Quarterly Report • May 30, 2010
Quarterly Report
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| Raiffeisen International Group Monetary values in € million |
2010 | Change | 2009 |
|---|---|---|---|
| Income statement | 1/1-31/3 | 1/1-31/3 | |
| Net interest income | 690 | (10.1)% | 767 |
| Provisioning for impairment losses | (295) | (33.8)% | (445) |
| Net fee and commission income | 282 | (3.9)% | 294 |
| Net trading income | 58 | 26.4% | 46 |
| General administrative expenses | (585) | 1.9% | (574) |
| Profit before tax | 166 | 98.8% | 84 |
| Profit after tax | 124 | 94.7% | 64 |
| Consolidated profit (after minorities) | 100 | 77.8% | 56 |
| Statement of financial position | 31/3 | 31/12 | |
| Loans and advances to banks | 9,723 | (5.7)% | 10,310 |
| Loans and advances to customers | 51,230 | 1.4% | 50,515 |
| Deposits from banks | 20,132 | 0.1% | 20,110 |
| Deposits from customers | 42,553 | (0.1)% | 42,578 |
| Equity (including minorities and profit) | 7,367 | 5.2% | 7,000 |
| Total assets | 77,190 | 1.2% | 76,275 |
| Key ratios | 1/1-31/3 | 1/1-31/3 | |
| Return on equity before tax | 9.6% | 4.3 PP | 5.3% |
| Return on equity after tax | 7.1% | 3.0 PP | 4.1% |
| Consolidated return on equity (after minorities) | 6.7% | 2.5 PP | 4.2% |
| Cost/income ratio | 57.7% | 6.0 PP | 51.7% |
| Return on equity before tax | 0.87% | 0.47 PP | 0.40% |
| Net provisioning ratio (average risk-weighted assets, credit risk) | 2.24% | (0.77) PP | 3.01% |
| Bank-specific information1 | 31/3 | 31/12 | |
| Risk-weighted assets (credit risk) | 50,584 | 1.0% | 50,090 |
| Total own funds | 8,533 | 2.5% | 8,328 |
| Total own funds requirement | 5,150 | (0.6)% | 5,117 |
| Excess cover ratio | 65.7% | 2.9 PP | 62.8% |
| Core capital ratio (tier 1), credit risk | 14.3% | 0.2 PP | 14.1% |
| Core capital ratio (tier 1), total | 11.2% | 0.2 PP | 11.0% |
| Core tier 1 ratio (excl. hybrid capital), total | 9.4% | 0.2 PP | 9.2% |
| Own funds ratio | 13.3% | 0.3 PP | 13.0% |
| Stock data | 31/3 | 31/3 | |
| Earnings per share in € 2 | 0.55 | 0.28 | 0.27 |
| Price in € | 35.20 | 66.0% | 21.21 |
| High (closing prices) in € | 42.75 | 71.0% | 25.00 |
| Low (closing prices) in € | 30.52 | 134.8% | 13.00 |
| Number of shares in million | 154.67 | – | 154.67 |
| Market capitalization in € million | 5,444 | 66.0% | 3,280 |
| Resources | 31/3 | 31/12 | |
| Number of employees as of reporting date | 56,072 | (0.8)% | 56,530 |
| Business outlets | 2,977 | (1.4)% | 3,018 |
Calculated according to the Austrian Banking Act (Bankwesengesetz, BWG). Raiffeisen International as part of the RZB-Group is not subject to the Austrian Banking Act.
2 Adjusted for the computational compensation for the participation rights, earnings per share would amount to € 0.65.
| Overview of Raiffeisen International | 3 |
|---|---|
| Raiffeisen International stock | 4 |
| Raiffeisen International and RZB plan merger | 7 |
| Business development | 10 |
| General economic environment | 10 |
| Performance and financials | 11 |
| Detailed review of income statement items | 13 |
| Balance sheet development | 19 |
| Outlook | 25 |
| Segment reports | 26 |
| Regional segments | 26 |
| Business divisions | 40 |
| Consolidated financial statements | 45 |
| Statement of comprehensive income | 45 |
| Profit development | 47 |
| Statement of financial position | 48 |
| Statement of changes in equity | 49 |
| Notes | 53 |
Financial calendar/Publication details/Disclaimer 73
Raiffeisen International is one of the leading banking groups in Central and Eastern Europe. At the end of the reporting period, it comprised 15 banks and many other financial service enterprises in 17 markets. In 5 of those countries, Raiffeisen International network banks were among the top 3 banks, as measured by their balance sheet totals. As of 31 March 2010, Raiffeisen International had over 56,000 employees serving more than 15 million customers at almost 3,000 business outlets.
| Data as of | Total assets | Business | Number of | |
|---|---|---|---|---|
| 31 March 2010 | in € million | Change1 | outlets | staff |
| Albania | 1,891 | 2.7% | 104 | 1,340 |
| Belarus | 1,242 | 1.4% | 96 | 2,158 |
| Bosnia and Herzegovina | 2,326 | 0.0% | 101 | 1,655 |
| Bulgaria | 4,026 | 0.7% | 197 | 3,269 |
| Croatia | 5,870 | (0.5)% | 84 | 2,204 |
| Czech Republic | 7,694 | (0.6)% | 111 | 2,623 |
| Hungary | 8,995 | 2.5% | 144 | 3,164 |
| Kazakhstan | 75 | 1.7% | 1 | 10 |
| Kosovo | 672 | 0.0% | 52 | 680 |
| Poland | 6,408 | 2.7% | 126 | 3,028 |
| Romania (incl. Moldova) | 5,864 | (4.9)% | 542 | 6,039 |
| Russia | 12,343 | 5.7% | 210 | 8,386 |
| Serbia | 2,733 | (1.1)% | 98 | 1,963 |
| Slovakia | 9,131 | (2.1)% | 156 | 3,621 |
| Slovenia | 1,603 | 1.3% | 17 | 368 |
| Ukraine | 5,333 | 7.0% | 938 | 15,176 |
| Subtotal | 76,206 | 1.2% | 2,977 | 55,684 |
| Other/consolidation | 984 | – | – | 388 |
| Total, Raiffeisen International | 77,190 | 1.2% | 2,977 | 56,072 |
1 Change of total assets versus 31 December 2009. Growth in local currencies differs due to fluctuating euro exchange rates.
Raiffeisen International stock has been listed on the Vienna Stock Exchange since 25 April 2005 and is included in some of the most important national and international indices, such as the ATX and the DJ Euro Stoxx. Raiffeisen Zentralbank Österreich AG (RZB) owns about 72.8 per cent of Raiffeisen International shares. With a balance sheet total of € 148 billion as of 31 December 2009, RZB is Austria's third-largest bank and the central institution of the Raiffeisen Banking Group, Austria's largest banking group. The remaining shares are in free float.
After ending the past year on a positive note, international stock markets started 2010 in a comparatively subdued manner. Although some European stock indices still managed to post relatively small gains in the first few trading days, the sentiment quickly turned. Economic indicators below expectations, both from the United States and from Europe, prompted a consolidation. Added to that were market participants' concerns about the solvency of Greece and other Southern European countries and possible negative effects of that on the common European currency.
Since the beginning of March, however, attention has shifted to good corporate data, significant growth of demand worldwide, and continuing low interest rates, and the stock markets have resumed their upward trend. Numerous international stock indices have hit new highs in the ongoing ascent that began about a year ago.
The price of Raiffeisen International stock was very volatile during the first quarter. It developed largely in line with the Austrian Traded Index (ATX) of stocks until mid-February and reached its highest level in the first quarter at € 42.75 on 18 January. However, due to the announcement of deliberations regarding a possible merger between Raiffeisen International and RZB, the stock lost significant ground relative to the index and hit its low in the first quarter at € 30.52 on 4 March.
Raiffeisen International's business figures for 2009, which surpassed average expectations of analysts, and a buoyant stock market environment gradually served as a positive catalyst, causing the price of Raiffeisen International stock to rally significantly from its interim low by 15 per cent to € 35.20 on 31 March 2010. As of the editorial deadline for this report on 30 May 2010, the price of the stock was volatile due to the uncertainties surrounding the further development of the Euro. In particular the publication of further details about the merger on 19 April led to two-digit percentage gains in the share price, which led to a compensation for the losses that had been made in the meantime. The DJ Euro Stoxx Banks, the important comparative index for European banks, showed a minus of 6 per cent in
the first quarter and the Raiffeisen International stock declined in the same period by about 11 per cent.
Raiffeisen International constantly strives to develop its activities in communication with the capital market. For that reason, presentations in the framework of conference calls and online as webcasts have been made available since the beginning of 2010. They may be downloaded any time at www.ri.co.at Investor Relations Financial Reports & Figures Presentations.
Communication with analysts and investors in the first quarter was significantly shaped by deliberations concerning a merger between Raiffeisen International and RZB. On 22 February 2010, the market was informed for the first time – along with the announcement of preliminary business figures for 2009 – about these strategic plans. In a subsequent short conference call with over 260 participants, further background information was given regarding the status of the deliberations. Upon the publication of Raiffeisen International's final business figures for 2009 on 23 March 2010, preliminary proforma figures for the combined bank were presented for the first time in addition to further details about the planned transaction. The analyst conference in Vienna and the subsequent conference call was met with great interest from international analysts and investors.
Directly after the publication of the 2009 business figures, the company presented itself to about 250 participants at one of the world's most important banking conferences in London. The evening before that, Raiffeisen International invited analysts to a meeting, and a majority of those who observe the company attended. At the subsequent roadshow in London, the Managing Board presented the company in numerous individual and group talks.
Subsequent to the publication of further details about the planned merger on 19 April 2010, a telephone conference was held. Furthermore, a roadshow was planned which had to be cancelled at short notice due to the interference of European air travel at the time. Instead, numerous telephone and video-conferences were held.
| Price on 31 March 2010 | € 35.20 |
|---|---|
| High/low (closing prices) in Q1 2010 | € 42.75 / € 30.52 |
| Earnings per share from 1 January to 31 March 2010 | € 0.55 |
| Adjusted for computational compensation for participation rights € 0.65 | |
| Market capitalization as of 31 March 2010 | € 5.44 billion |
| Avg. daily trading volume (single counting) in first quarter 2010 | 525,603 shares |
| Stock exchange turnover (single counting) in first quarter 2010 | € 1,169 million |
| Free float as of 31 March 2010 | 27.2 % |
| ISIN | AT0000606306 |
|---|---|
| Ticker symbols | RIBH (Vienna Stock Exchange) |
| RIBH AV (Bloomberg) | |
| RIBH.VI (Reuters) | |
| Market segment | Prime Market |
| Issue price per share as of IPO (25 April 2005) | € 32.50 |
| Issue price per share as of capital increase (5 October 2007) | € 104.00 |
| Number of shares issued as of 31 March 2010 | 154,667,500 |
E-mail: [email protected] Internet: www.ri.co.at Investor Relations Phone: +43-1-71 707-2089 Fax: +43-1-71 707-2138
Raiffeisen International Bank-Holding AG, Investor Relations Am Stadtpark 3, 1030 Vienna, Austria
The first quarter of 2010 will most probably go down as a milestone in the history of Raiffeisen International. On February 22, the public was informed for the first time about the strategic plan of a possible merger between Raiffeisen International and RZB.
By the time of the copy deadline for this report, significant developments had been made regarding these plans. On 19 April 2010, the Management Boards of both companies resolved to go ahead with the planned merger. The final company valuations, and invitations to the Annual General Meeting, including documents required for passing a resolution will be published within the statutory period. Although the Annual General Meetings of both companies and the regulatory authorities have not yet approved the merger, it is becoming increasingly palpable.
At present, RZB holds 72.8 per cent of shares in Raiffeisen International via two intermediaries, the fully owned holding companies Raiffeisen International Beteiligungs GmbH (RI Beteiligung) and Cembra Beteiligungs AG (Cembra). In step one, the aim is to split the commercial customer business and investments connected with the operating commercial customer business from RZB with retroactive effect from 31 December 2009, and to integrate these business units in Cembra. Any functions of RZB connected with its position as the top company of Raiffeisen Banking Group Austria and all connected business units and RZB investments remain with the company. Shortly afterwards, in step two, Cembra and all its assets will be merged with Raiffeisen International as the incorporating company, which is to be renamed Raiffeisen Bank International AG (RBI). The shareholder of Cembra receives Raiffeisen International shares in return. These new shares were created as a result of RI increasing its share capital in order to carry out the merger. RBI is to receive an Austrian banking license after the merger and, like RI, is to take the form of a listed company.
The valuation ratios of the units included in the merger have been determined in the meantime; the underlying results are confirmed by reports from two renowned auditing companies, which were appointed as independent experts by both parties. On this basis, 21.5 per cent of Raiffeisen International shares will be in free float after the transaction has been completed (until now: 27.2 per cent; both figures include own shares held by Raiffeisen International). In turn, the merger would increase earnings per share in the first quarter of 2010 attributable to the hitherto existing Raiffeisen International shareholders from an actual € 0.55 to € 1.45 per share (based on a pro forma calculation).
The audit companies involved were appointed by the Management Boards of Raiffeisen International and RZB/Cembra to carry out company valuations on the basis of capitalized earnings value (calculated on the basis of a dividend discount model). The valuation method pursuant to the requirements for company valuations by the Board of Experts on Business Management and Organization (Fachsenat für Betriebswirtschaftslehre und Organisation) KFS BW1 therefore complies with widely recognized standards so as to take into consideration the interests of all shareholders in a transparent and fair process. In addition, an independent merger expert appointed by the court – and likewise an audit company – will confirm the appropriateness of the exchange ratio on the basis of Austrian merger law.
The Management Board of Raiffeisen Bank International AG will comprise the following members: Herbert Stepic (CEO), Karl Sevelda (Deputy CEO, Corporate Banking), Martin Grüll (CFO), Johann Strobl (CRO), Aris Bogdaneris (Retail Banking), Patrick Butler (Global Markets), Peter Lennkh (Network Management) and Heinz Wiedner (COO). This would provide a high degree of continuity in personnel and provide the new management team with a host of diverse experience from different sectors.
The business of RZB, which is to be integrated into Raiffeisen International's own, focuses on growth markets and is going to be an excellent addition to Raiffeisen International's business and income profile. By merging the two companies, the competitive position and financial situation of Raiffeisen in Central and Eastern Europe, including Austria, will improve significantly once the economic crisis has passed. It will also secure the future of the company in the long term. By building on a strong brand and a leading market position, the conditions are ideal for using all available growth opportunities.
All in all, the Management Board of Raiffeisen International sees many good reasons for a merger:
First steps and preparations for the merger were well under way in the first quarter. Important questions on strategy, organization, corporate law and other legal matters were answered. The business units included in the merger were valued and the results will be published on 30 May 2010. In the coming weeks, operations for the merger are going to be prepared and pushed forward. The Annual General Meeting of Raiffeisen International, with the vote on the merger being one point on the agenda, will take place on 8 July 2010. Once the necessary resolutions have been passed by both Annual General Meetings and approval has been obtained from the regulatory authorities, the merger will be legally executed and entered in the commercial register. This last step is unlikely to be implemented prior to the fourth quarter.
The second half of 2009 was shaped by the onset of economic recovery in Europe. After declines of real GDP by 2.4 per cent in the first quarter and 0.3 per cent in the second quarter of 2009 (each in comparison with the preceding quarter), the European economy (average of the EU-27) achieved small increases in the third and fourth quarters of 2009 by 0.3 per cent and 0.1 per cent, respectively. Overall, the real GDP of the EU-27 thus contracted in 2009 by 4.2 per cent year-on-year.
The national economies of Central and Eastern Europe (CEE) have held up to different extents in this very difficult world economic environment. Poland, for example, did not register a single quarterly decline in 2009 and was thus the only EU country to achieve positive real GDP growth last year. Slovakia and Slovenia resumed positive quarterly growth in the second quarter of 2009, and the Czech Republic did so in the third. By contrast, Hungary and Romania still showed quarterly declines of real GDP in the fourth quarter of 2009.
Viewed regionally, the decline of real GDP in the CEE countries was lowest in the new EU member states of Central Europe (CE) in 2009 at 1.7 per cent year-on-year. By contrast, the Southeastern European countries (SEE) including EU member states Romania and Bulgaria saw a decline of real GDP by 5.6 per cent. The European countries of the Commonwealth of Independent States (CIS) suffered a large drop of 8.3 per cent year-on-year. Overall, the real GDP of the CEE countries thus contracted in 2009 by 5.9 per cent on average.
The stabilization and recovery of the CEE national economies is likely to have continued in the first quarter of 2010. While development of private consumption was weak due to increased unemployment rates and lower demand for credit, the recovery of industrial production was bolstered by improved export demand. In addition, the base effect of the extremely low production levels in the first quarter of 2009 had a positive influence in year-on-year comparison.
The difficult conditions of the real economy led to a sharp rise of non-performing loans and an increase of provisioning for impairment losses in the financial sector last year. Rapid and extensive assistance from the International Monetary Fund (IMF) together with EU support measures and the resources made available by the World Bank, European Bank for Reconstruction and Development (EBRD), and European Investment Bank (EIB) resulted in a stabilization from the beginning of the second quarter and in a recovery of currencies and significant reduction of risk premiums in the second half of 2009. Toward the end of the year, the latter returned to levels from before the collapse of Lehman Brothers. The positive trend also continued on the financial markets in the first quarter of 2010. The region's currencies all posted gains, risk premiums declined further, and the international capital market showed renewed interest in issues from Central and Eastern Europe.
After a challenging year in 2009, in which the financial crisis led to a reduction of business volumes and sharply increased provisioning for impairment losses at Raiffeisen International, there were signs of a mild recovery at the beginning of 2010. On the currency side, almost all CEE currencies have appreciated in the period under review, in some cases strongly.
Against this background, Raiffeisen International achieved consolidated earnings after tax and minority interests of € 100 million. That is an improvement of 78 per cent, or € 44 million, compared with the same quarter of the previous year. Despite declining profit from operating activities due to lower business volume, a 34 per cent reduction of net allocations to provisions for impairment losses and valuation gains on marketable securities were the main positive influences.
Profit from operating activities fell in the first three months of 2010 by 20 per cent, or € 108 million, on the comparable period last year to € 428 million. The main reason was a decline of business volume by about 8 per cent year-on-year due to the economic crisis and selective lending.
Net interest income on a euro basis decreased by 10 per cent to € 690 million under volume influences and because of higher costs for long-term institutional refinancing. Net fee and commission income fell by only 4 per cent, with a slight slowing of the downward movement after a much steeper decline of 18 per cent in the preceding year as a whole, at the peak of the crisis. A lower volume of foreign exchange transactions, foreign currency loans, and domestic and foreign payment transfers in the first quarter of 2010 was also responsible for the moderate decline. However, a significantly improved income situation emerged in securities business and agency services. Net trading income continued to develop well, increasing by 26 per cent primarily due to interest-related transactions, while the appreciation of CEE currencies had a negative effect on the foreign exchange result in the first quarter. Other net operating income fell by € 20 million, resulting in a loss of € 17 million, mainly due to lower revenues from non-banking activities.
General administrative expenses rose by 2 per cent on the comparable period last year to € 585 million. That increase of € 11 million was in part due to revaluation of CEE currencies, but was also caused by higher depreciation on tangible and intangible fixed assets. The slight rise of general administrative expenses accompanied by 9 per cent lower operating income led to an increase of the cost/income ratio by 6.0 percentage points to 57.7 per cent.
The number of employees (expressed in full-time equivalents) fell versus the end of 2009 by 1 per cent, or 458 persons, to 56,072. This reduction mainly occurred in Russia (222) and Romania (196).
Net allocations to provisions for impairment losses decreased in the first quarter of 2010 by one-third, or € 150 million, on the preceding year to € 295 million. This significant reduction stems primarily from Russia (€ 57 million due to improvement of the economic situation of some borrowers, but also to a smaller increase of loans to retail customers in arrears) and from Ukraine (€ 51 million, due to the improved non-performing loan situation). The reduction divides into € 88 million from portfolio-related provisions and € 63 million from individual provisions. Of provisioning for impairment losses in the first quarter, 55 per cent was due to retail customers, while their share still amounted to 66 per cent in the comparable period last year.
The non-performing loan ratio (non-performing loans relative to total loans to customers) rose compared with the end of 2009 by 1.0 percentage points to 9.8 per cent. Currency revaluations accounted for € 185 million of the € 596 million increase. The remaining amount of new non-performing loans derived primarily from Central Europe (€ 145 million) and the CIS Other segment (€ 135 million). The ratio of non-performing loans to total lending (loans and advances, securities, and off-balance-sheet items) was 5.7 per cent (after 5.1 per cent at the end of 2009).
While a 20 per cent lower operating result weighed on Raiffeisen International's profit and hence on its rates of return, the significantly better situation in respect to provisioning for impairment losses and the positive net income from financial investments brought an improvement of return on equity before tax. At the end of the first three months, it amounted to 9.6 per cent and was thus 4.3 percentage points higher than in the comparable period of 2009 (5.3 per cent). Average equity underlying the calculation rose by 11 per cent on the comparable period to € 7.0 billion as a result of participation rights and positive currency differences.
The consolidated return on equity (after minorities) rose from 4.2 per cent to 6.7 per cent. Earnings per share grew by € 0.28 to € 0.55 for the first three months of 2010.
In the year to date, Raiffeisen International's balance sheet total grew by 1 per cent, or € 0.9 billion, to € 77.2 billion. Set against the organic decline of the balance sheet total of about 1 per cent were currency effects that increased the balance sheet total by about 2 per cent.
On the asset side, there were slight shifts in favor of financial investments, which rose by € 1.7 billion to € 9.0 billion. On the other hand, the cash reserve and loans and advances to banks were reduced. Under currency influences, however, loans and advances to customers hardly changed. Less provisioning for impairment losses, they rose by € 0.4 billion to € 47.8 billion.
On the liability side, there were hardly any changes compared with the end of last year. The largest increase was in equity, which rose by € 0.4 billion to € 7.4 billion under currency and earnings influences. Deposits from customers, the item relevant for refinancing, remained unchanged at € 42.6 billion. The loan/deposit ratio increased only negligibly from the end of the year, by 1 percentage point to 120 per cent.
Raiffeisen International's equity including minority interests rose by 5 per cent, or € 367 million, compared with the beginning of the year to € 7,367 million. That includes profit after tax of € 124 million. The material changes in equity resulted from revaluation of local currencies in the CEE region, which, together with relevant hedging measures, led to valuation gains in equity of € 303 million. Capital was reduced by the expected € 60 million dividend payment for participation rights.
In the reporting period, 40 subsidiaries were deconsolidated due to changed materiality limits. Comparability with the previous year's period is nevertheless ensured, because the changes did not materially influence individual items of the income statement. On the other hand, currency fluctuations in the CEE countries influenced income statement items significantly. The average exchange rates, on which the income statement is based, showed the following development: The Polish zloty appreciated by 11 per cent, the Hungarian forint by 8 per cent, the Russian rouble by 7 per cent, and the Czech koruna by 6 per cent. On the other hand, the Belarusian rouble depreciated by 15 per cent, and the Ukrainian hryvnia by 8 per cent.
| In € million | 1/1-31/3 2010 |
Change | 1/1-31/3 2009 |
1/1-31/3 2008 |
|---|---|---|---|---|
| Net interest income | 690 | (10.1)% | 767 | 711 |
| Net fee and commission income | 282 | (3.8)% | 294 | 331 |
| Net trading income | 58 | 26.3% | 46 | 38 |
| Other net operating income | (17) | – | 3 | 6 |
| Operating income | 1,013 | (8.8)% | 1,110 | 1,086 |
| Staff costs | (279) | 1.6% | (275) | (294) |
| Other administrative expenses | (241) | 0.9% | (238) | (234) |
| Depreciation on intangible and tangible fixed assets |
(65) | 7.2% | (61) | (57) |
| General administrative expenses | (585) | 1.9% | (574) | (585) |
| Profit from operating activities | 428 | (20.2)% | 536 | 501 |
Operating income fell by 9 per cent, or € 97 million, under volume influences to € 1,013 million. Viewed regionally, the Central Europe segment achieved the highest operating income. At € 367 million (plus € 3 million), it was slightly above the previous year's level. The Southeastern Europe segment had operating income of € 337 million, which means a decline of € 11 million. Lower operating income was shown by the Russia segment (minus € 35 million) and the CIS Other segment (minus € 31 million).
Among the business divisions, a decline of € 56 million to € 329 million was registered by the corporate customer division. Net interest income, which was down by 19 per cent, or € 53 million, was mainly responsible for that. Operating income in the retail customer division fell by € 29 million, with both net interest income and net fee and commission income turning out lower. Net interest income and net trading income developed positively in the treasury division, which led to an increase of operating income by 39 per cent, or € 22 million, to € 79 million.
The most important income component at 68 per cent was net interest income, which fell by € 77 million, or 10 per cent, on the comparable period last year to € 690 million. The decline of net interest income was thus greater than that of the average balance sheet total, which dropped by 8 per cent. Overall, interest income fell by 23 per cent, or € 353 million, to € 1,193 million. The decisive factor here was interest income from loans and advances to customers, which declined by € 282 million to € 963 million due to lower volume and decreased market interest rates. Interest expenses were down by 35 per cent, or € 276 million, to € 502 million. Interest expenses for deposits from customers and banks declined most sharply by € 140 million and € 135 million, respectively.
In Central Europe, net interest income rose by 13 per cent, or € 30 million, on the comparable period last year to € 261 million. The increase took place in Poland (plus € 14 million) due to lower funding costs and currency revaluation, in the Czech Republic (plus € 10 million) because of better conditions in dealings with private individuals, and in Slovakia (plus € 9 million) as a result of higher customer margins. In Hungary, on the other hand, there was a decline of € 8 million due to reduced credit volume and because of lower interest income from derivative financial instruments.
In Southeastern Europe, net interest income improved by 2 per cent, or € 5 million, compared with the previous year's period to € 222 million. Most of that came from reduced funding costs at banks and from lower interest expenses for customer deposits. Romania prominently contributed to this development.
Net interest income fell in Russia by 43 per cent, or € 90 million, to € 119 million and thus contributed decisively to the decline of total net interest income. This was due to a narrowing interest margin and decreased volumes of business with private individuals and corporate customers caused by low levels of new business.
In the CIS Other segment, net interest income declined by 9 per cent, or € 11 million, on the comparable period last year to € 115 million. The devaluation of the Ukrainian hryvnia, the decline of the customer portfolio, and lower margins on restructured loans were responsible for that.
The net interest margin, i.e., the ratio of net interest income to the average balance sheet total, amounted to 3.62 per cent. Compared with the previous year's period, that represents a decline of 9 basis points. For the full year of 2009, the net interest margin came to 3.73 per cent.
Net fee and commission income fell by 4 per cent, or € 11 million, on the comparable period last year to € 282 million. Income from payment transfers contributed € 129 million, or 46 per cent, and grew by € 3 million. Net income from foreign currency and precious-metals business declined in the first quarter of 2010 by € 26 million to € 66 million. Because of the reduced transaction volume, foreign currency and precious-metals business in Russia fell the most by € 10 million. The CIS Other and Southeastern Europe segments each registered a decline of € 7 million.
Income from securities business doubled to € 12 million. The Central Europe segment grew the most at plus € 3 million, which was mainly achieved in Hungary thanks to higher fee and commission income on municipal bonds. Income from agencies services in connection with own and third-party products rose by € 3 million to € 9 million due to increased insurance activities in Southeastern Europe.
Net trading income came to € 58 million and was thus 26 per cent, or € 12 million, higher than in the comparable period last year. The decisive reason for that was net income from interest-related business, which grew by € 19 million to € 55 million. Russia registered the largest increase at € 16 million, which derived primarily from securities. Also in Ukraine, there was a plus from the market valua-
Structure of operating income
tion of Ukrainian government bonds due to a better country rating.
Net income from currency-related business developed in the opposite direction, declining by € 10 million. At the segment level, different developments emerged. While net income from currencyrelated business fell in the Central Europe, Southeastern Europe, and CIS Other segments, it grew strongly in Russia. The increase was due to valuation gains on foreign exchange transactions for hedging measures in the Russian network bank.
Other net operating income changed from € 3 million in the first quarter of 2009 to minus € 17 million in the first quarter of 2010. Net proceeds from non-banking activities fell in the first three months of 2010 by € 5 million compared with the previous year's period. Allocations to other provisions resulted in expenses of € 6 million, which were caused among other things by the formation
of provisions for ongoing litigation in Russia and Hungary.
General administrative expenses rose by 2 per cent, or € 11 million, compared with the previous year's period to € 585 million. This increase was primarily due to currency revaluations in the CEE countries.
Because of a decline of operating income by 9 per cent and increased general administrative expenses, the cost/income ratio worsened. It rose by 6.0 percentage points compared with the previous year's period to 57.7 per cent.
Staff costs increased by 2 per cent, or € 4 million, on the comparable period last year to € 279 million. With a share of 48 per cent, this is the largest item in general administrative expenses. Measures such as personnel reduction, and natural turnover led to cost decreases, which were partly offset by the appreciation of most CEE currencies.
The average number of employees came to 56,294 and was thus 6,586 below the comparable figure for the previous year's period. It fell in the CIS Other segment by 10 per cent, or 1,929 employees, in Southeastern Europe by 10 per cent, or 1,915 employees, in Russia by 16 per cent, or 1,631 employees, and in Central Europe by 8 per cent, or 1,185 employees. In Austria, there was an increase of 24 per cent, or 74 employees.
The number of employees stood at 56,072 as of 31 March 2010, which represents a decline of 1 per cent, or 458 employees, compared with the end of 2009. Viewed by segments, the number declined in Russia by 3 per cent, or 222 employees, and in Southeastern Europe by 1 per cent, or 223 employees. The number of employees remained nearly constant as of the reporting date in the CIS Other segment (minus 39 employees) and in Central Europe (plus 9 employees). Austria registered an increase of 5 per cent, or 17 employees.
At € 241 million, other administrative expenses remained nearly constant compared with the level of the previous year's period. Office space expenses, the largest item among other administrative ex-
penses, amounted to € 74 million. That represents a reduction of 8 per cent due to the closing of business outlets in Russia and Ukraine and despite currency appreciation in some countries. Further savings were achieved in advertising, public relations, and promotional expenses (minus 7 per cent) and in travel and training expenses (minus 41 per cent and 33 per cent, respectively). Expenses increased in the area of legal, advisory, and consulting services (plus 5 per cent).
The number of business outlets was reduced by 231 to 2,977 compared with 31 March 2009. Due to location optimization measures, the number of business outlets in the CIS Other segment declined on the comparable period last year by 153 (thereof 149 in Ukraine), and in the Russia segment by 27. The number of business outlets in Central Europe fell by 30, and in Southeastern Europe by 21.
Depreciation on intangible and tangible fixed assets rose in comparison with the preceding year's period by 7 per cent, or € 4
million, to € 65 million. Tangible assets accounted for € 38 million of that, intangible assets for € 19 million, and leased assets for € 8 million. Group-wide investments amounted to € 63 million in the reporting period. Of that, 46 per cent (€ 29 million) flowed into own tangible assets. Investments in intangible assets, which predominantly concerned software systems, accounted for 34 per cent (€ 22 million). The rest was invested in assets for the operating leasing business.
Development of consolidated profit year-on-year
| 1/1-31/3 | 1/1-31/3 | 1/1-31/3 | ||
|---|---|---|---|---|
| In € million | 2010 | Change | 2009 | 2008 |
| Profit from operating activities | 428 | (20.2)% | 536 | 501 |
| Provisioning for impairment losses | (295) | (33.8)% | (445) | (93) |
| Sundry profit/loss | 33 | – | (8) | (38) |
| Profit before tax | 166 | 98.8% | 84 | 370 |
| Income taxes | (42) | 112.1% | (20) | (90) |
| Profit after tax | 124 | 94.7% | 64 | 279 |
| Minority interests in profit | (24) | 220.0% | (8) | (25) |
| Consolidated profit | 100 | 77.8% | 56 | 254 |
Net allocation to provisions for impairment losses significantly lower
Net allocations to provisions for impairment losses amounted to € 295 million and were thus significantly below the comparable period's level. In the first quarter of 2009, provisions had been formed in the amount of € 445 million. The decline of net allocations to provisions for impairment losses thus came to 34 per cent, or € 150 million. Of net allocations, individual provisions accounted for € 239 million, and portfolio-based provisions for € 58 million. From a quarterly perspective, that represents the lowest net allocations since the third quarter of 2008.
The highest net allocations to provisions for impairment losses were formed in the Central Europe segment in the amount of € 111 million, which constitutes an increase of € 6 million, or 5 per cent, on the comparable period last year. In Hungary, net allocations came to € 40 million and were thus € 19 million less than in the preceding year. Provisioning for impairment losses in Slovakia were increased by € 8 million to € 22 million and were formed predominantly for loans and project financing in the area of large corporate customers. Provisions were made in the Czech Republic in the amount of € 25 million (first quarter 2009: € 17 million), which was largely due to increased allocations for private individuals.
In the CIS Other segment, net allocations to provisions for impairment losses were made in the amount of € 78 million in the first quarter of 2010. Down by € 40 million, this amount is due to a much better situation in respect to the volume of non-performing loans compared with the previous year's period. Of total allocations in the segment, Ukraine accounted for € 73 million, which represents a decline of € 45 million.
In the Southeastern Europe segment, net allocations to provisions for impairment losses fell by € 44 million, or 39 per cent, to € 69 million. The largest declines were registered in Romania and Croatia. The highest net allocations were made in Bulgaria in the amount of € 18 million and for the most part concerned loans to corporate customers.
In the Russia segment, net allocations to provisions for impairment losses were reduced significantly. They were € 110 million in the first quarter of 2009, but only € 37 million were newly allocated in the same period of 2010. Due to loan repayments and a smaller increase of loans to retail customers in
arrears, there were on balance releases of portfolio-based provisions in the amount of € 22 million. In the first quarter of 2009, on the other hand, € 59 million in portfolio-based provisions had been newly allocated.
The net provisioning ratio, i.e., provisioning for impairment losses in relation to average credit riskweighted assets, fell on the comparable period by 0.77 percentage points to 2.24 per cent.
Income taxes amounted to € 42 million, after € 20 million in the comparable period last year. They thus climbed more sharply than profit before tax, which led to an increase of the tax rate from 23.8 per cent to 25.4 per cent.
Profit after tax rose from € 64 million in the comparable period last year to € 124 million. That represents an increase of 95 per cent, or € 60 million. Because of the better income situation of some Group units with minority shareholders, minority interests in profit went up by € 17 million to € 24 million.
Consolidated profit allocable to Raiffeisen International shareholders rose to € 100 million from € 56 million in the comparable period last year. Earnings per share therefore amounted to € 0.55 (previous year: € 0.27). A pro rata dividend of € 15 million was set for the participation rights. That was likewise taken into account in the ratio calculation for the comparable period. Without taking compensation for the participation rights into account, earnings per share would come to € 0.65, and in the comparable period last year to € 0.37.
The consolidated balance sheet total amounted to € 77.2 billion as of 31 March 2010 and was thus higher than at the end of 2009 by € 0.9 billion, or 1 per cent. Set against increases of securities investments of € 1.7 billion and loans and advances to customers of € 0.7 billion were decreases of loans and advances to banks of € 0.6 billion and the cash reserve of € 0.8 billion. Forty subsidiaries were deconsolidated as of 1 January 2010, and the change had no appreciable influence on the development of the balance sheet total.
After the devaluations of the past two years, the majority of the currencies in CEE countries gained appreciably in strength. The Russian rouble rose by 8 per cent, the Ukrainian hryvnia by 7 per cent, the Polish zloty by 6 per cent, and the Czech koruna by 4 per cent. These currency effects brought about an increase of the balance sheet total of 2 per cent, while the organic development counteracted that and the balance sheet total decreased overall by about 1 per cent.
Structure of assets on the statement of financial position
On the asset side, loans and advances to customers after deduction of provisioning for impairment losses are the dominant component in the consolidated balance sheet total with a share of 62 per cent. They rose by € 0.7 billion, or 1 per cent, compared with the end of last year. Corporate customers accounted for two-thirds of the increase, and retail customers for one-third. Viewed regionally, the Central Europe segment showed an increase in loans and advances to customers of € 1.0 billion, or 4 per cent. Lending was constant or marginally declined in all other segments. The ratio of customer loans to customer deposits amounted to 120 per cent (plus 1 percentage point compared with the end of last year). Provisions for impairment losses were increased by € 0.3 billion, or 11 per cent, to € 3.4 billion. That almost exclusively concerned loans to customers.
Loans and advances to banks fell by 6 per cent, or € 0.6 billion, to € 9.7 billion. Their share of the balance sheet total decreased by 2 percentage points to 12 per cent. The decline is mainly from loans to central banks (minus € 0.5 billion).
Since the beginning of 2009, surplus liquidity has been invested to a greater extent in securities, and that trend continued in the first quarter of 2010. The total amount of financial investments as of 31 March 2010 stood at € 12.9 billion. That means an additional investment of € 1.9 billion, or 17 per cent, compared with the end of last year. The share of the balance sheet total thus increased by 3 percentage points to 17 per cent. Securities investments were predominantly made in debt instruments of public authorities eligible for refinancing.
Other assets decreased by 10 per cent, or € 0.8 billion, to € 6.8 billion. Their share fell by 1 percentage point to 9 per cent. The decline is mainly due to the reduction of the cash reserve and in that respect particularly to the credit balances with central banks (minus € 0.8 billion). Intangible assets
remained constant compared with the end of 2009 at € 1.0 billion, they include € 619 million in goodwill (including € 270 million in Russia and € 219 million in Ukraine).
Structure of equity and liabilities on the statement of financial position
The structure of liabilities remained nearly unchanged compared with the end of 2009. Deposits from customers decreased by 1 percentage point, but continued to dominate the liability side of the statement of financial position with a share of 55 per cent. Deposits from banks were 1 percentage point below last year's level with a share of 26 per cent. Equity and subordinated capital increased by 1 percentage point to 13 per cent, and other liabilities rose by 1 percentage point to 6 per cent.
Deposits from customers amounted to € 42.6 billion and were thus at their year-end level in 2009. There was little change from a segment perspective. The Russia and CIS Other segments showed slight increases, but those were based on the revaluation of currencies. Small declines were registered in Central Europe (minus € 0.3 billion), while deposits remained constant in Southeastern Europe. Deposits from corporate customers increased slightly to € 16.5 billion, and deposits from retail customers decreased slightly to € 24.3 billion. Here, a shift occurred from time deposits (minus € 0.7 billion) to sight deposits.
Deposits from banks also remained constant compared with the end of 2009 at € 20.1 billion. The slight declines in money market business and in giro and clearing business (minus € 0.3 billion) were offset by increases in long-term funding transactions (plus € 0.3 billion). Viewed regionally, a shift occurred from Southeastern Europe (minus € 0.7 billion) and Russia (minus € 0.4 billion) to Austria (plus € 0.9 billion). The decrease of deposits from central banks was offset by a slight increase on the part of commercial banks.
Debt securities issued on the capital market for funding purposes amounted to € 2.6 billion as of 31 March 2010 and thus remained unchanged in comparison with the end of 2009.
The share of own funds rose by 1 percentage point to 13 per cent. Equity increased by € 0.4 billion and was thus 5 per cent above its year-end level. Subordinated capital rose by 2 per cent to € 2.5 billion.
Raiffeisen International's balance sheet equity, which consists of consolidated equity, consolidated profit, and minority interests, increased by 5 per cent, or € 367 million, compared with the end of 2009. As of 31 March 2010, it amounted to € 7,367 million.
Consolidated equity, consisting of subscribed capital, participation rights, capital reserves, and retained earnings, rose by € 442 million to € 6,232 million. The increase was in retained earnings, which were largely determined by amounts transferred to retained earnings and other comprehensive income. Currency differences constitute the largest component by amount in the item other comprehensive income. A majority of the CEE currencies revalued again in 2010, which led to a positive currency effect (including capital hedge) of € 286 million. Compensation for participation rights reduced equity by € 60 million.
Consolidated profit amounted to € 100 million. Minority interests in capital rose by € 37 million to € 1,035 million, with net income for the period and currency differences also being the decisive factors here.
Raiffeisen International is not a separate banking group within the meaning of the Austrian Banking Act (BWG) and therefore is not itself subject to the regulatory provisions for banks as a consolidated group. Credit risk and market risk are calculated generally according to the standardized approach pursuant to Section 22 of the BWG, but the credit risk for loans and advances to banks, corporates, and sovereigns is calculated according to the basic internal ratings-based approach (IRB) at the network banks in Croatia, Czech Republic, Hungary, Romania, and Slovakia. The consolidated figures presented below have been calculated pursuant to the provisions of the BWG and are accounted for within the scope of the RZB-Kreditinstitutsgruppe.
Consolidated own funds according to the BWG rose by € 205 million in the reporting period to € 8,533 million. That does not include the period's current profit, since Austrian law prohibits that from being taken into account yet.
Core capital (Tier 1) rose in the first quarter by € 175 million and amounted to € 7,247 million. Currency revaluations since the beginning of the year, particularly of the Russian rouble (plus 8 per cent), the Ukrainian hryvnia (plus 7 per cent), and the Polish zloty (plus 6 per cent), in the amount of € 162 million were mainly responsible for the increase.
The own funds requirement (Tier 2) rose by € 4 million to € 1,106 million. On the one hand, maturing Tier 2 issues led to a reduction of additional own funds, which were offset, on the other hand, by the currency revaluations.
Eligible short-term subordinated capital (Tier 3) rose by € 30 million to € 212 million due to maturing Tier 2 capital.
Set against available own funds was an own funds requirement that increased by € 33 million to € 5,150 million. The own funds requirement for credit risk accounted for the largest part of that at 79 per cent.
The items that make up the own funds requirement exhibited varying development. The own funds requirement for credit risk rose by € 40 million to € 4,047 million, and the requirement for market risk by € 7 million to € 144 million. The requirement for operational risk increased by € 25 million to € 599 million, but the requirement for open foreign exchange positions fell by € 39 million to € 360 million.
That results in own funds excess cover of € 3,383 million, or 65.7 per cent. In comparison with the end of 2009, that represents an improvement of € 172 million, or 5 per cent.
The core capital ratio based on credit risk came to 14.3 per cent (plus 0.2 percentage points). The core capital ratio based on total risk likewise improved by 0.2 percentage points and thus amounted to 11.2 per cent. The own funds ratio rose by 0.3 percentage points to 13.3 per cent. The core Tier 1 ratio (core capital less hybrid capital based on total risk) came to 9.4 per cent.
Active risk management is a core area of expertise for Raiffeisen International as a bank holding company. To recognize, assess, and manage risks effectively, Raiffeisen International established a comprehensive risk management system in the past and constantly continues to develop it. Raiffeisen International's risk management is designed to ensure deliberate dealing with and professional management of credit and country risks, market and liquidity risks, and operational risks.
The economic crisis certainly shaped the development of Raiffeisen International's risk management in the period under review. Retail risk management intensified its focus on stepping up activities in collections, supporting the implementation of loan restructuring, increasing stress testing and scenario analyses at the portfolio level. In risk management for most business divsions the focus was on the expansion of the early-warning system, expediting workout management, and more stress tests were conducted for individual industries and regions.
The workout process is based on a clear definition of the risk status of each customer. The assignment of a certain risk status is made by way of an early-warning system that consists of a partially automated, IT-supported cause-and-effect analysis. Most of the input factors that flow into this analysis are standardized at the Group level. However, they can be adapted and supplemented with further factors to meet specific local conditions. Early detection of potential problem cases in lending business thus follows a structured process. That enables Raiffeisen International to support its customers as early as possible and, if necessary, take countermeasures. In the framework of expanding the workout process, personnel capacities were significantly increased in this area.
A comprehensive restructuring concept for retail customers was formulated in 2009 and is now being gradually implemented in the individual countries. Agreements typically made with customers in cases of restructuring concern lengthening loan terms, providing additional collateral, and temporarily reducing installments while maintaining the loan's net present value. Successful restructuring efforts present Raiffeisen International with both advantages and disadvantages. On the one hand, collectability of loans improved, thereby making it possible to reduce future risk costs. On the other, delays of interest income and the high expense of carrying out restructuring measures have a negative impact. Last but not least, the findings from these activities have an effect on the instruments of credit assessment, which has a long-term effect on the structure of new business acquisitions.
In addition to these further developments in credit risk management, generating customer deposits was a special focus. The measures associated with that are primarily aimed at reducing potential liquidity and transfer risks.
Great importance is assigned to the use and continuing Group-wide implementation of advanced approaches to Basel II in the entire Group. Raiffeisen International Bank-Holding is not itself subject to those rules, but their application is obligatory for several subsidiary institutions. In the Raiffeisen International Group, the results are used for internal control and management information purposes.
The "standardized approach" is primarily used to calculate capital requirements for credit risks under the Basel II rules. The network banks in Slovakia, the Czech Republic, Hungary, Romania, and Croatia were already given permission in the past years by the respective regulatory authorities to calculate the credit risk of corporate customers and banks as well as that of the public sector according to the internal ratings-based (IRB) approach. It is planned to apply the IRB approach successively to other countries and to other asset classes. This gives Raiffeisen International the advantage that portfolio risks can be quantified more accurately and managed more efficiently.
The own funds requirement for market risk pursuant to Basel II is calculated using the standardized approach. To measure and limit the risk of interest rate changes in the banking book, a simulation is performed for regulatory purposes of the change of present value in the banking book on the assumption of a simultaneous interest rate increase for all maturities and currencies. The key assumptions necessary for interest rate pegging are made in accordance with regulatory specifications and on the basis of internal statistics and empirical data.
Raiffeisen International's liquidity position is subject to a regular monitoring process and is included in the weekly report for the RZB Group to the Austrian bank supervisory authority. This regulatory report presents the expected inflows and outflows and realizable additional liquidity in detail for different maturity bands and currencies.
Raiffeisen International currently calculates capital requirements for operational risks according to the Basel II framework by using the standardized approach. After an implementation phase of several years, Raiffeisen Bank Aval in Ukraine has also been using this model since 1 January 2010, so now all material group units are oriented to the standardized approach.
The discussion paper on measure to strengthen the banking sector published by the Basel Committee on Banking Supervision at the end of 2009 (also known as Basel III) is being reviewed by Raiffeisen International and evaluated in regards to its implications. The management of Raiffeisen International assumes that up until the point that the respective measures are implemented, that there may be considerable deviations from the suggestions currently submitted for consideration.
The financial and economic crisis again had a big hand in shaping the past business year. The recession continued to dominate in the first few months, causing severe fluctuations of currency exchange rates in some of our target markets and affecting our business trend and actions in the entire year through higher provisioning for impairment losses and cost-cutting programs.
Fortunately, however, economic development turned appreciably upward in the course of the year. Our business model, geared to universal bank services with a transparent product range strictly oriented to customer needs, consistently proved itself. As the financial crisis ebbed, the problems of procuring liquidity in the banking sector were also overcome. Nevertheless, the consequences of the economic crisis will continue to be felt for some time.
The broad diversification of our bank network in 15 countries again proved very advantageous in the crisis, because individual countries were affected quite differently. We remain committed to that and will expand our presence and business where we see appropriate growth potential. We hope to gain impetus from the expected economic recovery in the CEE region.
We further developed and considerably expanded our risk management in the past year and took extensive precautions for possible risks. We expect the rise of non-performing loans to continue in 2010, but their upward momentum appears to have broken with the onset of the economic recovery. The strict cost management introduced in the period under review will continue in 2010. Expansion of the business outlet network will move forward only selectively. Existing outlets may be closed or relocated, so the total number is likely to remain about the same in 2010.
Business with corporate customers proved to be the backbone of the Group in 2009. We aim to intensify lending business in this area selectively in 2010. Special attention will be given to business with customers in the mid-market segment and to selected industries. Moreover, fee and commission business will be strengthened further, for example, by means of targeted cross-selling.
In the retail customer division, we are striving for an increase in lending in 2010. The focus will initially be on cross-selling with selected loan offers such as consumer loans and credit cards. We also aim to increase customer deposits, for which we hope to gain positive impetus from the direct bank that is to begin operations in 2010. Another goal is to expand business with affluent private individuals, especially involving commission-related products.
Overall demand for credit will probably remain subdued in 2010, but from today's perspective, we expect a slight rise of lending to customers for Raiffeisen International in the course of the year.
Individual Central and Eastern European countries constitute Raiffeisen International's smallest cash generating units (CGUs). Countries that hold the prospect of similar long-term economic development and exhibit a similar economic profile are grouped together as regional segments. In view of the threshold values required by IFRS 8, four regional segments have been defined by means of which transparent and comprehensible reporting is achieved. The threshold values as defined by IFRS 8 are equivalent to 10 per cent, respectively, of operating income, profit after tax, and segment assets.
As of 31 March 2010, the following Group segments existed. The location of the respective business outlets served as the criterion for segment assignment:
• Central Europe
This segment contains the five countries that joined the EU on 1 May 2004 – the Czech Republic, Hungary, Poland, Slovakia, and Slovenia. They represent not only the most fully developed banking markets in Central and Eastern Europe, but also the markets in which Raiffeisen International was present the earliest.
• Southeastern Europe
The segment Southeastern Europe includes Albania, Bosnia and Herzegovina, Croatia, Kosovo, Moldova, Serbia, as well as Bulgaria and Romania, which joined the EU on 1 January 2007. Moldova has been included in this segment due to its close economic ties to Romania and the respective management structures within the Group.
• Russia
This segment includes the results of the Raiffeisen International companies in the Russian Federation. The Group is represented in Russia by a bank, a leasing company, and a capital management company, among others.
• CIS Other
This segment comprises Belarus, Kazakhstan, and Ukraine.
The figures stated in the segment report derive from the individual financial statements prepared according to International Financial Reporting Standards (IFRS) and underlying the consolidated financial statements. Divergences from locally published data are possible, as the latter may be based on different valuation rules – within the IFRS or between the IFRS and accounting standards applicable in the individual countries – and on different scopes of consolidation.
Each of the regional segments in Raiffeisen International registered higher profits in the first quarter of 2010, reflecting continued moderate recovery in the economy as a whole. Significantly lower levels of provisioning for impairment losses as well as positive revaluations of securities and bonds contributed to the improvement in profit before tax over the same period in the previous year.
The effects of the financial crisis on earlier periods continued to lead to a rising share of nonperforming loans and falling net interest income due to portfolio reductions. Through a combination of cost-cutting and efficiency-enhancing measures, the conditions were put in place for a long-term recovery in Group earnings. Due to the development of local currencies, as well as an optimization of the branch networks, there was a marked decrease in administrative expenses across all segments.
Southeastern Europe contributed € 98 million to profit before tax in the first quarter, the largest share among all the segments. This was also based on significantly lower net allocations to provisions for impairment losses as well as firm growth in net income from financial investments. Balance sheet assets in this segment were 5 per cent down year-on-year.
At € 63 million, Central Europe was the second-highest contributor to profit before tax. An increase in net interest income as well as net income from financial investments had a positive effect on pre-tax profits. Balance sheet assets rose by 3 per cent compared with the previous year.
In Russia, profit before tax amounted to € 58 million. The sharp increase over the comparable period of the previous year was due to a substantial decline in net allocations to provisions for impairment losses along with positive net trading income. Balance sheet assets in this segment were down 13 per cent on the previous year.
The CIS Other segment reported a pre-tax profit of € 17 million. Lower net allocations to provisions for impairment losses were primarily responsible for the year-on-year improvement in profit before tax. Balance sheet assets in this segment were down 14 per cent on the previous year.
The regional structure of Group assets changed slightly over the previous year. Central Europe's share increased by 3 percentage points to 44 per cent. The second largest share of Group assets was contributed by Southeastern Europe at 31 per cent, followed by Russia at 16 per cent, and CIS Other at 9 per cent.
| 1/1-31/3 | 1/1-31/3 | ||
|---|---|---|---|
| In € million | 2010 | 2009 | Change |
| Net interest income | 261 | 231 | 12.7 % |
| Provisioning for impairment losses | (111) | (105) | 5.4 % |
| Net interest income after provisioning | 150 | 126 | 18.8 % |
| Net fee and commission income | 107 | 100 | 7.8 % |
| Net trading income | 4 | 32 | (88.5 %) |
| Net income from derivatives | (4) | 1 | – |
| Net income from financial investments | 21 | (10) | – |
| General administrative expenses | (214) | (203) | 5.3 % |
| of which staff expenses | (103) | (97) | 5.3 % |
| of which other administrative expenses | (92) | (86) | 6.3 % |
| of which depreciation/amortization/write-offs | (19) | (19) | 1.0 % |
| Other net operating income | (5) | 1 | – |
| Net income from disposal of group assets | 4 | 0 | >500.0 % |
| Profit before tax | 63 | 46 | 35.0 % |
| Income taxes | (14) | (11) | 27.5 % |
| Profit after tax | 49 | 35 | 37.3 % |
| Minority interests in profit | (17) | (13) | 34.4 % |
| Profit after minority interests | 32 | 23 | 38.9 % |
| Segment's contribution to profit before tax | 26.5 % | 37.6 % | (11.1 PP) |
| Segment's contribution to profit after tax | 25.7 % | 37.2 % | (11.5 PP) |
| Risk-weighted assets (credit risk)1 | 21,565 | 22,322 | (3.4 %) |
| Total own funds requirement1 | 1,985 | 2,025 | (2.0 %) |
| Assets1 | 33,819 | 32,805 | 3.1 % |
| Liabilities1 | 31,066 | 30,523 | 1.8 % |
| Cost/income ratio | 58.3 % | 55.7 % | 2.6 PP |
| Average equity | 2,968 | 2,434 | 21.9 % |
| Return on equity before tax | 8.4 % | 7.6 % | 0.8 PP |
| Return on equity after minority interests | 5.7 % | 5.2 % | 0.5 PP |
| Average number of staff | 12,894 | 14,079 | (8.4 %) |
1 Data as at 31 March
In Central Europe, profit before tax was € 63 million in the first quarter of 2010, up 35 per cent or € 17 million over the previous year's level. Although net allocations to provisions for impairment losses increased slightly, higher net interest income and net income from financial investments were primarily responsible for raising pre-tax profits. The segment's return on equity before tax rose by 0.8 percentage points to 8.4 per cent.
Net interest income in the region rose by 13 per cent in the first quarter to € 261 million. Poland registered the largest increase, driven both by improved asset-side margins on loans as well as lower interest cost for customer deposits in the context of a gradual easing of conditions on the money market. The Czech Republic also generated considerable growth in net interest income, primarily due to loans for retail customers and decreasing interest costs for customer deposits. Slovakia benefited from higher margins on the asset side. In Hungary, however, reduced lending to large customers over the past fiscal year had a dampening effect on profits. Business in the Central Europe segment became more profitable year-on-year with a 41 basis-point increase in the net interest margin over the first quarter of 2009, to 3.09 per cent. Group assets increased by 3 per cent. Credit risk-weighted assets dropped 3 per cent year-on-year from € 22.3 billion to € 21.6 billion, primarily as a consequence of reduced volume in off-balance sheet items in nearly all countries across the region. Higher collateral levels – particularly for new business – had a positive impact on credit risk-weighted assets.
Net allocations to provisions for impairment losses in the region rose by 5 per cent or € 6 million in the first quarter 2010 to € 111 million. Individual provisions declined year-on-year by 26 per cent to € 60 million. The highest levels of impairment provisions arose in Poland and Slovakia among corporate customers. Net allocations to portfolio-related provisions doubled year-on-year to € 51 million, primarily in Hungary and the Czech Republic. The provisions for impairment losses were mostly for retail lending. The non-performing loan ratio in the credit portfolio rose 3.7 percentage points to 7.6 per cent.
Net fee and commission income grew in every country in the region, increasing by a total of 8 per cent or € 7 million to € 107 million. The largest increase came in the Czech Republic, thanks to the pricing policy introduced in the previous year. Profit from the foreign exchange and notes and coins business fell by 7 per cent to € 33 million, primarily due to the decline in new foreign currency lending, especially in Hungary. Income from payment transfers and account services grew throughout the region, increasing by 5 per cent year-on-year to € 42 million. The securities business expanded thanks to renewed customer activity – particularly in Hungary – by nearly 59 per cent year-on-year to € 8 million.
Net trading income in the Central Europe region was € 4 million, an 89 per cent decrease from the same period in 2009. The decline affected nearly every country in the region. Currency-related trading shrank to minus € 2 million (from € 20 million during the same period the previous year), mainly as a result of lower revenues in Hungary. Income from interest-related trading in the region declined, primarily as a result of the shortfall in valuation gains on interest rate swaps and fixed interest bonds in Slovakia, from € 13 million to € 3 million. Equity and index-related trading recorded a profit of € 3 million, which came almost entirely from Hungary.
Net income from derivatives of minus € 4 million was almost exclusively tied to hedging transactions used to adjust the currency structure in Hungary and the Czech Republic. Losses in the Czech Republic were not fully offset by valuation gains in Hungary.
Net income from financial investments came to € 21 million. This figure contains valuation gains on securities from all Group units in the region, although the highest gains were posted in Hungary and the Czech Republic.
General administrative expenses were up 5 per cent or € 11 million over the comparable period in the preceding year to € 214 million. However, average staff numbers declined 8 per cent year-on-year to 12,894. Staff expenses were up 5 per cent or € 6 million over the same period to € 103 million. Other administrative expenses rose by 6 per cent year-on-year to € 92 million. Depreciation/amortization/write-offs held steady from the previous year at € 19 million. The number of business outlets was reduced by 5 per cent (30 outlets) year-on-year to 554 outlets. The cost/income ratio in the region rose by 2.6 percentage points to 58.3 per cent.
Other operating income in the region amounted to minus € 5 million and for the most part comprised non-income related tax expenses, the bulk of which related to Group units in Hungary and Slovakia. Operating leases made a positive contribution of € 2 million.
Due to the removal of project companies, domiciled for the most part in the Czech Republic and Hungary, from the scope of consolidation for lack of materiality, the segment recorded a profit of € 4 million on net income from disposal of Group assets.
Income taxes fell by 28 per cent compared with the same period of the previous year to € 14 million. The effective tax rate in the region decreased slightly, down 1 percentage point to 22 per cent. Profit after minority interests came to € 32 million.
| In € million 2010 2009 Change Net interest income 222 217 2.1 % Provisioning for impairment losses (69) (112) (38.9 %) Net interest income after provisioning 153 105 46.0 % Net fee and commission income 90 100 (9.6 %) Net trading income 14 24 (38.7 %) Net income from derivatives (6) (3) 111.5 % Net income from financial investments 22 2 >500.0 % General administrative expenses (178) (180) (0.8 %) of which staff expenses (77) (79) (2.8 %) of which other administrative expenses (76) (76) (0.3 %) of which depreciation/amortization/write-offs (25) (24) 3.7 % Other net operating income 10 8 36.8 % Net income from disposal of group assets (10) 0 – Profit before tax 98 56 75.0 % Income taxes (13) (10) 27.2 % Profit after tax 84 45 85.9 % Minority interests in profit (5) 2 – Profit after minority interests 79 47 66.9 % Segment's contribution to profit before tax 41.4 % 45.3 % (3.9 PP) Segment's contribution to profit after tax 44.7 % 47.8 % (3.1 PP) Risk-weighted assets (credit risk)1 16,276 18,410 (11.6 %) Total own funds requirement1 1,514 1,653 (8.4 %) Assets1 23,300 24,421 (4.6 %) Liabilities1 20,497 21,726 (5.7 %) Cost/income ratio 52.9 % 51.6 % 1.3 PP Average equity 2,270 1,982 14.5 % Return on equity before tax 17.2 % 11.3 % 5.9 PP Return on equity after minority interests 15.5 % 10.8 % 4.7 PP Average number of staff 17,208 19,123 (10.0 %) Business outlets1 1,179 1,200 (1.8 %) |
1/1-31/3 | 1/1-31/3 | |
|---|---|---|---|
1 Data as at 31 March
In Southeastern Europe, profit before tax in the first quarter of 2010 rose by 75 per cent or € 42 million year-on-year to € 98 million. A significant decrease in net allocations to provisions for impairment losses along with positive net income from financial investments improved pre-tax profits as compared to the previous year's period. The segment's return on equity before tax rose by 5.9 percentage points to 17.2 per cent.
Net interest income in the region grew 2 per cent or € 5 million to € 222 million. The largest increase was registered in Romania, primarily due to lower funding costs for customer deposits, but also a reduction in exposure to inter-bank loans. By contrast, a strong decline in the customer loan book in Serbia due to a drop in new business led to lower net interest income. Balance sheet assets in the region fell by 5 per cent year-on-year to € 23.3 billion. The net interest margin increased by 29 basis points to 3.79 per cent. Credit risk-weighted assets declined by 12.0 per cent from € 18.4 billion to € 16.3 billion. The steeper decline in credit risk-weighted assets than in the balance sheet total was due to a reduction in off-balance sheet items, primarily in Serbia. The Basel II IRB approach was applied to certain asset classes in Romania from July 2009 and in Croatia from October 2009 for the first time, although this did not have any significant effect on risk assets.
Net allocations to provisions for impairment losses fell by € 43 million or 39 per cent to € 69 million. Net allocations to individual provisions for impairment totaled € 73 million. The highest provisions were recorded in Bulgaria, predominantly for loans to corporate customers, and Croatia, relating to private individual customers. Portfolio-related provisioning yielded a positive contribution of € 4 million, with the level of provisioning being reduced in almost all Group units in the region. The proportion of non-performing loans in the loan portfolio rose by 2.9 percentage points over the previous year's period to 7.0 per cent, remaining the lowest level among all the regions.
Net fee and commission income declined by 10 per cent year-on-year to € 90 million. Payment transfers contributed € 40 million to this result, 11 per cent above the previous year. The largest contribution was € 20 million from the Group unit in Romania, which continued to show the highest net fee and commission income. Net income from foreign currency and precious-metals business fell by 32 per cent to € 14 million. The loan and guarantee business generated € 17 million, almost entirely in Romania.
Net trading income in Southeastern Europe fell from € 24 million in the previous year to € 14 million. Currency trading generated € 4 million, again predominantly in Romania. A profit of € 14 million was earned on interest-related trading, distributed evenly across all the countries in the region.
Net income from financial investments rose to € 22 million, from only € 2 million in the comparable period in the previous year. This change was due particularly to valuation gains from fixed-interest bonds in Romania and Croatia, as a result of the lower interest levels in these markets.
General administrative expenses were € 178 million, or 1 per cent below the level of the first quarter of 2009. Staff expenses fell by € 2 million to € 77 million, while the average number of staff fell 10 per cent or 1,915 to 17,208. Other administrative expenses were unchanged at € 76 million. Depreciation/amortization/write-offs, which mainly related to investments in the branch network, increased by 4 per cent to € 25 million. From 1,200 at the end of the previous year's period, the number of business outlets fell by 2 per cent to 1,179. The cost/income ratio rose 1.3 percentage points to 52.9 per cent.
Other operating income was virtually unchanged from the previous year at € 10 million. Apart from minor expense items, this comprised primarily income from operating leases of € 9 million, predominantly in Croatia.
Due to the removal of project companies from the scope of consolidation for lack of materiality, predominantly in Romania, the segment showed a loss on net income from disposal of group assets of € 10 million.
Income taxes grew 27 per cent over the previous year to € 13 million. The effective tax rate for the region was 13 per cent, five percentage points below the previous year's level. Profit after minority interests was € 79 million.
| 1/1-31/3 | 1/1-31/3 | ||
|---|---|---|---|
| In € million | 2010 | 2009 | Change |
| Net interest income | 119 | 209 | (43.1 %) |
| Provisioning for impairment losses | (37) | (110) | (66.3 %) |
| Net interest income after provisioning | 82 | 100 | (17.4 %) |
| Net fee and commission income | 47 | 51 | (6.9 %) |
| Net trading income | 34 | (28) | – |
| Net income from derivatives | (9) | (4) | 141.7 % |
| Net income from financial investments | 0 | 2 | – |
| General administrative expenses | (96) | (100) | (4.2 %) |
| of which staff expenses | (49) | (44) | 13.1 % |
| of which other administrative expenses | (35) | (48) | (26.9 %) |
| of which depreciation, amortization and write-offs | (11) | (8) | 39.7 % |
| Other net operating income | (3) | (1) | 385.7 % |
| Net income from disposal of group assets | 3 | 0 | – |
| Profit before tax | 58 | 20 | 192.9 % |
| Income taxes | (14) | (6) | 123.8 % |
| Profit after tax | 44 | 13 | 225.4 % |
| Minority interests in profit | 0 | 0 | – |
| Profit after minority interests | 44 | 14 | 222.2 % |
| Segment's contribution to profit before tax | 24.6 % | 16.2 % | 8.4 PP |
| Segment's contribution to profit after tax | 23.2 % | 14.2 % | 9.0 PP |
| Risk-weighted assets (credit risk)1 | 7,535 | 10,003 | (24.7 %) |
| Total own funds requirement1 | 798 | 906 | (11.9 %) |
| Total assets1 | 12,343 | 14,126 | (12.6 %) |
| Liabilities1 | 10,535 | 12,676 | (16.9 %) |
| Cost/income ratio | 48.6 % | 43.1 % | 5.5 PP |
| Average equity | 1,008 | 1,038 | (2.9 %) |
| Return on equity before tax | 23.0 % | 7.7 % | 15.3 PP |
| Return on equity after minority interests | 17.4 % | 5.3 % | 12.1 PP |
| Average number of staff | 8,460 | 10,091 | (16.2 %) |
1 Data as at 31 March
Profit before tax rose in the first quarter by 193 per cent or € 38 million to € 58 million. The main reason for this was the comparatively low net allocations to provisions for impairment losses. In addition, net trading income was significantly positive, in contrast to the loss in the previous year. The segment's return on equity before tax thus increased by 15.3 percentage points to 23.0 per cent.
The sharp decrease of 43 per cent or € 90 million in net interest income to € 119 million was largely due to a reduction in the loan portfolio for corporate and retail customers. The selectivity in new lending and less profitable investment of surplus liquidity compared with the core business both depressed earnings. The net interest margin in the region decreased by 1.79 percentage points to 3.97 per cent. Balance sheet assets fell 13 per cent or € 1.8 billion compared to the same period of the previous year to € 12.3 billion. Credit risk-weighted assets fell 25 per cent to € 7.5 billion, primarily due to the reduced exposure for corporate customers.
Net allocations to provisions for impairment losses fell significantly from € 110 million in the previous year to € 37 million. This was mainly due to the release of provisions for portfolio impairment losses. Net allocations to individual impairment loss provisions totaled € 59 million, 16 per cent more than in the first quarter of 2009. The improvement in the rating structure and additional collateral resulted in higher releases during the reporting period. On balance, the reduction in the loan portfolio resulted in the release of portfolio provisions totaling € 22 million. The non-performing loan ratio in the loan portfolio rose by 8.5 percentage points over the previous year to 11.9 per cent.
Net fee and commission income fell 7 per cent or € 4 million to € 47 million, primarily as a result of income from the foreign exchange and notes and coins business, which fell 47 per cent year-on-year to € 11 million. Net income from payment transfers rose 9 per cent to € 20 million, making the largest contribution to net fee and commission income. In the loan and guarantee business, net income was unchanged from the previous year at € 8 million. Profit from the securities business increased to € 2 million in the period under review.
Net income from trading showed a turnaround in the period under review from minus € 28 million to € 34 million. Net income from interest-related trading doubled to almost € 35 million, with valuation gains on fixed-interest bonds due mainly to the continuing decrease in interest rates. A loss of € 2 million on currency trading was due primarily to the valuation of currency forward transactions caused by movements in forward rates.
In the period under review, net income from derivatives generated a loss of € 9 million, due mainly to the valuation losses on interest rate swaps entered into to reduce yield curve risk.
General administrative expenses fell overall by 4 per cent to € 96 million. By contrast, staff expenses rose 13 per cent or € 5 million to € 49 million as a result of salary adjustments. The average number of staff fell 16 per cent year-on-year to 8,460, mainly due to staff reductions at the bank's branches. Other administrative expenses fell 27 per cent or € 13 million to € 35 million, while depreciation, amortization and write-offs rose € 3 million to € 11 million. The number of business outlets fell 11 per cent or 27 locations on the previous year to 209, while the cost/income ratio in the region rose 5.5 percentage points to 48.6 per cent.
Other net operating income in this segment was minus € 3 million, mainly as a result of expense of € 2 million on non-income related taxes.
As a result of the removal from the scope of consolidation of an asset management company for reasons of materiality, the segment showed a positive result of € 3 million for net income from disposal of group assets.
Income taxes grew 8 per cent year-on-year to € 14 million. The effective tax rate fell 8 percentage points to 24 per cent. Profit after minority interests rose to € 44 million.
| In € million Net interest income Provisioning for impairment losses Net interest income after provisioning Net fee and commission income Net trading income Net income from derivatives Net income from financial investments |
2010 115 (78) 37 37 12 0 12 |
2009 126 (118) 8 43 23 |
Change (8.6 %) (33.6 %) 363.3 % (14.1 %) |
|---|---|---|---|
| (48.9 %) | |||
| 0 | – | ||
| 4 | 227.0 % | ||
| General administrative expenses | (78) | (78) | 0.4 % |
| of which staff expenses | (40) | (43) | (7.4 %) |
| of which other administrative expenses | (29) | (26) | 12.7 % |
| of which depreciation, amortization and write-offs | (9) | (9) | 2.2 % |
| Other net operating income | (2) | 1 | – |
| Net income from disposal of group assets | 0 | 0 | – |
| Profit/loss before tax | 17 | 1 | >500.0 % |
| Income taxes | (5) | 0 | >500.0 % |
| Profit/loss after tax | 12 | 1 | >500.0 % |
| Minority interests in profit | (2) | (4) | (60.0 %) |
| Profit/loss after minority interests | 10 | (3) | – |
| Segment's contribution to profit before tax | 7.4 % | 0.9 % | 6.5 PP |
| Segment's contribution to profit after tax | 6.4 % | 0.8 % | 5.6 PP |
| Risk-weighted assets (credit risk)1 | 5,374 | 7,500 | (28.3 %) |
| Total own funds requirement1 | 515 | 668 | (22.9 %) |
| Total assets1 | 6,650 | 7,715 | (13.8 %) |
| Liabilities1 | 5,711 | 6,724 | (15.1 %) |
| Cost/income ratio | 48.3 % | 40.4 % | 7.9 PP |
| Average equity | 700 | 850 | (17.6 %) |
| Return on equity before tax | 10.0 % | 0.5 % | 9.5 PP |
| Return on equity after minority interests | 5.9 % | 7.5 PP | |
| Average number of staff | 17,350 | 19,279 | (10.0 %) |
| Business outlets1 | 1,035 | 1,188 | (12.9 %) |
1 Data as ot 31 March
Profit before tax for the segment CIS Other rose by € 16 million to € 17 million in the period under review. The positive result before tax was achieved through a relatively significant decrease in net allocations to provisions for impairment losses and strong net income from financial investments. The segment's return on equity before tax rose accordingly by 9.5 percentage points to 10.0 per cent.
Net interest income for the segment fell 9 per cent or € 11 million overall to € 115 million. In Ukraine, the portfolio reduction, limited new business and credit restructuring measures all reduced earnings. In Belarus, by contrast, lower refinancing costs led to an increase in net interest income. Balance sheet assets fell 14 per cent or € 1.1 billion year-on-year to € 6.7 billion. The net interest margin rose accordingly by 72 basis points to 7.1 per cent. As a result of the reduction in business volume, credit riskweighted assets also fell 28 per cent to € 5.4 billion.
Net allocations to provisions for impairment losses fell 34 per cent overall from € 118 million to € 78 million. At the Ukraine Group units, they were significantly lower year-on-year, but remained at a relatively high level. In Belarus, net allocations to provisions for impairment losses increased from € 1 million to € 4 million in the first quarter of 2010. For the region as a whole, they totaled € 46 million, predominantly for retail loans in Ukraine. Net allocations to portfolio-related provisions totaled € 32 million, relating primarily to loans to major corporate customers in Ukraine. The non-performing loan ratio in the credit portfolio rose overall by 12.5 percentage points to 23.0 per cent, ranging from 4.0 per cent in Belarus to 27.2 per cent in Ukraine. However, growth in non-performing loans slowed over the 12-month period.
Net fee and commission income fell year-on-year by 14 per cent or € 6 million to € 37 million. Payment transfers again generated € 27 million, representing the largest contribution to net fee and commission income. Income from the foreign exchange and notes and coins business halved from the comparable period 2009 to € 9 million.
Net income from trading fell from € 23 million to € 12 million, predominantly in connection with the reduction in currency trading. Due to the movement in the exchange rate for the Belarusian rouble, valuation gains on a strategic currency position to hedge equity in Belarus fell from € 20 million in the previous year to € 1 million. Interest-related trading generated earnings of € 6 million, earned entirely in Ukraine. Revaluations on fixed-interest bonds and securities were partly due to the improvement in Ukraine's credit rating.
Net income from financial investments came to € 12 million. A positive factor here was the valuation gains under a mark-to-market approach for holdings of fixed-interest securities in Ukraine.
General administrative expenses were unchanged from the previous year at € 78 million. By contrast, staff expenses fell 7 per cent or € 3 million to € 40 million. The average number of staff in the region fell by 10 per cent or 1,929 to 17,350. In the course of the ongoing adjustment to the local presence, the number of business outlets was reduced by 13 per cent or 153 branches to 1,035. Other administrative expenses rose 13 per cent or € 3 million to € 29 million. Depreciation, amortization and writeoffs totaled € 9 million, unchanged from the previous year. As a result of the decrease in operating income, the cost/income ratio in the region rose by 7.9 percentage points to 48.3 per cent.
Other net operating income in this segment was minus € 2 million, involving a number of smaller income and expense items.
Income taxes totaled € 5 million. Following the loss a year earlier, profit for the period after minority interests was € 10 million.
Besides its regional segmentation, Raiffeisen International is arranged into business divisions that reflect its internal organization and reporting structure. The Group's business is broken down into the following divisions:
The corporate customer division comprises business with local and international mid-market companies and large corporations. The retail customer division includes private individuals and small and medium-sized businesses, in general, with a turnover of up to € 5 million. The treasury division encompasses the treasury's proprietary trading and investment banking activities, which are conducted only in a few Group units. Besides non-banking activities, the participations and other division concerns the management of participations. Other cross-divisional functions are also involved, including especially those performed by parent company Raiffeisen International Bank-Holding AG.
| 1/1-31/3/2010 | Corporate | Retail | Participations | ||
|---|---|---|---|---|---|
| In € million | customers | customers | Treasury | and other | Total |
| Net interest income | 222 | 404 | 23 | 42 | 690 |
| Provisioning for impairment losses | (134) | (161) | 1 | (1) | (295) |
| Net interest income after provisioning | 88 | 243 | 24 | 41 | 395 |
| Net fee and commission income | 97 | 185 | 0 | 0 | 282 |
| Net trading income | 1 | 0 | 56 | 1 | 58 |
| Net income from derivatives | 0 | 0 | (19) | 0 | (19) |
| Net income from financial investments | 0 | 0 | 55 | 0 | 55 |
| General administrative expenses | (120) | (408) | (23) | (33) | (585) |
| Other net operating income | 9 | 5 | 0 | (32) | (17) |
| Net income from disposal of Group assets | 0 | 0 | 0 | (3) | (3) |
| Profit/loss before tax | 75 | 25 | 93 | (26) | 166 |
| Risk-weighted assets (credit risk)1 | 24,615 | 17,040 | 5,697 | 3,232 | 50,584 |
| Total own funds requirement1 | 2,163 | 1,715 | 1,006 | 265 | 5,150 |
| Average number of employees | 9,211 | 43,959 | 1,397 | 1,727 | 56,294 |
| Cost/income ratio | 36.7% | 68.7% | 28.8% | –- | 57.7% |
| Average equity | 3,618 | 2,202 | 760 | 371 | 6,951 |
| Return on equity before tax | 8.2% | 4.7% | 48.8% | –- | 9.6% |
| Corporate | Retail | Participations | |||
| 1/1-31/3/2009 In € million |
customers | customers | Treasury | and other | Total |
| Net interest income | 275 | 428 | 10 | 54 | 767 |
| Provisioning for impairment losses | (151) | (295) | 0 | 1 | (445) |
| Net interest income after provisioning | 124 | 133 | 10 | 55 | 322 |
| Net fee and commission income | 99 | 192 | 0 | 3 | 294 |
Net trading income 0 0 47 (1) 46 Net income from derivatives 0 0 (5) 0 (5) Net income from financial investments (1) 0 (2) 0 (3) General administrative expenses (113) (409) (23) (29) (574) Other net operating income 11 3 0 (10) 4 Net income from disposal of Group assets 0 0 0 0 0 Profit/loss before tax 120 (81) 27 18 84 Risk-weighted assets (credit risk)1 30,098 17,828 6,240 3,902 58,068 Total own funds requirement1 2,573 1,692 986 331 5,582 Average number of employees 9,881 49,223 1,586 2,190 62,880 Cost/income ratio 29.2% 65.6% 39.8% 66.7% 51.7% Average equity 3,249 1,958 696 384 6,287 Return on equity before tax 14.9% –- 15.8% 16.0% 5.3%
1 Reporting date values as of 31 March
The corporate customer division registered a decline in earnings in the period under review. Profit before tax fell by 38 per cent to € 75 million. The main reason for that was a decrease of net interest income by almost one-fifth to € 222 million, while net allocations to provisions for impairment losses decreased by 11 per cent to € 134 million.
Operating income fell from € 385 million to € 329 million and thus remained 15 per cent below the comparable period's level. The decline of net interest income is primarily attributable to business with large corporate customers in Russia. Net fee and commission income was down only slightly, by 2 per cent to € 97 million. The decline of net fee and commission income in connection with large customers was mostly offset by income increases in business with medium-sized enterprises in the Czech Republic and Russia.
General administrative expenses increased by 6 per cent to € 120 million, and the cost/income ratio therefore rose by 7.5 percentage points to 36.7 per cent.
Other net operating income was down by 18 per cent to € 9 million. Operating leasing business in Croatia continued to make the largest contribution in the amount of € 5 million.
Credit risk-weighted assets came to € 24.6 billion. That means a decline of 18 per cent on the comparable period's level primarily due to volume influences.
The corporate customer division's return on equity before tax fell by 6.7 percentage points to 8.2 per cent due to the decline of net income.
The retail customer division achieved a profit before tax of € 25 million in the reporting period, after showing a loss before tax of € 81 million in the comparable period last year. That was due to the improved credit risk situation.
The division's operating income was down by 5 per cent on the comparable period at € 594 million. Net interest income fell by 6 per cent to € 404 million. That particularly affected the Group units in Ukraine, Romania, and Hungary, where interest income from this customer group decreased by half. Net fee and commission income also fell, by 4 per cent to € 185 million, primarily due to lower business with private individuals in the Ukrainian units.
The division's general administrative expenses remained almost unchanged in the reporting period at € 408 million. Because of the decline of operating income, the cost/income ratio increased by 3.1 percentage points to 68.7 per cent.
Other net operating income rose by € 2 million on the preceding year's period and amounted to € 5 million. Operating leasing business in Croatia made the largest contribution in the amount of € 3 million.
The credit risk-weighted assets of the retail customer division fell year-on-year by 4 per cent to € 17.0 billion. In contrast to the comparable period, the return on equity before tax was positive in the reporting period at 4.7 per cent.
The treasury division achieved profit before tax of € 93 million in the reporting period and thus registered a sharp increase on the comparable period. This growth was the result of improved net income from financial investments and higher net trading income.
Net interest income rose from € 10 million in the comparable period to € 23 million. The main reason for that was lower funding costs in almost all Group units.
Net trading income amounted to € 56 million and was positively influenced to a large extent by appreciation of the securities portfolio in Russia.
Net income from derivatives was negative in the amount of € 19 million primarily due to valuation losses on interest rate swaps in Russia and Croatia.
In contrast to the comparable period, net income from financial investments was significantly positive at € 55 million. It resulted largely from valuation gains of fixed-income securities in Romania and Ukraine.
General administrative expenses remained unchanged in comparison with the previous year's period at € 23 million. Operating income rose overall by 39 per cent to € 79 million. That resulted in an improvement of the cost/income ratio of 11.0 percentage points to 28.8 per cent.
Credit risk-weighted assets declined by 9 per cent to € 5.7 billion due to reallocations in the portfolios.
The division's return on equity before tax rose by 33.0 percentage points to 48.8 per cent.
The participations and other division registered a loss before tax of € 26 million in the period under review. Net interest income fell by 22 per cent on the comparable period to € 42 million. The result was negative in comparison with the previous year's period mainly because it includes computational results from the investment of equity, which decreased sharply mainly due to the lower interest rate level in Ukraine in the reporting period.
In addition to net income from participations and non-banking activities, this division includes the costs of central Group management, which remained stable in comparison with the previous year's period. Such costs remain in the division in accordance with internal guidelines and are not distributed among the other divisions.
Statement of comprehensive income
| 1/1-31/3 | 1/1-31/3 | ||
|---|---|---|---|
| In € million Notes |
2010 | 2009 | Change |
| Interest income | 1,193.2 | 1,546.0 | (22.8)% |
| Current income from associates | 0.0 | 0.3 | (84.5)% |
| Interest expenses | (503.3) | (779.2) | (35.4)% |
| Net interest income (2) |
689.9 | 767.1 | (10.1)% |
| Provisioning for impairment losses (3) |
(294.8) | (445.2) | (33.8)% |
| Net interest income after provisioning | 395.1 | 321.9 | 22.7% |
| Fee and commission income | 333.3 | 348.4 | (4.3)% |
| Fee and commission expense | (50.9) | (54.7) | (6.9)% |
| Net fee and commission income (4) |
282.4 | 293.7 | (3.9)% |
| Net trading income (5) |
57.6 | 45.6 | 26.4% |
| Net income from derivatives (6) |
(18.6) | (4.9) | 278.4% |
| Net income from financial investments (7) |
54.6 | (2.9) | – |
| General administrative expenses (8) |
(584.6) | (573.6) | 1.9% |
| Other net operating income (9) |
(17.3) | 3.7 | – |
| Net income from disposal of group assets | (3.1) | 0.1 | – |
| Profit before tax | 166.2 | 83.6 | 98.8% |
| Income taxes | (42.2) | (19.9) | 112.1% |
| Profit after tax | 124.0 | 63.7 | 94.7% |
| Minority interests in profit | (24.1) | (7.5) | 220.0% |
| Consolidated profit | 99.9 | 56.2 | 77.8% |
| Group equity | Minority interests | |||
|---|---|---|---|---|
| In € million | 1/1-31/3/2010 | 1/1-31/3/2009 | 1/1-31/3/2010 | 1/1-31/3/2009 |
| Consolidated profit | 100 | 56 | 24 | 8 |
| Exchange differences | 294 | (337) | 17 | (32) |
| Capital hedge | (8) | (1) | 0 | 0 |
| Cash flow hedge | 3 | (2) | 0 | 0 |
| Fair value reserve (available-for-sale financial assets) |
3 | 2 | 0 | 0 |
| Other comprehensive income | 292 | (338) | 17 | (32) |
| Total comprehensive income | 392 | (282) | 41 | (24) |
| In € | 1/1-31/3/2010 | 1/1-31/3/2009 | Change |
|---|---|---|---|
| Earnings per share | 0.55 | 0.27 | 0.28 |
| Earnings per share before computational compensation | |||
| for participation rights | 0.65 | 0.37 | 0.28 |
Earnings per share are obtained by dividing consolidated profit less the accrued compensation for the participation rights by the average number of common shares outstanding. As of 31 March 2010, the number of common shares outstanding was 153.7 million compared with 153.6 million as of 31 March 2009.
There were no conversion or option rights outstanding, so undiluted earnings per share are equal to diluted earnings per share.
| In € million | Q2/2009 | Q3/2009 | Q4/2009 | Q1/2010 |
|---|---|---|---|---|
| Net interest income | 728.6 | 728.7 | 712.1 | 689.9 |
| Provisioning for impairment losses | (523.4) | (396.5) | (372.9) | (294.8) |
| Net interest income after provisioning | 205.2 | 332.2 | 339.2 | 395.1 |
| Net fee and commission income | 291 | 321.6 | 316.7 | 282.4 |
| Net trading income | 73.3 | 27.8 | 39.7 | 57.6 |
| Net income from derivatives | 23.9 | (13.5) | 2.7 | (18.6) |
| Net income from financial investments | 34.2 | 12.2 | (2.2) | 54.6 |
| General administrative expenses | (569.5) | (534.9) | (591.7) | (584.6) |
| Other net operating income | 11.9 | (12.6) | (23.3) | (17.3) |
| Net income from disposal of group assets | 0 | 0 | 0 | (3.1) |
| Profit before tax | 70.0 | 132.8 | 81.1 | 166.2 |
| Income taxes | (14.8) | (36.3) | (9.5) | (42.2) |
| Profit after tax | 55.3 | 96.6 | 71.4 | 124.0 |
| Minority interests in profit | (33.5) | (19) | (14.9) | (24.1) |
| Consolidated profit | 21.8 | 77.6 | 56.6 | 99.9 |
| In € million | Q2/2008 | Q3/2008 | Q4/2008 | Q1/2009 |
|---|---|---|---|---|
| Net interest income | 786.5 | 844.1 | 890.3 | 767.1 |
| Provisioning for impairment losses | (108.3) | (164.2) | (414.8) | (445.2) |
| Net interest income after provisioning | 678.2 | 679.9 | 475.5 | 321.9 |
| Net fee and commission income | 372.0 | 394.9 | 398.6 | 293.7 |
| Net trading income | 54.6 | 35.2 | 40.3 | 45.6 |
| Net income from derivatives | 44.1 | (6.3) | (21.0) | (4.9) |
| Net income from financial investments | 0.9 | 10.8 | (35.8) | (2.9) |
| General administrative expenses | (665.5) | (689.6) | (693.4) | (573.6) |
| Other net operating income | (17.0) | (6.4) | 1.8 | 3.7 |
| Net income from disposal of group assets | 5.8 | (0.2) | 2.2 | 0.1 |
| Profit before tax | 473.1 | 418.3 | 168.2 | 83.6 |
| Income taxes | (106.0) | (99.3) | (55.3) | (19.9) |
| Profit after tax | 367.1 | 319.0 | 112.9 | 63.7 |
| Minority interests in profit | (55.8) | (23.2) | 7.7 | (7.5) |
| Consolidated profit | 311.3 | 295.8 | 120.6 | 56.2 |
| Assets | ||||
|---|---|---|---|---|
| In € million | Notes | 31/3/2010 | 31/12/2009 | Change |
| Cash reserve | 3,336 | 4,180 | (20.2)% | |
| Loans and advances to banks | (11,30) | 9,723 | 10,310 | (5.7)% |
| Loans and advances to customers | (12,30) | 51,230 | 50,515 | 1.4% |
| Impairment losses on loans and advances | (13) | (3,432) | (3,084) | 11.3% |
| Trading assets | (14,30) | 3,854 | 3,709 | 3.9% |
| Derivatives | (15,30) | 289 | 333 | (13.3)% |
| Financial investments | (16,30) | 9,019 | 7,271 | 24.0% |
| Investments in associates | (30) | 6 | 5 | 4.3% |
| Intangible fixed assets | (17) | 1,030 | 972 | 5.9% |
| Tangible fixed assets | (18) | 1,267 | 1,244 | 1.8% |
| Other assets | (19,30) | 868 | 820 | 5.9% |
| Total assets | 77,190 | 76,275 | 1.2% |
| Equity and liabilities | ||||
|---|---|---|---|---|
| In € million | Notes | 31/3/2010 | 31/12/2009 | Change |
| Deposits from banks | (20,30) | 20,132 | 20,110 | 0.1% |
| Deposits from customers | (21,30) | 42,553 | 42,578 | (0.1)% |
| Debt securities issued | (22,30) | 2,562 | 2,527 | 1.4% |
| Provisions for liabilities and charges | (23,30) | 355 | 312 | 14.0% |
| Trading liabilities | (24,30) | 538 | 514 | 4.6% |
| Derivatives | (25,30) | 348 | 259 | 34.0% |
| Other liabilities | (26,30) | 820 | 505 | 62.8% |
| Subordinated capital | (27,30) | 2,515 | 2,470 | 1.8% |
| Equity | (28) | 7,367 | 7,000 | 5.2% |
| Consolidated equity | 6,232 | 5,790 | 7.6% | |
| Consolidated profit | 100 | 212 | (52.9)% | |
| Minority interest | 1,035 | 998 | 3.7% | |
| Total equity and liabilities | 77,190 | 76,275 | 1.2% |
| In € million | Subscribed capital |
Participation rights |
Capital reserves |
Retained earnings |
Consoli dated profit |
Minority interests |
Total |
|---|---|---|---|---|---|---|---|
| Equity as of 1/1/2009 | 469 | 0 | 2,568 | 1,577 | 982 | 923 | 6,518 |
| Capital increases | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Transferred to retained earnings |
0 | 0 | 0 | 982 | (982) | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | (2) | (2) |
| Total comprehensive income |
0 | 0 | 0 | (338) | 56 | (24) | (306) |
| Own shares/share incentive program |
0 | 0 | (1) | 0 | 0 | 0 | (1) |
| Other changes | 0 | 0 | 0 | 7 | 0 | 0 | 534 |
| Equity as of 31/3/2009 | 469 | 0 | 2,567 | 2,227 | 56 | 897 | 6,216 |
| In € million | Subscribed capital |
Participation rights |
Capital reserves |
Retained earnings |
Consoli dated profit |
Minority interests |
Total |
|---|---|---|---|---|---|---|---|
| Equity as of 1/1/2010 | 469 | 600 | 2,569 | 2,152 | 212 | 998 | 7,000 |
| Capital increases | 0 | 0 | 0 | 0 | 0 | 3 | 3 |
| Transferred to retained earnings |
0 | 60 | 0 | 152 | (212) | 0 | 0 |
| Dividend payments | 0 | (60) | 0 | 0 | 0 | (3) | (63) |
| Total comprehensive income |
0 | 0 | 0 | 292 | 100 | 41 | 433 |
| Own shares/share incentive program |
0 | 0 | (2) | 0 | 0 | 0 | (2) |
| Other changes | 0 | 0 | 0 | 1 | 0 | (4) | (4) |
| Equity as of 31/3/2010 | 469 | 600 | 2,567 | 2,596 | 100 | 1,035 | 7,367 |
| In € million | 1/1-31/3 2010 |
1/1-31/3 2009 |
|---|---|---|
| Cash and cash equivalents at the end of previous period | 4,180 | 7,130 |
| Net cash from operating activities | (606) | (521) |
| Net cash from investing activities | (313) | 282 |
| Net cash from financing activities | (16) | 33 |
| Effect of exchange rate changes | 91 | (417) |
| Cash and cash equivalents at the end of period | 3,336 | 6,507 |
Raiffeisen International reports the following operating segments. The location of the respective business outlets served as the criteria for the segment assignment:
The reconciliation contains the amounts resulting from the elimination of intra-group results, the consolidation between segments and headquarters' results. It also includes the refinancing of the participations in the holding company.
| 1/1-31/3/2010 | Central | Southeastern | ||||
|---|---|---|---|---|---|---|
| In € million | Europe | Europe | Russia | CIS Other | Reconciliation | Total |
| Net interest income | 260.8 | 222.0 | 119.2 | 114.7 | (26.8) | 689.9 |
| Provisioning for impairment | ||||||
| losses | (111.1) | (68.6) | (37.0) | (78.1) | – | (294.8) |
| Net interest income (loss) after | ||||||
| provisioning | 149.7 | 153.4 | 82.2 | 36.6 | (26.8) | 395.1 |
| Net fee and commission income | 107.4 | 90.0 | 47.0 | 37.2 | 0.8 | 282.4 |
| Net trading income | 3.7 | 14.4 | 33.8 | 11.9 | (6.2) | 57.6 |
| Net income from derivatives | (3.7) | (5.5) | (8.7) | (0.4) | (0.3) | (18.6) |
| Net income from financial | ||||||
| investments | 20.5 | 22.4 | (0.4) | 12.1 | 0.0 | 54.6 |
| General administrative | ||||||
| expenses | (213.5) | (178.1) | (95.5) | (78.3) | (19.2) | (584.6) |
| of which staff expenses | (102.6) | (76.9) | (49.2) | (39.8) | (10.5) | (279.0) |
| of which other administrative expenses |
(91.6) | (76.1) | (35.4) | (29.3) | (8.1) | (240.5) |
| of which depreciation | (19.3) | (25.1) | (10.9) | (9.2) | (0.5) | (65.0) |
| Other net operating income | (5.3) | 10.4 | (3.4) | (1.7) | (17.3) | (17.3) |
| Net income from disposal of group | ||||||
| assets | 3.7 | (9.5) | 2.7 | 0.0 | – | (3.1) |
| Profit/loss before taxes | 62.5 | 97.5 | 57.7 | 17.4 | (68.9) | 166.2 |
| Income taxes | (13.9) | (13.1) | (14.1) | (5.4) | 4.4 | (42.1) |
| Profit/loss after taxes | 48.6 | 84.4 | 43.6 | 12.0 | (64.5) | 124.0 |
| Minority interests in profit | (16.8) | (5.3) | (0.1) | (1.6) | (0.3) | (24.1) |
| Consolidated profit/loss | 31.8 | 79.1 | 43.5 | 10.4 | (64.8) | 99.9 |
| Share of profit before tax | 26.5% | 41.4% | 24.6% | 7.4% | – | 100.0% |
| Share of profit after tax | 25.7% | 44.7% | 23.2% | 6.4% | – | 100.0% |
| Risk-weighted assets (credit risk)1 | 21,565 | 16,276 | 7,535 | 5,374 | (166) | 50,584 |
| Total own funds requirement1 | 1,985 | 1,514 | 798 | 515 | 338 | 5,150 |
| Total assets1 | 33,819 | 23,300 | 12,343 | 6,650 | 1,078 | 77,190 |
| Liabilities1 | 31,066 | 20,497 | 10,535 | 5,711 | 2,014 | 69,823 |
| Cost/income ratio | 58.3% | 52.9% | 48.6% | 48.3% | – | 57.7% |
| Average equity | 2,987 | 2,285 | 1,014 | 704 | (39) | 6,951 |
| Return on equity before tax | 8.4% | 17.1% | 22.8% | 9.9% | – | 9.6% |
| Consolidated return on equity (after minorities) |
5.6% | 15.4% | 17.3% | 5.9% | – | 6.7% |
| Average number of staff | 12,894 | 17,208 | 8,460 | 17,350 | 382 | 56,294 |
| Number of business outlets1 | 554 | 1,179 | 209 | 1,035 | – | 2,977 |
1 Reporting date values as of 31 March
| 1/1-31/3/2009 | Central | Southeastern | ||||
|---|---|---|---|---|---|---|
| In € million | Europe | Europe | Russia | CIS Other | Reconciliation | Total |
| Net interest income | 231.4 | 217.4 | 209.4 | 125.5 | (16.7) | 767.1 |
| Provisioning for impairment | ||||||
| losses | (105.4) | (112.3) | (109.9) | (117.7) | – | (445.2) |
| Net interest income (loss) after | ||||||
| provisioning | 126.1 | 105.2 | 99.5 | 7.8 | (16.7) | 321.9 |
| Net fee and commission income | 99.6 | 99.6 | 50.5 | 43.3 | 0.7 | 293.7 |
| Net trading income | 32.1 | 23.5 | (27.9) | 23.3 | (5.5) | 45.6 |
| Net income from derivatives | 0.6 | (2.6) | (3.6) | 0.1 | 0.6 | (4.9) |
| Net income from financial | ||||||
| investments | (10.3) | 2.1 | 1.6 | 3.7 | 0.0 | (2.9) |
| General administrative | ||||||
| expenses | (202.7) | (179.6) | (99.7) | (77.9) | (13.8) | (573.6) |
| of which staff expenses | (97.4) | (79.1) | (43.5) | (43.0) | (11.7) | (274.6) |
| of which other administrative expenses |
(86.2) | (76.3) | (48.4) | (26.0) | (1.4) | (238.3) |
| of which depreciation | (19.1) | (24.2) | (7.8) | (9.0) | (0.7) | (60.7) |
| Other net operating income | 0.9 | 7.6 | (0.7) | 0.8 | (4.8) | 3.7 |
| Net income from disposal of | ||||||
| group assets | 0.1 | 0.0 | 0.0 | 0.0 | – | 0.1 |
| Profit/loss before taxes | 46.3 | 55.8 | 19.9 | 1.1 | (39.5) | 83.6 |
| Income taxes | (10.9) | (10.3) | (6.3) | (0.3) | 7.9 | (19.9) |
| Profit/loss after taxes | 35.4 | 45.5 | 13.6 | 0.7 | (31.5) | 63.7 |
| Minority interests in profit | (12.5) | 2.0 | 0.1 | (4.0) | 6.8 | (7.5) |
| Consolidated profit/loss | 23.0 | 47.5 | 13.7 | (3.3) | (24.7) | 56.2 |
| Share of profit before tax | 37.6% | 45.3% | 16.2% | 0.9% | – | 100.0% |
| Share of profit after tax | 37.2% | 47.8% | 14.2% | 0.8% | – | 100.0% |
| Risk-weighted assets (credit risk)1 | 22,322 | 18,410 | 10,003 | 7,500 | (166) | 58,068 |
| Total own funds requirement1 | 2,025 | 1,653 | 906 | 668 | 330 | 5,582 |
| Total assets1 | 32,805 | 24,421 | 14,126 | 7,715 | 817 | 79,883 |
| Liabilities1 | 30,523 | 21,726 | 12,676 | 6,724 | 2,018 | 73,667 |
| Cost/income ratio | 55.7% | 51.6% | 43.1% | 40.4% | 0.0% | 51.7% |
| Average equity | 2,434 | 1,982 | 1,038 | 850 | (17) | 6,287 |
| Return on equity before tax | 7.6% | 11.3% | 7.7% | 0.5% | – | 5.3% |
| Consolidated return on equity | ||||||
| (after minorities) | 5.2% | 10.8% | 5.3% | – | – | 4.2% |
| Average number of staff | 14,079 | 19,123 | 10,091 | 19,279 | 308 | 62,880 |
| Number of business outlets1 | 584 | 1,200 | 236 | 1,188 | – | 3,208 |
1 Reporting date values as of 31 March
The consolidated financial statements of Raiffeisen International 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 2010 is prepared in accordance with IAS 34. In the interim reporting, the same recognition and measurement principles and consolidation methods are applied as in the preparation of the consolidated financial statements of 2009. Standards and Interpretations to be applied in the EU as of 1 January 2010 were applied in the interim report.
In March 2010, the EU adopted IFRIC 16 (Hedges of a Net Investment in a Foreign Operation). IFRIC 16 is to be applied for the business years beginning on or after 30 June 2009. Raiffeisen International adopted IFRIC 16 for the business year 2010 for the first time. The Interpretation provides guidance on identifying the risk of a net investment in a foreign operation and on where, within a Group, hedging instruments can be held to minimize the risk. In the interim report, measurement results shown in other comprehensive income amounted to € 1 million.
The interim report for the first quarter 2010 of Raiffeisen International Bank-Holding AG did not undergo a complete audit, neither did it undergo an audit inspection carried out by a certified auditor (framework prime market, page 9).
| Fully consolidated | Equity method | ||||
|---|---|---|---|---|---|
| Number of units | 31/3/2010 | 31/12/2009 | 31/3/2010 | 31/12/2009 | |
| As of beginning of period | 135 | 131 | 1 | 1 | |
| Included for the first time in the financial period | 1 | 8 | 0 | 0 | |
| Merged in the financial period | 0 | (3) | 0 | 0 | |
| Excluded in the financial period | (40) | (1) | 0 | 0 | |
| As of end of period | 96 | 135 | 1 | 1 |
The following company was integrated in the consolidated financial statements for the first time:
| Included | |||
|---|---|---|---|
| Name | Share | as of | Fact |
| Centralised Raiffeisen International Services & Payments S.R.L., | Start of | ||
| Bucharest (RO) | 100.0% | 1/1 | operations |
As of 1 January 2010, 40 subsidiaries were excluded from the group due changed materiality limits.
The following table shows the income statement according to IAS 39 measurement categories:
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Net income from financial assets and liabilities held-for-trading | (11.0) | 256.4 |
| Net income from financial assets and liabilities at fair value through profit or | ||
| loss | 107.3 | 52.8 |
| Net income from financial assets available-for-sale | 3.3 | 0.3 |
| Net income from loans and advances | 770.6 | 950.9 |
| Net income from financial assets held-to-maturity | 49.4 | 42.2 |
| Net income from financial liabilities measured at acquisition cost | (503.2) | (772.1) |
| Net income from derivatives (hedging) | (3.6) | 2.9 |
| Net revaluations from exchange differences | 76.0 | (173.7) |
| Other operating income/expenses | (322.6) | (276.1) |
| Total profit before tax from continuing operations | 166.2 | 83.6 |
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Interest and interest-like income, total | 1,193.2 | 1,546.0 |
| Interest income | 1,188.0 | 1,543.1 |
| from balances at central banks | 17.6 | 33.9 |
| from loans and advances to banks | 25.0 | 42.8 |
| from loans and advances to customers | 963.2 | 1,245.4 |
| from financial investments | 101.7 | 98.0 |
| from leasing claims | 58.3 | 78.2 |
| from derivative financial instruments (non-trading), net | 22.3 | 44.9 |
| Current income | 3.7 | (0.1) |
| Interest-like income | 1.5 | 3.0 |
| Current income from associates | 0.0 | 0.3 |
| Interest expenses and interest-like expenses, total | (503.3) | (779.2) |
| Interest expenses | (502.0) | (777.8) |
| on deposits from central banks | (0.1) | (7.1) |
| on deposits from banks | (137.0) | (272.1) |
| on deposits from customers | (303.3) | (443.4) |
| on debt securities issued | (30.8) | (32.4) |
| on subordinated capital | (30.8) | (22.8) |
| Interest-like expenses | (1.3) | (1.4) |
| Net interest income | 689.9 | 767.1 |
| In € million | 1/1-31/3 2010 |
1/1-31/3 2009 |
|---|---|---|
| Individual loan loss provisions | (237.5) | (300.1) |
| Allocation to provisions for impairment losses | (425.7) | (396.5) |
| Release of provisions for impairment losses | 198.0 | 102.9 |
| Direct write-downs | (16.5) | (11.6) |
| Income received on written-down claims | 6.7 | 5.1 |
| Portfolio-based loan loss provisions | (57.5) | (145.1) |
| Allocation to provisions for impairment losses | (180.2) | (199.6) |
| Release of provisions for impairment losses | 122.7 | 54.5 |
| Gains from the sales of loans | 0.2 | 0.0 |
| Total | (294.8) | (445.2) |
| In € million | 1/1-31/3 2010 |
1/1-31/3 2009 |
|---|---|---|
| Payment transfer business | 128.8 | 125.8 |
| Loan administration and guarantee business | 48.2 | 46.3 |
| Securities business | 12.1 | 6.1 |
| Foreign currency, notes/coins, and precious-metals business | 66.3 | 92.0 |
| Management of investment and pension funds | 5.6 | 5.1 |
| Agency services for own and third party products | 9.3 | 6.0 |
| Credit derivatives business | (0.2) | (0.6) |
| Other banking services | 12.2 | 13.0 |
| Total | 282.4 | 293.7 |
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Interest-based transactions | 54.8 | 36.0 |
| Currency-based transactions | 0.2 | 10.5 |
| Equity-/index-based transactions | 2.5 | (1.0) |
| Other transactions | 0.2 | 0.1 |
| Total | 57.6 | 45.6 |
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Net income from hedge accounting | 0.4 | 3.1 |
| Net income from credit derivatives | (0.2) | 0.3 |
| Net income from other derivatives | (18.8) | (8.3) |
| Total | (18.6) | (4.9) |
| In € million | 1/1-31/3 2010 |
1/1-31/3 2009 |
|---|---|---|
| Net income from financial investments held-to-maturity | 0.1 | (1.5) |
| Net proceeds from sales of financial investments held-to-maturity | 0.1 | (1.5) |
| Net income from securities at fair value through profit and loss | 54.5 | (1.4) |
| Net valuations of securities at fair value through profit and loss | 46.8 | (1.8) |
| Net proceeds from sales of securities at fair value through profit and loss | 7.7 | 0.4 |
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Staff expenses | (279.0) | (274.6) |
| Other administrative expenses | (240.5) | (238.3) |
| Depreciation on intangible and tangible fixed assets | (65.0) | (60.7) |
| Total | (584.6) | (573.6) |
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| In € million | 2010 | 2009 |
| Sales revenues from non-banking activities | 12.6 | 39.1 |
| Expenses arising from non-banking activities | (18.2) | (39.2) |
| Net income from additional leasing services | 0.4 | 1.0 |
| Rental income from operating lease (vehicles and equipment) | 0.3 | 0.7 |
| Rental income from investment property incl. operating lease (real estate) | 10.7 | 10.6 |
| Net proceeds from disposal of tangible and intangible fixed assets | (0.8) | (0.4) |
| Other taxes | (11.6) | (12.5) |
| Income from release of negative goodwill | 0.0 | 0.0 |
| Net expense from allocation and release of other provisions | (6.0) | 1.3 |
| Sundry operating income | 3.7 | 8.3 |
| Sundry operating expenses | (8.5) | (5.2) |
| Total | (17.3) | 3.7 |
The following table shows the statement of financial position according to IAS 39 measurement categories:
| Assets according to measurement categories In € million |
31/3/2010 | 31/12/2009 |
|---|---|---|
| Trading assets | 4,116 | 4,021 |
| Financial assets at fair value through profit or loss | 4,657 | 3,234 |
| Financial assets available-for-sale | 145 | 119 |
| Investments in associates | 6 | 5 |
| Loans and advances | 61,700 | 62,709 |
| Financial assets held-to-maturity | 4,244 | 3,950 |
| Derivatives (hedging) | 26 | 22 |
| Other assets | 2,296 | 2,215 |
| Total assets | 77,190 | 76,275 |
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 provisions for impairment losses. Other assets comprise intangible and tangible fixed assets.
| Equity and liabilities according to measurement categories In € million |
31/3/2010 | 31/12/2009 |
|---|---|---|
| Trading liabilities | 832 | 723 |
| Financial liabilities at amortized cost | 68,582 | 68,190 |
| Derivatives (hedging) | 54 | 50 |
| Provisions for liabilities and charges | 355 | 312 |
| Equity | 7,367 | 7,000 |
| Total equity and liabilities | 77,190 | 76,275 |
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 | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Giro and clearing business | 2,050 | 2,125 |
| Money market business | 7,439 | 7,904 |
| Loans to banks | 232 | 278 |
| Leasing claims | 1 | 2 |
| Claims evidenced by paper | 1 | 1 |
| Total | 9,723 | 10,310 |
Loans and advances to banks classified regionally (counterparty's seat) are as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central Europe | 314 | 1,007 |
| Southeastern Europe | 1,029 | 1,148 |
| Russia | 738 | 559 |
| CIS Other | 543 | 466 |
| Austria | 5,604 | 5,673 |
| Other countries | 1,495 | 1,457 |
| Total | 9,723 | 10,310 |
Loans and advances to banks break down into the following bank segments:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central banks | 1,457 | 1,951 |
| Commercial banks | 8,266 | 8,336 |
| Multilateral development banks (MDB) | 0 | 23 |
| Total | 9,723 | 10,310 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Credit business | 28,146 | 26,724 |
| Money market business | 2,596 | 2,148 |
| Mortgage loans | 16,804 | 17,875 |
| Purchased loans | 483 | 499 |
| Leasing claims | 3,199 | 3,267 |
| Claims evidenced by paper | 2 | 2 |
| Total | 51,230 | 50,515 |
Loans and advances to customers break down into the following asset classes according to Basel II definition:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Sovereigns | 1,094 | 1,158 |
| Corporate customers – large | 25,791 | 25,372 |
| Corporate customers – small business | 3,910 | 3,815 |
| Retail customers – private individuals | 18,000 | 17,790 |
| Retail customers – small and medium-sized entities | 2,413 | 2,352 |
| Other | 22 | 28 |
| Total | 51,230 | 50,515 |
Loans and advances to customers classified regionally (counterparty's seat) are as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central Europe | 24,362 | 23,379 |
| Southeastern Europe | 12,163 | 12,320 |
| Russia | 6,030 | 6,112 |
| CIS Other | 5,425 | 5,403 |
| Austria | 23 | 32 |
| Other countries | 3,227 | 3,269 |
| Total | 51,230 | 50,515 |
Provisions for impairment losses are allocated to the following asset classes according to Basel II definition:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Sovereigns | 3 | 3 |
| Banks | 3 | 3 |
| Corporate customers – large | 1,526 | 1,365 |
| Corporate customers – small business | 371 | 333 |
| Retail customers – private individuals | 1,298 | 1,170 |
| Retail customers – small and medium-sized entities | 231 | 210 |
| Total | 3,432 | 3,084 |
The following table shows the geographic breakdown of provisions (including provisions for contingent liabilities) by the entities' head office:
| As of | Change in consolidated |
Exchange | As of | ||||
|---|---|---|---|---|---|---|---|
| In € million | 1/1/2010 | group | Allocation1 | Release | Usage2 | differences | 31/3/2010 |
| Individual loan loss | |||||||
| provisions | 2,383 | (1) | 435 | (198) | (80) | 110 | 2,649 |
| Central Europe | 759 | (1) | 163 | (103) | (22) | 21 | 817 |
| Southeastern Europe | 485 | 0 | 120 | (47) | (33) | 4 | 529 |
| Russia | 482 | 0 | 105 | (47) | (19) | 43 | 564 |
| CIS Other | 657 | 0 | 47 | (1) | (6) | 42 | 739 |
| Portfolio-based loan loss | |||||||
| provisions | 771 | 0 | 179 | (122) | 0 | 30 | 858 |
| Central Europe | 274 | 0 | 87 | (36) | 0 | 8 | 333 |
| Southeastern Europe | 199 | 0 | 24 | (28) | 0 | 1 | 196 |
| Russia | 137 | 0 | 18 | (40) | 0 | 11 | 126 |
| CIS Other | 161 | 0 | 50 | (18) | 0 | 10 | 203 |
| Total | 3,154 | (1) | 614 | (320) | (80) | 140 | 3,507 |
1 Allocation includes direct write downs and income on written down claims.
2 Usage includes direct write downs and income on written down claims.
| 31/3/2010 | Carrying | Individual loan loss |
Portfolio - based |
Net carrying |
Individually impaired |
|
|---|---|---|---|---|---|---|
| In € million | amount | provisions | provisions | amount | assets | Fair value |
| Banks | 9,723 | 3 | 0 | 9,720 | 7 | 9,712 |
| Sovereigns | 1,094 | 3 | 0 | 1,091 | 78 | 1,089 |
| Corporate customers – large |
25,791 | 1,271 | 255 | 24,265 | 2,995 | 24,843 |
| Corporate customers – small business |
3,910 | 317 | 54 | 3,539 | 631 | 3,728 |
| Retail customers – private individuals |
18,000 | 854 | 444 | 16,702 | 1,246 | 17,823 |
| Retail customers – small and medium-sized |
||||||
| entities | 2,413 | 177 | 54 | 2,182 | 298 | 2,268 |
| Other | 22 | 0 | 0 | 23 | 0 | 23 |
| Total | 60,953 | 2,625 | 807 | 57,521 | 5,256 | 59,486 |
The following table gives an overview of the loans and advances as well as loan loss provisions according to Basel II asset classes:
| 31/12/2009 | Individual | Portfolio - | Net | Individually | ||
|---|---|---|---|---|---|---|
| Carrying | loan loss | based | carrying | impaired | ||
| In € million | amount | provisions | provisions | amount | assets | Fair value |
| Banks | 10,310 | 3 | 0 | 10,307 | 4 | 10,306 |
| Sovereigns | 1,158 | 3 | 0 | 1,155 | 80 | 1,143 |
| Corporate customers – | ||||||
| large | 25,372 | 1,137 | 228 | 24,007 | 2,776 | 24,478 |
| Corporate customers – | ||||||
| small business | 3,815 | 280 | 53 | 3,482 | 582 | 3,665 |
| Retail customers – | ||||||
| private individuals | 17,790 | 778 | 392 | 16,620 | 1,192 | 17,596 |
| Retail customers – small | ||||||
| and medium-sized | ||||||
| entities | 2,352 | 157 | 54 | 2,142 | 271 | 2,276 |
| Other | 28 | 0 | 0 | 28 | 0 | 28 |
| Total | 60,825 | 2,358 | 726 | 57,741 | 4,906 | 59,491 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Bonds, notes and other fixed-interest securities | 3,266 | 3,152 |
| Shares and other variable-yield securities | 10 | 11 |
| Positive fair values of derivative financial instruments | 578 | 546 |
| Total | 3,854 | 3,709 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Positive fair values of derivatives in fair value hedges (IAS 39) | 25 | 22 |
| Positive fair values of derivatives cash flow hedges (IAS 39) | 1 | 0 |
| Positive fair values of other derivatives | 263 | 311 |
| Total | 289 | 333 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Bonds, notes and other fixed-interest securities | 8,673 | 6,955 |
| Shares and other variable-yield securities | 201 | 197 |
| Equity participations | 145 | 119 |
| Total | 9,019 | 7,271 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Goodwill | 619 | 581 |
| Software | 292 | 275 |
| Other intangible fixed assets | 119 | 116 |
| Total | 1,030 | 972 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Land and buildings used by the Group for own purposes | 548 | 526 |
| Other land and buildings (investment property) | 28 | 27 |
| Office furniture and equipment as well as other tangible fixed assets | 480 | 479 |
| Leased assets (operating lease) | 211 | 212 |
| Total | 1,267 | 1,244 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Tax assets | 255 | 229 |
| Receivables arising from non-banking activities | 21 | 27 |
| Prepayments and other deferrals | 242 | 221 |
| Clearing claims from securities and payment transfer business | 91 | 96 |
| Lease in progress | 117 | 141 |
| Assets held for sale (IFRS 5) | 3 | 2 |
| Inventories | 28 | 30 |
| Any other business | 111 | 74 |
| Total | 868 | 820 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Giro and clearing business | 584 | 733 |
| Money market business | 2,989 | 3,145 |
| Long-term loans | 16,559 | 16,232 |
| Total | 20,132 | 20,110 |
Deposits from banks classified regionally (counterparty's seat) break down as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central Europe | 1,660 | 1,671 |
| Southeastern Europe | 790 | 1,456 |
| Russia | 8 | 406 |
| CIS Other | 75 | 38 |
| Austria | 13,640 | 12,736 |
| Other countries | 3,959 | 3,803 |
| Total | 20,132 | 20,110 |
The deposits break down into the following bank segments:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central banks | 332 | 490 |
| Commercial banks | 18,982 | 18,773 |
| Multilateral development banks (MDB) | 818 | 847 |
| Total | 20,132 | 20,110 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Sight deposits | 17,739 | 17,140 |
| Time deposits | 23,369 | 24,045 |
| Savings deposits | 1,444 | 1,393 |
| Total | 42,553 | 42,578 |
Deposits from customers break down by according to Basel II definition as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Sovereigns | 1,328 | 1,559 |
| Corporate customers – large | 14,213 | 14,181 |
| Corporate customers – small business | 2,262 | 2,331 |
| Retail customers – private individuals | 21,343 | 21,104 |
| Retail customers – small and medium-sized entities | 3,006 | 3,129 |
| Other | 401 | 274 |
| Total | 42,553 | 42,578 |
Deposits from customers classified regionally (counterparty's seat) are as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Central Europe | 19,111 | 19,448 |
| Southeastern Europe | 12,242 | 12,249 |
| Russia | 5,873 | 5,496 |
| CIS Other | 3,030 | 2,890 |
| Austria | 475 | 405 |
| Other countries | 1,821 | 2,090 |
| Total | 42,553 | 42,578 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Bonds and notes issued | 1,986 | 1,925 |
| Other debt securities issued | 576 | 602 |
| Total | 2,562 | 2,527 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Severance payments | 9 | 9 |
| Retirement benefits | 5 | 5 |
| Taxes | 40 | 26 |
| Contingent liabilities and commitments | 77 | 70 |
| Pending legal issues | 43 | 40 |
| Overdue vacation | 33 | 29 |
| Bonus payments | 99 | 92 |
| Restructuring | 7 | 3 |
| Other | 42 | 38 |
| Total | 355 | 312 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Negative fair values of derivative financial instruments | 532 | 510 |
| Short-selling of trading assets | 6 | 4 |
| Total | 538 | 514 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Negative fair values of derivatives in fair value hedges (IAS 39) | 7 | 5 |
| Negative fair values of derivatives in cash flow hedges (IAS 39) | 47 | 45 |
| Negative fair values of derivative financial instruments | 294 | 209 |
| Total | 348 | 259 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Liabilities from non-banking activities | 63 | 62 |
| Accruals and deferred items | 135 | 111 |
| Liabilities from dividends | 62 | 1 |
| Clearing claims from securities and payment transfer business | 384 | 169 |
| Any other business | 176 | 162 |
| Total | 820 | 505 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Hybrid tier 1 capital | 1,188 | 1,169 |
| Subordinated liabilities | 1,236 | 1,210 |
| Supplementary capital | 91 | 91 |
| Total | 2,515 | 2,470 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Consolidated equity | 6,232 | 5,790 |
| Subscribed capital | 469 | 469 |
| Participation rights | 600 | 600 |
| Capital reserves | 2,567 | 2,569 |
| Retained earnings | 2,596 | 2,152 |
| Consolidated profit | 100 | 212 |
| Minority interests | 1,035 | 998 |
| Total | 7,367 | 7,000 |
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Contingent liabilities | 4,748 | 4,668 |
| Commitments (irrevocable credit lines) | 5,821 | 5,395 |
Moreover, revocable credit lines were granted to an amount of € 4,340 million (31/12/2009: € 4,646 million) which currently bear no credit risk.
Transactions with related parties who are natural persons are limited to banking business transactions which are carried out at fair market conditions. Moreover, members of the Managing Board hold shares of Raiffeisen International Bank-Holding AG. This information is published on the homepage of Raiffeisen International. Further business transactions, especially large banking business transactions with related parties who are natural persons were not concluded in the reporting period.
Transactions with related companies, especially relations to the parent company Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna, as majority shareholder are shown in the tables below:
| 31/3/2010 In € million |
Parent companies |
Affiliated companies |
Companies valued at equity |
Other interests |
|---|---|---|---|---|
| Loans and advances to banks | 4,813 | 17 | 0 | 26 |
| Loans and advances to customers | 0 | 257 | 0 | 44 |
| Trading assets | 68 | 2 | 0 | 0 |
| Financial investments | 0 | 83 | 0 | 62 |
| Investments in associates | 0 | 0 | 6 | 0 |
| Other assets including derivatives | 178 | 9 | 0 | 1 |
| Deposits from banks | 12,391 | 1,168 | 0 | 118 |
| Deposits from customers | 0 | 53 | 3 | 11 |
| Debt securities issued | 15 | 0 | 0 | 0 |
| Provisions for liabilities and charges | 4 | 0 | 0 | 0 |
| Trading liabilities | 100 | 0 | 0 | 0 |
| Other liabilities including derivatives | 223 | 12 | 0 | 0 |
| Subordinated capital | 1,557 | 590 | 0 | 0 |
| Guarantees given | 289 | 2 | 0 | 0 |
| Guarantees received | 125 | 0 | 0 | 1 |
| 31/12/2009 | Companies | |||
|---|---|---|---|---|
| Parent | Affiliated | valued at | ||
| In € million | companies | companies | equity | Other interests |
| Loans and advances to banks | 4,873 | 32 | 0 | 1 |
| Loans and advances to customers | 0 | 211 | 14 | 35 |
| Trading assets | 90 | 2 | 0 | 0 |
| Financial investments | 0 | 60 | 11 | 59 |
| Investments in associates | 0 | 0 | 5 | 0 |
| Other assets including derivatives | 192 | 3 | 0 | 1 |
| Deposits from banks | 11,699 | 1,254 | 0 | 95 |
| Deposits from customers | 0 | 66 | 2 | 11 |
| Debt securities issued | 19 | 0 | 0 | 0 |
| Provisions for liabilities and charges | 4 | 0 | 0 | 0 |
| Trading liabilities | 87 | 0 | 0 | 2 |
| Other liabilities including derivatives | 121 | 3 | 1 | 0 |
| Subordinated capital | 1,529 | 588 | 0 | 0 |
| Guarantees given | 372 | 11 | 0 | 0 |
| Guarantees received | 242 | 0 | 0 | 1 |
As a subsidiary of RZB, Raiffeisen International does not have its own Group of credit institutions as defined by the Austrian Banking Act (BWG). Therefore, it is not itself subject to the relevant regulatory requirements. However, the following figures are accounted for within the scope of RZB Group of credit institutions. They are provided here for information purposes only.
The own funds of Raiffeisen International according to the Austrian Banking Act 1993/Amendment 2006 (Basel II) break down as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Paid-in capital | 3,636 | 3,638 |
| Earned capital | 1,691 | 1,512 |
| Minority interest | 1,072 | 1,062 |
| Hybrid tier 1 capital | 1,150 | 1,150 |
| Intangible fixed assets | (302) | (289) |
| Core capital (tier 1 capital) | 7,247 | 7,072 |
| Deductions from core capital | (16) | (13) |
| Eligible core capital (after deductions) | 7,231 | 7,059 |
| Additional own funds according to Section 23 (1) 5 BWG | 91 | 91 |
| Provision excess of internal rating approach positions | 0 | 8 |
| Long-term subordinated own funds | 1,015 | 1,003 |
| Additional own funds (tier 2 capital) | 1,106 | 1,102 |
| Deduction items: participations, securitizations | (15) | (13) |
| Eligible additional own funds (after deductions) | 1,091 | 1,089 |
| Deduction items: insurances | (1) | (1) |
| Tier 2 capital available to be redesignated as tier 3 capital | 212 | 182 |
| Total own funds | 8,533 | 8,328 |
| Total own funds requirement | 5,150 | 5,117 |
| Excess own funds | 3,383 | 3,212 |
| Excess cover ratio | 65.7% | 62.8% |
| Core capital ratio (tier 1), credit risk | 14.3% | 14.1% |
| Core capital ratio (tier 1), total | 11.2% | 11.0% |
| Core tier 1 ratio (excl. hybrid capital), total | 9.4% | 9.2% |
| Own funds ratio | 13.3% | 13.0% |
The total own funds requirement is as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Risk-weighted assets according to Section 22 BWG | 50,584 | 50,090 |
| of which 8 per cent minimum own funds for the credit risk | ||
| according to Sections 22a to 22h BWG | 4,047 | 4,007 |
| Standardized approach | 2,887 | 2,862 |
| Internal rating approach | 1,160 | 1,146 |
| Settlement risk | 0 | 0 |
| Own funds requirement for position risk in bonds, equities and commodities | 144 | 136 |
| Own funds requirement for open currency positions | 360 | 399 |
| Own funds requirement for operational risk | 599 | 574 |
| Total own funds requirement | 5,150 | 5,117 |
Risk-weighted assets for the credit risk according to asset classes break down as follows:
| In € million | 31/3/2010 | 31/12/2009 |
|---|---|---|
| Risk-weighted assets according to the standardized approach | 36,089 | 35,771 |
| Central governments and central banks | 2,809 | 2,605 |
| Regional governments | 127 | 127 |
| Public administration and non-profit organisations | 36 | 38 |
| Multilateral development banks (MDB) | 0 | 0 |
| Banks | 1,806 | 1,684 |
| Corporates | 17,794 | 17,546 |
| Retail (including small and medium-sized entities) | 11,467 | 11,451 |
| Mutual funds | 123 | 123 |
| Securitization position | 1 | 3 |
| Other positions | 1,926 | 2,195 |
| Risk-weighted assets on internal rating approach | 14,495 | 14,319 |
| Central governments and central banks | 769 | 680 |
| Banks | 1,627 | 1,670 |
| Corporates | 11,942 | 11,817 |
| Equity exposures | 156 | 152 |
| Total | 50,584 | 50,090 |
The average number of staff employed during the reporting period (full-time equivalents) breaks down as follows:
| 1/1-31/3 | 1/1-31/3 | |
|---|---|---|
| Full-time equivalents | 2010 | 2009 |
| Central Europe | 12,894 | 14,079 |
| Southeastern Europe | 17,208 | 19,123 |
| Russia | 8,460 | 10,091 |
| CIS Other | 17,350 | 19,279 |
| Austria | 382 | 308 |
| Total | 56,294 | 62,880 |
| Annual General Meeting |
|---|
| Ex-Dividend und Dividend Payment Date |
| Start of the quiet period |
| Semi-Annual Report, Conference Call |
| Start of the quiet period |
| Third Quarter Report, Conference Call |
Published by Raiffeisen International Bank-Holding AG, Am Stadtpark 3, 1030 Vienna, Austria Edited by Investor Relations Copy deadline: 30 May 2010 Produced in Vienna Internet: www.ri.co.at This report is also available in German.
Inquiries to Investor Relations: Inquiries to Public Relations: E-mail: [email protected] E-mail: [email protected] Internet: www.ri.co.at Investor Relations Internet: www.ri.co.at Public Relations Phone: +43-1-71707-2089 Phone: +43-1-71707-2828
The forecasts, plans, and statements addressing the future are based on the knowledge and estimates of Raiffeisen International 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.
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.
www.ri.co.at
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