Raiffeisen Bk In Unsp/Adr

Good afternoon, 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 weeks, 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 markets day 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. and the time has come to execute on it. I appreciate that for the past four years two major legacy issues have impacted the business in different ways. In our home market, Austria, growth has also been sluggish at times. What I see is that the legacy issues are behind us, that our capital base is strong and our balance sheet is healthy. I see a lot of potential to grow faster in our CE and SE markets 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'm confident that this will transform our retail business. Putting this 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 and that 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've also asked Kamila, 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 rainfall 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 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 deregulating 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 Raspberry litigation, which I will comment on shortly. I will be reviewing all that has been attempted so far and I've asked my team to double down on this effort. Third, I'm 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. 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 profits. 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-suit 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'm 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 that 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 Raiffeisen 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, whereas if we focus on the core customer business, we stand at 5% in the first half of the year. Our CET1 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, stands at 12%. 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 slow down growth, but do not trigger a slump in economic activity. At least in some countries, such as Hungary, domestic factors play an important and positive role. 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 and 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 regions. Still, there is a difference between the uniformly stronger 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. Kamila 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 Rasparia litigation. I'm 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%. Risk cost up to 35 basis points. And Hannes will walk you through our expectations here. We leave organic loan growth unchanged at present, 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 CT1 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. If we look at 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 these levels. 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 CT1 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 CAT1 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 NIEM slightly up. We also saw rate hikes in CZK, although these did not come through to our margins yet. Competition for liabilities among banks remains lively, and I shared it with you last time, we were at times the ones driving this. We had 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. The other market I need to mention is Romania, where we have been running customer acquisition campaigns and offering attractive saving rates. While dilutive to NIEM, we still expect the volume effect to be positive, and I should prove resilience from here. And of course, we are attracting new customers, which is positive in the long term. With that being said, group-wide, I'm encouraged by the long road, as well as the continuing deposit collection trends, especially in retail. As you just heard from Michael, We are now guide for net interest income between 4.4 and 4.5 billion euros, including some euro 50 million upside from rates which we were guiding for the last time. Moving to the fee income, which is up 5.6% in the quarter and over 10% versus the half year last year. As you saw in our guidance, we are now expecting fees close to 2.2 billion, nearly 10% increase versus the last year. I'm happy to see that the growth in the coming is coming from the range of products and businesses and it's with very very few exceptions this appears sustainable into the year end. Loan growth again was very strong up 2.2 percent in the quarter and 5.7 percent year to date. There is some short-term business included here but also euro 700 million decrease in Poland due to accounting policy changes. Putting this all together, our true customer business is up around 5% year to date. Retail demand continues to be very strong. And what is particularly encouraging is that we are growing above the market rates in all of our key markets. New product origination was very strong in the quarter in our key markets. In Czech Republic, we saw record new mortgage production and near record new consumer levels. Likewise in Slovakia, in Romania, and in Hungary. In the corporate segment, we are also very good new business friends, notably in the Czech Republic, Slovakia, Hungary and Serbia. GCNM was a bit slower this quarter after a very strong start in Q1. On the liability side, we continue to see very good inflows, especially in retail, where the margins were more attractive. In Czech Republic, retail deposits are up 4% in the quarter, 7% in Hungary, 2% in Slovakia, and 4% in Croatia. Let us now jump to slide 20 and look at our CT1. As always, the starting point is our price book zero deconsolidation scenario, which assumes a complete loss of Russian business. With 15.5%, we are back to recent highs. and we are still expected to generate around 90 basis points of C81 in the next six months. You are of course aware that we plan to close both of our announced acquisitions till this year, both in the fourth quarter. If you factor in our long growth guidance, dividend and this brings us to around 14.3 at the year end, slightly below our medium term target of 14.5. It is, of course, too early to get into 2027 guidance, but I would simply point out to our solid capital generation and a deco carve out as the clear drivers back to about 14.5%. Needless to say, proceeds from RASP area litigation would come on top of this. Moving on to slide 22, very briefly on our issuance plan. In the coming months, you can expect us to issue Tier 2 out of head office. We have three maturities in the coming years and we look to refinance these. Michael also mentioned Romania, where we will be issuing senior non-preferred for the local embryo requirements. And with this, let us move to my final slide, Poland. We are making good progress in settlements and we have expanded our strategy. Now we offer settlements for Euros as well as Swiss Francs, and we approach borrowers at different stages of the litigation process. Finally, we are exploring new channels through which we engage with the borrowers. The benefits of settlements come primarily from the savings that we realize on legal costs, court fees, and penalty interest. Looking at the provisioning, we guide for around 220 million this year. We introduced an accounting policy change in Q2, bringing us in line with the market practice in Poland with the added benefit that it led to risk cost release of around 24 million. This means that the bottom line impact from provisions in Poland in year 2026 will remain around initial 200 million guidance. This accounting policy change led also to around 400 million credit, risk-related assets relief. Finally, I know you will ask about this. The first half run rate is not to be extrapolated in the second half of the year. The primary driver of the provisions is the inflow of the new cases. and Swiss franc cases are clearly declining, whereas Euro are peaking and also expected to decline from here. There is also a timing mismatch on annulments. We immediately book loss from annulments, and there is a delay in booking a counterclaim, which we will receive from the borrower. This will partly reverse in half year 2026 and second half year 2026. And on this basis, we can confirm Euro 220 million guidance. With that, it's all from my side and I will give floor to Hannes.