Raiffeisen Bk Intl Ag Ord

Ladies and gentlemen, and welcome to the Q2 2026 conference call of Heif Eisen Bank International. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Hollerer, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. I'm very pleased to speak to you today, and I look forward to meeting you personally in the coming months. I also look forward to working closely with you in the years to come. While this may be my first investor call, I'm not new to the bank. Prior to my appointment as CEO, I've sat on RBI's supervisory board for the past four years. Before that, I was RBI's CFO and I've spent most of my career within the organization. I'm humbled by the responsibility and confident in the future that lies ahead. Before we dive into the results and recent developments, I would like to share with you my first priorities for the bank. Since March, I've been meeting with our leaders, both in Vienna and across the network. I've also met with our supervisors and many of our partners. End of May this year, I've launched a strategic review and we are now finalizing our preliminary assessment. In the coming week, We will define clear ambitions together with a roadmap with tangible targets and deliverables. At the end of September, this will be presented to our senior management and in the course of Q4, the implementation will begin. I look forward to updating you on these developments at our next results call on the 3rd of November. More importantly, however, we will hold a capital market stay In February next year, following our full year 2026 results. Much of what we present will be based on the strategic review, which I have just outlined. There are some key elements, which I can already share with you today, based on my initial assessment and will guide our ambitions and strategy. First of all, RBI is ready for growth. Thank you very much. and we are ready to reallocate capital to make this happen. Furthermore, I believe that the SME and mid-market segment provides opportunities. In retail, there is huge potential for wealth management products in our region and we will capture our fair share. I also see potential to streamline our products across all our subsidiaries while also making them ready for AI and the future of banking. What I have also observed in our retail business is that we do an excellent job at acquiring new customers. Where we can improve is on the next step, engagement. There will be a particular focus on reducing the churn in our portfolio and I am confident that this will transform our retail business. Putting these all together, this means that we will grow our customer base, grow our balance sheet, and improve market share in our key markets. This also means earnings per share growth, which brings me to my next priority. Focus on profitability. I am familiar with the impact that the legacy issues have had on our profitability, and in trusting for these, I accept The core of the bank is currently capable of earning a 13% ROE. I won't mince my words. This is not enough. Like each one of you, I look to our peers and I see what is expected of us. I won't set targets here today or mention any numbers. But let there be no doubt. Improving the profitability of the core of the business has highest priority. I will take a very close look at efficiency and spending. We intend to review and challenge some of our spending. I have also asked Camilla, our CFO, to review our capital allocation and make sure that we are as efficient as possible here. This will include products, segments and geographies. It is of course exciting to think about redeploying the potential Rasperia windfall. But I first want to make sure that our capital allocation is sound and that we are efficient with the resources that we have. In GC&M specifically, I expect us to be more selective with better focus on cross-sell and wallet share. I believe that growth and profitability will go hand in hand. Our drive for better efficiency will not prevent us from gaining market share. and that better capital allocation will in fact enable better sustained growth where it matters. Technological transformation. In parallel to this, I expect technology to transform how we serve our clients and how we operate as a bank. This is not new and this is not unique for RBI. But I'm sure that we must capture all the possibilities and opportunities available to us. This transformation will also drive growth and efficiency. Our transformation in this respect will focus on three pillars. The first is customer interaction and marketing, where we are already making great strides with our mobile assistance and where customer journeys and experiences will increasingly be enhanced by AI. Marketing and how we approach and engage with new customers will also be transformed. We expect to see a material increase in positive outcomes while simultaneously reducing the effort and resources. Product delivery is already being transformed and we have very promising proof cases. Going forwards, we need to scale this individual success into sustainable delivery across teams and products. In practice, this will mean developing software much faster and with less effort. Finally, we will continue to digitize our processes and increasingly move towards AI native end-to-end processes. We see tremendous potential across the risk and operations chain. I will not spend any more time on these here today. For now, I simply wish to share with you my priorities. Let us now move to my next slide and how we plan to approach the Russia topic. First of all, I would like to acknowledge all the efforts that have been made in the past four and a half years. I could see firsthand how much was invested in sanction monitoring and compliance and how much the business in Russia has been de-risked. With that being said, my priorities for Russia will be as follows. The rundown will continue and will remain our base case until further solutions can be found. All the restrictions that we have placed on our Russian bank will remain in place and you can expect to see the loan book shrink further. I think the numbers here speak for themselves. Loans are down 80% since the start of the war and deposits are down 40%. Our commitment to shrinking and deepening Second, we will continue to explore ways to extract value and to recover what we can of our equity, which is trapped there. It is our duty to shareholders. This includes the Rasperia litigation, which I will comment on shortly. I will be reviewing all that has been attempted so far and I have asked my team to double down on this effort. I am aware of the many negotiations to sell our Russian subsidiary and I understand the difficulty to obtain the required approvals. There is no easy way to execute on this. But we need to keep trying however and we will try harder. This is also an area where I have instructed my team to double down and you can expect me to follow this very closely. Before we move on, let me give you a brief update on the Rasperia case. Time has come and we took decisive steps. I'm happy to report that we filed the claim yesterday in Vienna. We are seeking 3.15 billion euros in damages, reflecting the 2.4 billion which were taken from us in Russia and including penalty interest and loss of profit. First of all, we are confident that we will prevail in court and we expect a favorable outcome. Our claim is based on European sanction legislation. Second, because our claim largely reflects the terms of the anti-suiting injunction, which was pronounced by court in Russia and threatened our Russian business, we have good reasons to believe that the proceedings in Austria will not be acrimonious. This means that we can expect to receive the proceeds within the next 6 to 12 months. There is little more I can say here today and we will keep you updated as this situation develops. Let's now turn to the two acquisitions which we announced earlier this year and which are progressing. Let's begin with our voluntary takeover offer for Adico. On Wednesday this week we announced preliminary final results of at least 56.18% participation to our offer. In the coming days we will receive the final numbers and participation may still increase slightly if there are any last-minute instructions which have not been processed yet. In any case, I am happy to report that our voluntary takeover offer is successful and we can now move to the next phase. In the coming months, we will seek regulatory approval and merger clearance. In parallel, there is an additional acceptance window from August 3rd until November 3rd. Shareholders who have so far not tendered into our offer may still do so. It's my hope that in the coming weeks, investors who tendered into the competing offer will now switch to ours. While our offer might not be as financially attractive We firmly believe that we can provide the execution certainty required to get this deal over the line. We also are convinced that our offer provides a fair solution to investors who have not received a dividend in years. Let's briefly turn to my next slide and look at our other ongoing acquisition. Concerning the acquisition of BBVA Garanti in Romania, I'm happy to report The approval process is progressing well. We expect to close in early October and we are already mapping out the integration steps. The merger into our Romanian subsidiary will lead to higher AMREL requirements locally. And you can expect Reifers & Bank Romania to issue a Euro Senior Non-Preferred Benchmark Bond in the third quarter. There is little more to report today and on our next call I look forward to announcing the successful closing. Moving to my next slide. Allow me to spend some words on business in Q2. Stepping away from Russia M&A and strictly looking at our core business. Record fees, loan growth ahead of our peers in nearly all key markets and products, excellent capitalization, I believe we have many reasons to be excited. We close the second quarter with year-to-date profits of €708 million, with a strong second quarter right around €0.5 billion, and the loan book continues to grow nicely across markets, segments and products. Included in the 5.7 year-to-date is still some short-term business. If we focus on the core customer business, we stand at 5% in the first half of the year. Our ZG1 ratio, excluding Russia of course, is back near recent highs. At 15.5%, we are in a great place to begin the second half of the year and close the two acquisitions in progress. Finally, our adjusted return on equity, where we look past our legacy issues I will briefly walk you through our current macro outlook before finishing with our financial outlook for the year. Energy price volatility in line with the situation in the Middle East remains the biggest unknown this year. At the same time, sentiment indicators and high frequency economic data suggest resilience in many countries. This is visible in the industrial sector. Also, there may also have been some front-loading of production due to perceived supply chain risks. On the other hand, the services sector has been more reactive to the energy price shock. To summarize, weak external demand, higher energy costs and interest rates, as well as ongoing uncertainties Inflation is expected to remain entrenched in 2026 and 2027, and as mentioned, volatile energy prices defining inflation in 2026. Secondary effects of higher energy costs have been moderate so far, but some cost-driven inflation should not come as a surprise in the coming month. In addition, persistent domestic price pressures in the services sector from decent wage growth in recent years continue to pose mid-term challenges to central banks. Recurring geopolitical headwinds have not altered the overall solid lending trend across the core CE and SE region. Still, there is a difference between the uniformly strong retail segment and more uneven corporate lending dynamics. Precautionary monetary tightening may tamper credit demand in the second half of 2026 in larger markets. Which brings me to my final slide. Our outlook for full year 2026. We have seen better NRI trends in recent months and we now expect to land somewhere between 4.4 and 4.5 billion Euro. Camilla will expand on this in just a minute. Fee business is broadly sustainable and will remain strong in the second half. I expect fees to land close to 2.2 billion Euro for full year 2026. Now in the OPEX, we are expecting some one-offs in the second half, relating to Raspberry litigation. I am not concerned by these, considering the expected payoff. This will take OPEX closer to 3.8 billion Euro in 2026. Accordingly, our cost-income ratio will temporarily rise to 55%. Up to 35 basis points. And Hannes will walk you through our expectations here. We leave organic loan growth unchanged by 1%, but in fact above 9.5%, including already guaranteed BBVA transaction. The CT1 ratio, always assuming the worst case in Russia, is unchanged around 14.3%. This tip is explained by both acquisitions going through our results in the fourth quarter this year. And in any case, our CET1 ratio will remain at a very good level. Our return on equity is also impacted by this slightly higher OPEX and we now guide for 9.5% for the core excluding Russia. Also here, you should note that the respiratory litigation costs will have an impact. and the clean profitability for RBI, we are in fact above 12.5%. I will finish on this. Adjusting for both Russia and Poland should give a good sense of the future footprint and business of RBI. In recent years, as you can see here on slide 11, that this has ranged between 13 and 15.5% and could continue to achieve this level. This is not good enough, however. And in the coming months, I look forward to sharing with you how we intend to transform RBI and improve our profitability. Thank you.

Good afternoon, ladies and gentlemen. Thank you for your interest today. I will be brief. As you just heard from Michael, we are happy to report a strong second quarter in the core of the business. In addition to a very good bottom line, long growth and CSU-1 ratio that was just mentioned, we also show further top line strength and stable office. Let's go through these one by one before moving to our CSU-1 outlook. Starting from net interest income, which is up 3.2% in the quarter and 6% for the half year 2026 versus the same period last year. Interest-bearing assets were up 2.5% in the quarter. Long growth, of course, but also some growth in the treasury bond portfolios, with NIM slightly up. We also saw rate hikes in Czech Koruna, although this did not come through to our margins yet. Competition for liabilities among banks remained lively, and I shared it with you last time. We were at times the ones driving it. We have been willing to pay up for the deposits, but always subject to a high number of customer engagement requirements. For one, this has been a successful customer acquisition strategy, and two, we have made a lot of progress in cross-selling. Going forward, we sense that there will be a bit less pressure to reprice, and we expect our liability margins to stabilize.