Herbert Stepic, CEO of Raiffeisen International, is pleased with the results: „Not only did we have a very successful initial public offering, we also had a very good start in the current business year. Matching and even exceeding the good results of 2004 confirms the successful path we have been following for years. The results of the first quarter are fully in line with our budget for the entire business year 2005.”
Balance-sheet total exceeds € 30 billion
The balance-sheet total of Raiffeisen International reached € 31.5 billion in the first quarter, an increase of 8.9 per cent compared with year-end 2004. Compared with the first quarter 2004, it even grew by 48 per cent or € 10.2 billion. Deducting the € 1.5 billion stemming from the acquisition in Albania in April 2004, the growth rate was still 41 per cent. Loans and advances to customers increased by 8.8 per cent to € 17.7 billion. In relative terms, the strongest growth of credit business was recorded in Southeastern Europe. Loans to small and medium-sized customers showed the largest increase in Central Europe.
Deposits from customers grew by 6.2 per cent to € 19.3 billion. Deposits from banks showed an increase of 15.4 per cent during the first three months of 2005 compared with the year-end 2004 and reached € 7.6 billion.
Operating income increases by almost 50 per cent
Compared with the first quarter of 2004, Raiffeisen International’s operating income increased significantly by 47.9 per cent or € 130.1 million to € 401.8 million. The main driver was Net interest income which grew by 56.6 per cent to € 258.7 million., Thanks to an improvement of the interest margin by 25 basis points to 3.45 per cent, the growth rate of net interest income exceeded that of the balance-sheet total.
Administrative expenses grew less than operating income (by 44.5 per cent to € 240.9 million), and consequently Cost/income ratio improved to 59.9 per cent. The average number of employees increased by 23 per cent or 4,258 to 22,943. Approximately 1,000 thereof stem from Raiffeisenbank in Albania, which was consolidated for the first time in April 2004.
Operating result grew by 53.2 per cent or € 55.9 million reaching € 160.9 million. Despite significantly higher credit volumes, Provisioning for impairment losses increased only slightly versus the first quarter of 2004 by 4.8 per cent to € 28.5 million.
Equity continued to grow
Equity shown on Raiffeisen International’s Balance Sheet increased by 4 per cent or € 94 million to € 2,271 million between year-end 2004 and the reporting date. Current profit for the period contributed € 109 million and movements in the exchange rates of Central and Eastern European currencies further increased equity by € 38 million. Dividend distributions to the shareholders of Raiffeisen International and other shareholders of Group-members in respect of the 2004 financial year diminished equity by € 55 million.
Regulatory own funds increased by € 58 million or 2.5 per cent to € 2,418 million. Those own funds compared with a Regulatory own funds requirement of € 1,762 million. That was € 191 million more than at year-end 2004, reducing Raiffeisen International’s Excess own funds position by € 133 million to € 656 million. Its Own funds ratio was 11.0 per cent, compared with 12.0 per cent at year-end. The Group’s Core capital ratio also fell by a percentage point to 9.1 per cent. The IPO in April has substantially increased those values.
Return on Equity before tax (profit before tax divided by equity) improved versus year-end by 2.5 basis points to 24.7 per cent.
Retail Banking with significant profit contribution
The business segment Retail Banking showed the strongest growth among all segments and increased its profit before tax from € 3.3 million in the first quarter 2004 to € 27.7 million in the first quarter 2005. Martin Grüll, CFO of Raiffeisen International, considers this development a real success story: „The retail business has started galloping, and growth rates with private individuals and small and medium-sized companies exceed our expectations. Due to our excellent relationship with supranational financial institutions we are in the position to support local commercial customers with longer-term financing. Such products are naturally highly demanded.” The number of retail customers exceeded the number of 5 million during the first quarter and reached 5.27 million as of 31 March. The contribution of this segment to the Group’s overall profit was at break-even level in the first quarter of 2004, in the meantime it contributes 21 per cent. Return on equity (before tax) reached 18.9 per cent.
Raiffeisen International’s biggest and most profitable business segment still remains the Corporate Customers segment. It delivered first-quarter Profit before tax of € 80.5 million to account for 60 per cent of the Group’s total profit. The 19.6 per cent increase in profit before tax was mainly attributable to a further improvement in its risk position after extraordinary provisioning for impairment losses incurred in the first quarter 2004. This segment’s return on equity before tax reached 31.5 per cent.
The Treasury segment recorded a growth of 66.4 per cent to € 37.6 million. Both the significantly increased Net interest income and slightly reduced General administrative expenses contributed to this strong growth. Pre-tax return on Equity reached 34.6 per cent. The loss in Participations and Other was reduced by € 1.7 million to € 12.5 million.
You can download the First Quarter Interim Report 2005 from http://www.ri.co.at.
