Raiffeisen Bk In Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to the Q1 Results 2026 conference call of Heisenbank International. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Johan Strobel, Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today for our first quarter update. Hannes and I are delighted to be joined by Camilla Makhmudova, our CFO and board member since January this year. This is a very exciting time for RBI, and we are very fortunate to have her on board. Let me start with an overview of our key figures in the first quarter, and I refer to slide number four in our presentation. The operating result of the group excluding Russia came in at 760 million, up 3.2% versus the last quarter, and up 12% versus the same period last year. This speaks to the strength of our core rating business, driven by decent loan demands, stable margins, and a strong fee business. Consolidated profit stands at 209 million, largely impacted by effects below the operating result. A large portion of the 2026 bank levies booked in the first quarter, and we will not see the same effect in the coming quarters. Risk costs came up 36 basis points, and our guidance for 2026 is confirmed around these levels. Provision in Poland in Q1 ran a bit above assumed yearly run rate. Nevertheless, our full-year guidance here is unchanged for now. We confirm our return on equity target for the group excluding Russia at around 10.5% despite an optical low 5.2% this quarter. Finally, our CST1 ratio, assuming a full loss of the Russian equity, stands at 14.9%, reflecting decent long growth in the quarter. In recent weeks, we have announced two strategic transactions which have the potential to improve our market position in two key markets and which comfortably fit in our capital plan. Let's take a closer look at each of these. I'm turning to Slate 5 and want to talk about Romania, the acquisition of Garanti in Romania. We announced at the end of March that we intend to acquire this bank in Romania and merge with our own business there. The rationale is straightforward. We are very positive about the Romanian market and our teams there have done remarkable jobs for many years, consistently delivering a market-leading return on equity. We have witnessed some consolidation in the market and we clearly see the benefits of scaling up. With this transaction, we break into the top three or four in Romania and add over 200,000 new active customers. The business case is also straightforward. Whereas the integration costs will largely be booked in 2027, the profit accretion will be visible as early as 2028 at around $90 million and increasing thereafter. The impact on RBI-CAT1 ratio excluding Russia is around minus 60 basis points and will materialize in Q4 later this year. We believe that we are paying a reasonable price for a good asset. and which our teams in Romania will do an excellent job integrating it. My colleagues will update you on the progress in coming quarters, and with that, let us now move to my next slide, 6, ADICO. Let's take a closer look at the voluntary tender offer for ADICO, which we announced in early April. First of all, I am pleased to announce that our offer is being reviewed by the Austrian Takeover Commission, and we expect it to be made public at the latest on the 19th of May. We intend to acquire any and all article shares for Euro 23.05, subject to achieving a minimum of more than 75% of shares outstanding. We commissioned an independent valuation and our 23 Euros The purchase offer represents a 20% premium over the intrinsic value determined by Ernst & Young on the basis of public available information. We also announced that we plan to enter into a transaction agreement with one of Adico's shareholders, Altagroup, based in Serbia. Under the terms of this agreement, if the voluntary tender offer is successful, RBI is committed to selling four of Adico's subsidiaries to Altagroup. These are the banks in Serbia, Montenegro, and two banks in Bosnia and Herzegovina. For completeness, I should mention that this agreement does not require Alta Group to participate in the tender offer. It's only binding on RBI if the tender offer is successful. Alta Group owns just under 10% of Adico directly and has entered into share purchase agreements covering another close to 20% or so. although these shares purchase agreements have not been completed. For the purpose of this transaction, it is our understanding that a total of 29.59 of Adico shares are attributed to Alta Group. We appreciate that this tender and envisaged carve-out is uncommon, and I would like to spend a few words on the pricing mechanism, including in the carve-out. This mechanism has been designed to ensure that all Adico shareholders are treated equally. The carve-out price for the four non-EU banking subsidiaries will be floored at the level which reflects the same price-to-book multiple for which we are acquiring Adico Group. We will also ensure that Adico Bank obtains an independent and individual valuation of each of the four banking subsidiaries to be carved out. The purchase price offered to Alta will be the higher of the two, the independent valuation or the pricing using the flawed price book multiple. The applicable mechanism will be determined jointly for all the carved-out subsidiaries. If any of the four subsidiaries is sold and transferred at the independent valuation and additional payment to Adico shareholders, who tendered their shares in the takeover offer will be made to compensate for the difference. We believe that with this mechanism, all shareholders of Artico will benefit equally from an increased fair market value of the carved-out subsidiaries. Let's now look at the rationale and impact on RBI. We have communicated an initial impact of around 40 five basis points on the CETI-1 ratio excluding Russia. I should mention that this impact will depend on the opening balance valuation. This means that in the event of any fair value adjustments, the initial CETI-1 impact could be higher. The final impact is expected to be much lower, however, following the calf out of Serbia, Montenegro and Bosnia-Herzegovina. Viewed comprehensively and assuming a successful completion of the carve-out, this transaction would lead RBI to become the fourth largest bank in Croatia and re-enter Slovenia for a very modest 10 basis points impact on RBI C1 ratio excluding Russia. Similar to the acquisition in Romania, we expect the bulk of the integration cost to be booked in 2027 and visible profit accretion in 2028. In the coming days, we expect to sign the transaction agreements and to publish our voluntary tender offer. We also look forward in the coming days to engaging with ADECO shareholders. We believe that our takeover offer comes with a rather high transaction certainty and that for many stakeholders, our proposal provides a solution to our long-standing problems. Once the offer is published, the acceptance period lasts 10 weeks. By end of July, we should have a good idea if we are successful in achieving more than 75% participation. If we reach the minimum acceptance quota, the acceptance window will be extended by three months. In parallel, we will seek the necessary regulatory approvals. According to this timeline, we expect settlement and closing in Q4 this year. Let me stop here for now, and I'm sure you will have questions on these topics in a few minutes. Let's move to slide 7, Russia. We're making progress in reducing the business in Russia, and first of all, I think you might have noticed that we adjusted our reporting, and especially in the loans to customers. We now exclude loans to general government, which are in fact placements with the Russian Deposit Insurance Agency. These are so-called C-accounts and refer to coupons and dividends paid by Russian corporates and blocked for investors located in what the Russian authorities define as unfriendly countries. Raiffeisen Russia acts as a paying agent and receives the coupons and dividends from Russian corporate customers. and is required to place this with the Russian Deposit Insurance Agency. They are reported as loans to general governments and the loans to customers on the balance sheet. Since June 2024, these have increased from zero to almost two billion today. DC accounts volumes are excluded from the rundown targets agreed with ECB. I believe that this adjustment reveals the true scale of rundown. Since the start of the war, our loan book is down 78% in ruble terms, and we now have less than 2 billion, 2.5 billion in euro terms loans remaining. More generally, all the restrictions which have been introduced to Russia will remain in place for the foreseeable future. I'm sure you will also ask for an update on our claim for damages against Rosferia. First of all, allow me to repeat what I told you last time. We have not filed our claim yet, but we will absolutely do so at the time of our choosing. We continue to explore solutions which limit the risk of retaliation on our business and equity in Russia. Progress has been slow. But we believe it is our duty to explore all possibilities. If we now move to slide eight, the macro development, what you find here is that we have adjusted our forecast due to the geopolitical conflicts. And with that, I would also move to slide nine, inflation and rate. And you see here also some few adjustments. We believe that in the core of our regions, the non-Euro countries, there is no rush to increase rates, but maybe rate decreases will slow down a little bit. We have built in a little rate hike from the ECB, maybe two steps of each 25. Let me now move to slide 10, our outlook, and we confirmed the 2026 outlook largely unchanged since last time. Of course, the CT1 ratio is adjusted as this reflects the two acquisitions which we plan to do. And Camilla will discuss our CT outlook, CT1 outlook, in more detail. And with that, let me hand over to Camilla. Camilla, please.

Thank you. Good afternoon, ladies and gentlemen. I'm delighted to join you today, and I look forward to meeting many of you in person in the coming months. Let's run through the key P&L and balance sheet developments this quarter, stating with the overview slide on slide number 12. Loans to customers are up around 3.5% in the quarter, driven by encouraging trends across most of our markets, and in line with a good momentum which we experienced in the second half of the last year. Net interest income up 2% quarter-on-quarter, whereas fee income was down 2%. On fees, there is always an element of seasonality in Q1. When comparing to the same period last year, we see an improvement of more than 11%, and we expect another decent increase this year. OPEX were stable quarter-on-quarter in most of our markets, except for Austria. In Q1, head office suffered from a base effect in Q4 last year, which included few positive effects in Q4. There is also a small one-off from the higher deferred bonus provision. More importantly, we can confirm our guidance for financial year 2026, offered at around 3.6 billion euros, slightly above 5% year-on-year increase, and improvement of cost-income ratio to around 52.5%. Let's take a closer look at each of these, starting with NRI on slide 15. As mentioned, NRI is up 2% on the quarter, driven by further balance sheet growth in the core market. Rates and margins remain broadly stable. Looking ahead to the rest of the year, we should expect less headwinds from the coming key rates, with perhaps an exception in Hungary. More encouragingly, The rate development has changed noticeably since the beginning of the March. Curves have stiffened, which means that we will be rolling our model books into the vector rates. And we might even see some rate hikes, which were not expected earlier this year. So now we have chosen to keep our NRI guidance unchanged at around 4.4 billion, excluding Russia, with an upside between 50 to 100 million euros, depending on how rates, volumes, as well as customer behavior will develop. Moving to the fee and commission income. As I mentioned, we saw a 2% decrease in the quarter, but 11.4% increase over the Q1 last year. I'm happy to report that the increase is broad-based, coming from all key products across all markets. Also here we confirm our guidance of 2.1 billion euros. Moving to the balance sheet. The long growth specifically, the good trends which we observed at the end of last year continued first quarter with 3.5% growth in the quarter. Loan portfolio is now 9% larger than at this point last year. In retail, we see 2% growth in the quarter with very good trends in consumer loans in all of our markets. Personal and consumer loans are up 16% compared to the March last year. And in the first quarter, new business was particularly strong in Czech Republic, Slovakia, and Romania. In mortgages, we see 7% growth year-on-year, while new business generation Q1 was a little bit slower than Q4. It remains to be substantially higher than in all of the previous quarters last year. Here, I would like to highlight the Czech Republic, where Q1 origination is up 15% versus Q4. The corporate book is up 2% in the quarter and 8% year-on-year, with all products contributing very nicely. In Austria, I should flag that a large portion of the reported loan growth is coming from repos and other short-term non-strategic business. In the core of the business, the actual growth is closer to 1%. Focusing on countries, clearly the Czech Republic stands out with 2.7% growth, and if you consider the weaker Czech Karuna in the quarter, loan growth is actually closer to 4%. Likewise, Slovakia, Romania, and Hungary grew at similar rates. Looking ahead to the remainder of the 2026, our loan growth guidance is confirmed at 7%, and this excludes any of the announced acquisitions. Some of the short-term business will revert, and we will sense that the tourist growth rates in retail might ease up a little bit. Finally, the macro uncertainty cannot be ignored. On our macro outlook slide, you see that we have revised GDP for 2026, and we cannot exclude that this must fit to our corporate loan demand. Let's briefly jump to the slide 16 and take a look at the deposits from customers, which continue to pick up nicely into the quarter. Included is the 5%, which you see here. In this 5%, we have some effects from repo and short-term activities, especially in head office in Czech Republic. More relevant, however, is retail deposits, which are between 1% to 2% up in all of our markets. Considering how much these have contributed to our margin and NRI improvements, we are encouraged to see these times continue. And with that, let's now take a look at the CET1. Slide 17. We can report a core CET1 ratio excluding Russia at just inside 15%. As reported last time, there was a change in the Russian operational risk treatment on January 1st with an impact of 29 basis points. So from starting point of 15.2, the development in the quarter is largely coming from the long growth and the dividend accrual. Moving to my next slide and the assumptions for the worst-case scenario in Russia. At this point, you're very familiar with the approach, and there is little for me to add. However, I would like to add in one point, circling back to the Russian operational risk, which I just mentioned. In Russia, worst-case scenario, we do not assume any immediate relief from the Oprey Scarveras coming from our Russian business. This is a very conservative assumption and has an impact of half a day. And I look forward to meeting many of you in person in the coming months. Let's run through the key P&L and balance sheet developments this quarter, stating with the overview slide on slide number 12. Loans to customers are up around 3.5% in the quarter, driven by encouraging trends across most of our markets, and in line with a good momentum which we experienced in the second half of the last year. Net interest income up 2% quarter-on-quarter, whereas fee income was down 2%. On fees, there is always an element of seasonality in Q1. When comparing to the same period last year, we see an improvement of more than 11%, and we expect another decent increase this year. OPEX were stable quarter-on-quarter in most of our markets, except for Austria. In Q1, head office suffered from a base effect in Q4 last year, which included few positive effects in Q4. There is also a small one-off from the higher deferred bonus provision. More importantly, we can confirm our guidance for financial year 2026, OPEX at around 3.6 billion euros, slightly above 5% year-on-year increase, an improvement of cost-income ratio to around 52.5%. Let's take a closer look at each of these, starting with NRI on slide 13. As mentioned, NRI is up 2% on the quarter, driven by further balance sheet growth in the core market. Rates and margins remain broadly stable. Looking ahead to the rest of the year, we should expect less headwinds from the coming key rates, with perhaps an exception in Hungary. More encouragingly, The rate development has changed noticeably since the beginning of the March. Curves have steepened, which means that we will be rolling our model books into a better rate. And we might even see some rate hikes, which were not expected earlier this year. So now we have chosen to keep our NII guidance unchanged at around 4.4 billion, excluding Russia, with an upside between 50 to 100 million euros, depending on how rates, volumes, as well as customer behavior will develop. Moving to the fee and commission income, as I mentioned, we saw a 2% decrease in the quarter, but 11.4% increase over the Q1 last year. I'm happy to report that the increase is broad-based, coming from all key products across all markets. Also here we confirm our guidance of 2.1 billion euros. Moving to the balance sheet. The long growth specifically, the good trends which we observed at the end of last year continues first quarter with 3.5% growth in the quarter. Loan portfolio is now 9% larger than this point last year. In retail, we see 2% growth in the quarter with very good trends in consumer loans in all of our markets. Personal and consumer loans are up 16% compared to the March last year. And in the first quarter, new business was particularly strong in Czech Republic, Slovakia, and Romania. In mortgages, we see 7% growth year on year. While new business generation Q1 was a little bit slower than in Q4, it remains to be substantially higher than in all of the previous quarters last year. Here, I would like to highlight the Czech Republic, where Q1 origination is up 15% versus Q4. The corporate book is up 2% in the quarter and 8% year-on-year, with all products contributing very nicely. In Austria, I should flag that a large portion of the reported loan growth is coming from repos and other short-term non-strategic business. In the core of the business, the actual growth is closer to 1%. Focusing on countries, clearly the Czech Republic stands out with 2.7% growth, and if you consider the weaker Czech Karuna in the quarter, loan growth is actually closer to 4%. Likewise, Slovakia, Romania, and Hungary grew at similar rates. Looking ahead to the remainder of the 2026, our loan growth guidance is confirmed at 7%, and this excludes any of the announced acquisitions. Some of the short-term business will revert, and we will sense that the torrid growth rates in retail might ease up a little bit. Finally, the micro uncertainty cannot be ignored. On our macro outlook slide, you see that we have revised GDP for 2026, and we cannot exclude that this might feed through to our corporate loan demand. Let's briefly jump to the slide 16 and take a look at the deposits from customers, which continue to tick up nicely into the quarter. Included is the 5%, which you see here. In this 5%, we have some effects from repo and short-term activities, especially in head office in Czech Republic. More relevant, however, is retail deposits, which are between 1% to 2% up in all of our markets. Considering how much these have contributed to our margin and NII improvements, we are encouraged to see these trends continue. And with that, let's now take a look at the CET1. Slide 17. We can report a core CET1 ratio excluding Russia at just inside 15%. As reported last time, there was a change in the Russian operational risk treatment on January 1st with an impact of 29 basis points. So from starting point of 15.2, the development in the quarter is largely coming from the long growth and the dividend accrual. Moving to my next slide and the assumptions for the worst-case scenario in Russia. At this point, you're very familiar with the approach, and there is little for me to add. However, I would like to add in one point, circling back to the Russian operational risk, which I just mentioned. In Russia, worst-case scenario, we do not assume any immediate relief from the opris carveras coming from our Russian business. This is very conservative assumption and has an impact of 114 basis points. And to put it differently, if we were to lose our Russian bank and obtain relief from the operational risk, our CET1 ratio would be 114 basis points higher than shown here. On my next slide, I'll spend a few minutes on our CET ratio going forward. On the left-hand side, this is how we think about the capital generation, larger agreement by earnings in the next nine months, as well as some balance sheet optimization, including further securitization. And on the right-hand side is how we think about capital allocation. Portfolio development is largely driven by loan growth, but also includes possible rating migration. We have, of course, included two acquisitions which we are targeting for the later this year. As Johan mentioned, there remains to be some uncertainty as to initial capital impact of the ADECO takeover. subject to the opening balance valuation. For 2026, despite strong long growth in M&A, we continue to assume a payout ratio of 40%, equal to roughly 1.8 euros per share. This is what we accrue in our CET1 ratio in Q1 through Q3. I'll give you a description review in Q4. More generally, at 14.3, we will dip slightly below our medium-term target of 14.5. Clearly, we intend to revert back to 14.5 in the following quarters. Solid capital buffers have been built up over the years, and I believe that the current opportunities warrant the expense. Some of you might know that I spent a large portion of my career in emergence and acquisition, leading RBI corporate developments. Building on this experience, I'm a firm believer in the merits of organic growth. I will be the first one to say that acquisitions needs to be opportunistic, always with a very careful eye on the valuation. Capital allocation will be one of my highest priorities at CFO, and you can count on me to pay very close attention on how we deploy it. There are no changes in our capital requirements shown on the slide 20, and I will skip ahead to slide 21. MREL and funding plan. Starting with the MREL resolution group Austria. From January, a subordination requirement has been added. Now it's a level of 26.69% of the three years. This subordination requirement will not materially change our funding plan. First of all, we currently run a comfortable buffer with eligible subordinated liabilities of 32.78%. Furthermore, our stock of our capital instruments CT1, AT1, and Tier 2, largely satisfy the subordination requirements. Structurally, this means that we will only require modest amounts of senior non-preferred. Moving to funding plans, it has been a busy start of the year, both in Vienna and in subsidiary level. Looking ahead for the rest of the year, Out of the head office, we are looking for a possible tier two ahead of the next year maturity and after summer possible senior preferred depending on the loan growth. In Slovakia, Satra Banka will look to issue senior preferred for MREL purposes in the coming months and the covered bonds after the summer. In Romania, scheduled maturities as well as acquisition of guarantee bank will drive issuance domestically and probably in Euro benchmark format also after the summer. Moving to the final slide and the legacy portfolio in Poland. In the first quarter, we booked 77 million euros of provisions. This is in part driven by temporary effects, which are expected to reverse later in the year. There is also an element of volatility as the model reflects changes in effects and Polish interest rates, which are used for discounting. This means that the provisions through the income statement will not be linear every quarter. And the trend of new litigation cases is very much in line with the downward assumptions in our model, both for active and repaid loans. In Europe, we do not have the same propensity model, and we base our provisions on the observed inflows. These have ticked up slightly, but we are still within the range of our expectations. Accordingly, our guidance for 2026 is unchanged at about 200 million euros. And this is what we have booked into ROE targets. With that being said, we have been rolling out a range of settlement offers across the portfolio, including in Europe. In the coming months, we will see to what extent this is possible to accelerate the resolution of this legacy portfolio. If we find it cost-effective and legally sound ways to bring forward an end to this issue, we certainly will consider that. I would like now to hand over to Hannes for the risk report. Thank you.

Thank you very much, Camilla. Good afternoon, ladies and gentlemen. Thank you for your interest this afternoon. There are two topics which I would like to update you on today. The first, of course, is the geopolitical environment and how we think about this in our portfolio. The second is a brief walkthrough of our provisioning in the first quarter, which is illustrated on slide 25. Let's start with how the events in the Middle East over the past two months have impacted our portfolio. Direct exposure is negligible and no direct impact or risk costs to report. More generally, we are looking at second-round defects, including high oil and gas prices, maybe even shortages. Defected industries are the ones you might have expected. Oil and gas traders, construction materials and mining, chemists, automotives, and so on. We have reviewed 500 individual customer groups across these industries, and updated credit ratings were required. The impact so far is very limited. we have downgraded a handful of customers for a net exposure of just around 500 million euros. Beyond that, a slightly larger list of customers have been put on the watch list, still only representing around 800 million euros of exposure as default. All to be clear, we are talking about a watch list for a potential rating review and not insolvency or even stage two shifts. For over 90% of our exposure in defected industries, there is no action needed. And we do not expect rating downgrades from today's perspective. This is due to a combination of factors. Supply chains are decently diversified. Cost path through is largely expected. And finally, we see very good hedging policies on individual customer levels. Clearly, this is encouraging. The bigger question is how long this will last and how high energy prices can go if the Strait of Hormuz remains all but shut. To this effect, we have also conducted an internal stress test where oil trades far above current level with the expected severe follow-on inflation and GDP drop. Clearly, the result would be harsh, but still better than the impact we reported in last year's EVA stress test, and where we ranked in the top tier among European banks, overall demonstrating the robustness of our portfolio against further adverse developments. In light of all these uncertainties, risk-cost guidance remains unchanged at around 35 basis points. Still on this page, you will see that our stock of overlays is largely unchanged at around 400 million euros for the core of the group excluding Russia. Let's now take a look at the risk-cost in Q1, turning to slide 25. Starting with the first column, where we show net releases in stage one and two. These need to be looked and in conjunction with Stage 3 risk costs. If we were doing our job correctly by the time a customer reaches Stage 3, there should already be a decent amount of Stage 1 and Stage 2 provisions booked. The shift to Stage 3 leads to a release of these Stage 1 and 2 provisions and new provisions in Stage 3. This is to a large extent what happened here. I could also mention some relief from securitization just for the sake of completeness. At the same time, state three risk costs of 62 million euros are about evenly split between retail and non-retail, with the non-retail defaults coming from the GC and M segment. The biggest swing is coming from the macro model update. With allocations of 74 million euros, excluding Russia, You saw at the beginning of the presentation the softer GDP inflation forecast across all our key countries. These same trends are captured in our micro model and led to increased provisions in Hungary, Slovakia, Romania, and Czech Republic. On the positive side, if the upswing in 2027 is confirmed, then some of these provisions could only be temporary. Ladies and gentlemen, Before opening the floor for questions, I would like to thank our CEO, Dr. Johann Straubel, for the many years presenting, sharing, and explaining the deep insight to the financial performance and dynamics of our API group. Johann, thank you very much. We all learned so much from the way you share your way of thinking. And now to you all, we are ready to take your questions.

Ladies and gentlemen, this comes unexpected. Moderator, please give us the questions.

Thank you. 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 and 1 on your telephone keypad. Please ensure that the mute function on your telephone is turned off or we will not receive your signal. If you want to withdraw your question, please press star 1 and 1. Once again, if you wish to ask a question, you will need to dial star 1 and 1. We will pause for a moment to allow a queue to assemble. Thank you. We will now start with our first question. And this is from Benoit Park from Kepler Schifra. Please go ahead.

Yes, good afternoon, everybody. And thank you, Johan, for your very strong insight and all the best, obviously. So just a few questions on my side. So the first one will be actually on the net interest margin. which remains very stable actually in the quarter. So I was wondering if you could comment maybe on whether that's a trend you expect to continue into the coming quarter, so roughly stable net interest margin. And I was wondering if you also could comment on potentially competitive pressure you do expect in the coming months. Some competitors talked about a bit of pressure on liability margin in some countries. So, yeah, I was wondering if you've seen the same trend. The second question is on loan growth. Very strong loan growth in the first quarter at plus 3% on quarter. You know, when you look at the macro developments, do you expect your loan growth momentum to remain positive? And are you still comfortable with the the 7% loan growth target for the full year. So that's number two. Number three is actually on the fees because you've got a very strong start of the year on the fees. You've not upgraded the guidance. But if we analyze Q1, it seems that your fee guidance is actually quite conservative. So I was wondering if you expect something negative on the fee side at some point this year or So yeah, it's just a bit of conservatism you prefer to put on your side at the beginning of the year. So those are my questions. Thank you very much.

Thank you. First, let's come back to NIMS. Yes, we do expect the NIMS to remain largely stable at 2.3% for 2026. There might be small fluctuation in one or the other market, but overall nothing material that would move any needle for the entire group. So when you're talking about the competitiveness and what we observe in various countries, I think it's worth mentioning three countries. First of all, Romania. We observed some pressure on the asset side from the competition, which led to a lower average margin across credit products. Most personal loans and specialized finance. In addition, we had M relations in Q1, which also weighted on NIM. On the other hand side, Q1, we have a lower number of days, which also adds into a bit lower performance. In Czech Republic, this is a traditionally very competitive market, and we successfully attracted new deposits in the last few quarters to attract new customers, thereby accepting some pressure on the liability margin here. Overall, we do, however, not expect that this will have a very meaningful impact over 2026, and we see that the NIM will only slightly be lower compared to 2025. And the last country to mention is Croatia. Quote-unquote a decrease, yeah, so it was driven by repricing on the liability side. Overall, we also do not see a broader trend here. So we expect that NIM is relatively stable. Loan growth, your second question. So on the loan growth, indeed, we show quite a good development, Q1, plus 3% quarter-on-quarter. But as I mentioned, there is a lot of short-term repo transactions, so about €1.2 billion. So if we adjust for these terms, loan growth was about 1.7%. It's still a positive development, both in head office and in the network. But taking this into account, we feel comfortable with the guidance of 7% for this year on the loan growth. When it comes to fee and commission income, I think to a certain extent is a level of conservative. We confirmed the guidance of 6% growth. Indeed, we've seen in the first quarter year-on-year growth 11%. And we see some upside. But assuming a similar trend, like in 2025, the Q2 and Q4 average fee and commission income is usually higher by 9%, 10% versus Q1. So this is equivalent of the run rate of 550 million per quarter. And this would bring maybe additional 30 to 35 million upside.

Thank you very much. Very useful.

Thank you. We will now move to our next question. This is from Mati Nemes from UBS. Please go ahead. Mati Nemes, UBS, your line is open. Please go ahead. Checking if UBS has the line muted. We can't hear you. We will proceed with our next question. Please stand by. Next question is from Ben Maher from KBW. Please go ahead.

Hi, I've got three questions, please. First was on the risk costs in the first quarter. I think in the additional information prior to the the results uh you're going to 29 million in stage one stage two provisions largely coming from the macro updates um you obviously put 74 million i'm not sure about the like for like figure to compare against but just interested why uh what was the like the reason behind the larger figure second question is upon the deposit competition in czechia uh you saw very good growth q and q but several of your competitors have It's likely worsening the force of competition. So just interested in your thoughts on how you think that market is behaving. And then my final question is just on Russia. This still accounts for a large share of the headline P&L, which is on the half of the DBT for the headline group. I'm just interested in how you see that evolving for the remainder of this year and into 2027. Thank you.

Thank you very much. Let me start, Ben, with the risk costs in our guidance for the full year. If we look at our macro models, as shared also with this audience more than once, the biggest statistically relevant factor is the GDP growth, our long-term bond rates, and for retail also, of course, it's really vital to have a view on the unemployment rate. And so these three is what is driving our macro dynamics in this, you could say, we put the new updated numbers into our model and then we came to this 74 million euros. What you can see is on page eight and Johan was talking about our updated macro parameters and the countries which are most affected by this update is Hungary when allocating this macro overlay is Hungary with 30 million euros, is Slovakia and Romania with around about 10 million euros each. In our regular quarterly reporting, you would also see somewhere around page 60, some further details on how we think about these macro models are in the impact. Thanks for the question, Ben.

I will comment on the Czech deposit competition. Indeed, in the market, we see a very competitive environment, especially in Czech Republic, which stands out compared to any other markets in our jurisdictions. So in Czech Republic, we feel that we are generally benefiting from the current process and we are gaining market share. We are currently paying a very competitive rate, but with a number of conditions attached. We usually ask for a number of payments to be made or a volume of the investments to be made. Also, we have to highlight the excellent mobile banking offering that is making a difference comparing to our competitors. We also see a very encouraging cross-selling trend. We're paying a higher rate, converting to the products like turnover and current accounts and consumer loans and even mortgages. Thank you. Thank you.

Yeah, and I think your third question, which is the contribution to the overall group profits from our bank in Russia, and yeah, I could explain that we have, you've seen it in the presentation, a dual steering approach, which clearly shows the development of the bank, of course, also the contribution, but what you see is that focusing mainly or almost all on the core, you see that in the overall relevance, the numbers are of less importance and, of course, consistently reduced over time. This, in combination with probably lower interest rates, will reduce the contribution overall. And finally, there is the specifics, the seasonality of the first quarter in the core groups. Unfortunately, we have so many bank taxes which, to a large extent, have to be paid in the first quarter. As I said, this will not repeat itself in the coming quarters. Then again, the relative part will change significantly. Thank you for your questions.

Thank you.

Thank you. We will now take our next question. This is from Gabor Kemeny from Autonomous Research. Please go ahead.

Oh, hello. Thank you for me to Johan as well for all your contributions and the pleasure to be talking to you, Camilla as well. My first question will be on M&A. It's interesting to see Raiffeisen's franchise evolving with the proposed acquisitions. On ADICO in particular, how confident are you that this tender offer will be successful despite of another counterbid being made for the same bank? My other question would be on your profitability. I believe you commented that Q1 was depressed for a few reasons, I think even if we adjust for this kind of upfronting, you will return an 8% core return on equity. If you could just walk us through the drivers of how you are planning to get to the 10.5% target for the full year, please. And just coming back to Hannes' comments on the sensitivity, to higher energy prices, yeah, I believe the EPA stress test may have assumed a significant capital impact from a harsh macro scenario. But just if we think about your coal provisioning, how do you think it could evolve at these current energy prices? Any flavor on that would be helpful. Thank you.

Thank you, Gabor. I start with your first question about Adico. We cannot comment on the offers by the other competitor. We haven't seen it. We just have read about their announcement, which is of less detail than what we have. But what we know is that we believe strongly that we can offer very high transaction certainty This is, I think, important for all of the shareholders, as we had a quite difficult situation for the shareholders in recent months. And yeah, I also explained that one of the core shareholders of the group is not is not obliged to tender into our offer. But on the other hand, we know that last time he did not tender in the offer, what was proposed at that time. And yeah, we have an agreement if our offer is successful, then there would be further transactions in which he obviously is interested in.

On the second question on bridging the ROE, So first of all, we see a higher quarterly run rate for both net interest income and fee and commission income. First quarter is always the shortest, and the impact from the number of days adjustment leads to a quarterly NRI rate closer to 1,090,000,000, excluding positive impact from the loan growth in Q2, Q4, which will come on top. So I've already mentioned that we have a stable margin at 2.3 and the growth for the year expected of 7%. Secondly, average fee and commission income in Q2, Q4 is usually higher by 9%, 10% versus the Q1. And that leads to a quarterly run rate of approximately 550 million per quarter in Q2, Q4. And finally, I think we need to bear in mind the impact of the average equity when it comes to ROE. In Q1, the underlying average equity is around 13.8 billion. not reflecting the payout, dividend payout, which occurs in April. So for the year, financial year 2026, estimation, the ROE and the calculation would be based on the underlying average equity at around 13.4 billion. So that's how we bridge it. I hope that answers the question.

Gabor, let me take the third question when it comes to the activity of higher energy prices. As already indicated with regards to the question from Ben, you know, we have in our macro models the GDP growth, long-term bond rates, and for retail portfolios, we also consider, of course, the unemployment rates. But if you would look at the at the function you would see that the highest weight is on the GDP perception. We look in our sensitivities and you also can see them on page 66 in our quarterly reports towards three scenarios. we give the biggest weight to the you could say the the going concern to the base case scenario and then we give 25 percent weight to the pessimistic case and 25 percent to the optimistic case so if in this distribution we would see a complete reversion of the current situation And confirming again this positive GDP outlook in which we have started towards this year, we would see a release of provisions of around about 70 million euros. If the pessimistic scenarios would turn out, which means the street of Hormuz stays closed, oil price stays at elevated level, GDP going down, rates going even further up, inflation pressure is here to stay, we would have to use another 135 million euros in addition. This is all what you can anyway find in the reporting asset starting onwards from page 66. Just one thing what is for me very clear, if really this negative scenario would turn out of this additional 135 million euros, it's more than fair to assume that in this case also we would use part of our management overlays to give you a complete picture. Thank you, Kava, for your question.

Very useful. Thank you.

Thank you. We'll now take the next question. This is from from UBS. Please go ahead.

Yes, good afternoon. Can you hear me now?

Yes, we can hear you.

Excellent. I apologize for the audio issues. So first of all, I would like to say thank you to Johan as well for his insights and kind help over the years. And my first question actually would be to you. You and your team managed RBI through a very challenging last four years and put the company back on a profitable growth path, backed up by solid asset quality and a firm capital position. With this call being your last one, and without the inevitable responsibility for delivery and past panelists chasing you, What are the key opportunities that you see for the group in the next five years in broad terms? What would you be the most excited about when it comes to RBI? That's the first question. And the second question would be a question for Camilla, and I'm looking forward to working with you. I was wondering if you could share some color on the rollout of in-court settlement strategy for the FX, you know, mortgage loans in Poland. What does this mean for your provisioning approach? You, I think, alluded to the fact that it might be a bit more volatile, but if you could elaborate a little bit on the details, that would be helpful. Thank you.

Because just checking if you have the line on mute.

I start again. Can you hear me? Give me, operator, please give me a feedback if you can hear me.

We hear you loud and clear. Thank you.

Ah, thank you. Mate, thank you very much for your kind words. Maybe I cannot repeat now my many thanks. There will be another opportunity. I like to work with all of you. Coming to your question, I think you see in the numbers, but I would not take quite a long period of time to talk. I think the bank is in a very good shape, and I'm not talking about the financials, but the skills which have been developed over the last couple of years, which you have seen in a fantastic organic growth. I think the group is also very good in integrating whenever there is, as Camilla said, good opportunistic targets. I'm pretty sure that we are in the right region for this good business, and I think we have a new fantastic management, so I think they will soon explain to all of you how the next couple of years will be, but I tell you the potential is really huge.

Thank you. I would address, do you hear me? Just to check. Yes, okay. So to address the second question on the rollout of the settlement in Poland, we are now targeting much more broadly, both in Swiss francs but also in euros. We, of course, attempt to settle with those borrowers who are already in court, but we increasingly are having programs to target the borrowers before they file in court. As soon as we have some indication that they are intending to file, we approach them with an attractive offer. If successful, this could bring forward some provisions from next year into this year, but it's too early to say. So for now, we maintain the guidance at 200 million euros for 2026. Hope that answers the question.

Yes, thank you.

Thank you. We will now take the next question. This is from Krishnendra Dubey from Barclays. Please go ahead.

Hey, hi. Thanks for the question. I hope you can hear me well.

Yes, we can hear you.

Hey, thanks for bearing with us on long Russia questions on the calls, and thanks for guiding us through this time. And I have three questions. Just starting first on the GCNM, I guess the NIM margin in the business seems to be very volatile. If you can comment on how should we think about the NIM margin for GCNM business and also the fee growth in the GCNM business is very strong this quarter and is it partly due to the off late, like you have done few collaborations, have kind of got few joint ventures, are those kind of bearing fruits for you in GCNM? second is on the NIM overall. I guess you talked about pressure points in Czech Republic with your liability margin in Romania on the asset side. Could you talk us through what are the positives which you are seeing for the NIM margin for the rest of the year? And lastly, third, just on the Rasperia claim, I know you haven't filed the claim and welcome Camille and thanks a lot for talking about 40% payout ratio. I guess narrowing the range now for us to to do the work and in a sense if you get, if hypothetically the claim comes true, how would you be trying to allocate the claim money and should we take 40% as a base for a dividend payer?

Let me first comment on the NIEM in GCNM segment. So on NAI side, the liability margin is under pressure in Q1, and we could not fully compensate by volume increases. And therefore, we see slight NAI decrease in Q1 at minus $4 million. In addition, interest-bearing assets include a high proportion of low-margin business, repo business. As this is a short-term business, it can lead to some swings and neems. Just for your information, we have reported a 3% increase in the volumes. However, as I mentioned already, the core business increase is actually at 1.7%, and the rest was rather a short-term repo business at a very low margin. and this repo business is $1.2 billion, as I mentioned. On the full year basis, given that everything we know as of today, we expect that there would be no significant drop compared to year-end 2025. When it comes to your second question on the fees, the increase mainly comes from the strong debt capital market business. Institutional clients and sovereign issuances, which are up €12 million quote-on-quote. Secondly, we saw a positive development in corporate lending, primarily structured finance, and the asset manager in Austria, so right-facing capital management. It's primarily driven by average fund volumes that increase. When it comes to year-on-year, in addition to the mentioned drivers on the Q&Q development, We saw higher volumes from the banknote business on the back of the increased volumes. Growth in custody and increased transaction volumes. Generally, increased client activity in payment business as well. Name generally what positives you see for the rest of the year. I have mentioned that on the NIM side, we are stable relatively. So here we guide you through the NII of 4.4 billion. So I don't see that there is a lot of NIM positivity, but NII generally will be supported by a key rates increase that we expect. And I mentioned already in my speech the sensitivity of the and an upside of 50 to 100 million.

That's very kind. Unfortunately, I have to say I do not expect that we see the money in my term as CEO, unfortunately. But I think you can trust that the management team has a a very, very strong understanding of shareholder wishes, of decent capital allocation, and they have all the tools in their boxes. So I trust the team fully. And in the future, this I dare to say, I would also enjoy good dividends, but this is up to the management there. And 40% dividend payout ratio is answered by Camilla. But it sounds good, no?

Yes, we have confirmed payout ratio estimation for 2026 at 40%, which is roughly 1.8 euros per share. And this is what we accrue in Q1 and Q3. And in Q4, we will review based on the development. Thank you.

Thank you. Thanks a lot.

Thank you. We will now move to our next question. This is from Simon Nellis from Citibank. Please go ahead.

Oh, hi. Thanks very much for the opportunity. Just maybe two last remaining questions from me would be, do you just outline what the drivers of the higher tax rate in the quarter, if there's anything else other than Ukraine And what's your expectation for the effective tax rate going forward? That'd be my first question. And so I saw that it's very high income growth at the GC and M division. Just wondering having that and is that sustainable? Also NIM contraction at GCM was also quite pronounced. If you could also comment on that and what the outlook going forward is for NIM in that division.

Okay, so first let me comment on the higher tax rate. Higher tax rate is mainly due to the increased tax rate in Ukraine, which is up 50% from the 25% last year. This replaces the windfall tax, which was previously charged in the fourth quarter. Additionally, we have a bank levy in Slovakia, which is booked in the income tax line. Overall, we currently expect that the effective tax rate is a bit lower than 25% for the full year. So there would be a finalization after for the entire year. So how sustainable are GCNM fees? Currently we see them as sustainable going forward in line with the 2025. As I've mentioned, Q1 shown that you see has increased interest-bearing assets due to a short-term business repo transactions, which are very low margin. And therefore, there is a pronounced difference in Q1. But we see that through the year, the GCNM fee... Oh, sorry. I was about interest and income. So on the GCNM fees... The DCM fees were caused by the business primarily in DCM and as well as ever mentioned in the asset manager. Here, there would be a certain volatility to the extent of, I mean, to perform a similar development throughout the year that we see in Q1, probably difficult, but we are very optimistic on a further positive development going forward. When commenting on the third question is the drop in NIEM, this is what I started to answer. Here is primarily driven by the short-term business that we see in Q1, which are the report transactions. And the NIEM contraction generally driven by lower NII in the quarter. NII is down by 3 million quarter-on-quarter due to slightly lower liability margin. It's dilution from the high proportion of low-margin repo business. And at the same time, average interest-bearing assets were up, and this resulted to a relatively low need.

Thank you.

Thank you, Simon. Thank you.

Next question today comes from Ricardo Rovere from Mediobanca. Please go ahead.

Thanks. Thanks for taking my questions. And again, I just want to join greetings to Sobel for having accompanied us throughout all these years and all this complicated situation. And maybe for him, the first question, maybe it's my fault, but I haven't read anything in particular with regard, recently at least, with regard to the possible unfreezing of Russian assets in Europe. Do you think that the change in the government in Hungary could eventually change and maybe speed up and this could eventually be a positive for you? I just want to know your opinion on this. Second question I have is for Camila would say, just on the 14.5% that in your slide you indicate as a medium term target, when you say medium term, is what you have in mind, this is the appropriate level of capital that RBI ex-Russia should have as a sort of target or is what you think the capital will land after Romania and eventually after the conclusion of all the transactions. And if it is the first one, why 14 and a half percent? Why not 14 or 15 or 13 and a half? Then I have a question for Agnes. This quarter, if I understand it correctly, you charge the 74, if I'm not mistaken, million related to the macro update of the models. Now, this is an exercise that is not per se, and correct me if I'm wrong, a one-off, but maybe 74 million in a quarter is a one-off. Not by nature, but maybe by magnitude. But your guidance is unchanged at 35 basis points. This quarter you charge around 36, if I remember correctly. So implicitly, it's like you're saying that you expect some underlying deterioration of asset quality throughout the rest of the year. And then maybe a final question, if I may, still related to capital somehow. One day, Russia should not be part of the group anymore, is already considered not to be part of the group anymore, but still represent a fairly large amount of the profit of RBI. It's not immaterial at all. Are you planning to use the capital to replace Russia? with other transactions, which basically means buying earnings. I was a bit surprised, honestly, to see two transactions, one after the other, in such a short period of time. Just to have an idea if that could be eventually a way of using your capital. Thank you.

Yeah, Riccardo, thank you for your questions. I mean, unfortunately, we have not been successful to convince the European government that it would be in the interest of Europe to unfreeze the Strabag shares. It's an interesting dynamic which always occurs when the new sanction package is under negotiation. De-freezing would be a very, very clean way forward. Bringing Rasperia in Austria to the court is, and I have explained this many times, creates some risks for us in Russia. We will not be able now to fully solve this or reduce this risk, but we are working on that as well. I mean, the change in the government in Hungary, I think it's... We assume it will now create the flow of EU funds which have been blocked. Time is difficult, but definitely this could be beneficial to the Hungarian economy, to Russia itself. I find your way of thinking interesting. I have to admit I haven't thought and would not immediately expect something from this side. And with this, I would hand over to Camilla.

Thank you, Ricardo, for your question. We believe that 14.5 is a prudent level to which we run the bank, excluding Russia. This is almost 250 basis points above our SRAP requirements, and we expect to be back on this level in the course of 2027. We will dip, as we've mentioned, to 14.3 at the end of 2026, but we will be building it up back to 14.5 throughout the year. Hannes, you have a question?

Yes, thank you very much, Camilla. Ricardo, on the risk side, what is very important, let me distinguish between the macro part of the provisioning and the overlay. The macro, as I explained beforehand, goes very nicely with GDP, with long-term rates, and with unemployment when considering the retail models. The overlays is where we accept that our current risk models do not completely comprise a current situation. An example which I had to give, unfortunately, more than once in this setting is, for instance, a war situation like in Ukraine. No model is out there who can deal with wars and has it in the database memory, so to say. So that's the reason if I look at the 103 million euros what we have printed in the Q1 and we deduct the overlays of the 74 million euros. I was talking about the shift from stage one, stage two to stage three. So release in stage one, stage two, because this was a company where we already have booked stage two provisions. Company defaulted. Therefore, we released it in stage one, stage two, and we had to build up a comparable number for the for the stage three. And then I was also talking about that the total stage three risk costs that we could split them up about 50-50 in the retail, non-retail, you know, the 62 million euros. And, you know, the retail part, You could almost assume that for a full year, we have somewhere around risk cost for retail, for the retail portfolio, somewhere around, let's say, 180 to 220 million euros. This is what you have to assume in the remaining part, summing up to the part of the corporate side. I would not yet dare to speak about a deterioration, as you indicated. Because in the end of the day, if I take from the one or three total risk costs, I deduct the market overlays of 74. And I know I should then also consider stage one, stage two. But we have these 29 million euros of additional risk costs. Or I said stage three, 31 million euros. So for me, I cannot yet indicate a deterioration across the entire portfolio. I was even sharing that we have done a review of 500 group of connected customers and only a handful we had to adjust our rating. We have put some others on the watch list, but for me, this would be way too early Ricardo to already call out any structural deterioration. Having said all this, if the local situation in the Middle East starts settling and year 27, 28 economic forecast is being confirmed, then here we have a sort of a rolling model where the most actual update on Markov course counts the highest. We, as I also said in my introductory speech, part of this micro overlay hopefully could be released. Hopefully I did not dive too deep, but it is my current way of thinking. So to reiterate, no confirmation that I see already at the iteration of the portfolio. Part of the macro overlay could be released by the year-end if GDP and rates outlook has been confirmed towards the year-end. Thank you for the question, Riccardo.

Sorry, sorry, Camille, exactly, sorry.

Last but not least, if I understand correctly, there is a question on the redeployment of the capital taken out of Russia. So here we can look at it from two folds. So one thing is redeployment of the capital, which is being from potential sale and so on and so forth. This is the timing is unclear and the amount is not very clear. So we will talk about it when there would be a little bit more certainty. But when it comes to the second part of the recovery efforts is the claim from birth period, so 2.4 billion, which in damages we have a claim that we need to file. First of all, we need to bear in mind that it might take up to two years from the time we file the claim for the recovery. So any damages suffered in Russia will be rather recovery will be in medium term. When it comes to how do we redeploy it, I mean, it's always quite a standard toolbox. Some portion will be, of course, reserved for the dividends. Quite a substantial portion should be reserved for the organic growth. We see a very good trend on the organic growth throughout our markets, and hopefully that will continue in the midterm as well. I mean, only to note is the personal loan growth year on year 16%, overall growth of the loan portfolio 7%. So I think it's a very encouraging thing. And of course, M&A will be also part of the toolbox. And here, as I mentioned, we always have to be very careful when it comes to valuations. Currently, we see quite a high valuations in the attractive markets. So if you find an opportunity for successful and value accretive redeployment of the capital in the M&As, we will pursue them, as you've seen it now.

Perfect. Thanks. Very clear. Thank you.

Thank you. We will now take the next question. This is from Robert Brasosa from PKO BP Securities. Please go ahead. Hi.

Thank you for taking up my question so late during the presentation. I appreciate it. Luckily, most of my questions have already been answered except for one. I'm curious what has happened with the other and trading income in the Russian subsidiary, even though it's in a way gated. Could you comment whether you have lost permanently some income stream there for what reason or this has been purely due to market conditions? Thank you.

Yeah, we are aware or we made you aware that our business is shrinking and this also leads to a reduction in the trading income. Of course, trade flows are changing also. So I think it's over time a declining business. But I