RZB Group Improves Results in 2013
OREANDA-NEWS. The Raiffeisen Zentralbank Osterreich AG (RZB) Group - composed of the central institution of the Raiffeisen Banking Group and its participations, including the sub-group Raiffeisen Bank International (RBI), the specialised sector companies and UNIQA - achieved a substantial improvement in its results, despite the challenging economic conditions. “2013 was a good year for us. We saw strong gains in both operative business and profits. This success once again underlines RZB's excellent strategic positioning and solid business model,” said RZB CEO Walter Rothensteiner.
In 2013, RZB earned a profit before tax of € 1,049 million (plus 14.3 per cent). The pre-tax profit was mainly influenced by the significantly better operating result, which rose 26 per cent or € 529 million to € 2,563 million. Companies valued at equity also made positive contributions to the Group's pre-tax result. The result was negatively impacted by an increase of € 169 million in net provisioning for impairment losses, higher banking levies and negative results from derivatives and liabilities.
Solid capital adequacy
At the end of 2013, the Tier 1 capital ratio based on credit risk was 12.6 per cent (minus 1.2 percentage points). Based on total risk, the Core Tier 1 ratio was 9.9 per cent (minus 1.0 percentage point), and the Tier 1 ratio amounted to 10.4 per cent (minus 1.0 percentage point). The own funds ratio reached 14.2 per cent in 2013, after 14.5 per cent in the previous year. These values were calculated in accordance with the Austrian Banking Act. As of year-end 2013, RZB's total own funds amounted to € 12,645 million, reflecting a mild decline of 0.2 per cent. “RZB's solid capital position further improved thanks to the successful capital increase at RBI, which also laid the foundation for the planned redemption of the participation capital,” noted Rothensteiner. In particular, the € 126 million in reinvested profits from the previous year helped to reinforce the equity capital position. This was contrasted against a decline of € 449 million, mainly due to currency translation adjustments, in particular in Ukraine and Russia, and to valuation results.
In 2013, RZB paid out a total of € 529 million in dividends. Of this, dividends of € 244 million were paid to shareholders of Raiffeisen Zentralbank and a dividend of € 140 million was paid on RBI AG's participation capital, which is subscribed by the Republic of Austria. RZB services the capital subscribed by the state every year. Subject to approval by the Annual General Meeting, RZB will have paid dividends on the participation capital to the Republic of Austria totalling € 700 million for the period 2009 through 2013.
Profit before tax rises by 14.3 per cent
During the reporting period, RZB earned a profit before tax of € 1,049 million, representing an increase of 14.3 per cent or € 131 million compared to the previous year. One major factor behind this was a significant increase in the operating result, which rose by 26.0 per cent or € 529 million.
This, in turn, was primarily driven by a strong increase in the net interest margin to 3.05 per cent in the year under review (up from 2.61 per cent in 2012). Despite a reduction in interest-bearing assets, net interest income rose by 11 per cent or € 400 million to € 3,931 million in 2013. A positive effect was also felt from the significant rise of € 124 million in regular income from companies valued at equity. This increase mainly stemmed from the better result at UNIQA Insurance Group AG and improved results at the other associated companies.
Net fee and commission income increased by € 109 million, accounting for 27 per cent of operating income. Growth was registered in payment transactions (plus € 69 million or 10 per cent) and securities transactions (plus € 30 million or 25 per cent). Net trading income grew by 65 per cent in 2013, rising by € 127 million to € 323 million. Significant increases were registered in currency-related transactions (plus € 52 million), other transactions (plus € 26 million) and interest-related transactions (plus € 23 million).
Moderate increase in administrative expenses
Administrative expenses rose by 4 per cent or € 120 million to €3,460 million. The bulk of this stemmed from increases in Russia and the Czech Republic, as well as in Poland, due to the integration of Polbank in May 2012.
Staff and other administrative expenses both rose by 3.0 per cent. In full-time equivalents, the headcount as of the balance-sheet date declined by 1,853 to 59,686. Compared to the end of 2012, the number of branch offices fell by 78 to 3,037.
There was a massive increase in expenses for banking levies, which rose from € 167 million to € 207 million, of which € 114 million was paid in Austria. “The levy charged on banks' balance sheets is particularly damaging for credit institutions. When economic growth picks up again, it may have a limiting effect on lending,” explained Rothensteiner.
Increase in non-performing loans
In year-on-year terms, net provisioning for impairment losses rose by 16 per cent or € 169 million to € 1,200 million. Net provisioning for individual loan losses were up € 59 million to € 1,263 million, whereas there was once again a net release of portfolio-based loan loss provisions. At € 49 million, however, the net release was € 115 million lower than last year's figure of € 164 million.
The net provisioning ratio, expressing the ratio of net provisioning for impairment losses to average receivables from customers, increased by 0.20 percentage points to 1.40 per cent. The NPL ratio, expressing the ratio of non-performing loans to average loans to customers, stood at 10.2 per cent during the year under review, following 9.7 per cent in 2012. The NPL coverage ratio was 63.1 per cent, down 3.8 percentage points from year-end 2012.
Balance-sheet total edges 0.9 per cent higher
During 2013, RZB's balance sheet total increased by 0.9 per cent or € 1.4 billion to € 147.3 billion. The main reason for this was the first-time consolidation of associated companies as of year-end, with a volume of € 11.1 billion. On the other hand, the balance sheet total was reduced by currency translation effects of around € 3.4 billion, mainly owing to developments in the US dollar (minus 3 per cent) and some CEE currencies (Russian rouble minus 11 per cent, Czech koruna minus 9 per cent, Ukrainian hryvnia minus 5 per cent). Optimisation of the liquidity position and the subdued demand for credit in much of Central and Eastern Europe also resulted in a decline in the balance sheet total.