,355 | (14) | (1.0)% |
| Staff expenses | (380) | (395) | 15 | (3.8)% |
| Other administrative expenses | (287) | (334) | 47 | (14.1)% |
| Depreciation of tangible and intangible | ||||
| fixed assets | (86) | (98) | 12 | (12.2)% |
| General administrative expenses | (753) | (827) | 74 | (8.9)% |
| Operating result | 588 | 528 | 60 | 11.4% |
Compared to the previous quarter, the net interest income increased by 2 per cent or € 13 million. It grew especially in the Ukraine on account of the low net interest income in the fourth quarter, caused by a change in how interest on impaired loans is calculated. In addition, the net interest income increased in Russia due to high volumes and better refinancing. Across the Group, the interest margin rose by 7 basis points to 2.61 per cent.
Compared to the previous quarter, the net fee and commission income fell by 11 per cent or € 46 million. On a seasonal basis, net income from payment transfer business declined in all segments. The net income from securities business decreased in the Group markets and Russia segments. Due to seasonal effects, net income from foreign exchange, notes/coins and precious-metals business declined.
Compared to the previous quarter, trading results grew by € 53 million due to the positive valuation effects in interest-related business. The interest rates rose more slowly in the first quarter of 2011 compared to the previous quarter, which led to a valuation surplus especially in the interest derivatives.
Compared to the previous quarter, other net operating income decreased by € 35 million to minus € 24 million. This decline was primarily caused by the bank levy under the Stability Levy Act which taxed RBI AG with € 23 million.
Compared to the previous quarter, it is especially important to take into account the seasonality of the expense categories. As such, the expenses in the fourth quarter are generally higher than in the first
three quarters of the year due to differing accruals during the year and/or higher closing accounts at the end of year.
At € 380 million, staff expenses were € 15 million or 4 per cent below the fourth quarter of 2010. This was especially due to the seasonal peaks in the fourth quarter 2010 and related expenses for severance pay and pensions. On the other hand, social security contributions rose in the first quarter of 2011, especially due to statutory changes at the Russian Group unit.
Other administrative expenses decreased by € 47 million or 14 per cent to € 287 million, wherein nearly all expense items were affected. Legal, advisory and consultancy expenses (minus € 10 million) accounted for especially large decreases, as did advertising, PR and promotional expenses (minus € 15 million). In the fourth quarter of 2010, legal, advisory and consulting expenses were included in expenses that were incurred in connection with the merger. There was a slight increase in the cost of deposit insurance. At € 84 million, the office space expenses remained approximately at the same level of the fourth quarter 2010.
| In € million | Q1/2011 | Pro forma Q4/2010 |
Change absolute |
Change in % |
|---|---|---|---|---|
| Operating result | 588 | 528 | 60 | 11.4% |
| Net provisioning for impairment losses | (208) | (281) | 73 | (25.8)% |
| Other results | 25 | 44 | (18) | (42.2)% |
| Profit before tax | 405 | 290 | 115 | 39.6% |
| Income taxes | (100) | 34 | (134) | – |
| Profit after tax | 305 | 324 | (19) | (5.8)% |
| Profit attributable to non-controlling interests | (35) | (20) | (15) | 77.2% |
| Consolidated profit | 270 | 304 | (34) | (11.3)% |
Since the beginning of the year, there was a decline in non-performing loans. The favorable economic conditions led to an improved repayment rate that was mainly responsible for the reduction. This was followed by a reduced need for impairment losses on loans and advances.
Net provisioning for impairment losses decreased sharply from € 281 million in the fourth quarter of 2010 to € 208 million in the first quarter of 2011. In the case of the specific allowances for bad debts, € 46 million less was allocated than in the previous quarter. Comparing the quarters, € 26 million were released from the portfolio value adjustments. The sale of loans resulted in € 1 million in additional revenue.
Taking into account the one-off effect as a result of a change in the way interest is calculated on impaired loans at the Ukrainian Group unit (profit-neutral effect due to a reciprocal entry in the provisioning for impairment losses), which took place wholly within the fourth quarter of 2010, the decline in net provisioning for impairment losses would have been even higher quarter-on-quarter.
Other results declined from € 44 million to € 25 million compared to the previous quarter. The share of revenue that includes derivatives and designated liabilities fell by € 40 million to € 3 million. The decrease was due to valuation losses on credit derivatives and lower valuation income from bank book derivatives.
After the he difficult market environment and the resulting losses on market-valued securities in the fourth quarter of 2010, net income from financial investments performed well in the first quarter of 2011. In the fourth quarter of 2010, net income totaled € 1 million, wherein the valuation losses from market-valued securities amounted to € 30 million. For the most part this could be offset by gains realized by sales. In the first quarter of 2011, an income of € 25 million was generated from financial investments. The valuation gains amounted to € 8 million. € 16 million came about as a result of gains realized by sales of market-valued securities and to a lesser extent, shares in companies.
Quarter-on-quarter, income taxes for the quarter were characterized by deferred taxes. The fourth quarter of 2010 resulted in a positive tax effect of € 34 million, especially due to the valuation of deferred taxes on tax-losses carried forward at the Group's headquarters (which to date are still not taken into account) as a result of an updated medium-term plan, which assumes offsetable taxable gains. In the first quarter of 2011 however, a deferred tax expense was entered on valuation gains. These primarily originate from the fair value option. As such, the tax rate was 25 per cent in the first quarter of 2011.
As of 31 March 2011, the total assets of RBI amounted to € 139.5 billion. This was 6 per cent or € 8.3 billion above the comparable figure for the end of 2010. On the assets side, the increase was caused by growth in loans to banks and customers. On the liabilities side, the increase came from deposits from banks and customers as well as securities issued.
The spot rate forming the basis of the balance sheet has not developed uniformly since the start of the year: The US dollar and the Ukrainian hyrvnia each devalued by 6 per cent, the Belarusian rouble devalued by 8 per cent, whilst the Hungarian forint appreciated by 4 per cent, the Romanian leu appreciated by 3 per cent and both the Czech koruna and Serbian dinar each appreciated by 2 per cent. In all, currency effects decreased the total assets by 1 per cent.
The assets side is dominated by loans and advances to customers. Compared to the end-of-year figure, these increased by € 1.4 billion or 2 per cent to € 77.1 billion. The increase in loans and advances was attributed to commercial customers. Here, the credit volume amounted to € 54.4 billion. At € 20.9 billion, the volume of loans to retail customers remained almost stable. Compared to the end-ofyear figure, the ratio of customer loans to customer deposits improved by 4 per cent to 127 per cent. The impairment losses on loans and advances rose only marginally to € 4.8 billion and related primarily to loans to customers.
Loans and advances to banks grew by € 7.5 billion or 35 per cent to € 29.1 billion. The increase was especially attributed to the awarding of short-term credit to commercial banks and here, in turn, repo transactions.
Since the end of 2010, financial investments decreased by € 0.7 billion or 3 per cent to € 27.0 billion. This decrease was seen in all
security categories (held for trading, held to maturity and available for sale).
At € 11.1 billion, the remaining asset items, consisting of cash reserves, tangible assets, intangible assets, derivatives and the terms posted as 'other assets', were almost unchanged.
Customer deposits increased by 6 per cent or € 3.2 billion and as such, grew more strongly than loans and advances to customers. Customer deposits amounted to € 60.9 billion, € 32.3 billion of which was attributable to large corporate customers, who were primarily responsible for the rise in deposits. This increase was mainly due to short-term deposits from corporate customers.
Breakdown of equity and liabilities on the balance sheet
The refinancing volume via banks – primarily commercial banks – amounted to € 37 billion. This represents an increase of € 3.3 billion or 10 per cent compared to the end of 2010. The refinancing mainly took place by the short-term deposits of large corporates.
Other liabilities, including issued securities, provisions, trading liabilities, derivatives, as well as the other liability items amounted to € 26.9 billion. Issued securities rose by € 2.4 billion to € 18.9 billion. During the reporting period, two benchmark issues were issued by the Group headquarters amounting to € 2 billion.
Compared to the year-end 2010, the bank's balance sheet equity (consisting of the consolidated equity, consolidated net profit and the capital of the non-controlling interests) increased by 3 per cent or € 268 million to € 10,672 million.
The consolidated equity, consisting of subscribed capital, participation capital, capital reserves and retained earnings, increased by € 1,046 million to € 9,297 million. The increase in retained earnings was mainly put down to the transfer of earnings amounting to € 1,087 million. Other income reduced this by € 43 million. At minus € 36 million, the key components of this was a cash flow hedge, minus taxes. During the reporting period, the exchange differences (including capital hedging) turned out to be quite minor (minus € 5 million).
Consolidated profit amounted to € 270 million. The capital of the non-controlling interests increased due to the rise in net profit to € 1.1 billion.
RBI does not form an independent credit institution group (Kreditinstitutsgruppe) as defined by the Austrian Banking Act (BWG) and therefore is not subject to the regulatory provisions on a consolidated basis. This is because it is part of the RZB Group. The consolidated values (shown below) have been worked out according to the provisions of the BWG and are assumed in the calculation of the RZB-Kreditinstitutsgruppe.
Consolidated own funds pursuant to BWG fell from year-end 2010 by € 34 million to € 12,574 million as of 31 March 2011. This does not include profit from the current reporting period as due to legal regulations in force in Austria, this is not allowed to be considered in the calculation.
In the first quarter, core capital (tier 1) rose by € 30 million to € 9,236 million. Non-controlling interest were responsible for this increase.
Additional own funds (tier 2) decreased by € 56 million to € 3,310 million. The main reason for this were maturities of tier 2 issues at RBI AG and in the Czech Republic.
Short-term subordinated capital (tier 3) increased by € 16 million to € 85 million.
The own funds should be viewed in the context of the own funds requirements which are almost unchanged. These fell by € 25 million to € 7,560 million. At 79 per cent, the own funds requirement for the credit risk made up most of this.
The own funds requirement for credit risk fell by € 49 million to € 5,999 million, wherein the requirement contained in the standard approach decreased by € 30 million and the requirement based on internal ratings decreased by € 19 million. The requirement for market risks increased by €
5 million to € 332 million and the requirement for open currency positions increased by € 20 million to € 405 million. The requirement for operational risks decreased by € 1 million to € 823 million.
This resulted in an excess cover ratio of 66.3 per cent or € 5,014 million. Compared to the end of 2010, this was a decrease of € 9 million.
However, the tier 1 ratio – based on credit risk – rose by 0.1 percentage points to 12.3 per cent. Based on total risk, this resulted in a core tier 1 ratio of 8.9 per cent and a tier 1 ratio of 9.7 per cent. The own funds ratio remained unchanged at 13.3 per cent.
Active risk management represents a core competence for RBI. In order to recognize, assess and manage risks effectively, the Group has developed a comprehensive risk management. This is an integral component of managing the bank as a whole and is being constantly refined. RBI's risk management is oriented towards ensuring that credit and country risks, market and liquidity risks, risks arising from holdings and operational risks are dealt with conscientiously and managed professionally.
Managing non-performing loans was once again a risk management priority in the first quarter of 2011. Measures and objectives here included improving early recognition of potential troubled loans, reporting on the progress in restructuring management at Group level and a rapid and efficient reduction in the portfolio of non-performing loans. Despite the higher rate of defaults when viewed over the long term, the volume of non-performing loans fell slightly for the first time in several years over the period under review.
To actively manage the loan portfolios, internal Credit Portfolio Committees were set up in 2009. Their purpose is to direct the respective credit risk policies and strategies for various groups of customers. Lending guidelines and limits for directing the loan portfolio are defined on the basis of analyses by internal research departments and portfolio management. Monitoring and constantly fine-tuning the respective limits continued to be intensively followed up.
The success of this management can be seen in RBI reporting virtually no direct receivables from Greece, Portugal or Ireland. However, the sustainability of our customer business in these countries, which has its origins in the financing of international corporate customers and in capital markets business, is constantly being monitored for the potential effects of the sovereign debt of the respective countries. This also applies to the political and economic risk in North Africa and the Middle East. RBI is only exposed here to a limited degree (e.g. through providing export finance). By contrast, the assessment of the economic policies of the EU accession countries in Central and Eastern Europe is mainly positive. Above all, experts are keeping a close eye on Belarus, which has to cope with a large outflow of foreign exchange reserves.
Detailed loan portfolio simulations based on a number of economic scenarios are at the core of the current stress tests across Europe for banks, which are being coordinated by the European Banking Authority (EBA). For this purpose, RBI uses internal models in both the retail and non-retail areas of business. These models are for the assessment of the direct and indirect effects of prescribed crisis scenarios (e.g. GDP growth rates, foreign exchange rates, credit spreads) on potential loan defaults. Publication of the results by the EBA is planned at individual bank level for June 2011. RBI's liquidity position is not assessed separately in this stress test. However, it was checked during the period under review as part of the Liquidity Risk Assessment that was also organized by the EBA.
Independently of the stress tests, risk management also made increasing use of statistical methods to assess credit risks. This applies both to the ongoing development of the corporate rating model and the calculation of economic capital for credit risks relating to retail customers. By taking advantage of the experience gained from the financial and economic crisis, major improvements in validation and modeling were achieved.
In recent years, RBI had already heavily reduced or completely ended the granting of foreign currency loans in several countries to retail customers. In addition to this, one of the current initiatives in retail
banking consists of developing measures to reduce in particular the portfolio of foreign currency loans denominated in Swiss francs.
Besides these developments in credit risk management, RBI continues to closely consider measures to reduce liquidity and transfer risks. For instance, the period under review saw the rollout of a new Fund Transfer Pricing (FTP) concept at RBI. The purpose of the FTP is to agree on internal netting rates of interest between groups of customers and Treasury in order to correctly calculate the profitability of the lending and deposit business and/or the proprietary business. It also influences the pricing of loans to customers, with the new concept ensuring that the bank's liquidity costs are correctly passed on to the cost center responsible for them.
Throughout the Group, great significance is given to the application and virtually universal implementation of advanced approaches under Basel II. RBI uses the parameters and results determined for these approaches for internal management information purposes. In addition, RBI is continuing to invest in improving its risk management systems. This relates, for instance, to building up the data warehouse that is used jointly in risk management, to the migration of the reporting platform for a daily overview of the liquidity position and to finding a technical solution for collecting data on losses arising from operational risks. Each of the new systems was selected with a view to them also being able to meet the expected requirements under Basel III.
| Credit risk | ||||
|---|---|---|---|---|
| Unit | Non retail | Retail | Market risk | Operational risk |
| Raiffeisen Bank International AG, Vienna | IRB1 | n.a. | Internal model2 | STA |
| (Austria) | ||||
| RBI Finance (USA) LLC, New York (USA) | IRB | STA3 | STA | STA |
| Raiffeisenbank a.s., Prague (Czech Republic) | IRB | STA | STA | STA |
| Raiffeisen Bank Zrt., Budapest (Hungary) | IRB | IRB | STA | STA |
| Raiffeisen Malta Bank plc, Sliema (Malta) | IRB | STA | STA | STA |
| Tatra banka a.s., Bratislava (Slovakia) | IRB | IRB | STA | STA |
| Raiffeisen Bank Zrt., Bucharest (Romania) | IRB | STA | STA | STA |
| Raiffeisenbank Austria d.d., Zagreb (Croa | IRB4 | STA | STA | STA |
| tia) | ||||
| All other units | STA | STA | STA | STA |
IRB = internal ratings-based approach
Only for risks of open foreign exchange positions and general interest rate risk on the trading book
STA = standard approach
Only at consolidated level
To determine the capital requirements for credit risks under Basel II, RBI mainly uses the internal ratingsbased approach (IRB). In recent years, the regulatory authorities already approved use of the IRB approach by RBI AG and several of its network banks to calculate the credit risk of corporate customers, banks and public-sector institutions. Within the retail area, this method is being used in both Slovakia and Hungary. It is planned to gradually introduce the IRB approach in other countries and for other classes of receivables. This gives RBI the advantage of being able to put a more precise figure on the risks in its credit portfolio and to manage them.
The own funds requirement under Basel II for RBI AG's market risk for the trading book and foreign currency risks are determined using an internal value-at-risk model (VaR). The standard approach is used for all other units and the consolidated foreign currency position. To measure and limit the interest rate risk in the banking book, a change in the present value of the banking book is simulated based on the assumption of a simultaneous increase in interest rates for all maturities and all currencies. For estimating interest rate gaps, essential key assumptions are made in compliance with regulatory provisions and based on internal statistics and figures gained through experience.
RBI's liquidity position is subject to a regular monitoring process and is included in the RZB Group's return when it reports weekly to the Austrian banking supervisory authority. This regulatory return presents details of the expected cash in- and outflows and the additional realizable liquidity for various maturities and currencies.
The standard approach is currently being used to calculate capital requirements for operational risk under Basel II. This applies to all the main Group units.
Now that the crisis is tailing off and amidst mounting signs of an overall economic recovery, we are aiming in the medium term, with the inclusion of the acquisition of Polbank, for a return on equity before tax of 15 to 20 per cent. This is excluding future acquisitions, any capital increases, as well as unexpected regulatory requirements from today's perspective.
In 2011, we plan to notably increase growth in customer lending volumes relative to the previous year (2010: 4.3 per cent). In terms of regions, we are seeking the highest absolute growth in lending to customers in CEE.
From the customer standpoint, we plan to retain our Corporate customers division as the backbone of our business and in the medium term to expand the proportion of Group lending to customers accounted for by our Retail customers division. Following the successful conclusion of the acquisition of Polbank, the Central European segment will continue to gain importance in terms of customer lending volumes.
In terms of credit risk, we expect to witness a further decline in the net provisioning ratio (provisioning for impairment losses in relation to the average credit risk-weighted assets) over the medium term. Based on current market forecasts, we assume that the non-performing loan ratio at Group level will peak in the second half of 2011.
The bank levies in Austria and Hungary will lead to an anticipated reduction in our 2011 result of some € 130 million (approximately € 90 million for Austria and € 40 million for Hungary).
In 2011, we plan to raise around € 6.5 billion in long-term wholesale funding in the capital markets, of which € 3.6 billion had already been successfully placed by mid May.
The number of Group outlets is to remain fairly stable in 2011, although there may continue to be some optimization of our network in some countries.
Internal management reporting at RBI is based on the current organizational structure. The matrix structure means that each member of the Management Board is responsible both for individual countries and specific business activities (country and functional responsibility model). Within the Group, a cash generating unit is either a country or a business activity. The RBI management bodies – the Management Board and Supervisory Board – take decisions that determine the resources allocated to each segment in accordance with its financial strength and profitability. Consequently the reporting criteria are an essential component in the decision-making process. The segments are also defined in accordance with the International Financial Reporting Standards (IFRS) – in particular IFRS 8.
In Central and Eastern Europe (CEE) geographical aspects are used to define segments, with each Group unit being allocated to a segment in accordance with its location. Countries that are expected to achieve comparable long-term economic performance and that have similar economic profiles are grouped together in regional segments. Business outside the CEE area that was recently added due to the meger is defined by business activity. The segments therefore correspond to the Group's organizational structure and are reflected in the internal management reports and in the management approach required under IFRS 8.
In order to achieve maximum transparency and in consideration of the IFRS 8 thresholds, seven segments were defined, which ensures clear reporting. IFRS 8 establishes a threshold of 10 per cent of key figures, namely operating income, result after tax and segment assets.
The Group comprises the following segments:
This segment is made up of five countries: the Czech Republic, Hungary, Poland, Slovakia and Slovenia. These constitute the most mature banking markets in the CEE region. They are also the markets in which RBI has been operating longest. In Poland, Raiffeisen Bank Polska S.A. provides services to corporate customers, SMEs and a growing number of affluent customers. Tatra Banka a.s. in Slovakia is primarily involved in corporate and retail activities, but also has a strong emphasis on affluent customers. In Slovenia, the Group is represented by Raiffeisen Banka d.d.. This bank especially concentrates on business with local corporate customers. The Czech Raiffeisenbank a.s. provides traditional banking services together with building society and insurance products in its local market. Raiffeisen Bank Zrt. has an extensive branch network in Hungary which serves retail customers, SMEs and a large number of corporate customers. RBI is also represented by ZUNO BANK AG, a direct bank, in Slovakia. Separate leasing companies also operate in each country.
The Southeastern Europe segment comprises Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Moldova, Romania and Serbia. The Albanian Raiffeisen Bank Sh.a. provides financial services across all business activities. Raiffeisen Leasing Sh.a. rounds off the product offering. Raiffeisen Bank Kosovo J.S.C. and Raiffeisen Leasing LLC Kosovo represent RBI in Kosovo and offer a comprehensive product range. In Bosnia and Herzegovina, Raiffeisen Bank d.d. Bosna i Hercegovina and Raiffeisen Leasing d.o.o. Sarajevo focus on SMEs but also have a broad range of products for retail customers. In Bulgaria, the Group is represented by Raiffeisen (Bulgaria) EAD, Raiffeisen Leasing Bulgaria OOD. The Croatian Raiffeisenbank Austria d.d. specializes in large and medium-sized corporate customers and also has a substantial retail business. RBI also operates Raiffeisen Leasing d.o.o., capital management companies and an asset management company in Croatia. Raiffeisen Bank S.A. has an extensive branch network in Romania offering top-notch financial services. The Romanian operation also provides a tailored selection of products for corporate customers in Moldova. RBI has a presence in the Serbian market in the form of Raiffeisen banka a.d., Raiffeisen Leasing d.o.o., two pension funds and an asset management company.
ZAO Raiffeisen is one of the leading foreign banks in Russia; the bank specializes in corporate and retail customers. The national branch network also offers products tailored for affluent retail customers. The product range in Russia is rounded off by OOO Raiffeisen Leasing.
This segment comprises Belarus, Kazakhstan and the Ukraine. The Group is represented by Priorbank JSC and JLLC Raiffeisen-Leasing in Belarus. In Kazakhstan, RBI is represented by Raiffeisen Leasing Kazakhstan LLP and in the Ukraine, Raiffeisen Bank Aval JSC and LLC Raiffeisen Leasing Aval provide a full range of financial services and products via an extensive network of business outlets. In addition, as a specialized service provider, the Ukrainian Processing Center PJSC processes a large proportion of the card business within the segment.
The Group corporates segment covers Austrian and international (mainly Western European) customers managed by RBI AG in Vienna within the Corporate customers profit center. These customers include Austria's top 1,000 companies, most of whom have an excellent credit quality. The segment report also shows the results generated by corporate business with Central and Eastern European multinationals (excluding Austrian customers) in the Network corporate customers & support profit center. The Corporate customers and Network corporate customers & support profit centers also include net income from structured trade financing for commodity traders, documentary business, project financing and a range of cofinancing solutions. Corporate customer business at the Singapore and China branches is also allocated to this segment, as are operations involving international customers of the Maltese subsidiary, RB International Finance (USA) LLC and RB International Finance (Hong Kong) Ltd., all of which provide a selection of products for niche market customers.
The Group markets segment covers capital market customers and proprietary trading. The results show income from currency, interest and securities trading as well as from structured products for financial institutions and income from proprietary trading. Proprietary trading and market-maker activities are allocated under the Capital markets and Credit investments (non-core strategic proprietary trading in securities) profit centers plus the relevant profit centers in the Singapore, China and London branches. Net income from transactions for customers is included in Financial institutions & sovereigns and Raiffeisen financial institutions clients (operations involving Raiffeisen Landesbanks and related financial service companies). The profit centers post net income from sales of all banking products and business relationships with banks, institutional customers, governments and local authorities. Raiffeisen Centrobank, where securities trading and capital market financing constitute the core business, is also part of this segment. The Mergers & acquisitions division, which operates via locations in a number of different countries, is also represented in this segment by the subsidiaries of Raiffeisen Investment AG. Commodity trading is undertaken by Centrotrade AG branches around the world and by F.J. Elsner & Co. in Austria. The segment also includes private banking, reporting results from Kathrein & Co. Privatgeschäftsbank, which advises on investing private and foundation assets, as well as on inheritance issues.
The Corporate center segment encompasses all the services provided by Group headquarters for various parts of the Group to realize the Group's overall strategy. Liquidity management and balance sheet structure management linked to proprietary trading are included under this segment and reported in Treasury profit center.
Net income from the equity investment portfolio is also to be reported in the segment. In addition, the Corporate center segment report covers net income from banking operations carried out by Group headquarters and the Maltese subsidiary in relation to refinancing for Group units. Net income from the Special customers profit center – customers for whom members of the Managing Board are directly responsible – is also posted under this segment, as is income from the Austrian transaction services business operated by Raiffeisen Data Service Center GmbH, which offers a wide selection of order processing products and services for financial service providers.
Net income from companies operated for the purpose of equity management, from the holding company and all other companies that do not fall directly under another segment is also included in the segment report.
The comparisons with earlier periods in the following description are based on pro forma figures for the first quarter of 2010, as the merger with the principal business areas of RZB was retroactive for the full financial year.
In the first quarter of 2011 RBI maintained its growth with the new Group structure optimized by the merger. Profit before tax grew by 3 per cent to € 405 million. The increase was due to a decline in risk costs and higher operating income. However, significantly lower valuation gains on financial investments as a result of the stabilization in financial markets reduced income compared to earlier periods. General administrative expenses rose 8 per cent, primarily in connection with the increase in employment in the CEE home market, leading to a rise in the cost/income ratio. Almost all segments increased results, although the economic recovery took a different path in the regional and other segments.
In Central Europe, profit before tax rose by 57 per cent to € 95 million. Higher operating income and lower net provisioning for impairment losses were decisive factors in this growth. Balance sheet assets rose by 2 per cent compared with a year ago.
In the period under review, Southeastern Europe reported a profit before tax of € 93 million, down by 5 per cent. The main reason for this decrease was a decline of other results. Balance sheet assets in this segment were also 5 per cent lower than the previous year.
In Russia, profit before tax rose by 63 per cent to € 94 million. A year-on-year comparison shows that the increase in profit before tax resulted from higher operating income and the considerably lower net allocations to provisioning for impairment losses. Balance sheet assets in this segment were 1 per cent up on the end of the first quarter of 2010.
The CIS other segment reported profit before tax for the period of € 19 million, an increase of 7 per cent. Lower net provisioning for impairment losses was key in the slight rise of profit before tax. Balance sheet assets in this segment were 3 per cent up on the end of the first quarter of 2010.
The Group corporates segment showed strong growth of 41 per cent in results, with profit before tax of € 101 million. This increase was due to the year-on-year rise in operating income and lower net provisioning for impairment losses. Balance sheet assets in this segment were 4 per cent down on the previous year.
The Group markets segment generated the biggest profit before tax of all segments, with € 142 million. Increased operating income and growth in other net income were responsible for this strong performance. Balance sheet assets fell by 41 per cent compared with 2010.
At the Corporate center segment there was a swing from profit before tax of € 79 million to a pre-tax loss of € 85 million. This reflected the impact of significantly lower operating income and other income. Balance sheet assets in this segment were 17 per cent up on the end of the first quarter of 2010.
A breakdown of group assets by segment shows changes over the period under review. The share of Central Europe rose by 2 percentage points to 21 per cent, while Southeastern Europe was unchanged at 13 per cent. Russia's share rose 1 percentage point to 7 per cent, and CIS other also increased by 1 percentage point to 4 per cent. Group corporates increased its share by 1 percentage point to
13 per cent, while Group markets dropped by 10 percentage points over the year to 17 per cent, partly losing to Corporate center which had a share of 25 per cent at the end of the period under review (up 5 percentage points).
| 1/1-31/3/2011 | Pro forma | Change | |
|---|---|---|---|
| In € million | 1/1-31/3/2010 | ||
| Net interest income | 287 | 261 | 10.2% |
| Net fee and commission income | 119 | 107 | 10.6% |
| Net trading income | 12 | 4 | 224.5% |
| Other net operating income | (5) | (3) | 102.2% |
| Operating income | 413 | 369 | 11.8% |
| General administrative expenses | (236) | (216) | 9.6% |
| Operating result | 176 | 154 | 14.9% |
| Net provisioning for impairment losses | (79) | (111) | (29.1)% |
| Other results | (3) | 18 | – |
| Profit/loss before tax | 95 | 60 | 57.4% |
| Income taxes | (19) | (14) | 37.9% |
| Profit/loss after tax | 76 | 46 | 63.2% |
| Profit attributable to non-controlling interests | (28) | (17) | 67.5% |
| Profit/loss after deduction of non-controlling | |||
| interests | 48 | 30 | 60.8% |
| Share of profit before tax | 20.7% | 13.0% | 7.7 PP |
| Risk-weighted assets (credit risk)1 | 23,151 | 21,668 | 6.8% |
| Total own funds requirement1 | 2,130 | 1,985 | 7.3% |
| Total assets1 | 34,393 | 33,845 | 1.6% |
| Liabilities1 | 31,485 | 31,069 | 1.3% |
| Net interest margin | 3.36% | 3.09% | 0.28 PP |
| NPL ratio | 8.5% | 7.6% | 0.9 PP |
| Coverage ratio | 57.6% | 57.8% | (0.2) PP |
| Cost/income ratio | 57.3% | 58.4% | (1.2) PP |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
1.86% | 2.08% | (0.22) PP |
| Average equity | 2,900 | 2,564 | 13.1% |
| Return on equity before tax | 13.1% | 9.4% | 3.7 PP |
| Business outlets1 | 548 | 554 | (1.1)% |
1 Reporting date values as of 31 March
In Central Europe, profit before tax was € 95 million in the reporting period, up 57 per cent or € 35 million year-on-year. The combination of higher operating income and lower risk costs was mainly responsible for this good result. Return on equity before tax rose by 3.7 percentage points to 13.1 per cent.
Net interest income in Central Europe rose by 10 per cent to € 287 million. The highest growth was in Poland and the Czech Republic, due in Poland to higher interest income from securities and in the Czech Republic mainly to higher volume and margins on loans to retail customers. The positive trend in net interest margins continued, rising by 28 basis points in all to 3.36 per cent.
Assets in this segment rose by 2 per cent year-on-year to € 34.4 billion, with credit risk-weighted assets rising 7 per cent year-on-year from € 21.7 billion to € 23.2 billion. The rather significant increase was primarily due to the credit risk-weighted assets in Slovakia and the Czech Republic. The dominant factors here were the reduction in Basel II collateral in the Corporate segment and rating migration. First initiation of the internal ratings-based approach for the majority of the loans and advances to retail customers in Hungary and Slovakia also significantly boosted credit risk-weighted assets.
Net fee and commission income grew in every country in the region except Hungary, rising by 11 per cent or € 12 million to € 119 million. Payment transfers accounted for € 47 million of this figure, a gain of 10 per cent or € 4 million year-on-year. This growth was almost entirely due to the higher number of transactions in the Czech Republic. Net income from the loan and guarantee business grew by 24 per cent year-on-year to € 19 million. This increase was primarily generated in Poland by the significant growth in business activity. Net income from currency, notes/coins and precious-metals business rose by 7 per cent to € 35 million, for which increased foreign exchange margins for customers in the Czech Republic were responsible.
Net trading income for Central Europe grew from € 4 million to € 12 million year-on-year. This increase came mainly from Hungary and the Czech Republic. Currency-based transactions swung from a net loss of € 2 million to net income of € 11 million, primarily due to revaluation gains on various foreign currency instruments in Hungary. Net income from interest-related trading fell by 41 per cent overall to € 2 million, reflecting on the one hand revaluation gains in Slovakia on interest swap transactions and on the other hand valuation gains on the trading portfolio in the Czech Republic. Otherwise, there was a decrease in valuation gains on derivatives in Hungary. Net income from equity and index-based transactions was generated almost entirely in Hungary, turning around year-on-year from € 3 million to a loss of € 1 million.
Other net operating income in the region fell by € 2 million over the period under review to a loss of € 5 million. The increase in other taxes as a result of the levy on banks and financial service providers in Hungary (€ 11 million) was mostly offset by increased income from non-banking activities.
General administrative expenses in the region advanced by 10 per cent or € 20 million year-on-year to € 236 million. This increase was essentially due to a rise in staff expenses in the Czech Republic, where there were increased staffing needs due to the expansion of the marketing channels – several new branches and the installation of new customer areas (Affluent Corners) in existing branches. Other administrative expenses and depreciation, amortization and write-offs rose year-on-year, again largely due to higher costs of branches in the Czech Republic and the adjustment of the residual book value of various IT systems following implementation of the new core bank system. The number of business
outlets decreased year-on-year by 1 per cent or 6 outlets to 548. The cost/income ratio in the region improved by 1.2 percentage points to 57.3 per cent.
Net provisioning for impairment losses in the region fell by a total of 29 per cent or € 32 million in the reporting period to € 79 million. In Hungary, the net provisioning for impairment losses rose by 18 per cent to € 47 million. Net allocations to individual provisions in the Central Europe segment increased year-on-year by 18 per cent to € 71 million. This was almost entirely due to net provisioning for losses on loans to private customers and mortgage loans where collateral was revalued. Portfolio-based loan loss provisions totaled € 8 million, compared with € 51 in the comparable period of the previous year. Due to a significant reduction in new business and overdue loans up to180 days, a release of portfolio-based loan loss provisions for private individuals in Hungary occurred, while individual loan loss provisions rose even further. The proportion of non-performing loans in the loan portfolio in the Central Europe segment was 8.5 per cent in the reporting period.
Other results fell by € 21 million to minus € 3 million. Net income from derivative financial investments turned around year-on-year from minus € 4 million to € 1 million. This improvement came almost entirely from revaluation gains on various hedging transactions in the Czech Republic which had been entered into to adjust the foreign currency structure. As a result of the general rise in interest rates in the region, net income from financial investments swung from € 21 million to a loss of € 4 million. This was due to losses in Hungary on the revaluation of municipal bonds, while in Slovakia and the Czech Republic revaluations of government securities were positive but significantly lower than a year earlier.
Income taxes climbed by 38 per cent year-on-year to € 19 million. The tax rate in the region fell by 3 percentage points to 20 per cent. Profit after non-controlling interests totaled € 48 million.
| 1/1-31/3/2011 Pro forma Change In € million 1/1-31/3/2010 Net interest income 221 222 (0.5)% Net fee and commission income 87 90 (3.1)% Net trading income 14 14 0.8% Other net operating income 7 5 34.5% Operating income 330 332 (0.6)% General administrative expenses (182) (178) 2.2% Operating result 148 153 (3.7)% Net provisioning for impairment losses (60) (69) (12.1)% Other results 5 12 (57.3)% Profit/loss before tax 93 97 (4.7)% Income taxes (13) (13) (4.7)% Profit/loss after tax 80 84 (4.7)% Profit attributable to non-controlling interests (7) (5) 38.1% Profit/loss after deduction of non-controlling interests 73 79 (7.6)% Share of profit before tax 20.2% 21.0% (0.8) PP Risk-weighted assets (credit risk)1 16,269 16,339 (0.4)% Total own funds requirement1 1,530 1,522 0.5% Total assets1 22,247 23,300 (4.5)% Liabilities1 19,310 20,496 (5.8)% Net interest margin 3.94% 3.79% 0.15 PP NPL ratio 9.1% 7.0% 2.1 PP Coverage ratio 63,0% 67.8% (4.8) PP Cost/income ratio 55.2% 53.7% 1.5 PP Net provisioning ratio (average risk-weighted assets, credit risk) 2.07% 1.68% 0.39 PP Average equity 2,121 1,979 7.2% Return on equity before tax 17.5% 19.7% (2.2) PP Business outlets1 1,156 1,179 (2.0)% |
||
|---|---|---|
1 Reporting date values as of 31 March
Profit before tax in the Southeastern Europe segment fell during the reporting period by 5 per cent or € 4 million to € 93 million. Significantly reduced net allocations to provisioning for impairment losses were a positive influence on profit before tax, but operating income remained below the previous year's level. The segment's return on equity before tax fell year-on-year by 2.2 percentage points to 17.5 per cent.
Net interest income in the segment fell by 1 per cent to € 221 million. The decrease affected Bulgaria, Romania and Croatia, while the other countries in the region saw an increase. Despite lower refinancing costs, the decrease was caused mainly by falling interest income. By contrast, in Bosnia and Herzegovina the drop in costs for customer deposits led to an increase in net interest income.
Balance sheet assets were down by 5 per cent year-on-year at € 22.2 billion while the net interest margin rose 15 basis points to 3.94 per cent. Credit risk-weighted assets were unchanged from the previous year at € 16.3 billion. This difference from total assets was primarily due to Romania, with the combination of the migration of the exposures of the corporate customers to poorer ratings and a reduction in collateral relevant for Basel II.
Net fee and commission income declined by 3 per cent year-on-year to € 87 million. Payment transfers made the largest contribution at € 40 million, although this was unchanged from the previous year. The country with the highest commission income was Romania, which contributed almost half of the total. Income from credit and guarantee business decreased by 21 per cent year-on-year to € 18 million. The new provisions of the Consumer Protection Act in Romania, which have been in force since June 2010, reduced earnings. Income from the foreign currency, notes/coins and precious-metals business rose by 9 per cent to € 15 million, with all the countries in the region showing growth.
Net trading income was unchanged year-on-year at € 14 million. Currency-related trading brought in € 6 million, the result of the revaluation of forward and currency swap transactions in Romania. Interest-related trading recorded a profit of € 8 million, most of which was generated by revaluation gains on fixed-income securities in Albania and by revaluations of various positions in the trading portfolio in Croatia.
Other net operating income rose year-on-year by € 2 million to € 7 million. This primarily comprised income from operating leases of € 10 million, predominantly in Croatia.
General administrative expenses rose slightly year-on-year by 2 per cent to € 182 million. The decisive factor was the growth in expense in Romania, where staff expenses rose due to the salary increases implemented at the end of 2010 and depreciation and amortization increased on investments in IT hardware and new IT applications. Other administrative expenses were largely stable in the region. The combination of unchanged operating income and increased expenses meant that the cost/income ratio increased slightly by 1.5 percentage points to 55.2 per cent.
Net provisioning for impairment losses for the region fell by 12 per cent or € 9 million to € 60 million. Individual net provisioning declined by 10 per cent or € 7 million year-on-year to € 80 million. In Romania and Croatia net allocations to individual provisioning rose mainly on loans to private customers, with an increase in Croatia also for loans to corporate customers. At the same time, a total of € 19 million in net allocations to portfolio provisioning were released, with the highest level in Bulgaria. Romania showed significantly lower allocations to portfolio provisioning. Non-performing loans made up 9.1 per cent of the loan portfolio.
Other results fell year-on-year by € 7 million to € 5 million. Net income from derivatives amounted to € 7 million, after a net loss of € 6 million the previous year. This came almost entirely from hedging transactions in Croatia, which were mostly entered into in the 2009 financial year to adjust the currency structure. Net income from financial investments dropped from € 22 million the previous year to a net loss of € 2 million, mainly due to the absence of profits from the sale and revaluation of government bonds in Romania. Croatia also reported a decrease in revaluation profits on corporate bonds, due to the flagging economy. Due to the deconsolidation for materiality of a leasing company in Moldova, the segment showed a net loss on disposal of group assets of € 0.3 million.
Income taxes in the region were unchanged from the previous year at € 13 million, as was the tax rate of 14 per cent. Profit after the deduction of non-controlling interests was € 73 million.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change |
|---|---|---|---|
| Net interest income | 136 | 119 | 14.1% |
| Net fee and commission income | 52 | 47 | 10.4% |
| Net trading income | 32 | 34 | (6.4)% |
| Other net operating income | (2) | (3) | (50.4)% |
| Operating income | 218 | 197 | 10.8% |
| General administrative expenses | (113) | (96) | 17.6% |
| Operating result | 105 | 101 | 4.2% |
| Net provisioning for impairment losses | (2) | (37) | (95.2)% |
| Other results | (9) | (6) | 45.2% |
| Profit/loss before tax | 94 | 58 | 63.4% |
| Income taxes | (24) | (14) | 69.5% |
| Profit/loss after tax | 70 | 44 | 61.5% |
| Profit attributable to non-controlling interests | (1) | 0 | >500,0% |
| Profit/loss after deduction of non-controlling | |||
| interests | 69 | 44 | 58.9% |
| Share of profit before tax | 20.6% | 12.5% | 8.1 PP |
| Risk-weighted assets (credit risk)1 | 8,834 | 7,611 | 16.1% |
| Total own funds requirement1 | 908 | 805 | 12.8% |
| Total assets1 | 12,464 | 12,343 | 1.0% |
| Liabilities1 | 10,464 | 10,535 | (0.7)% |
| Net interest margin | 4.41% | 3.97% | 0.44 PP |
| NPL ratio | 8.4% | 11.8% | (3.4) PP |
| Coverage ratio | 98.7% | 85.6% | 13.1 PP |
| Cost/income ratio | 51.7% | 48.7% | 3.0 PP |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.96% | 2.06% | (1.11) PP |
| Average equity | 1,234 | 988 | 24.9% |
| Return on equity before tax | 30.6% | 23.4% | 7.2 PP |
| Business outlets1 | 196 | 210 | (6.7)% |
1 Reporting date values as of 31 March
Despite an increase in general administrative expenses, profit before tax for the period rose substantially by 63 per cent to € 94 million. The main drivers were lower net provisioning for impairment losses and increased operating income. The return on equity before tax improved by 7.2 percentage points to 30.6 per cent.
Net interest income in Russia rose by 14 per cent or € 17 million to € 136 million. This increase was due primarily to the expansion of the loan portfolio and the reduction in less profitable investment of surplus liquidity. There was also a positive effect from the decrease in interest expense on customer deposits. Business was accordingly more profitable again year-on-year with the net interest margin increasing by 44 basis points to 4.41 per cent.
Balance sheet assets rose slightly year-on-year by 1 per cent to € 12.5 billion, with the 22 per cent increase in the loan portfolio offset by the reduction in interbank business and public sector security investment. However, credit risk-weighted assets increased significantly because of the change in the structure of assets, rising by 16 per cent to € 8.8 billion. The main reason for this was the combination of the rise in loans to corporate customers, the simultaneous reduction in Basel II collateral, the reduction in loans and advances to banks and the securities business.
Net fee and commission income rose by 10 per cent or € 5 million year-on-year to reach € 52 million. Payment transfers declined, but still made the largest contribution at € 16 million, due to the release of accruals for expected income. Income from the securities business totaled € 2 million. Income from the foreign currency, notes coins and precious-metals business was unchanged year-on-year at € 11 million. Income from other banking services rose by 22 per cent to € 8 million, particularly because of increased income from treasury and consulting services.
Net trading income fell slightly from € 34 million to € 32 million. After a loss of € 1 million in the previous year, net income from currency-related trading amounted to € 16 million, thanks to revaluation gains from currency swaps which exceeded the revaluation loss on an open foreign exchange position. By contrast, net income from interest-related trading fell by € 20 million to € 15 million. The main reason for this decline was the high level of revaluation gains on fixed income bonds in the previous year due to reversals of impairments after the 2009 financial crisis.
Other net operating loss in the segment was € 2 million, an improvement of € 1 million primarily due to lower allocations to other provisions.
General administrative expenses in the segment rose by 18 per cent to € 113 million, primarily due to the increase in staff expenses from the salary increases agreed upon in 2010 and increases in ancillary salary costs (particularly social security contributions) in the period under review. Other administrative expenses rose, primarily due to increased legal and advisory expenses and IT expenses. Depreciation, amortization and write-downs rose due to higher investment in tangible assets in 2010. The number of business outlets fell by 14 to 196 in the year under review. Due to the sharp rise in general administrative expenses, the cost/income ratio rose by 3.0 percentage points to 51.7 per cent.
Net provisioning for impairment losses fell significantly, from € 37 million in the previous year to € 2 million. The key factor here were significantly lower allocations for individual loan loss provisions. The fall from 11.8 per cent to 8.4 per cent in the ratio of non-performing loans and the improvement in
customer rating structure were major reasons for the decrease. Portfolio-based loan loss provisions increased by € 29 million to € 7 million. This was primarily due to the growth of the loan portfolio, which is the basis for portfolio-based loan loss provisions.
Other results came in at minus € 9 million. The net loss from derivatives was € 8 million, primarily linked to valuation losses on interest rate swaps concluded in order to mitigate interest rate structure risk. Due to the deconsolidation for materiality of a leasing company, the segment showed a net loss on disposal of group assets of € 1 million.
Income taxes grew by € 10 million year-on-year to € 24 million, while the tax rate was unchanged at 25 per cent. Profit after non-controlling interests rose to € 69 million.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change |
|---|---|---|---|
| Net interest income | 101 | 115 | (12.2)% |
| Net fee and commission income | 43 | 37 | 14.9% |
| Net trading income | 7 | 12 | (40.5)% |
| Other net operating income | (1) | (2) | (11.7)% |
| Operating income | 149 | 162 | (8.0)% |
| General administrative expenses | (85) | (78) | 8.9% |
| Operating result | 64 | 84 | (23.8)% |
| Net provisioning for impairment losses | (51) | (78) | (35.1)% |
| Other results | 5 | 12 | (53.9)% |
| Profit/loss before tax | 19 | 17 | 6.6% |
| Income taxes | (7) | (5) | 38.4% |
| Profit/loss after tax | 11 | 12 | (7.5)% |
| Profit attributable to non-controlling interests | (2) | (2) | 49.9% |
| Profit/loss after deduction of non-controlling | |||
| interests | 9 | 10 | (16.4)% |
| Share of profit before tax | 4.1% | 3.8% | 0.3 PP |
| Risk-weighted assets (credit risk)1 | 5,532 | 5,374 | 2.9% |
| Total own funds requirement1 | 540 | 515 | 4.8% |
| Total assets1 | 6,864 | 6,650 | 3.2% |
| Liabilities1 | 5,900 | 5,711 | 3.3% |
| Net interest margin | 5.76% | 7.10% | (1.33) PP |
| NPL ratio | 26.3% | 23.0% | 3.3 PP |
| Coverage ratio | 72.4% | 72.9% | (0.5) PP |
| Cost/income ratio | 57.2% | 48.3% | 8.9 PP |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
4.00% | 6.00% | (2.00) PP |
| Average equity | 753 | 650 | 16.0% |
| Return on equity before tax | 9.9% | 10.8% | (0.9) PP |
| Business outlets1 | 1,019 | 1,034 | (1.5)% |
1 Reporting date values as of 31 March
Profit before tax for the segment CIS other rose to € 19 million in the period under review, due entirely to declining risk costs. The segment's return on equity before tax decreased by 0.9 percentage points to 9.9 per cent.
Net interest income for the segment fell by 12 per cent or € 14 million to € 101 million. This was due to the change in methodology in Ukraine in the fourth quarter of 2010 for calculating interest on impaired loans and advances, resulting in a non-recurring effect of around € 18 million in year-on-year comparison. However, this change did not affect profit, as it was offset by the corresponding reduction in impairment loss provisioning. Reasons for the stagnation of net interest income were further reductions in the private customer portfolio in Ukraine and the margins on assets throughout the loan portfolio, despite the decrease in financing costs. In Belarus, by contrast, net interest income rose year-onyear, mainly due to the increase in the corporate portfolio.
Balance sheet assets gained 3 per cent year-on-year to € 6.9 billion due to the expansion in loans in Belarus. The net interest margin fell by 1.33 percentage points to 5.76 per cent. Due to the change in methodology described above, the interest margin fell by 1.08 percentage points, and this was reinforced by the downtrend in margins. Credit risk-weighted assets increased by 3 per cent to € 5.5 billion. In Ukraine the increase in fixed assets and other assets led to an increase in credit riskweighted assets. The growth in credit risk-weighted assets in Belarus was due to expanded commitment in almost all asset classes.
Overall, net fee and commission income rose by 15 per cent or € 6 million year-on-year to € 43 million, primarily as a result of growth in payment transfers. Income from the payment transfer business increased by 19 per cent or € 5 million to € 31 million, the largest contribution to net fee and commission income. In Ukraine, new product ranges for corporate customers introduced at year-end 2010 accounted for a considerable share of this. In Belarus the significant increase in customer activity fuelled the increase in net fee and commission income. Net income from the foreign currency, notes/coins and precious-metals business totaled € 9 million, essentially unchanged from the previous year's low level, due to the continuing suspension of foreign currency lending to private customers in Ukraine. Net income from the loan and guarantee business was also unchanged, and contributed € 2 million to net fee and commission income.
Because of lower earnings from interest-related trading in Ukraine, net trading income fell by 41 per cent or € 5 million to € 7 million. The decreasing Ukrainian hryvnia yield curve led to reduced income from revaluations of fixed income securities and bonds. Income from currency-related trading was slightly down on the previous year at € 5 million. In Belarus, the sharp depreciation of the local currency against the euro and US dollar boosted the revaluation gain on a strategic currency position taken to hedge equity from € 1 million last year to € 3 million. However, this increase was offset by revaluation losses in Kazakhstan.
Other net operating loss in the segment increased minimally to € 1 million, the result of a number of smaller items of income and expenses.
General administrative expenses were up 9 per cent or € 7 million over the same period last year to € 85 million. Staff expenses were affected by the increase in the number of employees in Ukraine and Belarus. In Ukraine, this was due to the increase in collection activities and various IT projects. Other administrative expenses remained almost unchanged over the previous year at € 30 million. By contrast, depreciation on tangible assets rose, mainly due to IT investment in the new core bank system in Ukraine. As a result of the decline in operating income and higher general administrative expenses, the cost/income ratio rose by 8.9 percentage points to 57.2 per cent.
Net allocations to loan loss provisions in the region fell by 35 per cent from € 78 million to € 51 million. In all, net allocations to individual loan loss provisions rose by 23 per cent to € 57 million due to increases in Ukraine and Belarus. This includes a decrease in net allocations to individual loan loss provisions of € 18 million due to the change in methodology described above in connection with interest on impaired loans in Ukraine.
The portfolio provisioning resulted in a release of € 6 million year-on-year, compared to a net allocation for portfolio provisioning of € 32 million a year earlier. This was due primarily to the significantly lower allocations to portfolio provisions in Ukraine. The ratio of non-performing loans in the credit portfolio stood at 26.3 per cent, and continues to be the highest of all segments (Belarus: 2.6 per cent, Ukraine: 33.7 per cent).
Other results fell year-on-year by 54 per cent to € 5 million. The main cause of this decrease was the drop from € 12 million to € 5 million in profit from financial investments. The decline in the yield curve of the Ukrainian hryvnia was less marked than a year earlier, resulting in lower revaluation gains on the fixed income portfolio of Ukrainian government bonds recognized at fair value.
Income taxes for the segment rose by 38 per cent to € 7 million. Profit after deduction of noncontrolling interests was € 9 million in the period under review.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change |
|---|---|---|---|
| Net interest income | 97 | 82 | 17.7% |
| Net fee and commission income | 41 | 39 | 6.8% |
| Net trading income | 5 | 2 | 169.6% |
| Other net operating income | 0 | 1 | (80.7)% |
| Operating income | 143 | 123 | 15.8% |
| General administrative expenses | (33) | (40) | (17.3)% |
| Operating result | 110 | 83 | 31.5% |
| Net provisioning for impairment losses | (11) | (21) | (47.5)% |
| Other results | 2 | 9 | (79.9)% |
| Profit/loss before tax | 101 | 71 | 40.7% |
| Income taxes | (23) | (15) | 51.4% |
| Profit/loss after tax | 78 | 56 | 37.8% |
| Profit attributable to non-controlling interests | 0 | 0 | – |
| Profit/loss after deduction of non-controlling | |||
| interests | 78 | 56 | 37.7% |
| Share of profit before tax | 21.9% | 15.4% | 6.5 PP |
| Risk-weighted assets (credit risk)1 | 15,664 | 14,312 | 9.4% |
| Total own funds requirement1 | 1,275 | 1,192 | 6.9% |
| Total assets1 | 20,602 | 21,490 | (4.1)% |
| Liabilities1 | 13,104 | 9,700 | 35.1% |
| Net interest margin | 1.75% | 1.50% | 0.25 PP |
| NPL ratio | 4.6% | 3.1% | 1.5 PP |
| Coverage ratio | 67.2% | 63.9% | 3.3 PP |
| Cost/income ratio | 23.1% | 32.3% | (9.2) PP |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.86% | 0.59% | 0.27 PP |
| Average equity | 1,766 | 1,536 | 15.0% |
| Return on equity before tax | 22.8% | 18.6% | 4.1 PP |
| Business outlets1 | 8 | 8 | – |
1 Reporting date values as of 31 March
Profit before tax for this segment rose by 41 per cent in the first quarter of 2011 to € 101 million. The main reasons for this growth were substantially higher operating income and lower net provisioning for impairment losses. The return on equity before tax improved by 4.1 percentage points to 22.8 per cent.
Net interest income grew by 18 per cent or € 15 million to € 97 million. This growth was primarily due to the rise in the margin on assets in business with Austrian RBI AG customers, which more than offset the rising liquidity costs. The margins in business with international customers remained stable year-over-year. Volume declined, particularly in export and investment financing at RBI AG. By contrast, the number of syndicated loans increased year-over-year. Net interest margin for the Group corporates segment was up 25 basis points to 1.75 per cent.
Balance sheet assets fell by 4 per cent or € 0.9 billion year-over-year to € 20.6 billion. By contrast, credit risk-weighted assets totaled € 15.7 billion, 9 per cent above the previous year's level. Despite the reduction in exposure, there was an increase in credit risk-weighted assets at RBI AG as a result of the expansion of guarantee commitments and the migration of exposures to major international customers to poorer rating grades.
Net fee and commission income rose by 7 per cent or € 2 million to € 41 million. At Group headquarters there was a decrease due to the lower number of transactions in export and investment financing. By contrast, growth in business activity at a Group headquarters branch in Malaysia resulted in substantial growth in net fee and commission income. The Group unit in the USA also increased net fee and commission income to € 5 million as a result of the loan and guarantee business.
Net trading income rose year-on-year by € 3 million to € 5 million. This was largely attributable to the profit centers at Group headquarters, based on revaluation gains from currency and interest-based transactions related to a range of financial instruments, primarily with Austrian customers.
General administrative expenses fell overall by 17 per cent to € 33 million. The main reason for this was a change in 2010 in the methodology for cost allocation at Group headquarters. This segment operated eight business outlets at the end of the reporting period. The cost/income ratio improved significantly, by 9.2 percentage points, to 23.1 per cent.
Net provisioning for impairment losses almost halved from € 21 million to € 11 million. Key factors in this were lower net allocations to portfolio provisions for loans and advances to corporate customers at Group headquarters. The Singapore branch and the Group unit in the USA also reported a decrease in net provisioning for impairment losses on loans. The ratio of non-performing loans in the credit portfolio totaled 4.6 per cent at the end of the period under review.
Other results fell year-over-year by € 7 million to € 2 million. This essentially comprised positive markto-market valuations of various corporate bonds in the portfolio. Due to the deconsolidation for materiality of a leasing company, the segment showed a net loss on disposal of group assets of € 1 million.
Income taxes grew by € 8 million year-over-year to € 23 million. The tax rate rose slightly by 2 percentage points to 23 per cent. Profit after deduction of non-controlling interests doubled to € 78 million.
| In € million | 1/1-31/3/2011 | Pro forma 1/1-31/3/2010 |
Change |
|---|---|---|---|
| Net interest income | 50 | 64 | (21.6)% |
| Net fee and commission income | 32 | 26 | 21.7% |
| Net trading income | 70 | 31 | 127.2% |
| Other net operating income | 7 | 4 | 53.5% |
| Operating income | 159 | 125 | 26.8% |
| General administrative expenses | (62) | (63) | (2.1)% |
| Operating result | 97 | 62 | 56.3% |
| Net provisioning for impairment losses | (6) | (7) | (18.3)% |
| Other results | 50 | 25 | 98.5% |
| Profit/loss before tax | 142 | 81 | 76.0% |
| Income taxes | (35) | (19) | 83.5% |
| Profit/loss after tax | 106 | 61 | 73.6% |
| Profit attributable to non-controlling interests | 0 | 0 | 0.8% |
| Profit/loss after deduction of non-controlling | |||
| interests | 106 | 61 | 73.9% |
| Share of profit before tax | 30.9% | 17.4% | 13.5 PP |
| Risk-weighted assets (credit risk)1 | 4,814 | 7,817 | (38.4)% |
| Total own funds requirement1 | 1,037 | 1,314 | (21.1)% |
| Total assets1 | 29,196 | 49,390 | (40.9)% |
| Liabilities1 | 29,701 | 51,333 | (42.1)% |
| Net interest margin | 0.71% | 0.53% | 0.18 PP |
| NPL ratio2 | 1.5% | 2.4% | (0.9) PP |
| Coverage ratio | 88.7% | 88.9% | (0.2) PP |
| Cost/income ratio | 39.0% | 50.5% | (11.5) PP |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.43% | 0.32% | 0.11 PP |
| Average equity | 1,456 | 1,796 | (18.9)% |
| Return on equity before tax | 38.9% | 17.9% | 21.0 PP |
| Business outlets1 | 4 | 3 | 33.3% |
1 Reporting date values as of 31 March
2 Due to the nature of its business the calculation of the Group markets NPL ratio is based on the full exposure.
Profit before tax in the Group markets segment rose during the reporting period by 76 per cent or € 61 million to € 142 million. Increased operating income and growth in other net income were responsible for this strong performance. The segment's return on equity before tax improved significantly by 21.0 percentage points to 38.9 per cent.
Net interest income fell by 22 per cent year-on-year to € 50 million, predominantly due to the reduction in the holding of securities issued by European banks at the Capital markets head office profit center. The so-called high-quality security portfolio, which exclusively comprises securities with the best ratings, contributed stable income of remarkable € 26 million. Despite a significant decrease in business volume, the Financial institutions & sovereigns head office profit center posted only a slight decline in net interest income. This was due to the change in methodology for calculating interests on impaired loans and advances in RBI AG, partly offset by the improved customer margins on assets.
Balance sheet assets in this segment fell by 41 per cent year-on-year to € 29.2 billion. The main reason for this was the reduction of interbank business. Loans and advances to banks at RBI AG fell as a result by 19 per cent to € 33 billion. A further reason for the decrease in balance sheet assets was the reclassification of some of the assets to the Corporate center segment in the course of an internal reorganization measure in 2010 that resulted in the separation of the Treasury's activities from those of the Capital markets division. The net interest margin expanded by 18 basis points to 0.71 per cent. Credit risk-weighted assets in the segment declined by 38 per cent from € 7.8 billion to € 4.8 billion. This decline was also the result of the shift of some of the volumes to the Corporate center segment. In addition, a decline in credit risk-weighted assets was also recorded in the Capital markets head office profit center, caused by the reduction in money market and securities commitments for Financial institutions, predominantly in Spain, Italy and Greece. The Financial institutions & sovereigns head office profit center was generally affected by smaller business volumes during the period under review.
Net fee and commission income was up 22 per cent year-on-year to € 32 million. Year-on-year growth at the head office Capital markets profit center was the result of lower costs of credit default swaps. The head office profit center dealing with interbank business reported an increase in net fee and commission income year-on-year. The Private banking and asset management division (Kathrein) also increased its contribution to net fee and commission income year-on-year to € 2 million from the securities business. The Mergers & acquisitions division also increased its contribution to € 2 million.
Net trading income in the Group markets segment rose by € 39 million in the period under review to € 70 million. The net trading income of Raiffeisen Centrobank rose slightly to € 15 million. This significant contribution comprised the net income from the revaluation gains of the certificates issued within the context of equity and index-linked transactions and structured bonds. At the Capital markets head office profit center, revaluation gains of € 23 million came from propriety trading of fixed-interest securities as well as from structured products. A further € 6 million came from the Financial institutions & sovereigns.
Compared to the last year the other net operating income increased by € 3 million to € 7 million. This consisted primarily of income from the operations of Raiffeisen Centrobank Group, amounting to € 4 million, which was generated predominantly from commodity trading by Group units in the USA and Switzerland. The commodity trading of F.J. Elsner Group contributed a further € 2 million to this figure.
Administrative expenses fell by 2 per cent year-on-year to € 62 million. The segment comprised of four business outlets at the end of the period under review. Thanks to the rise in operating income, the cost/income ratio improved significantly by 11.5 percentage points to 39.0 per cent.
Net provisioning for impairment losses fell by € 1 million to € 6 million and stabilized at a low level. This was limited to the Group head office. Non-performing loans made up 1.5 per cent of the segment's total credit exposure.
Other results during the period under review doubled to € 50 million. Income from financial investments rose due to the revaluation of securities at the Credit investments head office profit center. Results of derivatives at the Capital markets head office profit center also moved into the black.
Income taxes increased by 84 per cent year-on-year to € 35 million. The tax rate in the segment was 25 per cent, up 1 percentage point on the previous year. Profit after deduction of non-controlling interests was € 106 million.
| 1/1-31/3/2011 | Pro forma | Change | |
|---|---|---|---|
| In € million | 1/1-31/3/2010 | ||
| Net interest income | 60 | 46 | 30.6% |
| Net fee and commission income | (12) | (7) | 68.0% |
| Net trading income | (26) | 56 | – |
| Other net operating income | (12) | 22 | – |
| Operating income | 10 | 117 | (91.4)% |
| General administrative expenses | (69) | (48) | 44.6% |
| Operating result | (59) | 69 | – |
| Net provisioning for impairment losses | 0 | (2) | (101.2)% |
| Other results | (26) | 12 | – |
| Profit/loss before tax | (85) | 79 | – |
| Income taxes | 22 | 48 | (54.5)% |
| Profit/loss after tax | (63) | 127 | – |
| Profit attributable to non-controlling interests | (1) | (1) | 20.5% |
| Profit/loss after deduction of non-controlling | |||
| interests | (63) | 126 | – |
| Share of profit before tax | (18.4)% | 17.0% | (35.4) PP |
| Risk-weighted assets (credit risk)1 | 17,724 | 19,875 | (10.8)% |
| Total own funds requirement1 | 1,452 | 1,615 | (10.1)% |
| Total assets1 | 41,809 | 35,833 | 16.7% |
| Liabilities1 | 47,768 | 39,218 | 21.8% |
| Net interest margin | 0.64% | 0.55% | 0.09 PP |
| NPL ratio | – | – | – |
| Coverage ratio | – | – | – |
| Cost/income ratio | >100% | 40.8% | – |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.00% | 0.04% | (0.04) PP |
| Average equity | 1,932 | 2,197 | (12.0)% |
| Return on equity before tax | – | 14.4% | – |
| Business outlets1 | 1 | 1 | – |
1 Reporting date values as of 31 March
In the Corporate center segment, the pre-tax net loss was € 85 million. This year-on-year decrease was primarily due to the sharp decrease in operating income. Return on equity before taxes was negative.
Net interest income rose by 31 per cent to € 60 million, mainly due to a positive trend in interest rates and rather higher intra-group dividend income. Conversely the negative effects of maturities transformation and the costs of € 7 million for RBI AG subordinated capital impacted net interest income. Income from internal financing by the Group head office fell slightly year-on-year.
Assets in this segment rose by 17 per cent year-on-year to € 41.8 billion. However, this change was distorted by one-time effects due to the reorganization described previously in the Group markets report that meant that the Treasury division was shifted from the Group markets segment to the Corporate center segment in 2010. Credit risk-weighted assets declined by 11 per cent from € 19.9 billion to € 17.7 billion.
Net fee and commission income fell by € 5 million year-on-year to minus € 12 million, largely due to commission payments by Group headquarters for country risk insurance policies in connection with financing abroad.
Net trading income showed a turnaround in the period under review from € 56 million to a loss of € 26 million. This decrease was due primarily to the Group head office Treasury department, and resulted from liquidity management and measures for balance sheet structure management in proprietary trading. This drop was primarily linked to valuation losses on various foreign currency and interestrelated financial instruments for hedging.
Other net operating income fell from € 22 million in the previous year to a loss of € 12 million. The decisive factor here were other taxes, primarily affected by the newly introduced special banking levy in Austria, which caused expense of € 23 million in the period under review. Income from intra-group user-pays cost allocation to other segments was also lower. Revenues from the Raiffeisen Service Center in Vienna, which offers services such as payment transfers and securities clearing, again made a positive contribution to this figure.
General administrative expenses were up 45 per cent or € 21 million over the same period to € 69 million. The main reason for this was a change in cost allocation at Group head office during 2010, as a result of which certain costs remained at Corporate center and were no longer allocated to the other segments. The business outlet recognized in this segment is part of the Group headquarters RBI AG in Vienna.
Net provisioning for impairment losses played a minor role due to the intra-group nature of the Corporate center segment.
Other results fell from € 12 million to a loss of € 26 million. Due to revaluation of the securities portfolio, net income from financial investments decreased from € 15 million to a loss of € 13 million. Net loss from derivatives was virtually unchanged at € 12 million, as a result of the revaluation results on hedging transactions for own issues. Due to the deconsolidation for materiality of a holding company, the segment showed a net loss on disposal of group assets of € 1 million.
Income taxes made a positive contribution as in the previous year, amounting to € 22 million in the period under review. This was primarily due to the recognized losses of the segment. Loss after noncontrolling interests totaled € 63 million.
RBI is broken down into the following divisions:
Corporate customers includes business with local and international medium- and large-scale enterprises. The Financial institutions & public sector business division focuses on business with customers from the financial and public sectors. Retail customers includes business with private individual customers as well as with small and medium-sized enterprises (SMEs) with annual revenues up to a maximum of € 5 million. Capital markets & treasury covers Treasury proprietary trading as well as investment banking undertaken only in certain Group units. Participations & other concerns non-bank-specific activities as well as the administration of participations. It also includes other cross-division functions, particularly in the parent company RBI AG.
| 1/1-31/3/2011 | Corporate customers |
Retail customers |
Financial institutions & |
Capital markets & |
Participations & other |
Total |
|---|---|---|---|---|---|---|
| in € million | public sector | treasury | ||||
| Net interest income | 307 | 410 | 74 | 44 | 49 | 884 |
| Net fee and commission | ||||||
| income | 127 | 198 | 40 | 5 | (13) | 357 |
| Net trading income | 5 | 2 | 15 | 97 | 5 | 123 |
| Other net operating income | 0 | (3) | (3) | (11) | (7) | (24) |
| Operating income | 439 | 607 | 125 | 136 | 35 | 1,341 |
| General administrative | ||||||
| expenses | (150) | (440) | (49) | (54) | (61) | (753) |
| Operating result | 289 | 167 | 76 | 81 | (26) | 588 |
| Net provisioning for | ||||||
| impairment losses | (75) | (127) | (7) | 0 | 1 | (208) |
| Other results | 4 | 1 | 18 | 1 | 2 | 25 |
| Profit/loss before tax | 217 | 41 | 88 | 82 | (24) | 405 |
| Risk-weighted assets (credit | ||||||
| risk)1 | 36,786 | 16,103 | 9,687 | 9,593 | 2,819 | 74,987 |
| Total own funds | ||||||
| requirement1 | 3,212 | 1,660 | 852 | 1,589 | 247 | 7,560 |
| Cost/income ratio | 34.2% | 72.5% | 38.9% | 39.9% | – | 56.2% |
| Average equity | 5,134 | 2,480 | 1,244 | 1,198 | 329 | 10,385 |
| Return on equity before tax | 16.9% | 6.7% | 28.2% | 27.4% | – | 15.6% |
1 Reporting date values as of 31 March
| Pro forma 1/1-31/3/2010 |
Corporate customers |
Retail customers |
Financial institutions & public sector |
Capital markets & treasury |
Participations & other |
Total |
|---|---|---|---|---|---|---|
| In € million | ||||||
| Net interest income | 297 | 413 | 76 | 37 | 37 | 859 |
| Net fee and commission | ||||||
| income | 121 | 188 | 41 | 0 | (13) | 337 |
| Net trading income | 2 | 0 | 45 | 77 | 2 | 126 |
| Other net operating income | 10 | 3 | 4 | 2 | (25) | (5) |
| Operating income | 430 | 604 | 166 | 116 | 1 | 1,317 |
| General administrative expenses |
(143) | (407) | (56) | (43) | (51) | (700) |
| Operating result | 287 | 197 | 110 | 72 | (50) | 617 |
| Net provisioning for impairment losses |
(153) | (161) | (9) | 1 | (3) | (325) |
| Other results | 11 | 10 | 16 | 69 | (5) | 100 |
| Profit/loss before tax | 145 | 46 | 117 | 142 | (58) | 392 |
| Risk-weighted assets (credit | ||||||
| risk)1 | 34,055 | 17,357 | 7,116 | 9,933 | 2,506 | 70,967 |
| Total own funds | ||||||
| requirement1 | 2,963 | 1,723 | 662 | 1,620 | 215 | 7,432 |
| Cost/income ratio | 33.2% | 67.4% | 33.8% | 37.3% | – | 53.1% |
| Average equity | 4,584 | 2,177 | 1,004 | 1,193 | 523 | 9,481 |
| Return on equity before tax | 12.7% | 8.5% | 46.5% | 47.6% | – | 16.5% |
1 Reporting date values as of 31 March
During the period under review, the Corporate customers division posted a sharp increase in profit. The profit before tax grew by 50 per cent to € 217 million, due to the reduction in net provisioning for impairment losses and the increase in operating income. A sharp rise in performance was reported in Russia, which doubled net income. Despite continuing modest demand for loans, RBI AG continued to focus on expanding volume and generated substantial growth in net income through improved margins.
Operating income grew, mainly as a result of an increase in net interest income, from € 430 million to € 439 million, an increase of 2 per cent year-on-year. Growth in net interest income totaled 4 per cent as a result of the increase in business volume, primarily with large customers in Russia. There was also a significant increase in net interest income at RBI AG from large customers, due to increased customer margins on assets. Net fee and commission income rose by 5 per cent to € 127 million, with the highest growth in Russia. By contrast, at RBI AG, which made the largest contribution, net fee and commission income declined due to the slightly negative trend in the service business. Other net operating
income declined significantly. While operating leasing made a positive contribution of € 7 million in Croatia and Serbia, the bank levy in Hungary and Austria weighed on results.
General administrative expenses rose by 5 per cent to € 150 million as a result of the increase in staff and IT expenses. The segment's cost/income ratio rose slightly, up 1.0 percentage points at 34.2 per cent.
Other results fell by 66 per cent to € 4 million, with net income from financial investments at RBI AG in particular significantly down on the previous year.
Credit risk-weighted assets increased by 8 per cent year-on-year to € 36.8 billion. The main reasons for this increase were the use of higher default probabilities and rather lower level of collateralization in some cases.
Return on equity before tax in the Corporate customers division rose on the back of growth in profit before tax by 4.3 percentage points to 16.9 per cent.
Profit before tax in the business division Retail customers fell by 10 per cent to € 41 million. This development was attributable to the 21 per cent reduction in net provisioning for impairment losses. During the period under review, the division was generally still marked by the recovery phase after the financial crisis. The expansion of the premium banking unit, which was already completed in the period under review, had involved higher investment in earlier periods, but was already having a slightly positive effect through increased operating income.
Operating income in this division increased by € 2 million year-on-year to € 607 million. Net interest income remained on one level with the previous year at € 410 million, impacted by the change in the method of calculating interest on impaired loans in Ukraine. Net fee and commission income increased by 5 per cent contributing € 198 million to operating income. Russia and Romania delivered the biggest contributions at € 33 million and € 32 million respectively. Other net operating income dropped below the value from the prior year to a loss of € 3 million. While operating leasing made a positive contribution of € 3 million here, the bank levy in Hungary reduced results.
General administrative expenses in the division rose by 8 per cent to € 440 million in the period under review as a result of the expansion of business outlets and infrastructure and salary adjustments in several markets. The cost/income ratio duly increased by 5.1 percentage points to 72.5 per cent.
Net provisioning for impairment losses declined by 21 per cent to € 127 million. The largest net allocations to loan loss provisions (individual) in the period under review were in Hungary, Ukraine and Bulgaria.
Credit risk-weighted assets fell by 7 per cent year-on-year to € 16.1 billion. However, the use for the first time of an internal rating-based approach for the majority of the loans and advances to retail customers in Hungary and Slovakia significantly boosted credit risk-weighted assets.
The continuing recovery in the financial markets led to an increase in activity in the RBI AG issuing business and stronger demand for financial services products. In the lending business, transactions continued to be selective. Even so, profit before tax in the Financial institutions & public sector division fell by 25 per cent to € 88 million. This was due almost entirely to the decline in operating income.
Operating income fell, primarily as a result of lower net trading income, from € 166 million to € 125 million, a drop of 25 per cent year-on-year. Net trading income was predominantly generated at RBI AG and Raiffeisen Centrobank, and fell by € 30 million to € 15 million, while net interest income and net fee and commission income were almost unchanged. Other net operating income fell over the period under review from € 4 million to a loss of € 3 million, impacted by the bank levy in Austria.
General administrative expenses fell by 13 per cent to € 49 million as a result of changes in cost allocation. As a result of the decline in operating income, the cost/income ratio rose by 5.2 percentage points to 38.9 per cent.
Other results rose by € 2 million to € 18 million. This was due to higher income from measuring securities at RBI AG at market value, partly offset by negative revaluations of municipal bonds in Hungary.
In spite of the reduction in commitments, credit risk-weighted assets increased by 36 per cent year-onyear to € 9.7 billion, primarily as a result of rating migrations and higher default probabilities.
Return on equity before tax in the Financial institutions & public sector division fell due to lower profit before tax by 18.3 percentage points to 28.2 per cent.
The Capital markets & treasury division posted a profit before tax of € 82 million, a decrease of 42 per cent year-on-year. This was due almost entirely to other results. By contrast, operating income was positively affected by developments at RBI AG in trading on own account and in new issues to expand the investment portfolios. Bond trading by RBI AG for its customer business also increased, while activity in the interest and foreign currency business declined.
Overall, the division's operating income rose by 17 per cent to € 136 million. Net interest income rose from € 37 million to € 44 million, due to growth in several RBI countries. Net fee and commission income rose to € 5 million as a result of higher contributions by RBI AG. Net trading income resulted to € 97 million. The largest contribution was by Russia, followed by RBI AG. Other net operating income was strongly impacted by the bank levies in Hungary and Austria, and duly fell from € 2 million to a loss of € 11 million.
General administrative expenses rose year-on-year by 25 per cent to € 54 million due to higher IT expenses and salary adjustments. As a result of the increased general administrative expenses, the division's cost/income ratio rose by 2.6 percentage points to 39.9 per cent.
Other results fell year-on-year from € 69 million to € 1 million. After heavy impairments on financial instruments in the previous year, particularly in Romania, Ukraine and RBI AG, net income from financial investments was significantly lower in the first quarter of 2011. Net income from derivatives at RBI AG and several of the Group's banks improved significantly.
Total own funds requirement declined slightly by 2 per cent year-on-year to € 1,589 million.
The division's return on equity before tax fell year-on-year by 20.2 percentage points to 27.4 per cent due to a decline in profit before tax.
The Participations & other division posted a pre-tax net loss of € 24 million. Net interest income was up 35 per cent year-on-year to € 49 million. This includes the imputed results from investment of equity, which decreased primarily because of the lower interest rates in the period under review in Russia, Romania and Hungary.
Net fee and commission income was almost unchanged at minus € 13 million, and comprised mainly the rather lower commission payments of RBI AG for country exposure insurance. Other net operating income was positively influenced over the period under review by results from the non-banking activities of Raiffeisen Centrobank and Raiffeisen Service Center GmbH (RSC).
Participations & other also includes costs from central Group management, which increased over the period under review as a result of the change in cost allocation of RBI AG. According to internal guidelines, these costs remain in this division and are not fully apportioned to other divisions.
The comparable figures for the income statement represent the pro forma figures according to the structure of RBI.
| In € million | Notes | 1/1-31/3/2011 | 1/1-31/3/2010 | Change |
|---|---|---|---|---|
| Interest income | 1,568 | 1,613 | (2.8)% | |
| Current income from associates | 0 | 0 | – | |
| Interest expenses | (684) | (754) | (9.3)% | |
| Net interest income | (2) | 884 | 859 | 3.0% |
| Net provisioning for impairment losses | (3) | (208) | (325) | (35.9)% |
| Net interest income after provisioning | 676 | 534 | 26.7% | |
| Fee and commission income | 428 | 396 | 8.1% | |
| Fee and commission expense | (71) | (59) | 20.1% | |
| Net fee and commission income | (4) | 357 | 337 | 6.0% |
| Net trading income | (5) | 123 | 126 | (2.2)% |
| Net income from derivatives and designated | ||||
| liabilities | (6) | 3 | (45) | – |
| Net income from financial investments | (7) | 25 | 141 | (82.2)% |
| General administrative expenses | (8) | (753) | (700) | 7.6% |
| Other net operating income | (9) | (24) | (5) | 420.5% |
| Net income from disposal of group assets | (3) | 5 | – | |
| Profit before tax | 405 | 392 | 3.3% | |
| Income taxes | (10) | (100) | (33) | 200.2% |
| Profit after tax | 305 | 359 | (14.9)% | |
| Profit attributable to non-controlling interests | (35) | (25) | 40.1% | |
| Consolidated profit | 270 | 334 | (19.1)% |
| Group equity | Non-controlling interests | |||
|---|---|---|---|---|
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 | 1/1-31/3/2011 | 1/1-31/3/2010 |
| Consolidated profit | 270 | 334 | 35 | 25 |
| Exchange differences | (8) | 301 | 11 | 17 |
| Capital hedge | 3 | (8) | 0 | 0 |
| Cash flow hedge | (48) | 53 | 0 | 0 |
| Fair value reserve (available-for-sale financial assets) |
(2) | 3 | 0 | 0 |
| Deferred taxes on income and expenses directly recognized in equity |
12 | 0 | 0 | 0 |
| Other comprehensive income | (43) | 349 | 11 | 17 |
| Total comprehensive income | 227 | 683 | 46 | 42 |
| In € | 1/1-31/3/2011 | 1/1-31/3/2010 | Change |
|---|---|---|---|
| Earnings per share | 1.13 | 1.46 | (0.33) |
Earnings per share are obtained by dividing adjusted consolidated profit less dividend for the participation capital by the average number of common shares outstanding. As of 31 March 2011, the number of common shares oustanding remained unchanged with 194.5 million.
There were no conversion rights or options outstanding, so undiluted earnings per share are equal to diluted earnings per share.
The figures 2010 represent the pro forma figures according to the structure of RBI, whereas the figures of 2009 are the those of Raiffeisen International.
| In € million | Q2/2010 | Q3/2010 | Q4/2010 | Q1/2011 |
|---|---|---|---|---|
| Net interest income | 921 | 927 | 871 | 884 |
| Net provisioning for impairment losses | (283) | (306) | (281) | (208) |
| Net interest income after provisioning | 639 | 621 | 590 | 676 |
| Net fee and commission income | 378 | 373 | 403 | 357 |
| Net trading income | 66 | 66 | 70 | 123 |
| Net income from derivatives and designated liabilities |
(86) | 5 | 43 | 3 |
| Net income from financial investments | (88) | 84 | 1 | 25 |
| General administrative expenses | (725) | (728) | (827) | (753) |
| Other net operating income | 3 | (3) | 11 | (24) |
| Net income from disposal of group assets | 0 | 0 | 0 | (3) |
| Profit before tax | 187 | 418 | 290 | 405 |
| Income taxes | (31) | (80) | 34 | (100) |
| Profit after tax | 157 | 337 | 324 | 305 |
| Profit attributable to non-controlling interests | (18) | (26) | (20) | (35) |
| Consolidated profit | 138 | 311 | 304 | 270 |
| In € million | Q2/2009 | Q3/2009 | Q4/2009 | Q1/2010 |
|---|---|---|---|---|
| Net interest income | 729 | 729 | 712 | 859 |
| Net provisioning for impairment losses | (523) | (397) | (373) | (325) |
| Net interest income after provisioning | 205 | 332 | 339 | 534 |
| Net fee and commission income | 291 | 322 | 317 | 337 |
| Net trading income | 73 | 28 | 40 | 126 |
| Net income from derivatives and designated liabilities |
24 | (14) | 3 | (45) |
| Net income from financial investments | 34 | 12 | (2) | 141 |
| General administrative expenses | (570) | (535) | (592) | (700) |
| Other net operating income | 12 | (13) | (23) | (5) |
| Net income from disposal of group assets | 0 | 0 | 0 | 5 |
| Profit before tax | 70 | 133 | 81 | 392 |
| Income taxes | (15) | (36) | (10) | (33) |
| Profit after tax | 55 | 97 | 71 | 359 |
| Profit attributable to non-controlling interests | (34) | (19) | (15) | (25) |
| Consolidated profit | 22 | 78 | 57 | 334 |
| Assets | Notes | 31/3/2011 | 31/12/2010 | Change |
|---|---|---|---|---|
| In € million | ||||
| Cash reserve | 4,936 | 4,807 | 2.7% | |
| Loans and advances to banks | (12,32) | 29,069 | 21,532 | 35.0% |
| Loans and advances to customers | (13,32) | 77,061 | 75,657 | 1.9% |
| Impairment losses on loans and advances | (14) | (4,782) | (4,756) | 0.5% |
| Trading assets | (15,32) | 7,750 | 8,068 | (3.9)% |
| Derivatives | (16,32) | 1,282 | 1,488 | (13.9)% |
| Financial investments | (17,32) | 19,264 | 19,631 | (1.9)% |
| Investments in associates | (32) | 5 | 5 | 3.3% |
| Intangible fixed assets | (18) | 1,197 | 1,220 | (1.9)% |
| Tangible fixed assets | (19) | 1,430 | 1,454 | (1.6)% |
| Other assets | (20,32) | 2,251 | 2,067 | 8.9% |
| Total assets | 139,463 | 131,173 | 6.3% |
| Equity and liabilities | Notes | 31/3/2011 | 31/12/2010 | Change |
|---|---|---|---|---|
| In € million | ||||
| Deposits from banks | (21,32) | 37,047 | 33,659 | 10.1% |
| Deposits from customers | (22,32) | 60,863 | 57,633 | 5.6% |
| Debt securities issued | (23,32) | 18,946 | 16,555 | 14.4% |
| Provisions for liabilities and charges | (24,32) | 691 | 672 | 2.8% |
| Trading liabilities | (25,32) | 4,852 | 5,742 | (15.5)% |
| Derivatives | (26,32) | 955 | 1,264 | (24.5)% |
| Other liabilities | (27,32) | 1,430 | 1,243 | 15.0% |
| Subordinated capital | (28) | 4,007 | 4,001 | 0.1% |
| Equity | (29) | 10,672 | 10,404 | 2.6% |
| Consolidated equity | 9,297 | 8,251 | 12.7% | |
| Consolidated profit | 270 | 1,087 | (75.2)% | |
| Non-controlling interests | 1,105 | 1,066 | 3.7% | |
| Total equity and liabilities | 139,463 | 131,173 | 6.3% |
| In € million | Subscribed capital |
Participation capital |
Capital reserves |
Retained earnings |
Consoli dated profit |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|---|
| Equity as of 1/1/2010 |
593 | 2,500 | 2,567 | 2,452 | 212 | 1,000 | 9,325 |
| Capital increases | 0 | 0 | 0 | 0 | 0 | 3 | 3 |
| Transferred to retained earnings |
0 | 0 | 0 | 450 | (450) | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | (105) | 0 | 0 | (105) |
| Total comprehensive income |
0 | 0 | 0 | 349 | 334 | 42 | 725 |
| Own shares/share incentive program |
0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other changes | 0 | 0 | 0 | 40 | 0 | (4) | 36 |
| Equity as of 31/3/2010 |
593 | 2,500 | 2,567 | 3,187 | 96 | 1,041 | 9,984 |
| In € million | Subscribed capital |
Participation capital |
Capital reserves |
Retained earnings |
Consoli dated profit |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|---|
| Equity as of 1/1/2011 |
593 | 2,500 | 2,568 | 2,590 | 1,087 | 1,066 | 10,404 |
| Capital increases | 0 | 0 | 0 | 0 | 0 | (2) | (2) |
| Transferred to retained earnings |
0 | 0 | 0 | 1,087 | (1,087) | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | (3) | (3) |
| Total comprehensive income |
0 | 0 | 0 | (43) | 270 | 46 | 273 |
| Own shares/share incentive program |
0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other changes | 0 | 0 | 0 | 1 | 0 | (1) | 0 |
| Equity as of 31/3/2011 |
593 | 2,500 | 2,568 | 3,635 | 270 | 1,105 | 10,672 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Cash and cash equivalents at the end of previous period | 4,807 | 6,093 |
| Effects due to the merger | 0 | 1,914 |
| Net cash from operating activities | (131) | (3,837) |
| Net cash from investing activities | 239 | (531) |
| Net cash from financing activities | 0 | (75) |
| Effect of exchange rate changes | 21 | 91 |
| Cash and cash equivalents at the end of period | 4,936 | 3,655 |
Internal management reporting at RBI is based on the current organizational structure. This is formed in a matrix structure i.e. directors are responsible both for individual countries and specific business activities ("country and functional responsibility" model). Within the Group, a cash generating unit is either a country or a business activity. The RBI management bodies – the Management Board and Supervisory Board – take decisions that determine the resources allocated to each segment in accordance with its financial strength and profitability. Consequently the reporting criteria are an essential component in the decision-making process. The segments are also defined in accordance with IFRS 8. The reconciliation includes the amounts resulting from the elimination of intercompany results and from cross-segment consolidation.
The Group comprises the following segments:
| 1/1-31/3/2011 | Central | Southeastern | Russia | CIS other | Group |
|---|---|---|---|---|---|
| in € million | Europe | Europe | Corporates | ||
| Net interest income | 287 | 221 | 136 | 101 | 97 |
| Net fee and commission income | 119 | 87 | 52 | 43 | 41 |
| Net trading income | 12 | 14 | 32 | 7 | 5 |
| Other net operating income | (5) | 7 | (2) | (1) | 0 |
| Operating income | 413 | 330 | 218 | 149 | 143 |
| General administrative expenses | (236) | (182) | (113) | (85) | (33) |
| Operating result | 176 | 148 | 105 | 64 | 110 |
| Net provisioning for impairment losses | (79) | (60) | (2) | (51) | (11) |
| Other results | (3) | 5 | (9) | 5 | 2 |
| Profit before tax | 95 | 93 | 94 | 19 | 101 |
| Income taxes | (19) | (13) | (24) | (7) | (23) |
| Profit after tax | 76 | 80 | 70 | 11 | 78 |
| Profit attributable to non-controlling interests | (28) | (7) | (1) | (2) | 0 |
| Profit after deduction of non-controlling | |||||
| interests | 48 | 73 | 69 | 9 | 78 |
| Share of profit before tax | 20.7% | 20.2% | 20.6% | 4.1% | 21.9% |
| Risk-weighted assets (credit risk) 1 | 23,151 | 16,269 | 8,834 | 5,532 | 15,664 |
| Total own funds requirement1 | 2,130 | 1,530 | 908 | 540 | 1,275 |
| Total assets1 | 34,393 | 22,247 | 12,464 | 6,864 | 20,602 |
| Liabilities1 | 31,485 | 19,310 | 10,464 | 5,900 | 13,104 |
| Net interest margin | 3.36% | 3.94% | 4.41% | 5.76% | 1.75% |
| NPL ratio | 8.5% | 9.1% | 8.4% | 26.3% | 4.6% |
| Coverage ratio | 57.6% | 63.0% | 98.7% | 72.4% | 67.2% |
| Cost/income ratio | 57.3% | 55.2% | 51.7% | 57.2% | 23.1% |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
1.86% | 2.07% | 0.96% | 4.00% | 0.86% |
| Average equity | 2,900 | 2,121 | 1,234 | 753 | 1,766 |
| Return on equity before tax | 13.1% | 17.5% | 30.6% | 9.9% | 22.8% |
| Business outlets1 | 548 | 1,156 | 196 | 1,019 | 8 |
| 1/1-31/3/2011 | Group markets |
Corporate center |
Reconciliation | Total |
|---|---|---|---|---|
| in € million | ||||
| Net interest income | 50 | 60 | (67) | 884 |
| Net fee and commission income | 32 | (12) | (5) | 357 |
| Net trading income | 70 | (26) | 9 | 123 |
| Other net operating income | 7 | (12) | (18) | (24) |
| Operating income | 159 | 10 | (80) | 1,341 |
| General administrative expenses | (62) | (69) | 27 | (753) |
| Operating result | 97 | (59) | (53) | 588 |
| Net provisioning for impairment losses | (6) | 0 | 0 | (208) |
| Other results | 50 | (26) | 0 | 25 |
| Profit/loss before tax | 142 | (85) | (53) | 405 |
| Income taxes | (35) | 22 | 0 | (100) |
| Profit/loss after tax | 106 | (63) | (53) | 305 |
| Profit attributable to non-controlling interests | 0 | (1) | 5 | (35) |
| Profit after non-controlling interests | 106 | (63) | (49) | 270 |
| Share of profit before tax | 30.9% | (18.4)% | 0.0% | 100.0% |
| Risk-weighted assets (credit risk) 1 | 4,814 | 17,724 | (17,001) | 74,987 |
| Total own funds requirement1 | 1,037 | 1,452 | (1,311) | 7,560 |
| Total assets1 | 29,196 | 41,809 | (28,113) | 139,463 |
| Liabilities1 | 29,701 | 47,768 | (28,941) | 128,791 |
| Net interest margin | 0.71% | 0.64% | – | 2.61% |
| NPL ratio | 1.5% | – | – | 8.6% |
| Coverage ratio | 88.7% | – | – | 68.3% |
| Cost/income ratio | 39.0% | >100% | – | 56.2% |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.43% | 0.00% | – | 1.16% |
| Average equity | 1,456 | 1,932 | (1,777) | 10,385 |
| Return on equity before tax | 38.9% | – | – | 15.6% |
| Business outlets1 | 4 | 1 | 0 | 2,932 |
| 1/1-31/3/2010 | Central Europe |
Southeastern Europe |
Russia | CIS other | Group corporates |
|---|---|---|---|---|---|
| in € million | |||||
| Net interest income | 261 | 222 | 119 | 115 | 82 |
| Net fee and commission income | 107 | 90 | 47 | 37 | 39 |
| Net trading income | 4 | 14 | 34 | 12 | 2 |
| Other net operating income | (3) | 5 | (3) | (2) | 1 |
| Operating income | 369 | 332 | 197 | 162 | 123 |
| General administrative expenses | (216) | (178) | (96) | (78) | (40) |
| Operating result | 154 | 153 | 101 | 84 | 83 |
| Net provisioning for impairment losses | (111) | (69) | (37) | (78) | (21) |
| Other results | 18 | 12 | (6) | 12 | 9 |
| Profit/loss before tax | 60 | 97 | 58 | 17 | 71 |
| Income taxes | (14) | (13) | (14) | (5) | (15) |
| Profit after tax | 46 | 84 | 44 | 12 | 56 |
| Profit attributable to non-controlling interests | (17) | (5) | 0 | (2) | 0 |
| Profit after non-controlling interests | 30 | 79 | 44 | 10 | 56 |
| Share of profit before tax | 13.0% | 21.0% | 12.5% | 3.8% | 15.4% |
| Risk-weighted assets (credit risk) 1 | 21,668 | 16,339 | 7,611 | 5,374 | 14,312 |
| Total own funds requirement1 | 1,985 | 1,522 | 805 | 515 | 1,192 |
| Total assets1 | 33,845 | 23,300 | 12,343 | 6,650 | 21,490 |
| Liabilities1 | 31,069 | 20,496 | 10,535 | 5,711 | 9,700 |
| Net interest margin | 3.09% | 3.79% | 3.97% | 7.10% | 1.50% |
| NPL ratio | 7.6% | 7.0% | 11.8% | 23.0% | 3.1% |
| Coverage ratio | 57.8% | 67.8% | 85.6% | 72.9% | 63.9% |
| Cost/income ratio | 58.4% | 53.7% | 48.7% | 48.3% | 32.3% |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
2.08% | 1.68% | 2.06% | 6.00% | 0.59% |
| Average equity | 2,564 | 1,979 | 988 | 650 | 1,536 |
| Return on equity before tax | 9.4% | 19.7% | 23.4% | 10.8% | 18.6% |
| Business outlets1 | 554 | 1,179 | 210 | 1,034 | 8 |
| 1/1-31/3/2010 | Group markets |
Corporate center |
Reconciliation | Total |
|---|---|---|---|---|
| in € million | ||||
| Net interest income | 64 | 46 | (50) | 859 |
| Net fee and commission income | 26 | (7) | (2) | 337 |
| Net trading income | 31 | 56 | (26) | 126 |
| Other net operating income | 4 | 22 | (30) | (5) |
| Operating income | 125 | 117 | (108) | 1,317 |
| General administrative expenses | (63) | (48) | 19 | (700) |
| Operating result | 62 | 69 | 0 | 617 |
| Net provisioning for impairment losses | (7) | (2) | 0 | (325) |
| Other results | 25 | 12 | 18 | 100 |
| Profit/loss before tax | 81 | 79 | (71) | 392 |
| Income taxes | (19) | 48 | 0 | (33) |
| Profit/loss after tax | 61 | 127 | (71) | 359 |
| Profit attributable to non-controlling interests | 0 | (1) | (1) | (25) |
| Profit/loss after non-controlling interests | 61 | 126 | (72) | 334 |
| Share of profit before tax | 17.4% | 17.0% | 0.0% | 100.0% |
| Risk-weighted assets (credit risk) 1 | 7,817 | 19,875 | (22,030) | 70,967 |
| Total own funds requirement1 | 1,314 | 1,615 | (1,516) | 7,432 |
| Total assets1 | 49,390 | 35,833 | (37,279) | 145,574 |
| Liabilities1 | 51,333 | 39,218 | (32,471) | 135,590 |
| Net interest margin | 0.53% | 0.55% | – | 2.36% |
| NPL ratio | 2.4% | – | – | 7.7% |
| Coverage ratio | 88.9% | – | – | 68.9% |
| Cost/income ratio | 50.5% | 40.8% | – | 53.1% |
| Net provisioning ratio (average risk-weighted assets, credit risk) |
0.32% | 0.04% | – | 1.84% |
| Average equity | 1,796 | 2,197 | (2,227) | 9,481 |
| Return on equity before tax | 17.9% | 14.4% | – | 16.5% |
| Business outlets1 | 3 | 1 | 0 | 2,989 |
The consolidated financial statements of RBI are prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and the international accounting standards adopted by the EU on the basis of IAS Regulation (EC) 1606/2002 including the applicable interpretations of the International Financial Reporting Interpretations Committee (IFRIC/SIC).
The interim report as of 31 March 2011 is prepared in accordance with IAS 34. In the interim reporting, the same recognition and measurement principles (comparison Annual Report 2010, page 150 ff.) and consolidation methods are applied as in the preparation of the consolidated financial statements 2010. Standards and interpretations to be applied in the EU from 1 January 2011 onwards were applied in the interim report.
RBI's interim report for the first quarter 2011 did not undergo a complete audit, nor did it undergo an audit inspection carried out by a certified auditor (framework prime market of the Vienna Stock Exchange). The comparable figures for the income statement represent the pro forma figures according to the structure of RBI.
| Number of units | Fully consolidated | |||
|---|---|---|---|---|
| 31/3/2011 | 31/12/2010 | 31/3/2011 | 31/12/2010 | |
| As of beginning of period | 132 | 135 | 1 | 1 |
| Included in the course of merger | 0 | 38 | 0 | 0 |
| Included for the first time in the financial period | 2 | 6 | 0 | 0 |
| Merged in the financial period | 0 | 0 | 0 | 0 |
| Excluded in the financial period | (4) | (47) | 0 | 0 |
| As of end of period | 130 | 132 | 1 | 1 |
In the reporting period, the following subsidiaries were included in the consolidated group as of 1 January 2011 for the first time: RIRE Holding GmbH, Vienna, a real estate holding company and OOO "R3", Novosibirsk, a real estate management company.
In the reporting period, four subsidiaries were excluded as of 1 January 2011 due to immateriality.
The following table shows the income statement according to IAS 39 measurement categories:
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2011 | 2010 |
| Net income from financial assets and liabilities held-for-trading | 173 | 166 |
| Net income from financial assets and liabilities at fair value through profit | ||
| or loss | 178 | 128 |
| Net income from financial assets available-for-sale | (1) | 2 |
| Net income from loans and advances | 1,092 | 1,005 |
| Net income from financial assets held-to-maturity | 116 | 111 |
| Net income from financial liabilities measured at acquisition cost | (680) | (733) |
| Net income from derivatives (hedging) | (1) | (3) |
| Net revaluations from exchange differences | (49) | 79 |
| Other operating income/expenses | (422) | (363) |
| Total profit before tax from continuing operations | 405 | 392 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Interest and interest-like income, total | 1,568 | 1,613 |
| Interest income | 1,560 | 1,605 |
| from balances at central banks | 13 | 27 |
| from loans and advances to banks | 105 | 120 |
| from loans and advances to customers | 1,126 | 1,143 |
| from financial investments | 186 | 175 |
| from leasing claims | 52 | 58 |
| from derivative financial instruments (non-trading), net | 78 | 82 |
| Current income | 1 | 5 |
| Interest-like income | 7 | 4 |
| Current income from associates | 0 | 0 |
| Interest expenses and interest-like expenses, total | (684) | (754) |
| Interest expenses | (674) | (744) |
| on deposits from central banks | (4) | 0 |
| on deposits from banks | (152) | (186) |
| on deposits from customers | (305) | (347) |
| on debt securities issued | (166) | (161) |
| on subordinated capital | (48) | (50) |
| Interest-like expenses | (10) | (11) |
| Total | 884 | 859 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Individual loan loss provisions | (217) | (259) |
| Allocation to provisions for impairment losses | (387) | (447) |
| Release of provisions for impairment losses | 187 | 198 |
| Direct write-downs | (26) | (17) |
| Income received on written-down claims | 9 | 7 |
| Portfolio-based loan loss provisions | 6 | (66) |
| Allocation to provisions for impairment losses | (133) | (190) |
| Release of provisions for impairment losses | 139 | 124 |
| Gains from loan termination or sale | 2 | 0 |
| Total | (208) | (325) |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Payment transfer business | 141 | 133 |
| Loan and guarantee business | 74 | 67 |
| Securities business | 28 | 33 |
| Foreign currency, notes/coins, and precious-metals business | 77 | 72 |
| Management of investment and pension funds | 7 | 6 |
| Sale of own and third party products | 11 | 9 |
| Credit derivatives business | 1 | 2 |
| Other banking services | 20 | 15 |
| Total | 357 | 337 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Interest-based transactions | 49 | 148 |
| Currency-based transactions | 41 | 18 |
| Equity-/index-based transactions | 14 | (19) |
| Credit derivatives business | (6) | 0 |
| Other transactions | 25 | (21) |
| Total | 123 | 126 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Net income from hedge accounting | 0 | (1) |
| Net income from credit derivatives | (15) | 1 |
| Net income from other derivatives | (62) | (52) |
| Net income from liabilities designated at fair value | 80 | 7 |
| Total | 3 | (45) |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Net income from financial investments held-to-maturity | 1 | 2 |
| Net valuations of financial investments held-to-maturity | 1 | 1 |
| Net proceeds from sales of financial investments held-to-maturity | 0 | 1 |
| Net income from equity participations | 4 | (2) |
| Net valuations of equity participations | 0 | (2) |
| Net proceeds from sales of equity participations | 4 | 0 |
| Net income from securities at fair value through profit and loss | 20 | 141 |
| Net valuations of securities at fair value through profit and loss | 8 | 132 |
| Net proceeds from sales of securities at fair value through profit | ||
| and loss | 12 | 9 |
| Total | 25 | 141 |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Staff expenses | (380) | (346) |
| Other administrative expenses | (287) | (279) |
| Depreciation of intangible and tangible fixed assets | (86) | (75) |
| Total | (753) | (700) |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Sales revenues from non-banking activities | 240 | 158 |
| Expenses arising from non-banking activities | (230) | (153) |
| Net income from additional leasing services | 24 | 25 |
| Expenses from additional leasing services | (23) | (24) |
| Rental income from operating lease (vehicles and equipment) | 9 | 9 |
| Rental income from investment property incl. operating lease (real | ||
| estate) | 5 | 2 |
| Net proceeds from disposal of tangible and intangible fixed assets | (2) | (1) |
| Other taxes | (42) | (12) |
| thereof special bank levies | (34) | 0 |
| Net expense from allocation and release of other provisions | (3) | (6) |
| Sundry operating income | 10 | 5 |
| Sundry operating expenses | (12) | (8) |
| Total | (24) | (5) |
| In € million | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Current income taxes | (65) | (60) |
| Austria | (2) | (2) |
| Foreign | (63) | (58) |
| Deferred taxes | (35) | 27 |
| Total | (100) | (33) |
The following table shows the statement of financial position according to IAS 39 measurement categories:
| Assets according to measurement categories | 31/3/2011 | 31/12/2010 |
|---|---|---|
| In € million | ||
| Trading assets | 8,410 | 8,631 |
| Financial assets at fair value through profit or loss | 7,991 | 8,070 |
| Financial assets available-for-sale | 386 | 394 |
| Investments in associates | 5 | 5 |
| Loans and advances | 108,500 | 99,268 |
| Financial assets held-to-maturity | 10,921 | 11,207 |
| Derivatives (hedging) | 622 | 925 |
| Other assets | 2,628 | 2,673 |
| Total assets | 139,463 | 131,173 |
Positive market values of derivatives not designated as hedging instruments according to IAS 39 Hedge Accounting are reported in the measurement category trading assets. The measurement category financial assets available-for-sale comprises other affiliated companies and other equity participations. Loans and advances are reported net after provisioning for impairment losses. Other assets comprise intangible and tangible fixed assets.
| Equity and liabilities according to measurement categories In € million |
31/3/2011 | 31/12/2010 |
|---|---|---|
| Trading liabilities | 5,467 | 6,528 |
| Financial liabilities | 119,627 | 110,535 |
| Liabilities at fair value through profit and loss | 2,666 | 2,557 |
| Derivatives (hedging) | 340 | 477 |
| Provisions for liabilities and charges | 691 | 672 |
| Equity | 10,672 | 10,404 |
| Total equity and liabilities | 139,463 | 131,173 |
Negative market values of derivatives not designated as hedging instruments according to IAS 39 Hedge Accounting are reported in the measurement category trading liabilities.
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Giro and clearing business | 4,056 | 1,517 |
| Money market business | 20,183 | 14,789 |
| Loans to banks | 3,490 | 3,766 |
| Purchased loans | 38 | 34 |
| Leasing claims | 1 | 1 |
| Claims evidenced by paper | 1,301 | 1,425 |
| Total | 29,069 | 21,532 |
Loans and advances to banks include € 5,492 million (31/12/2010: € 1,457 million) from repo transactions.
Loans and advances to banks classified regionally (counterparty's seat) are as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Austria | 11,765 | 10,794 |
| Foreign | 17,304 | 10,738 |
| Total | 29,069 | 21,532 |
Loans and advances to banks break down into the following bank segments:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Central banks | 2,010 | 1,484 |
| Commercial banks | 27,049 | 20,038 |
| Multilateral development banks | 10 | 10 |
| Total | 29,069 | 21,532 |
The maturity of loans and advances to banks break down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Due at call or without maturity | 5,015 | 2,370 |
| Up to 3 months | 18,287 | 14,035 |
| More than 3 months, up to 1 year | 1,975 | 2,005 |
| More than 1 year, up to 5 years | 2,717 | 2,266 |
| More than 5 years | 1,075 | 856 |
| Total | 29,069 | 21,532 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Credit business | 50,278 | 48,764 |
| Money market business | 5,231 | 5,000 |
| Mortgage loans | 16,650 | 16,888 |
| Purchased loans | 1,084 | 1,139 |
| Leasing claims | 3,014 | 3,109 |
| Claims evidenced by paper | 804 | 757 |
| Total | 77,061 | 75,657 |
Loans and advances to customers include € 1,363 million (31/12/2010: € 111 million) from repo transactions.
Loans and advances to customers break down into asset classes according to Basel II definition as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Sovereigns | 1,671 | 1,493 |
| Corporate customers – large | 50,555 | 49,201 |
| Corporate customers – small business | 3,848 | 3,829 |
| Retail customers – private individuals | 18,464 | 18,549 |
| Retail customers – small and medium-sized entities | 2,401 | 2,441 |
| Other | 122 | 144 |
| Total | 77,061 | 75,657 |
Loans and advances to customers classified regionally (counterparty's seat) are as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Austria | 7,592 | 7,914 |
| Foreign | 69,469 | 67,743 |
| Total | 77,061 | 75,657 |
The maturity of loans and advances to customers break down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Due at call or without maturity | 7,616 | 6,844 |
| Up to 3 months | 14,203 | 12,583 |
| More than 3 months, up to 1 year | 13,317 | 13,704 |
| More than 1 year, up to 5 years | 25,789 | 26,393 |
| More than 5 years | 16,136 | 16,133 |
| Total | 77,061 | 75,657 |
Impairment losses on loans and advances are allocated to the following asset classes according to the Basel II definition:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Banks | 252 | 255 |
| Sovereigns | 1 | 1 |
| Corporate customers – large | 2,452 | 2,432 |
| Corporate customers – small business | 398 | 407 |
| Retail customers – private individuals | 1,430 | 1,418 |
| Retail customers – small and medium-sized entities | 249 | 243 |
| Total | 4,782 | 4,756 |
Loans and advances and loan loss provisions according to Basel II asset classes are shown in the following table:
| 31/3/2011 In € million |
Fair value | Carrying amount |
Individually impaired assets |
Individual loan loss provisions |
Portfolio based provisions |
Net carrying amount |
|---|---|---|---|---|---|---|
| Banks | 28,816 | 29,069 | 268 | 234 | 19 | 28,816 |
| Sovereigns | 1,569 | 1,671 | 12 | 1 | 0 | 1,670 |
| Corporate customers – large |
47,566 | 50,677 | 3,644 | 2,046 | 406 | 48,224 |
| Corporate customers – small business |
3,508 | 3,848 | 656 | 369 | 29 | 3,451 |
| Retail customers – private individuals |
17,642 | 18,464 | 1,752 | 1,136 | 294 | 17,034 |
| Retail customers – small and medium sized entities |
2,300 | 2,401 | 317 | 196 | 52 | 2,152 |
| Total | 101,401 | 106,129 | 6,648 | 3,982 | 800 | 101,347 |
| 31/12/2010 In € million |
Fair value | Carrying amount |
Individually impaired assets |
Individual loan loss provisions |
Portfolio based provisions |
Net carrying amount |
|---|---|---|---|---|---|---|
| Banks | 21,270 | 21,532 | 271 | 237 | 18 | 21,277 |
| Sovereigns | 1,405 | 1,493 | 12 | 1 | 0 | 1,492 |
| Corporate customers – large |
46,229 | 49,345 | 3,598 | 2,026 | 406 | 46,913 |
| Corporate customers – small business |
3,469 | 3,829 | 670 | 376 | 32 | 3,421 |
| Retail customers – private individuals |
17,918 | 18,549 | 1,789 | 1,115 | 302 | 17,131 |
| Retail customers – small and medium sized entities |
2,379 | 2,441 | 320 | 193 | 50 | 2,198 |
| Total | 92,670 | 97,189 | 6,661 | 3,947 | 809 | 92,434 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Bonds, notes and other fixed-interest securities | 4,278 | 4,013 |
| Shares and other variable-yield securities | 409 | 430 |
| Positive fair values of derivative financial instruments | 3,048 | 3,625 |
| Call/time deposits from trading purposes | 15 | 0 |
| Total | 7,750 | 8,068 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Positive fair values of derivatives in fair value hedges (IAS 39) | 235 | 361 |
| Positive fair values of derivatives in cash flow hedges (IAS 39) | 387 | 565 |
| Positive fair values of credit derivatives | 28 | 9 |
| Positive fair values of other derivatives | 632 | 553 |
| Total | 1,282 | 1,488 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Bonds, notes and other fixed-interest securities | 18,606 | 18,957 |
| Shares and other variable-yield securities | 272 | 280 |
| Equity participations | 386 | 394 |
| Total | 19,264 | 19,631 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Goodwill | 603 | 614 |
| Software | 474 | 480 |
| Other intangible fixed assets | 120 | 126 |
| Total | 1,197 | 1,220 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Land and buildings used by the Group for own purpose | 553 | 554 |
| Other land and buildings (investment property) | 110 | 113 |
| Office furniture, equipment and other tangible fixed assets | 483 | 507 |
| Leased assets (operating lease) | 284 | 280 |
| Total | 1,430 | 1,454 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Tax assets | 481 | 494 |
| Current tax assets | 52 | 31 |
| Deferred tax assets | 429 | 463 |
| Receivables arising from non-banking activities | 133 | 140 |
| Prepayments and other deferrals | 277 | 263 |
| Clearing claims from securities and payment transfer business | 664 | 356 |
| Lease in progress | 75 | 83 |
| Assets held for sale (IFRS 5) | 9 | 5 |
| Inventories | 173 | 147 |
| Any other business | 439 | 579 |
| Total | 2,251 | 2,067 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Giro and clearing business | 2,977 | 2,326 |
| Money market business | 24,597 | 21,168 |
| Long-term refinancing | 9,473 | 10,165 |
| Total | 37,047 | 33,659 |
Deposits from banks include € 4,001 million (31/12/2010: € 4,977 million) from repo transactions.
Deposits from banks classified regionally (counterparty's seat) break down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Austria | 18,342 | 16,046 |
| Foreign | 18,705 | 17,613 |
| Total | 37,047 | 33,659 |
Deposits from banks break down into the following bank segments:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Central banks | 1,275 | 1,399 |
| Commercial banks | 34,224 | 30,948 |
| Multilateral development banks | 1,548 | 1,311 |
| Total | 37,047 | 33,659 |
The maturity of deposits from banks breaks down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Due at call or without maturity | 2,708 | 2,161 |
| Up to 3 months | 19,752 | 14,809 |
| More than 3 months, up to 1 year | 4,076 | 6,291 |
| More than 1 year, up to 5 years | 8,238 | 7,954 |
| More than 5 years | 2,273 | 2,444 |
| Total | 37,047 | 33,659 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Sight deposits | 24,960 | 23,781 |
| Time deposits | 34,439 | 32,382 |
| Savings deposits | 1,464 | 1,470 |
| Total | 60,863 | 57,633 |
Deposits from customers include € 3,134 million (31/12/2010: € 1,343 million) from repo transactions.
Deposits from customers break down analog to Basel II definition as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Sovereigns | 1,898 | 1,723 |
| Corporate customers – large | 30,045 | 26,924 |
| Corporate customers – small business | 2,279 | 2,489 |
| Retail customers – private individuals | 22,471 | 22,123 |
| Retail customers – small and medium-sized entities | 3,310 | 3,673 |
| Other | 860 | 702 |
| Total | 60,863 | 57,633 |
Deposits from customers classified regionally (counterparty's seat) are as follows:
| Total | 60,863 | 57,633 |
|---|---|---|
| Foreign | 54,660 | 51,914 |
| Austria | 6,203 | 5,719 |
| In € million | 31/3/2011 | 31/12/2010 |
The maturity of deposits from customers breaks down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Due at call or without maturity | 25,225 | 24,396 |
| Up to 3 months | 19,078 | 19,402 |
| More than 3 months, up to 1 year | 11,120 | 8,648 |
| More than 1 year, up to 5 years | 3,330 | 3,116 |
| More than 5 years | 2,110 | 2,071 |
| Total | 60,863 | 57,633 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Bonds and notes issued | 16,644 | 15,917 |
| Money market instruments issued | 1,560 | 0 |
| Other debt securities issued | 742 | 638 |
| Total | 18,946 | 16,555 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Severance payments | 61 | 61 |
| Retirement benefits | 14 | 14 |
| Taxes | 124 | 107 |
| Contingent liabilities and commitments | 125 | 132 |
| Pending legal issues | 108 | 109 |
| Overdue vacation | 51 | 50 |
| Bonus payments | 159 | 148 |
| Restructuring | 5 | 5 |
| Other | 44 | 46 |
| Total | 691 | 672 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Negative fair values of derivative financial instruments | 3,729 | 4,531 |
| Interest-based transactions | 2,430 | 3,019 |
| Currency-based transactions | 590 | 923 |
| Equity-/index-based transactions | 653 | 526 |
| Credit derivatives business | 27 | 44 |
| Other transactions | 28 | 19 |
| Short-selling of trading assets | 379 | 426 |
| Certificates issued | 744 | 785 |
| Total | 4,852 | 5,742 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Negative fair values of derivatives in fair value hedges (IAS 39) | 20 | 24 |
| Negative fair values of derivatives in cash flow hedges (IAS 39) | 320 | 453 |
| Negative fair values of credit derivatives | 11 | 18 |
| Negative fair values of derivative financial instruments | 604 | 769 |
| Total | 955 | 1,264 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Liabilities from non-banking activities | 121 | 114 |
| Accruals and deferred items | 193 | 190 |
| Liabilities from dividends | 2 | 1 |
| Clearing claims from securities and payment transfer business | 662 | 405 |
| Any other business | 453 | 533 |
| Total | 1,430 | 1,243 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Hybrid tier 1 capital | 829 | 819 |
| Subordinated liabilities | 2,570 | 2,576 |
| Supplementary capital | 608 | 606 |
| Total | 4,007 | 4,001 |
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Consolidated equity | 9,297 | 8,251 |
| Subscribed capital | 593 | 593 |
| Participation capital | 2,500 | 2,500 |
| Capital reserves | 2,568 | 2,568 |
| Retained earnings | 3,635 | 2,590 |
| Consolidated profit | 270 | 1,087 |
| Non-controlling interests | 1,105 | 1,066 |
| Total | 10,672 | 10,404 |
The subscribed capital of RBI AG as defined by the articles of incorporation amounted to € 596 million. After deduction of own shares of 972,909, the stated subscribed capital totaled € 593 million.
Active risk management is one of the core areas of expertise of RBI. In order to effectively identify, measure, and manage risks the Group has implemented a comprehensive risk management system in the past and continues to develop it. Risk management constitutes an integrated part of overall bank management. In particular, in addition to legal and regulatory requirements, it takes into account the nature, scale, and complexity of the business activities and the resulting risks. Risk management in RBI controls the exposure to and ensures professional management of all material risks.
The principles and organization of risk management are disclosed in the relevant chapters of the Annual Report 2010.
Credit risk within RBI stems mainly from default risks that arise from business with retail and corporate customers, other banks and sovereign borrowers. Default risk is defined as the risk that a customer will not be able to fulfill contractual financial obligations. Migration risks (caused by deteriorations in customers' creditworthiness), concentration risks of creditors, risks in credit risk mitigation techniques, and country risk are also considered.
Risk management is based on credit exposure. The following table translates items of the statement of financial position (bank and trading book positions) into the maximum credit exposure. It includes exposures on and off the statement of financial position before the application of credit-conversion factors. It is not reduced by the effects of credit risk mitigation such as guarantees and physical collateral, effects that are, however, considered in the internal assessment of credit risks. The maximum credit exposure is used – if not explicitly stated otherwise – for showing exposures in all subsequent charts in the risk report. The main deviation between IFRS-accounting (Group reporting) and Basel II (regular reporting) figures is due to different loan volumes and valuation methods.
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Loans and advances to banks | 29,069 | 21,532 |
| Loans and advances to customers | 77,061 | 75,657 |
| Trading assets | 7,750 | 8,068 |
| Derivatives | 1,282 | 1,488 |
| Financial investments | 18,606 | 19,247 |
| Other assets | 235 | 227 |
| Contingent liabilities | 11,466 | 11,856 |
| Commitments | 12,687 | 11,756 |
| Revocable credit lines | 11,318 | 11,992 |
| Reconciliation | 8,674 | 6,491 |
| Total | 178,147 | 168,314 |
A more detailed credit portfolio analysis is based on individual customer ratings. Rating models in the main non-retail asset classes – corporates, financial institutions, and sovereigns – are uniform in all Group units and rank creditworthiness in ten classes. The default probabilities assigned to individual rating grades are estimated separately for each asset class. In other words, the default probability of the same ordinal rating grade (e.g. financial institutions A3 and sovereigns A3) is not the same for these asset classes.
The internal rating model for corporates takes into account qualitative factors as well as several business and performance figures (e.g. interest cover, EBT margin, EBITDA margin, equity ratio, return on assets, debt amortization period), which are tailored to the various industries and financial reporting standards.
The following table provides a breakdown of the maximum credit exposure according to the internal rating of corporates. The figures shown below refer to the credit exposure, collateral is also taken into account for the overall assessment of credit risk:
| In € million | 31/3/2011 | Share | 31/12/2010 | Share | |
|---|---|---|---|---|---|
| 0.5 | Minimal Risk | 1,146 | 1.4% | 1,171 | 1.4% |
| 1.0 | Excellent credit standing | 7,495 | 9.3% | 7,643 | 9.4% |
| 1.5 | Very good credit standing | 7,790 | 9.6% | 7,729 | 9.6% |
| 2.0 | Good credit standing | 10,105 | 12.5% | 9,960 | 12.3% |
| 2.5 | Sound credit standing | 11,717 | 14.5% | 11,206 | 13.8% |
| 3.0 | Acceptable credit standing | 12,922 | 16.0% | 12,314 | 15.2% |
| 3.5 | Marginal credit standing | 12,988 | 16.1% | 13,183 | 16.3% |
| 4.0 | Weak credit standing/sub-standard | 7,423 | 9.2% | 7,664 | 9.5% |
| 4.5 | Very weak credit standing/doubtful | 3,748 | 4.6% | 4,282 | 5.3% |
| 5.0 | Default | 4,180 | 5.2% | 4,287 | 5.3% |
| NR | Not rated | 1,386 | 1.7% | 1,472 | 1.8% |
| Total | 80,900 | 100.0% | 80,911 | 100.0% |
It should be noticed that the economic rating shown in the table above shows a borrower-specific but not transactionspecific view.
The credit exposure to corporates remained nearly unchanged compared to the year end 2010. Analyzed in terms of internal rating, an improvement of the average portfolio quality can be recorded. The share of the average rating grades up to rating 3.0 on the credit exposure increased by 5 per cent to € 24,640 million. However, in the lower rating grades the share decreased by 4 per cent to € 24,159 million. The share of credit exposure in default (rating 5.0) decreased by 3 per cent. The major part of the credit exposure at default is located in the segments CIS other, Central Europe and Group corporates.
The rating model for project finance has five different grades which consider borrower-specific as well as transactionspecific characteristics. The exposure from project finance is shown in the table below.
| In € million | 31/3/2011 | Share | 31/12/2010 | Share | |
|---|---|---|---|---|---|
| 6.1 Excellent project risk profile – very low risk | 2,497 | 38.6% | 2,460 | 39.7% | |
| 6.2 Good project risk profile – low risk | 2,174 | 33.6% | 2,035 | 32.8% | |
| 6.3 Acceptable project risk profile – average risk | 876 | 13.5% | 912 | 14.7% | |
| 6.4 Poor project risk profile – high risk | 387 | 6.0% | 370 | 6.0% | |
| 6.5 Default | 379 | 5.9% | 365 | 5.9% | |
| NR | Not rated | 154 | 2.4% | 57 | 0.9% |
| Total | 6,467 | 100.0% | 6,199 | 100.0% |
The maximum credit exposure in project finance increased by 4 per cent compared to the year end 2010. The continuous increase of the credit exposure in project finance can be mainly explained by the reclassification of customers, whose credit standing was originally evaluated based on the rating model for corporates. The major part of the change is allotted to Central Europe with € 104 million and Austria with € 48 million. Due to the high level of collateralization in specialized lending transactions the ratings are accordingly good.
Retail customers are subdivided into private individuals and small and medium-sized enterprises (SME). For retail customers a two-fold scoring system is used – consisting of the initial and ad-hoc scoring based on customer data and behavioral scoring based on account data. The table below provides a breakdown of the maximum retail credit exposure:
| In € million | 31/3/2011 | Share | 31/12/2010 | Share |
|---|---|---|---|---|
| Retail – Private individuals | 19,577 | 87.9% | 20,301 | 88.3% |
| Retail – SME | 2,692 | 12.1% | 2,687 | 11.7% |
| Total | 22,269 | 100.0% | 22,989 | 100.0% |
| thereof non-performing loans | 2,330 | 10.5% | 2,399 | 10.4% |
| thereof individual loan loss provision | 1,332 | 6.0% | 1,308 | 5.7% |
| thereof portfolio-based loan loss provision | 347 | 1.6% | 353 | 1.5% |
The total credit exposure of retail customers break down by segments as follows:
| 31/3/2011 | Central Europe |
Southeastern Europe |
Russia | CIS other | Group markets |
|---|---|---|---|---|---|
| In € million | |||||
| Retail – Private individuals | 9,647 | 5,860 | 2,168 | 1,852 | 10 |
| Retail – SME | 1,694 | 801 | 20 | 177 | 0 |
| Total | 11,341 | 6,661 | 2,188 | 2,029 | 10 |
| thereof non-performing loans | 885 | 540 | 218 | 680 | 0 |
| thereof individual loan loss provision |
358 | 330 | 184 | 455 | 0 |
| thereof portfolio-based loan loss provision |
205 | 96 | 10 | 37 | 0 |
| 31/12/2010 In € million |
Central Europe |
Southeastern Europe |
Russia | CIS other | Group markets |
| Retail – Private individuals | 9,794 | 6,293 | 2,093 | 2,062 | 10 |
| Retail – SME | 1,673 | 802 | 20 | 191 | 0 |
| Total | 11,467 | 7,095 | 2,113 | 2,253 | 10 |
| thereof non-performing loans | 919 | 544 | 212 | 718 | 0 |
| thereof individual loan loss provision |
332 | 347 | 178 | 445 | 0 |
| thereof portfolio-based loan loss provision |
199 | 101 | 9 | 45 | 0 |
In the first quarter 2011, the total credit exposure of retail customers decreased by 3 per cent to € 22,269 million, with strong decreases occurring above all in the segment Southeastern Europe and CIS other. While the decrease in CIS other was partly currency-based (the exchange rate for Ukrainian hryvnia and Belarusian rouble decreased in line with the US dollar against the euro) the reduction in Southeastern European countries was due to a more cautious lending policy in this region.
The financial institutions asset class mainly contains exposures to banks and securities firms. The internal rating model for financial institutions is based on a peer-group approach that takes both qualitative and quantitative information into account. The final rating for financial institutions is capped by the country rating of the respective home country.
| In € million | 31/3/2011 | Share | 31/12/2010 | Share | |
|---|---|---|---|---|---|
| A1 | Minimal risk | 222 | 0.5% | 246 | 0.8% |
| A2 | Excellent credit standing | 2,299 | 5.6% | 2,173 | 6.7% |
| A3 | Very good credit standing | 26,168 | 63.2% | 18,251 | 56.4% |
| B1 | Good credit standing | 4,776 | 11.5% | 4,498 | 13.9% |
| B2 | Average credit standing | 4,753 | 11.5% | 3,527 | 10.9% |
| B3 | Mediocre credit standing | 1,163 | 2.8% | 1,603 | 5.0% |
| B4 | Weak credit standing | 644 | 1.6% | 893 | 2.8% |
| B5 | Very weak credit standing | 468 | 1.1% | 474 | 1.5% |
| C | Doubtful/high default risk | 178 | 0.4% | 128 | 0.4% |
| D | Default | 507 | 1.2% | 383 | 1.2% |
| NR | Not rated | 218 | 0.5% | 185 | 0.6% |
| Total | 41,395 | 100.0% | 32.360 | 100.0% |
The following table shows the maximum credit exposure by internal rating for financial institutions (excluding central banks). Collateral (e.g. financial collaterals of securities transactions) and guarantees (e.g. by central government) are taken into account for assessment of credit risk.
Compared to the year end 2010, loans to financial institutions as well as the volume of securities of financial institutions increased by 28 per cent to € 41,395 million, mainly due to the strong expansion of the repo business, which is fully collateralized from a risk point of view. This business is mainly carried out with financial institutions with high credit ratings (rating A3), which led to an increase in the share of this rating grade by 6.8 percentage points to 63.2 per cent of the total volume. The loans with average credit standing (rating B2) increased by 35 per cent compared to year end 2010, caused by an increase in repo business with banks in Germany. The volume of the financial institutions in default increased by € 124 million or 32 per cent compared to year end 2010. The strongest increases were noticed in Iran and Portugal.
Another customer segment is formed by central governments, central banks, and regional municipalities as well as other public sector entities. The table below provides a breakdown of the credit exposure to sovereigns (including central banks) by internal rating:
| In € million | 31/3/2011 | Share | 31/12/2010 | Share | |
|---|---|---|---|---|---|
| A1 | Minimal risk | 9,317 | 34.4% | 8,386 | 32.4% |
| A2 | Excellent credit standing | 628 | 2.3% | 624 | 2.4% |
| A3 | Very good credit standing | 3,926 | 14.5% | 3,927 | 15.2% |
| B1 | Good credit standing | 1,506 | 5.6% | 1,640 | 6.3% |
| B2 | Average credit standing | 1,060 | 3.9% | 1,399 | 5.4% |
| B3 | Mediocre credit standing | 6,510 | 24.0% | 5,951 | 23.0% |
| B4 | Weak credit standing | 2,182 | 8.0% | 2,097 | 8.1% |
| B5 | Very weak credit standing | 1,769 | 6.5% | 1,692 | 6.5% |
| C | Doubtful/high default risk | 0 | 0.0% | 0 | 0.0% |
| D | Default | 58 | 0.2% | 60 | 0.2% |
| NR | Not rated | 159 | 0.6% | 79 | 0.3% |
| Total | 27,116 | 100.0% | 25,855 | 100.0% |
The volume of the credit exposure to sovereigns was € 27,116 million as of 31 March 2011, 5 per cent above the level at year end 2010. The share of credit exposure with highest rating grade (rating A1) increased by 11 per cent due to higher deposits with the Austrian national bank. The credit exposure with average credit standing (rating B2) decreased by nearly one quarter compared to the year end 2010, primarily caused by a reduction of the volume of Russian state bonds. On the other hand, credit exposure with mediocre credit standing (rating B3) increased because of higher volumes of Hungarian state bonds.
The following table shows the loans included in the statement of financial position under the items loans and advances to banks and loans and advances to customers (excluding items off-balance sheet items) and the corresponding share of non-performing loans, collateral provided, and loan loss provisions defined by seat of Group units:
| 31/3/2011 | Central | Southeastern | Russia | CIS other | Group | Group |
|---|---|---|---|---|---|---|
| In € million | Europe | Europe | corporates | markets | ||
| Corporate customers | ||||||
| Non-performing loans | 1,335 | 837 | 440 | 660 | 809 | 207 |
| of which collateralized | 598 | 454 | 136 | 197 | 171 | 0 |
| Impairment losses on loans and advances |
721 | 466 | 439 | 492 | 543 | 183 |
| Loans | 15,022 | 7,310 | 5,677 | 3,188 | 17,588 | 2,396 |
| NPL ratio | 8.9% | 11.5% | 7.8% | 20.7% | 4.6% | 8.6% |
| Coverage ratio | 54.0% | 55.7% | 99.8% | 74.6% | 67.1% | 88.7% |
| Retail customers | ||||||
| Non-performing loans | 885 | 540 | 218 | 680 | 6 | 0 |
| of which collateralized | 436 | 158 | 55 | 371 | 1 | 0 |
| Impairment losses on loans and advances |
562 | 426 | 194 | 491 | 4 | 0 |
| Loans | 10,168 | 6,674 | 2,012 | 1,910 | 0 | 45 |
| NPL ratio | 8.7% | 8.1% | 10.8% | 35.6% | – | 0.3% |
| Coverage ratio | 63.5% | 78.9% | 89.3% | 72.2% | 76.1% | 99.2% |
| Sovereigns | ||||||
| Non-performing loans | 12 | 0 | 0 | 0 | 0 | 0 |
| of which collateralized | 0 | 0 | 0 | 0 | 0 | 0 |
| Impairment losses on loans and advances |
1 | 0 | 0 | 0 | 0 | 0 |
| Loans | 276 | 838 | 45 | 0 | 0 | 0 |
| NPL ratio | 4.2% | – | – | – | – | – |
| Coverage ratio | 6.4% | – | – | – | – | – |
| Banks | ||||||
| Non-performing loans | 3 | 0 | 1 | 0 | 1 | 398 |
| of which collateralized | 0 | 0 | 0 | 0 | 0 | 112 |
| Impairment losses on loans and advances |
2 | 0 | 1 | 0 | 1 | 253 |
| Loans | 1,287 | 2,287 | 2,834 | 764 | 1,384 | 22,593 |
| NPL ratio | 0.2% | – | – | – | 0.1% | 1.8% |
| Coverage ratio | 83.3% | 128.6% | 83.5% | 100.0% | 132.2% | 63.4% |
The division corporate customers shows a decrease in non-performing loans of 2 per cent or € 94 million to € 4,288 million. The Group corporates and CIS other segments were considerably affected, each with a reduction of 7 per cent. However, the segment Southeastern Europe recorded an increase of 7 per cent. The impairment losses on loans and advances remained nearly unchanged with € 2,845 million which resulted in a coverage ratio of 66 per cent.
In the retail division, non-performing loans decreased by 3 per cent to € 2,329 million. The major part of the decrease was in the CIS other segment with 5 per cent and the Central Europe segment with 3 per cent. The ratio of nonperforming loans to credit exposure decreased by 26 basis points to 11.2 per cent. The total loan loss provision for retail customers rose slightly to € 1,679 million, resulting in a coverage increase of 2.8 percentage points to 72.0 per cent.
The financial institutions segment recorded an increase of non-performing loans of 51 per cent or € 135 million to € 403 million, for which impairment losses on loans and advances of € 257 million were allocated.
The following tables shows the comparable figures as of year end 2010:
| 31/12/2010 | Central Europe |
Southeastern Europe |
Russia | CIS other | Group corporates |
Group markets |
|---|---|---|---|---|---|---|
| In € million | ||||||
| Corporate customers | ||||||
| Non-performing loans | 1,357 | 785 | 450 | 710 | 873 | 206 |
| of which collateralized | 496 | 443 | 128 | 233 | 239 | 0 |
| Impairment losses on loans and advances |
687 | 459 | 443 | 503 | 563 | 183 |
| Loans | 14,762 | 7,305 | 5,620 | 3,248 | 20,157 | 3,584 |
| NPL ratio | 9.2% | 10.8% | 8.0% | 21.8% | 4.3% | 5.8% |
| Coverage ratio | 50.7% | 58.4% | 98.4% | 70.9% | 64.5% | 88.8% |
| Retail customers | ||||||
| Non-performing loans | 917 | 544 | 218 | 718 | 0 | 0 |
| of which collateralized | 423 | 166 | 62 | 406 | 0 | 0 |
| Impairment losses on loans and advances |
530 | 448 | 187 | 490 | 6 | 0 |
| Loans | 10,159 | 6,714 | 1,943 | 2,058 | 2 | 42 |
| NPL ratio | 9.0% | 8.1% | 11.2% | 34.9% | – | – |
| Coverage ratio | 57.9% | 82.3% | 85.7% | 68.3% | – | – |
| Sovereigns | ||||||
| Non-performing loans | 12 | 0 | 0 | 0 | 0 | 0 |
| of which collateralized | 0 | 0 | 0 | 0 | 0 | 0 |
| Impairment losses on loans and advances |
1 | 0 | 0 | 0 | 0 | 0 |
| Loans | 296 | 762 | 38 | 0 | 0 | 0 |
| NPL ratio | 4.0% | – | 0.5% | – | – | – |
| Coverage ratio | 8.0% | – | 20.9% | – | – | – |
| Banks | ||||||
| Non-performing loans | 3 | 0 | 1 | 0 | 1 | 263 |
| of which collateralized | 0 | 0 | 0 | 0 | 0 | 0 |
| Impairment losses on | ||||||
| loans and advances | 2 | 0 | 0 | 0 | 1 | 251 |
| Loans | 1,387 | 2,587 | 1,821 | 861 | 2,597 | 14,125 |
| NPL ratio | 0.2% | – | 0.1% | – | – | 1.9% |
| Coverage ratio | 82.5% | – | 35.8% | 100.0% | 73.9% | 95.7% |
In € million As of 1/1/ 2011 Change in consolidated group Allocation1 Release Usage 2 Exchange differences As of 31/3/ 2011 Individual loan loss provisions 4,000 (1) 403 (187) (129) (59) 4,028 Central Europe 980 0 184 (113) (35) 11 1,026 Southeastern Europe 723 0 120 (40) (72) (6) 725 Russia 536 0 25 (30) (2) 7 535 CIS other 859 0 61 (4) (7) (49) 860 Group corporates 665 (1) 9 0 (10) (17) 646 Group markets 238 0 5 0 (3) (5) 235 Corporate center 0 0 0 0 0 0 0 Portfolio-based loan loss provisions 888 0 133 (139) 0 (2) 880 Central Europe 286 0 79 (71) 0 4 298 Southeastern Europe 206 0 14 (32) 0 2 189 Russia 135 0 26 (19) 0 2 144 CIS other 143 0 9 (16) 0 (8) 129 Group corporates 100 0 5 (1) 0 (1) 102 Group markets 18 0 0 0 0 0 18 Corporate center 0 0 0 0 0 0 0 Total 4,888 (1) 537 (326) (129) (60) 4,908
The following table summarizes the development of impairment losses on loans and advances and off-balance sheet transactions during the reporting period by segments:
Allocation including direct write-downs and income on written down claims.
2 Usage including direct write-downs and income on written down claims.
The credit portfolio of RBI is well diversified in terms of geographical region and industry. Single name concentrations are also actively managed (based on the concept of groups of connected customers) by limits and regular reporting. As a consequence portfolio granularity is high. The regional breakdown of the maximum credit exposure reflects the broad diversification in European markets. The following table shows the regional distribution of the maximum credit exposure by the borrower's home country. The changes in the reporting period are mainly caused by the enlargement of business with financial institutions in Germany.
| In € million | 31/3/2011 | Share | 31/12/2010 | Share |
|---|---|---|---|---|
| Austria | 41,239 | 26.3% | 39,319 | 26.6% |
| Russia | 14,473 | 8.1% | 14,453 | 8.6% |
| Slovakia | 11,296 | 6.3% | 8,611 | 5.1% |
| Czech Republic | 10,552 | 5.9% | 10,032 | 6.0% |
| Hungary | 10,177 | 4.2% | 9,938 | 5.9% |
| Germany | 9,785 | 5.5% | 5,708 | 3.4% |
| Far East | 8,209 | 1.4% | 7,722 | 1.3% |
| Poland | 8,052 | 4.5% | 8,232 | 4.9% |
| Romania | 7,754 | 4.4% | 8,047 | 4.8% |
| Croatia | 6,465 | 3.6% | 6,190 | 3.7% |
| Ukraine | 5,780 | 3.2% | 6,156 | 3.7% |
| Great Britain | 5,232 | 2.9% | 4,000 | 2.4% |
| USA | 4,187 | 2.4% | 4,369 | 2.6% |
| Bulgaria | 3,911 | 2.2% | 3,959 | 2.4% |
| Serbia | 2,546 | 1.4% | 2,557 | 1.5% |
| Other | 28,489 | 17.5% | 29,023 | 17.3% |
| Total | 178,147 | 100.0% | 168,314 | 100.0% |
Risk policies and credit assessments in RBI take into account the industry class of customers as well. The credit industry represents the largest industry class, which is mostly attributed to exposure against members of the Austrian Raiffeisen Sector (central liquidity balancing function). The second largest industry class is private households, primarily retail customers in Central and Eastern European countries. The following table shows the maximum credit exposure by industry classification:
| In € million | 31/3/2011 | Share | 31/12/2010 | Share |
|---|---|---|---|---|
| Banking and insurance | 59,963 | 33.7% | 48,146 | 28.6% |
| Private households | 20,578 | 11.6% | 22,554 | 13.4% |
| Public administration and defence and social insurance institutions |
15,591 | 8.8% | 16,182 | 9.6% |
| Wholesale trade and commission trade (except car trading) |
14,567 | 8.2% | 15,217 | 9.0% |
| Real estate activities | 11,941 | 6.7% | 12,347 | 7.3% |
| Other business activities | 7,362 | 4.1% | 6,709 | 4.0% |
| Construction | 5,060 | 2.8% | 4,950 | 2.9% |
| Retail trade and repair of consumer goods | 4,170 | 2.3% | 4,087 | 2.4% |
| Electricity, gas, steam and hot water supply | 3,633 | 2.0% | 3,516 | 2.1% |
| Manufacture of food products and beverages | 3,012 | 1.7% | 2,987 | 1.8% |
| Manufacture of basic metals | 2,673 | 1.5% | 2,939 | 1.7% |
| Other manufacturing | 11,851 | 6.7% | 11,900 | 7.1% |
| Land transport, transport via pipelines | 2,326 | 1.3% | 2,231 | 1.3% |
| Other transport | 2,411 | 1.4% | 2,606 | 1.5% |
| Manufacture of machinery and equipment | 1,709 | 1.0% | 1,730 | 1.0% |
| Mining and quarrying | 1,480 | 0.8% | 1,277 | 0.8% |
| Sale of motor vehicles | 1,777 | 1.0% | 1,796 | 1.1% |
| Other industries | 8,043 | 4.5% | 7,138 | 4.2% |
| Total | 178,147 | 100.0% | 168,314 | 100.0% |
RBI developed a new market risk management system in 2008 based on an internal model. VaR is measured based on a hybrid simulation approach (mixture of a historical and Monte Carlo simulation where 5000 scenarios are calculated). The Austrian financial market authority and the Austrian national bank have approved this model such that it can be used for calculating own funds requirement for market risk.
The following table shows risk figures (VaR 99 per cent, 10d) for individual market risk categories of the trading and banking book in the first quarter 2011:
| Trading book VaR 99% 10d In € million |
VaR as of 31/3/2011 |
Average VaR | Minimum VaR |
Maximum VaR |
VaR as of 31/12/2010 |
|---|---|---|---|---|---|
| Currency risk | 5 | 6 | 4 | 9 | 8 |
| Interest rate risk | 5 | 6 | 4 | 10 | 7 |
| Credit spread risk | 2 | 2 | 2 | 5 | 2 |
| Share price risk | 2 | 2 | 1 | 2 | 1 |
| Total | 11 | 12 | 9 | 18 | 13 |
| Banking book VaR 99% 10d In € million |
VaR as of 31/3/2011 |
Average VaR | Minimum VaR |
Maximum VaR |
VaR as of 31/12/2010 |
|---|---|---|---|---|---|
| Interest rate risk | 32 | 50 | 31 | 87 | 70 |
| Credit spread risk | 28 | 27 | 20 | 39 | 30 |
| Total | 35 | 51 | 35 | 80 | 66 |
The following table shows total risk figures for individual market risk categories in the first quarter 2011. The VaR is dominated by the exchange rate risk out of equity positions held in foreign currencies, structural interest rate risks and credit spread risks of bonds, which are held as a liquidity buffer.
| Total VaR 99% 10d In € million |
VaR as of 31/3/2010 |
Average VaR | Minimum VaR |
Maximum VaR |
VaR1 as of 31/12/2010 |
|---|---|---|---|---|---|
| Currency risk1 | 41 | 51 | 40 | 64 | 53 |
| Interest rate risk | 56 | 51 | 31 | 91 | 70 |
| Credit spread risk | 29 | 28 | 22 | 41 | 31 |
| Share price risk | 2 | 2 | 1 | 2 | 1 |
| Total | 58 | 74 | 58 | 104 | 87 |
Exchange rate risk on total bank level also includes equity positions of subsidiaries denominated in foreign currency. The structural exchange rate risk resulting from equity positions is managed independently from the mainly short-term trading positions.
The following table shows excess liquidity and the ratio of expected cash inflows plus counterbalancing capacity to cash outflows (liquidity ratio) for select maturities on a cumulative basis, taking into account balance sheet items and offbalance-sheet transactions. Based on expert opinions, statistical analyses and country specifics, this calculation also incorporates estimates on the prolongation of defined assets, the so-called sediment of customer deposits, and the liquidity counterbalancing capacity (in particular, assets that are eligible for refinancing at central banks and that can be used as collateral in repo transactions).
| In € million | 31/3/2011 | 31/12/2010 | |||||
|---|---|---|---|---|---|---|---|
| Maturity | 1 week | 1 month | 1 year | 1 week | 1 month | 1 year | |
| Liquidity gap | 21,639 | 19,786 | 6,190 | 15,997 | 13,133 | 5,994 | |
| Liquidity ratio | 187% | 139% | 105% | 172% | 126% | 105% |
Internal limits have been established in each Group unit in order to limit liquidity risk. They require a positive short-term liquidity gap based on the internal liquidity model. For medium and long-term maturities limits have been established as well, which reduces the effect of a possible increase in refinancing cost on the result of RBI.
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Contingent liabilities | 11,466 | 11,856 |
| Commitments (irrevocable credit lines) | 11,318 | 11,992 |
Moreover, revocable credit lines were granted to an amount of € 12,687 million (31/12/2010: € 11,756 million) which currently bear no credit risk.
Transactions with related parties are limited to banking business transactions which are carried out at fair market conditions. Moreover, members of the Managing Board hold shares of RBI AG. This information is published on the homepage of Raiffeisen Bank International. Further business transactions, especially large banking business transactions with related parties were not concluded in the reporting period.
The following tables show transactions with related companies. Parent companies are Raiffeisen-Landesbanken-Holding GmbH, Vienna and Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna.
| 31/3/2011 In € million |
Parent companies |
Affiliated companies |
Companies valued at equity |
Other interests |
|---|---|---|---|---|
| Loans and advances to banks | 9,896 | 251 | 250 | 96 |
| Loans and advances to customers | 0 | 1,156 | 414 | 343 |
| Trading assets | 0 | 13 | 18 | 8 |
| Financial investments | 0 | 238 | 2 | 339 |
| Investments in associates | 0 | 0 | 5 | 0 |
| Other assets including derivatives | 0 | 7 | 0 | 0 |
| Deposits from banks | 9,712 | 0 | 6,470 | 89 |
| Deposits from customers | 1 | 396 | 1 | 9 |
| Debt securities issued | 0 | 1 | 0 | 0 |
| Provisions for liabilities and charges | 0 | 0 | 0 | 0 |
| Trading liabilities | 0 | 18 | 26 | 3 |
| Other liabilities including derivatives | 1 | 43 | 0 | 0 |
| Guarantees given | 0 | 72 | 263 | 21 |
| Guarantees received | 0 | 403 | 148 | 2 |
| 31/12/2010 In € million |
Parent companies |
Affiliated companies |
Companies valued at equity |
Other interests |
|---|---|---|---|---|
| Loans and advances to banks | 7,892 | 224 | 274 | 244 |
| Loans and advances to customers | 0 | 1,113 | 437 | 354 |
| Trading assets | 0 | 17 | 20 | 19 |
| Financial investments | 0 | 234 | 2 | 352 |
| Investments in associates | 0 | 0 | 5 | 0 |
| Other assets including derivatives | 5 | 19 | 0 | 0 |
| Deposits from banks | 7,151 | 3 | 6,908 | 115 |
| Deposits from customers | 1 | 527 | 2 | 112 |
| Debt securities issued | 0 | 1 | 0 | 0 |
| Provisions for liabilities and charges | 0 | 0 | 0 | 0 |
| Trading liabilities | 0 | 23 | 26 | 18 |
| Other liabilities including derivatives | 0 | 57 | 0 | 0 |
| Guarantees given | 0 | 74 | 264 | 5 |
| Guarantees received | 0 | 389 | 143 | 1 |
RBI does not form a credit institution group on its own according to the Austrian Banking Act (BWG) and is thus not subject to regulatory provisions on a consolidated basis as it is part of the RZB credit institution group. The following figures are for information purposes only.
The own funds of RBI according to Austrian Banking Act (BWG) 1993/Amendment 2006 (Basel II) break down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Paid-in capital | 4,914 | 4,914 |
| Earned capital | 2,897 | 2,958 |
| Non-controlling interests | 1,090 | 1,003 |
| Hybrid tier 1 capital | 800 | 800 |
| Intangible fixed assets | (465) | (469) |
| Core capital (tier 1 capital) | 9,236 | 9,206 |
| Deductions from core capital | (26) | (15) |
| Eligible core capital (after deductions) | 9,210 | 9,191 |
| Supplementary capital according to Section 23 (1) 5 BWG | 600 | 600 |
| Provision excess of internal rating approach positions | 229 | 231 |
| Hidden reserves | 55 | 55 |
| Long-term subordinated capital | 2,426 | 2,480 |
| Additional own funds (tier 2 capital) | 3,310 | 3,366 |
| Deduction items: participations, securitizations | (27) | (15) |
| Eligible additional own funds (after deductions) | 3,283 | 3,351 |
| Deduction items: insurance companies | (4) | (4) |
| Tier 2 capital available to be redesignated as tier 3 capital | 85 | 69 |
| Total own funds | 12,574 | 12,608 |
| Total own funds requirement | 7,560 | 7,585 |
| Excess own funds | 5,014 | 5,023 |
| Excess cover ratio | 66.3% | 66.2% |
| Core tier 1 ratio, total | 8.9% | 8.9% |
| Tier 1 ratio, credit risk | 12.3% | 12.2% |
| Tier 1 ratio, total | 9.7% | 9.7% |
| Own funds ratio | 13.3% | 13.3% |
The total own funds requirement is composed as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Risk-weighted assets according to section 22 BWG | 74,987 | 75,601 |
| of which 8 per cent minimum own funds for the credit risk | ||
| according to Sections 22a to 22h BWG | 5,999 | 6,048 |
| Standardized approach | 2,944 | 2,974 |
| Internal rating approach | 3,055 | 3,074 |
| Own funds requirement for position risk in bonds, equities and | ||
| commodities | 332 | 327 |
| Own funds requirement for open currency positions | 405 | 386 |
| Own funds requirement for operational risk | 823 | 824 |
| Total own funds requirement | 7,560 | 7,585 |
Risk-weighted assets for the credit risk according to asset classes break down as follows:
| In € million | 31/3/2011 | 31/12/2010 |
|---|---|---|
| Risk-weighted assets on standardized approach | 36,803 | 37,175 |
| Central governments and central banks | 3,658 | 3,712 |
| Regional governments | 112 | 95 |
| Public administration and non-profit organizations | 29 | 42 |
| Banks | 957 | 1,013 |
| Corporates | 18,775 | 18,800 |
| Retail (including small and medium-sized entities) | 10,179 | 10,089 |
| Mutual funds | 130 | 125 |
| Securitization position | 20 | 18 |
| Other positions | 2,945 | 3,282 |
| Risk-weighted assets on internal rating approach | 38,184 | 38,426 |
| Central governments and central banks | 958 | 879 |
| Banks | 4,862 | 5,048 |
| Corporates | 29,548 | 29,586 |
| Retail (including small and medium-sized entities) | 2,393 | 2,465 |
| Equity exposures | 284 | 314 |
| Securitization position | 139 | 135 |
| Total | 74,987 | 75,601 |
The average number of staff employed during the reporting period (full-time equivalents) breaks down as follows:
| Full-time equivalents | 1/1-31/3/2011 | 1/1-31/3/2010 |
|---|---|---|
| Salaried employees | 58,856 | 57,900 |
| Wage earners | 986 | 1,086 |
| Total | 59,842 | 58,986 |
| Full-time equivalents | 1/1-31/3/2011 | 1/1-31/3/2010 |
| Austria | 2,673 | 2,670 |
| Foreign | 57,169 | 56,316 |
| Total | 59,842 | 58,986 |
Publisher: Raiffeisen Bank International AG, Am Stadtpark 9, 1030 Vienna, Austria Editorial Team: Group Investor Relations Copy deadline: 23 May 2011 Produced in Vienna Internet: www.rbinternational.com This report is also available in German.
Group Investor Relations inquiries: Public Relations inquiries: E-mail: [email protected] E-mail: [email protected] Internet: www.rbinternational.com Investor Relations Internet: www.rbinternational.com Public Relations Phone: +43-1-71707 2089 Phone: +43-1-71707 2828
The forecasts, plans, and statements addressing the future in this report are based on the knowledge and estimates of Raiffeisen Bank International AG at the time at which they are prepared. Like all statements addressing the future, they are subject to risks and uncertainty factors that may ultimately lead to considerable divergences. No guarantees can therefore be given that the forecasts and targeted values or the statements addressing the future will actually materialize.
This report is for information purposes only and contains neither a recommendation to buy or sell nor an offer of sale or subscription to shares nor does it constitute an invitation to make an offer to sell shares.
We have exercised the utmost diligence in preparing this report and have checked the data contained therein. However, rounding, transmission, and printing errors cannot be ruled out. The present English version is a translation of the report that the company originally prepared in the German language. The company only recognizes the German version as the authentic version. We are not liable for any losses or similar damages that may occur as a result of or in connection with the use of this report.
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