Raiffeisen Bk Intl Ag Ord

Please stand by, we're about to begin. Good afternoon, ladies and gentlemen, and welcome to the Q2 2025 conference call of a Fison Bank International. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. Thank you for taking time out. Thank you for joining us for our Q2 update. We can report a consolidated profit of €567 million for the first half of the year in the core of the group excluding Russia. This translates to a return of equity of 8.1%. Our CD1 ratio excluding Russia stands at 15.7%. If we were to have to deconsolidate Russia at the end of June with a zero recovery on the equity. In the figures above, you can see the impact of the claim to recognition in Russia in the second quarter announced last week, which I will touch upon shortly. The consolidated RE for the group here is annualized with this claim to recognition considered in the first half year only. Launch to customers continue to grow, and the first half of the year has been successful with good volumes in retail for personal loans and mortgages, with corporate business showing signs of life. Main revenues are stable in the comparable period, while fee income continues to show positive developments. OPEX inflation, on the other hand, is visible year on year, resulting in a cost-to-income ratio of 53.7% for the core group Mainly driven by staff expenses. Moving to our slide on Russia and starting with the business rundown, which continues as expected. Our loan book in Russia has shrunk by 9% in ruble terms since the beginning of the year, and I can confirm that we are ahead of schedule here. Deposits have also started to shrink, also down 9% in ruble terms due to date. You will recall the ruble appreciation in Q1, which distorted the graph on the left-hand side of the page. With a stable currency development in Q2, you now see the reduction in Euro terms has resumed. Let me now briefly address the statement which we put out last week and which refers to the claim we have faced in Russia and our options to seek damages in Austria. You will recall that in Q4 2024 we booked a single provision, which was the net amount of the claim for damages to be paid in Russia and the expected proceeds from the enforcement of our legal claim in Austria. Unfortunately, the strict IFRS criteria for recognizing the value of our Austrian claim are no longer met, so we have to recognize it in Q2. A few important points. First of all, this has no impact on the core of the group, meaning that neither our price book zero-city-one ratio nor our ROE guidance is affected. Second, the strength of our legal recourse claim and our own expectations of success and recovery are unchanged. Our legal strategy is unaffected by this accounting change. Please understand there is little more that I can say here today in particular with regards to our next steps and our litigation strategy. We will communicate in a timely manner when necessary. Let's move now to the following slide, looking at the main revenues in the second quarter. NI was stable compared to last quarter, despite headwinds from rate cuts in Euro and the Czech Koruna. Beta volumes were supportive, Particular in non-euro countries. RNI in Hungary was affected by minus 22 million due to an adjustment in the reporting of interest rate differential on hedging instruments, which explains the decrease you can see here in the quarterly view. RNI guidance for the full year remains unchanged. Fee income in the second quarter rebounded up 8% quarter on quarter for the core group, From the seasonally first quarter, which is usually a little bit weaker, mostly stemming from clearing settlement and payment services. Also, our fee income guidance for the end of the year remains unchanged. Next up are the developments on loans and deposits, which we show in slide 8. The Euro 1.4 billion increase in loans to customers in the second quarter was driven by continued expansion in CE, especially in Czechia and Slovakia, and partly in SCE countries. We can also confirm our loan guidance of around 6-7% expected by the end of the year, with the new corporate loans picking up more dynamically in the second half. As seen here on the liability side, we observe continued retail deposit inflows as in the previous quarter, especially in Czechia. Coming to the next slide. We now also show the liquidity ratios for the core of the group. One could think that high liquidity in Russia might skew the ratios very much in the positive direction, but here you can see that even without Russia, the LCR stands at a comfortable 150%. Over the last quarter, our corporate deposit base continues to decrease slightly, which means we are close to our targeted levels of deposits. Across the countries and, of course, in head office, we can report, as usual, high liquidity. On slide 10, we now show also the CET1 ratio development quarter over quarter, excluding Russia, assuming the price book zero scenario. Out of the credit risk bucket, 39 basis point impact is exposure growth. And on the other hand, of course, we see a positive impact of 24 basis points from retained earnings on minimal FX effects. You are by now familiar with the price book zero scenario on the following slide, where we again show the CT1 ratio for the group under the assumption that the Russian business has been deconsolidated with a full loss to the equity. As flagged in the previous quarter for the rest of the year, the Russian operational risk component was capped at 2.8 billion, equal to 57 basis points. We keep the outlook for this and expect the ratio to land at around 15.2% at year-end 2025. So moving to our core group, we see the one ratio outlook on slide 12. The moving parts behind this, notably the expected increase in credit RWAs with the upcoming loan growth and naturally the positive impact of retained earnings for the second half of the year. Quickly covering also our capital ratios for the entire group sit very well above the requirements, which leads to ample buffers even after the recognition in Russia in the second quarter. On slide 14, we will note We note our MREL ratios for the Austrian and the other resolution groups are very satisfactory. We issued a senior preferred note in February and we still aim to issue a senior non-preferred this year. Our resolution group in CE was already flagged here with the MREL needs for 2026. Coming to slide 15, we outline the macro outlook for this and the following year. The growth you can see across our markets is driven by rising consumption and an increase of investments. However, the picture is different for some countries where the growth is still sluggish. It's worth mentioning here that the GDP forecast in the table already includes assumptions on imposed US tariffs. Jumping to slide 16, one can observe that inflation rates have stabilized on elevated levels in CE, while in EUR rates, Our key rate forecasts expect that rate cuts in Czechia, Hungary and Romania are on hold for the rest of this year. Finally, on the last slide, we show our outlook. As you can see, it is broadly unchanged with the only tweak made to the risk-cost guidance, which is now reduced to around 35 basis points for the full year 2021. and over to Hannes. Thank you.

Good afternoon, ladies and gentlemen. Allow me to run you through a few key elements of our second quarter result. Starting with risk costs, we can report 62 million euros of provisions equal to 23 basis points and broadly in line with the 20 basis points which we reported in the first quarter. This is of course a very satisfactory level and it allows us to revise our guidance for the full year 2025 down The 35 basis points. Our stage one and stage two provisions were up, mainly as a function of our portfolio development, as well as some minor adaptations to our retail post model adjustments. We released a small amount of our overlays and still hold around 439 million euros for the group, excluding Russia. As I mentioned to you in the first quarter, we have been running reviews, internal stress tests in fact, We did see a big cap in stage 3 provisions in the quarter, also from extremely low level in the previous quarter. Asset quality Continuous to improve overall, with TMP ratio for the group excluding Russia down to 1.8%, following some recoveries, and our coverage ratio has slightly improved to 48%. Dear all, of course I know that some of you will ask why our guidance is at 35 basis points with only 20 basis points halfway through the year, and I can simply refer you to the persistent high uncertainty, both in economic terms and also looking at the geopolitics. Let me move on to Poland. We booked a further 167 million years of provisions for litigation in Poland. And by this, we leave our guidance for the full year 2025 unchanged at around 300 million euros. In the second half, we do not expect significant model updates. Furthermore, as the law to accelerate the resolution of these cases is introduced, this should reduce penalty interest in court fees, which are part of our provision numbers. Before we take your questions, let me finish on a positive note. As you know, the 2025 EVA stress test results will be published this Friday afternoon. Let me use this opportunity to say a big thank you Thank you, gentlemen. At this time, we may start the Q&A session. If you wish to ask a question today, you will need to press the Start key on your telephone keypad, followed by the digit 1.