Raiffeisen Bk Intl Ag Ord

Good afternoon ladies and gentlemen and welcome to the preliminary results 2025 conference call of Reifus & Bank International. Today's conference is being recorded. At this time I'd like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead sir.

Good afternoon ladies and gentlemen. Thank you for joining us today. We are happy to report a good set of results for the fourth quarter. and all in all a very satisfactory full year 2025. We finished the year with a consolidated profit excluding Russia of 1 billion 443 million euros and the return on equity of 10.6% slightly ahead of our guidance. The business year 2025 was again impacted by litigation provisions in Poland or so to a lesser extent than in previous years, and we expect further improvements here in 2026 and beyond. When we look at the future of the group and what it is capable of achieving, as we include Russia and the legacy portfolio in Poland, what we see is a bank that achieved a 13.4% ROE in 2025. We are confident that the underlying business model is strong, that the balance sheet is healthy and well capitalized, and that we are ready to grow for years to come. We finished the business year 2025 with 6% loan growth in line with our guidance. And while the first two quarters were slow, we are encouraged by the momentum that has built up in the second half of the year. We start 2026 in full swing with a solid C to one ratio Improving liquidity costs and most importantly good demand from our customers. Moving to slide 6, we are happy to share with you the dividend proposal for 2025. With Euro 1.6 per share, we would like to see our shareholders participate in the good results of the past year. Please note that this is of course subject to the audited figures and will be voted on at our annual shareholder meeting on April 9th. RBI Supervisory Board has also announced changes to the Board of Management in 2026. First of all, Michael Hellerer will replace me as CEO from the 1st of July. Michael knows RBI inside and out. He has previously helped the role of CFO at RBI and prior to that headed our asset management business. As for me, I will be turning 67, and with my mandate expiring in February next year, I am happy to hand over at this time. RBI is in great shape and ready for growth, and I am excited to see what the future holds. The Supervisory Board has also appointed Camilla Makhmudova as CFO and member of the Board of Management since January 1st. Camilla has been with RBI for over 20 years and most recently was our CFO in the Czech Republic. Prior to that, she led our Intel M&A and Corporate Development Department. Finally, the Supervisory Board has also appointed Rainer Schnabel to the Board of Management effective of March 1st, where he will be responsible for corporate and investment banking products and solutions. For the past few years, Rainer was the CEO of our Bosnian subsidiary and prior to that, CEO of our asset manager. In the coming weeks and months, I expect you will get the chance to meet this accomplished new leadership team, and I'm certain that you will be as excited as I am about our future. Moving to the next slide, where we can show the good progress in the rundown of our Russian business. First of all, in terms of loans to customers, we finished the year having reached the targets that were set. Going forward, there are no new targets, but more importantly, all the measures and restrictions that we have implemented will remain in full force. This goes for our loans, for payments, for deposit collections, for liquidity investments and so on. Accordingly, you can expect the rundown to continue, and we will continue to update our regulators and investors on the progress. You can see how this rundown, which started on the 1 of the war and accelerated in 2024, has transformed the balance sheet in Russia. As of year end, there was nearly 30% more equity than loans on the balance sheet. The loan-to-deposit ratio is now below 30%, and the LCR above 500%. While the rundown remains our base case scenario, we do continue to explore transactions with interested parties. So far, we have not been able to identify a structure which meets the requirements of the local authorities, but we will not give up. And on the litigation side, I'm sure you are aware that a second court decision in December in Russia led to a further 339 million penalty to be paid by a Russian subsidiary. This penalty can be added to the value of our claim for damages in Austria, now equivalent to 2.4 billion euros. And as to the Austrian claim and court proceedings, there is little I can say today. We have not filed it yet, but we will absolutely do so at the time of our choosing. The other option which is to see our claim for damages satisfied in the next EU sanction package remains in discussion. I do not want to exaggerate the likelihood of this here today, as it remains unlikely even though this would be in everyone's interest, not least of which our European partners. Let us now move to the next slide, the quarterly developments starting with the main revenue trends on slide 8. Net interest income is broadly stable quarter and quarter and up slightly year on year. With some modest interest rate headwinds throughout the year and a large part of the loan growth coming later in the year, we are satisfied with the stable development. More interesting, however, is our outlook for 2026. For one, these interest rate headwinds should become more neutral. or possible even Dern Supportive. And more importantly, the good momentum in the loan growth is visible from the very beginning of the year and contributes to an expected 5% or so NII improvement this year. Fee income continued to tick up nicely in Q4 and we finished the year just over 2 billion euros, up 8.5% versus 2024. Looking ahead, our initial guidance for 2026 is around 2.1 billion. On slide 9, we show the balance sheet development and this is encouraging. I have mentioned the good loan growth and it is always good to see that it is being driven by key markets, including Czech Republic, Slovakia and Romania. In mortgages specifically, we also see good progress in Hungary, where retail expansion is important to our business mix. More importantly, corporate business in GC&M has picked up nicely and the pipeline for 2026 looks equally promising. On the liability side, we see further deposit inflows and notably mid-single-digit growth in retail deposits in our network units. Slide 10. I'd be sure liquidity ratio remains solid across the group, including, of course, in each of our key markets. and in head office. Turning to slide 12. RCT1 ratio assuming a worst case scenario in Russia with 15.5% at year end, we slightly exceed our guidance. I should also draw your attention to an increase in the Russian op risk RWAs with January 1st. You may recall from previous presentations that in our worst-case scenario we do not assume immediate derecognition of the OPRISC RWA stemming from the Russia business. The reason for this is that OPRISC is calculated on the group, fully consolidated basis and not booked at the individual unit level. This means that if any part of the business is sold, our deconsolidated The relief on the corresponding OPRISC RWAs is not immediate. In 2025, we had agreed with our regulator to cap the Russian OPRISC, which was retained in this price book zero scenario. This agreement expired at year end, and from January, we are to recognize the full 3.9 billion RWAs. The effect of this increase is around 29 basis point, meaning that our CT1, excluding Russia, is at 15.2 with January 1st. On the right hand of the slide you will see our capital stack also under the worst case scenario in Russia. The 81 bucket does not reflect the note which was issued in January and where we added 150 million to our 81 stack. All else equal. On the next slide, 13, our C to 1 ratio guidance for 2026, always under the assumption of reverse case in Russia. No surprises here. We continue to steer the bank to around 15% and above. Now let's jump to slide 15, the MREL and funding plans. On MREL, first of all, with the start of the year, we have a subordination requirement of 26.71%. Considering the own funds in our 81 capital stack, this new subordination requirement does not change our issuance plans. We have also issued a few senior non-preferred in previous years, which add to the buffer here. I mentioned a moment ago The other Emerald needs which you see here for 2026 across our countries are expected to be covered domestically. Moving now to slide 16 and 17. On the following slides we have shared our macro update which I will let you go through at your leisure. Let's turn to our 2026 outlook on slide 18 and starting with core revenues. We expect 4-5% improvements in NII and fees and a similar impact on the OPEC side. We aim for a small improvement in cost-income ratio next year to around 52.5. The initial guidance on risk cost is around 35 basis points and Hannes will share his thinking later on. We expect loan growth to continue in line with the positive trends that we have seen in the past few quarters and target 7% growth in 2026. As mentioned, we expect RCT1 ratio excluding Russia to remain above 15%. For the group excluding Russia, we expect a stable ROE around 10.5%. On the one hand, we expect improvements in the operating results. and fewer litigation costs on the Polish legacy portfolio. This, however, is largely offset by larger bank levies and windfall taxes, as well as the denormalization of the risk costs. When we look to the future of the group, excluding both Russia and Poland, and illustrate it here with the yellow line, we expect to be closer to 12.5%. In this case, the improvements in operating income are not enough to offset the announced increases in bank leverage and the high assumed risk costs. Going forward, however, we continue to expect that the core of the group will sustainably earn 13% and above. And with that, allow me to hand over to Hannes.

Thank you very much, Jeroen. Good afternoon, ladies and gentlemen, and thank you for spending your Friday afternoon with us here today. I guess You have seen the numbers, and I will keep it short. We finished the business year 2025 with risk costs of €192 million, down €95 million from a year ago. In basis points, this is a provision ratio of 20 basis points for full year 2025, which I'm happy to report is inside our guidance. Overall, we remain very satisfied with the quality of our portfolio and our non-performing exposure ratio is at record lows. We continue to make good progress on our workout strategy, as you can see with the further drop in MPE volumes. Beyond MPEs, the grant and the performing book are healthy and we continue our proactive workout strategy. In Q4, we released the overlays which we have built up in Russia. The bank is so well capitalized and the loan book has shrunk so much that the overlays have become redundant. In the core of the group, we have made minor adjustments leading to around 45 million euros of releases in Q3 versus Q4. Going into 2026, we still have 413 million euros of overlays available to us, equal to more than a one year's worth of standardized risk costs. Riskless guidance for 2026 is around 35 basis points, which, as you know, always includes a degree of prudency this early in the year. I do not need to remind you of the geopolitical turbulences that we have witnessed in 2025 and since the start of the year, which also led us to start the year with a modicum of caution in our riskless guidance. Away from asset quality, let me touch briefly on Poland, where the trend is clearly improving, and where we believe that the worst of the litigation provisions are behind us. The inflow of new Swiss francs claims continues to decline, while the inflow of euro claims has stabilized. Uncertainties remain, not least coming from the draft law, which aims to accelerate settlements and court proceedings. For 2026, we assume somewhere between Thank you, gentlemen. Ladies and gentlemen, we may now start the Q&A session. If you wish to ask a question today, you will need to press star 1 on your telephone keypad. Please ensure that the mute function on your telephone is turned off.