Raiffeisen Bank International FY 2014 Results & Strategic Update

Transcription

1 Raiffeisen Bank International FY 2014 Results & Strategic Update

2 Disclaimer Certain statements contained herein may be statements of future expectations and other forward-looking statements, which are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, words such as "may", "will", "should", "expects", "plans", "contemplates", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions typically identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As such, no forward-looking statement can be guaranteed. Undue reliance should not be placed on these forward-looking statements. Many factors could cause our results of operations, financial condition, liquidity, and the development of the industries in which we compete, to differ materially from those expressed or implied by the forward-looking statements contained herein. These factors include, without limitation, the following: (i) our ability to compete in the regions in which we operate; (ii) our ability to meet the needs of our customers; (iii) our ability to leverage synergies from acquisitions, cost reduction programs or other projects; (iv) uncertainties associated with general economic conditions particularly in CEE; (v) governmental factors, including the costs of compliance with regulations and the impact of regulatory changes; (vi) the impact of currency exchange rate and interest rate fluctuations; and (vii) other risks, uncertainties and factors inherent in our business. Subject to applicable securities law requirements, we disclaim any intention or obligation to update or revise any forward-looking statements set forth herein, whether as a result of new information, future events or otherwise. This document is for information purposes only and shall not be treated as giving any investment advice and/or recommendation whatsoever. This presentation and any information (written or oral) provided to you does not constitute an offer of securities, nor a solicitation for an offer of securities, nor a prospectus or advertisement or a marketing or sales activity for such securities. The shares of Raiffeisen Bank International AG ( RBI ) have not been registered under the U.S. Securities Act of 1933 (the Securities Act ) nor in Canada, U.K. or Japan. No securities may be offered or sold in the United States or in any other jurisdiction, which requires registration or qualification, absent any such registration or qualification or an exemption therefrom. These materials must not be copied or otherwise distributed to U.S. persons (according to the definition under Regulation S of the Securities Act as amended from time to time) or publications with general circulation in the United States. The circulation of this document may be restricted or prohibited in certain jurisdictions. For the United Kingdom: This presentation and related material (these "Materials") are for distribution only to persons who are members of RBI falling within Article 43(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order") or who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Promotion Order), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). These Materials are directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which these Materials relate is available only to relevant persons and will be engaged in only with relevant persons. Figures shown in the presentation are based on figures disclosed in the annual report of RBI. However, figures used in this document have been rounded, which could result in percentage changes differing slightly from those provided in such reports. We have exercised utmost diligence in the preparation of this presentation. However, rounding, transmission, printing, and typographical errors cannot be ruled out. We are not responsible or liable for any omissions, errors or subsequent changes which have not been reflected herein and we accept no liability whatsoever for any loss or damage howsoever arising from any use of this document or its content or third party data or otherwise arising in connection therewith. 25 March

3 Table of Contents Executive Summary Financials Risk Management Appendix March

4 Executive Summary FY 2014 Transformation program launched Participation capital repaid in full Negative consolidated result due to several large one-offs Stable core revenue lines in a challenging environment Lower general administrative expenses due to tight cost management Increased risk costs due to higher allocations mainly in Ukraine and Asia Significantly improved NPL coverage ratio Russia performance solid despite macro economic headwinds 25 March

5 FY 2014 Financial Highlights Net interest income of EUR 3,789 mn (up 1.6% y-o-y) Net trading income of minus EUR 30 mn (down EUR 351 mn y-o-y) Operating income of EUR 5,355 mn (down 6.5% y-o-y) Profitability General administrative expenses decreased to EUR 3,024 mn (down 9.5% y-o-y) Net provisioning for impairment losses increased to EUR 1,716 mn (up 49.3% y-o-y) Negative one-offs of EUR 753 mn consisting of goodwill impairments, deferred tax asset write-downs and new legislation in Hungary (Settlement Act) Profit before tax decreased to EUR 23 mn (down 97.3% y-o-y) Consolidated profit decreased to minus EUR 493 mn (down EUR 1,050 mn y-o-y) Asset Quality NPL ratio at 11.3% (up 0.6PP compared to FY 2013) NPL coverage ratio increased to 67.4% (up 4.2PP compared to FY 2013) Loans to customers decreased to EUR 77.9 bn (down 3.4% compared to FY 2013) Regulatory Capital Ratios Common equity tier 1 ratio: fully loaded 10.0%; transitional 10.9% Total capital ratio: fully loaded 15.2%; transitional 16.0% Leverage ratio: fully loaded 5.7%; transitional 6.1% 25 March

6 RBI: A More Focused Universal Bank Less complex Reduced risk profile Higher capital buffer & = Building on core competencies A More Focused Universal Bank Strong relationship-based universal bank in CEE incl. Austria Well-capitalized for new regulatory environment Reduced risk profile and complexity Focused on markets with strong position to generate sustainable returns 25 March

7 Strategic Update (1/2) Transformation Targets 12% CET1 ratio (fully loaded) and 16% Total Capital ratio (fully loaded) by end 2017 Release of EUR ~26 bn gross RWAs from 09/2014 to end 2017 to reach capital targets and facilitate growth in promising markets Release of EUR ~16 bn gross RWAs from 12/2014 to end 2017 Post-transformation cost base ~20% lower than 2014 (at constant prices and FX rates) Targeted RWA Reduction (in EUR bn) 09/ / / /2017 Poland (8.1) (7.7) Asia & USA (4.7) (3.5) Russia (5.1) (1.7) Ukraine (1.8) (1.0) Other (6.0) (2.0) Total (25.7) (15.9) 25 March

8 Strategic Update (2/2) Exit/Sale: Specific Measures Status Update Sales process for Polish operations initiated Projects for exit / significant rescaling in Asia and USA set up Slovenia: Advanced negotiations, final decision expected in coming weeks Zuno: Competitive sales process based on strong interest Rescaling/Review: Rescaling of Russian operations by 20% RWA in EUR by end-2017 on track, footprint optimization program reducing presence from 65 cities across Russia to 44 at end-2015 Rescaling of Ukrainian operations by 30% RWA in EUR under way, RWA reduction to be accompanied by reduction in cost base and infrastructure Review of business model in Hungary under way, plan to be announced with Q1 figures 25 March

9 RWA Reduction Path RWA development (in EUR bn) 79.4 (9.8) Q4/2014 (14.4) (25.7) (8.2) 2015 to (7.7) 4.3 Sep-14 RWA reduction excluding Poland Sale Polish operations Regulatory & other effects Business growth Dec-17 Release of EUR ~26 bn gross RWAs from 09/2014 to end 2017 to reach capital targets and facilitate growth in promising markets Release of EUR ~16 bn gross RWAs from 12/2014 to end 2017 Headroom for EUR 7.0 bn of business growth while keeping the 12% target CET1 ratio Note: Final RWA reduction and RWA amount in 2017 depend on FX and future regulatory developments 25 March

10 Route to Target CET1 ratio of 12% (0.7%) 12.0% 1.1% Poland (1.1%) 1.2% 2.7% 0.6% 0.3% 0.2% 0.5% Asia & USA Russia Ukraine Other 10.0% End 2014 RWA relief Regulatory & other effects Business growth Required earnings retention Target 2017 Planned measures release EUR ~1.9 bn of capital equivalent leading to a target CET1 ratio of 12%, with strong buffers facilitating growth in promising markets Business growth in selected countries, e.g. Czech Republic, Slovakia, Romania, certain SEE countries, and Austria Notes: RWA relief displayed without effects of potential sales prices; CET1 ratio fully loaded; Required Earnings Retention indicates the minimum cumulative earnings retention necessary over three years to reach target capital ratio; Figures may not sum up due to rounding effects 25 March

11 Rescale Operations in Russia Business Development Profitable franchise with EUR 340 mn profit after tax in 2014 Solid liquidity and capital buffer Stable NPL ratio in 2014 y-o-y Limited direct impact from most recent sanctions on business due to its short term nature Retail lending predominantly in RUB with fixed interest rates Corporate USD lending mainly to exporting companies 2015 negatively impacted by RUB devaluation Key Figure Overview (in EUR mn) 1-12/ /2013 Risk-weighted assets (total) 8,372 11,536 Total assets 12,457 15,555 Employees 8,252 8,542 Intercompany funding* Profit after tax *) ~80% of funding exposure covered by political risk insurance Management Action Targeted further RWA reduction of ~20% (vs 12/2014) in EUR terms by 2017 Further tightening of underwriting criteria, strengthen focus on top tier and key relationships with corporates, multinational customers, trade finance and reduction of cyclical industry exposure Shorten maturity profile; higher collateralization levels Retail focus on affluent customers and existing primary customers in major cities FOOTPRINT OPTIMIZATION: Optimization of the network by exiting regions with lower prospects and focusing on major cities in bigger regions 6 regions in Far East of Russia to be exited by end-august Additional 15 cities to be exited in 2015 (currently present in 65 cities; target 44 by end 2015) Overall 34 branches to be closed by end 2015, with some openings planned in Moscow Structural optimization in rest of Russia through adjustments to capacity and resources 25 March

12 Portfolio Facts & Figures: Russia Products & Segments Out of EUR 8.4 bn total RWAs, Credit RWAs amount to EUR 7.1 bn, of which EUR 4.1 bn (57%) are in the Corporate and EUR 2.3 bn (32%) in the retail segment Balance sheet dominated by the loan book (88% of RWAs): in the Corporates segment only 12% of lending is to the energy sector; personal loans in RUB make up 50% of the Retail portfolio Breakdown of Total RWA Operational 13% Other Credit 9% Retail 27% Market 3% Corporates 48% Maturity Profile Tenors & Currencies Within 5 years almost 80% of the portfolio RWAs turn over, driven by short Corporate loans and Retail personal loans Retail portfolio almost exclusively in RUB, USD share less than 5% (EUR 90 mn); in Corporates about 50% is denominated in USD 3,000 2,000 1,000 0 < 3M 03M-1Y 1Y-2Y 2Y-5Y > 5Y USD RUB EUR Other Asset Quality NPL volume EUR 0.5 bn (NPL ratio of 5.9 %) mainly stemming from Corporate loans Coverage ratio of 70.5% Net provisioning for impairment losses of EUR 0.2 bn in 2014 EUR mn NPL and Coverage Ratio % 55% 165 6% 5% Corporate Retail Coverage ratio NPL ratio 120% 80% 40% 0% Note: All data as per 31 Dec March

13 Rescale Operations in Ukraine Business Development Raiffeisen Bank Aval results negatively impacted by currency devaluation and geopolitical situation Loans of EUR 1.6 bn (net of provisions) as of end 2014 NPL coverage ratio further increased to 87%; NPL ratio of 46% end-2014 Raiffeisen Bank Aval s credit exposure in Donbass region ~90% provisioned as of end 2014 Stable liquidity position NIM of 9.35% in 2014 Benefit from flight to quality, resulting in new fee-generating business Management Actions Further RWA reduction, focusing also on non-bank assets, of ~30% (vs 12/2014) in EUR terms by 2017 Reduction of FX risks and USD funding requirements Emphasize top tier corporates, multinational customers, agro business, trade finance Centralize the operating model and consolidate hubs across Ukraine to bundle back office and regulatory functions RWA reduction to be accompanied by reduction in cost base and infrastructure (consolidation of distribution footprint) Key Figure Overview (in EUR mn) 1-12/ /2013 Risk-weighted assets (total) 3,047 4,646 Total assets 2,481 4,327 Employees 11,478 13,053 Intercompany funding* Profit/loss after tax (290) 101 *) ~80% of funding exposure covered by political risk insurance 25 March

14 Portfolio Facts & Figures: Ukraine Products & Segments Out of EUR 3 bn total RWAs, Credit RWAs amount to EUR 2.5 bn, hereof EUR 1.5 bn (57%) in Corporates and EUR 0.35 bn (14%) in Retail 50% of Corporate Lending is to the non-cyclical consumer goods industry (e.g. agriculture & food); the Retail portfolio is driven by mortgages (50%) Sovereign RWAs in bonds (EUR 350 mn), minimum reserve and tax assets Breakdown of Total RWA Operational 13% Other Credit 7% Retail 12% Sovereign 16% Market 3% Corporate 49% Tenors & Currencies Short portfolio duration: 61% of the credit RWAs have a tenor of less than two years Two thirds of the portfolio is UAH denominated, less than one third in USD (lending to Corporates with USD income streams and USD mortgages). Insignificant amounts in EUR and other currencies Maturity Profile < 3M 03M-1Y 1Y-2Y 2Y-5Y > 5Y UAH USD EUR Other Asset Quality NPL volume EUR 1.2 bn (NPL ratio of 46.0%) mainly stemming from Retail consumer loans Coverage ratio of 86.9% Net provisioning for impairment losses of EUR 0.5 bn in 2014 Over 70% of the gross Retail FX portfolio is provisioned EUR mn NPL and Coverage Ratio % 92% 63% 36% Corporate Retail Coverage ratio NPL ratio 120% 80% 40% 0% Note: All data as per 31 Dec March

15 Macro Outlook Source: RBI/Raiffeisen Research Development of Real GDP (%) Country e 2015f 2016f CE Czech Republic (0.7) Hungary Poland Slovakia Slovenia (1.0) CE SEE Albania Bosnia a. H Bulgaria Croatia (0.9) (0.4) Kosovo Romania Serbia 2.5 (1.8) SEE Russia Russia (4.0) 0.5 CEE Belarus (2.0) 1.0 Other Ukraine 0.0 (6.9) (5.5) 0.5 CEE Other 0.3 (4.5) (3.9) 0.6 Austria Germany Eurozone (0.4) General Market Trends Recovery in euro area and solid German economy as support factors for CE/SEE, highly expansionary monetary policy in CE/SEE amid low inflation to continue well into 2016, Fed tightening risks for selected CEE currencies Robust growth in CE: Solid performance in Poland and Slovakia; Czech Republic, Hungary and Slovenia as turnaround stories, strongest upside in Hungary Modest recovery in SEE: Strong performance in Romania due to structural reforms, growth outlook for rest of SEE (Croatia, Serbia, Bosnia and Herzegovina) less benign Russia: Recession on weak investments and consumption, economic downsides limited by recent RUB/oil stabilization and still solid Q performance, recovery capped by geopolitical uncertainties and deteriorating liquidity and funding conditions (RUB weakness) Ukraine: Deep adjustment recession to continue with downside risks due to hefty deterioration in Q4 2014, sizeable USD 40 bn support by IMF/EU/International Financial Institutions, USD 5 bn already transferred; implementation risks remain. 25 March

16 Outlook and Targets We are planning an aggregate gross risk-weighted asset (total RWA) reduction of EUR 16 bn in selected markets by the end of 2017 (total RWA as at December 2014: EUR 68.7 bn). We intend to partly offset the reduction with growth in other business areas After the implementation of the new strategic measures, the cost base should be 20% below the level of 2014 (at constant prices and foreign exchange rates; general administrative expenses 2014: EUR 3,024 mn). We further aim to achieve a cost/income ratio of between 50 and 55% in the medium term We aim for a return on equity before tax of approximately 14% and a consolidated return on equity of approximately 11% in the medium term. The full year 2015 consolidated result may be negative as the majority of the restructuring costs (around EUR 550 mn in total) are expected to be booked in 2015 We expect net provisioning for impairment losses to remain elevated in 2015; however, we anticipate that the requirement will be below the level of the previous year (2014: EUR 1,716 mn) We target a CET1 ratio (fully loaded) of 12% and a total capital ratio (fully loaded) of 16% by the end of March

17 Table of Contents Executive Summary Financials Risk Management Appendix March

18 Q4/2014 Financial Highlights Net interest income of EUR 895 mn (down 4.8% q-o-q) Net fee and commission income of EUR 417 mn (up 3.4% q-o-q) Net trading income of minus EUR 68 mn (down EUR 98 mn q-o-q) Operating income of EUR 1,218 mn (down 12.4% q-o-q) Profitability General administrative expenses decreased to EUR 728 mn (down 6.2% q-o-q) Net provisioning for impairment losses increased to EUR 633 mn (up 22.9% q-o-q) Major one-offs of minus EUR 493 mn driven by goodwill impairments and deferred tax asset write-downs Loss before tax of EUR 479 mn (minus EUR 16 mn in Q3) Consolidated loss of EUR 718 mn (minus EUR 119 mn in Q3) NPL ratio at 11.3% (up 0.2PP q-o-q) Asset Quality NPL coverage ratio increased to 67.4% (up 2.0PP q-o-q) Loans to customers decreased to EUR 77.9 bn (down 5.6% compared to Q3) Regulatory Capital Ratios Common equity tier 1 ratio: fully loaded 10.0%; transitional 10.9% Total capital ratio: fully loaded 15.2%; transitional 16.0% Leverage ratio: fully loaded 5.7%; transitional 6.1% 25 March

19 One-off Charges in FY 2014 Goodwill impairments Total impairments of EUR 306 mn; thereof Russia (EUR 148 mn) and Poland (EUR 101 mn) due to revised midterm expectations as well as Albania (EUR 51mn) triggered by higher discount rates; no impact on (fully loaded) regulatory capital Remaining goodwill as at 31/12/2014: EUR 140 mn Government measures in Hungary New legislation (Settlement Act) led to provisions of EUR 251 mn for 2014 EUR 67 mn booked in Q2, EUR 205 mn booked in Q3, partly offset by a positive EUR 20 mn FX impact in Q4 Deferred tax asset (DTA) write-downs Updated mid term tax planning led to write-down of DTA in head office (EUR 161 mn) and Asia (EUR 35 mn) DTA write-down had no impact on (fully loaded) regulatory capital Total remaining DTA of EUR 285 mn within the Group (primarily due to temporary differences) Impairment of the brand and customer base in Ukraine EUR 30 mn partial write-down of intangibles (brand and customer base) in Q3 Remaining book value of intangibles EUR 26 mn (EUR 16 mn brand value and EUR 10 mn customer base) Impairment has no impact on (fully loaded) regulatory capital 25 March

20 Development of Financial Ratios in FY 2014 RoE (Consolidated) and RoTE 1 Cost/Income Ratio 9.5% 7.3% 8.0% 58.3% 56.1% 55.3% 55.5% 56.5% 4.3% 4.9% 4.8% 5.4% 1.7% <0.0% 1 12/ / / / /2014 RoE RoTE 1 12/ / / / /2014 Net Interest Margin 1 Provisioning Ratio % 3.11% 3.35% 3.33% 3.29% 3.24% 1.39% 1.40% 1.41% 1.79% 1 12/ / / / / / / / / /2014 1) Annualized 25 March

21 Distribution of Profit Before Tax by Segments in EUR mn (29.1)% (253) (11.8)% Including EUR 306 mn goodwill impairments 436 (60) % (66) (493) 348 (97.3)% 23 SEE CE Russia CEE Other Group Corporates Group Markets Corporate Center 1 & Reconciliation Group Profit Before Tax Note: Percentage changes are y-o-y 1) Due to the mostly internal nature of Corporate Center, amount is netted with Reconciliation for illustration purposes 25 March

22 Overview Future Segment Non-Core Financials (pro-forma) in EUR mn 1-12/ /2013 y-o-y (absolute) y-o-y (in %) Total assets 22,489 22,893 (405) (1.8)% RWAs (total) 11,829 12,498 (669) (5.4)% Equity 1,724 1, % Loans and advances to customers 14,774 15,129 (355) (2.3)% Deposits from customers 9,730 9, % Operating income (84) (11.2)% General admin. expenses (432) (486) 54 (11.1)% Operating result (30) (11.3)% Net provisioning for imp. losses (344) (228) (116) 51.0% Other results (4) (0) (4) >500.0% Profit/loss before tax (109) 41 (151) NPL ratio 12.0% 10.5% 142BP Coverage ratio 58.1% 62.6% (4.5)PP Changes in Segment Reporting Due to the decision to rescale and/or exit certain markets a new Non-Core segment will be formed starting with Q1/2015 The following countries/units will be reported in the new segment: Poland, Slovenia, Zuno (previously in Central Europe (CE) segment) Asia, USA (previously in Group Corporates/Markets segments) In addition the segments Russia and CEE other will be combined into a new segment Eastern Europe (EE) Commentary on Financials (y-o-y) Operating income down EUR 84 mn: Net interest income down EUR 29 mn mainly in Asia; net fee and commission income down EUR 18 mn resulting from Poland; trading income down EUR 16 mn predominately in Asia; sundry net operating income down EUR 21 mn mainly in Poland General admin. expenses down EUR 54 mn due to lower expenses in Poland NPL ratio at 12.0% and NPL coverage ratio at 58.1% Net provisioning up EUR 116 mn, as individual loans to large corporates in Asia caused higher provisioning Other results was flat RWA Breakdown (31 Dec 2014) Asia 21% USA 9% Slovenia 4% Zuno <1% Total RWA: EUR 11.8 bn Poland 65% Group Investor Relations 25 March

23 Overview of Key Financials in EUR mn 1-12/ /2013 y-o-y Q4/2014 Q3/2014 q-o-q Net interest income 3,789 3, % (4.8)% Net fee & commission income 1,586 1,626 (2.5)% % Net trading income (30) 321 (68) 30 Sundry net operating income (80.5%) (26) 17 Operating income 5,355 5,729 (6.5)% 1,218 1,391 (12.4)% General admin expenses (3,024) (3,340) (9.5)% (728) (776) (6.2)% Staff expenses (1,450) (1,632) (11.2)% (301) (373) (19.3)% Other admin expenses (1,193) (1,277) (6.6)% (319) (292) 9.2% Depreciation (381) (431) (11.6)% (108) (112) (2.9)% Operating result 2,332 2,389 (2.4)% (20.2)% Net provisioning for imp losses (1,716) (1,149) 49.3% (633) (515) 22.9% Other results (593) (405) 46.3% (336) (115) 193.1% Net inc from derivatives 88 (257) (72.3)% Net inc fin investments % (39) 23 Bank levies (177) (197) (10.2)% (35) (37) (6.0)% Profit/loss before tax (97.3)% (479) (16) >500.0% Consolidated profit/loss (493) 557 (718) (119) >500.0% Net interest margin (%) 3.24% 3.11% 13BP 3.06% 3.23% (17)BP RoE (consolidated) (%) <0% 4.9% <0% <0% RoTE (%) <0% 9.5% <0% <0% Development (y-o-y) NIM up 13 bps to 3.24%, driven by re-pricing measures and higher net interest income from derivatives; NIM improvement mainly in CEE Other, Russia and head office Provisioning up EUR 567 mn driven by higher individual provisioning; increase mainly from Ukraine, Asia and Russia while reductions in CE and SEE Other results down EUR 188 mn; goodwill impairments (up EUR 303 mn) and one-off effect of minus EUR 251 mn due to new legislation in Hungary; positively influenced by improved credit spread valuation result from own liabilities (up EUR 292 mn) and valuation result from derivatives Income taxes up EUR 254 mn impacted by EUR 196 mn impairment of deferred tax assets in head office and Asia Development (q-o-q) Net trading income down EUR 98 mn mainly due to valuation losses in currency and interest based business in Ukraine, Russia and head office Provisioning up EUR 118 mn mostly due to higher net allocations of individual loan loss provisions mainly in Hungary and Ukraine Other results down EUR 221 mn mainly due to goodwill impairments; lower result from derivatives and liabilities due to credit spread valuation (down EUR 49 mn) and valuation losses on securities mainly in Russia; partly offset by one-off effect in Hungary (up EUR 225 mn) booked in Q3 Income taxes up EUR 147mn impacted by EUR 187 mn impairment of deferred tax assets in head office and Asia 25 March

24 Overview of Balance Sheet RBI Balance Sheet (Dec 2014) in EUR mn Dec 2014 Dec 2013 y-o-y Dec 2014 Sep 2014 q-o-q 13% 15% EUR 122 bn 10% 8% 9% Total assets 121, ,640 (6.9)% 121, ,016 (7.9)% Loans and adv to banks 15,573 22,243 (30.0)% 15,573 22,353 (30.3)% 59% 54% Loans and adv to customers 77,925 80,635 (3.4)% 77,925 82,550 (5.6)% 13% 18% Deposits from banks 22,408 30,105 (25.6)% 22,408 30,771 (27.2)% Loans and advances to banks (net) Loans and advances to customers (net) Securities (including trading assets and investments in associates) Other assets Assets Liabilities Deposits from banks Deposits from customers Debt securities issued Other liabilities Equity and subordinated liabilities Deposits from customers 66,094 66,437 (0.5)% 66,094 67,824 (2.5)% Equity 8,302 10,364 (19.9)% 8,302 9,819 (15.5)% Assets Liabilities Loans and advances to customers decreased (down EUR 2.7 bn YTD) mostly FX driven; decline in retail business (down EUR 1.6 bn mainly Russia, Poland and Ukraine partly offset by Slovakia); corporate business down EUR 0.9 bn mainly in Ukraine and Russia partly offset by Poland and Slovakia Interbank business (down EUR 6.7 bn YTD) mainly in head office due to lower short term placements; repo and securities lending business (down EUR 2.1 bn YTD) mainly in head office Deposits from customers despite negative FX impact only slightly down EUR 0.3bn; increase of corporate deposits (up EUR 0.4 bn) mainly in head office and Poland partly offset by Russia and Ukraine; decrease of retail deposits (down EUR 0.4 bn) and repo business (down EUR 0.6 bn); deposits from sovereigns (up EUR 0.3 bn) mainly head office and Hungary Decrease in deposits from banks (down EUR 7.7 bn YTD) mainly in head office from lower short-term money market business; partly offset by increase of current account business (up EUR 1.8 bn) mainly in head office 25 March

25 Revenue Composition Split of Operating Income (in EUR mn) 1, ,345 1, , ,218 (26) 81 (19) (68) Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Net interest income Net fee and commission income Net trading income Sundry net operating income Development (y-o-y) Net interest income up EUR 60 mn; driven by higher NIM (up 13 bps) due to margin driven improvement in Russia and Belarus and lower refinancing costs mainly in head office; additional impact from higher income from derivatives mainly in Russia Net fee and commission income down EUR 40 mn triggered by FX development in Ukraine and Russia; decrease in loan and guarantee business primarily in Russia; lower fees in securities business in head office; decrease of payment transfer business mainly in Ukraine and Russia; increase in FX and precious metals business mainly Russia, Ukraine Net trading income down EUR 351 mn mainly due to valuation losses on derivatives and currency driven valuation losses on foreign currency positions in Russia and Ukraine Net Interest Margin 3.11% 3.24% 1 12/ /2014 Loan & Guarantee 13% Net Fee and Commission Income Other 17% Payment transfers 45% Foreign currency 25% Total 1 12/2014: EUR 1,586 mn Development (q-o-q) Net interest income down EUR 45 mn; NIM fell to 3.06% (down 17 bps) mainly from decrease in Russia, CE and Asia Net fee and commission income up EUR 14 mn as a result of higher turnover in FX and precious metals business (mainly Russia); increase in income from management of investment and pension funds and securities business Net trading income down EUR 98 mn due to valuation losses on foreign currency positions in Ukraine; additionally lower interest based business in Russia and head office due to valuation losses on securities and derivatives 25 March

26 Expense Base Breakdown Development of General Administrative Expenses (in EUR mn) Split of Other Administrative Expenses (1 12/2014) Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Staff expenses Other administrative expenses Depreciation Communication 6% Advertising 9% Other 20% Legal and consulting 9% Office space 26% IT 21% Deposit insurance 9% Development (y-o-y) General administrative expenses down EUR 316 mn, strongly influenced by FX effects in Russia and Ukraine Staff expenses down EUR 182 mn, mainly driven by Ukraine (down EUR 55 mn) and Czech Republic (down EUR 15 mn) due to cost saving measures and currency devaluation Other administrative expenses down EUR 84 mn, influenced by several countries; decline of office space expenses in Russia, Ukraine and Romania, decrease of IT expenses in Poland, head office and Russia; advertising expenses mainly down in Russia and Poland Depreciation of tangible and intangible assets down EUR 50 mn; decreases in head office and a 2013 software impairment in Czech Republic partly offset by impairment losses from intangible assets in Ukraine (EUR 30 mn for brand and customer base) and from tangible assets in Romania and Ukraine Development (q-o-q) General administrative expenses down EUR 48 mn Staff expenses decreased (down EUR 72 mn) driven by release of bonus accruals and cost saving measures in head office, Russia, Romania and Czech Republic Other administrative expenses increased (up EUR 27 mn) due to higher advertising and legal, advisory and consulting expenses Depreciation of tangible and intangible assets slightly down EUR 3 mn Total 1 12/2014: EUR 1,193 mn 25 March

27 Regulatory Capital Overview in EUR mn Regulatory Capital Structure Dec 2014 Basel III Sep 2014 Basel III CET1/Core Tier 1 (before deductions) 7,902 9,530 Deduction items (425) (810) Additional Tier 1 (after deductions) 0 (0) Tier 1 (after deductions) 7,477 8,720 Tier 2 (after deductions) 3,527 3,613 Total capital 11,003 12,333 Changes in Regulatory Capital (q-o-q) Common equity tier 1 ratio (transitional) of 10.9% (down 0.1 PP), decrease resulting from FX differences in equity and recognition of full year loss 2014 Common equity tier 1 ratio (fully loaded) amounted to 10.0%, down 0.2 PP mainly due to FX differences RWA decreased by EUR 10.7 bn primarily driven by credit risk (FX effects, exposure decrease, active RWA management) as well as market and operational risk (down EUR 1 bn each) Leverage ratio (fully loaded) of 5.7% (transitional: 6.1%) Common Equity Tier 1 Ratio (31 Dec 2014) RWA (total) 68,721 79,402 CET 1 ratio (transitional) 10.9% 11.0% 10.9% (0.5)% (0.3)% (0.1)% 10.0% CET 1 ratio (fully loaded) 10.0% 10.2% Tier 1 ratio (transitional) 10.9% 11.0% Total capital ratio (transitional) 16.0% 15.5% Total capital ratio (fully loaded) 15.2% 14.8% Transitional Intangible assets Excess minority capital IRB shortfall Fully loaded 25 March

28 Funding Overview Funding Structure (Dec 2014) Loan-to-Deposit Ratio (net) 1 Medium & long-term funding 17% Short-term funding 15% Subordinated liabilities 4% Total: EUR 103 bn Customer deposits 64% 113% 113% 112% 114% 112% 116% 115% 111% 107% Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 1) Loan-to-Deposit ratio (net) minus claims and obligations from (reverse) repurchase agreements, securities lending/borrowing and impairment losses on loans and advances Overview 2015 Funding Plan Funding plan 2015 of EUR 3.5 bn Funding mix broadly unchanged, dominated by 64% share of customer deposits (up 4.8PP YTD); decrease in short-term refinancing Solid contribution from private placements of EUR 2.1 bn in 2014 (additionally EUR 0.4 bn in 2015, as of 10 March) Loan-to-Deposit Ratio (net) improved by 5.5PP y-o-y to 106.7% partly due to FX effects (UAH and RUB) and reduced loan volume 25 March

29 Table of Contents Executive Summary Financials Risk Management Appendix March

30 Diversified Risk Profile Economic Capital Comments Operational Risk 9% Risk Buffer 5% Corporates 25% Risk-adjusted return on Economic Capital as key group steering measure Total Economic Capital requirement of EUR 7.38 bn 55% of Economic Capital is consumed by Credit Risk (Q3 2014: 65%) Market Risk 19% TBU Credit Risk Overall Credit Risk non-retail decreases due to lower exposure in the segments Group Corporates and Russia Market Risk increased strongly q-o-q due to higher volatility in exchange rates (RUB, UAH) Other 12% Liquidity 1% Sovereigns 6% Financial Institutions 3% Retail 21% Other Risk includes participation risk, owned property risk and macroeconomic risk About one third of the economic capital is distributed to Central Europe, followed by South Eastern Europe (one fifth), Austria and Russia 25 March

31 Portfolio Overview Exposure to Business Lines by Region at end of December 2014 (in EUR bn) 1 48 Total: EUR 155 bn 24 23% 68% 10% 1) Includes Project Financing 19% 33% 47% 1% 24 22% 17 1% 3% 33% 21% 6% 45% 70% 6% Highlights 6 62% 9% 23% 23 13% 48% 40% 7 13% 6 2% 71% 16% 70% 28% Austria CE SEE Russia CEE Other Other EU Far East RoW Corporates Retail Financial Institutions Sovereigns Portfolio structure dominated by the corporate portfolio held in all regions and forming the back-bone of RBI Group s business model; exposure reductions mainly in Group Corporates, Russia and Ukraine led to an overall decline of EUR 3.7 bn to EUR 74.8 bn and a reduced share of the Corporates segment Retail business: Overall stable portfolio structure development in 2014; the slight decrease by EUR 0.8 bn to EUR 28.6 bn was driven by FX developments in certain markets The Financial Institutions portfolio decreased y-o-y by EUR 6 bn to EUR 21.4 bn due to smaller volumes in repo transactions and security positions The Sovereign portfolio increased by EUR 2.5 bn to EUR 21.8 bn due to an increase of the liquidity buffer in the second half of March

32 NPL Development NPLs as % of Customer Loans and NPL Coverage Ratio NPL Breakdown by Segment (31 Dec 2014) 63% 65% 65% 65% 67% 68% 67% 70% 87% 33.7% 53% 80% 10.7% 10.6% 10.7% 11.1% 11.3% 10.3% 13.2% 5.9% 10.5% 2.2% Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 CE SEE Russia CEE Other Group Corporates Group Markets 1) NPLs as % of customer loans Coverage ratio NPLs as % of customer loans Coverage ratio 10.7% NPL ratio Dec 13 1) Including exposure to banks NPL Ratio Development in 1 12/2014 (1.0)% 0.4% FX effects Volume Organic changes 1.2% 11.3% NPL ratio Dec 14 NPLs slightly up EUR 181 mn YTD to EUR 8,838 mn FX impact of minus EUR 778 mn YTD, mainly from UAH, RUB, HUF NPL allocation (YTD net of FX effects) mainly from Group Corporates (up EUR 629 mn), Ukraine (up EUR 604 mn) and Russia (up EUR 195 mn) Main release (YTD net of FX effects) in Bulgaria (EUR 187 mn), Hungary (EUR 181 mn), Poland (EUR 92 mn due to NPL sale of EUR 294 mn) and Slovenia (EUR 89 mn) NPL ratio up 0.6PP to 11.3% YTD; highest increase in CEE Other with 9.3PP and Group Corporates with 3.8PP; decrease in Central Europe 2.0PP NPL coverage ratio up 4.2PP to 67.4% YTD primarily driven by CEE Other and Group Corporates 25 March

33 Provisioning Quarterly Change in NPL Stock (in EUR mn) 4% 2% 2% 6% (3)% (228) 213 (4)% (365) Loan loss provisioning increased by 49.3% or EUR 567 mn y-o-y and remained on an elevated level at EUR 1,716 mn, in line with expectations Main y-o-y developments driven by higher individual loan loss provisioning (up EUR 614 mn); slightly higher portfolio-based loan loss provisioning (up EUR 6 mn); partly offset by gain on sale of NPLs (up EUR 54 mn) primarily in Poland Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Absolute NPL net change 1 Relative NPL net change Development of Provisioning Ratio 3.16% 2.52% 1.61% 1.72% % 1.42% Q3/2013 Q4/2013 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Net provisioning for impairment losses Net provisioning ratio (q-o-q) (average customer loans) 1) Relative to NPLs recorded at previous end of period; NPLs at the end of Q4/2014 EUR 8,838 mn ECB AQR adjusted CET1 ratio used in the stress test by 0.65 PP; adjustments to CET1 ratio stemmed from different approach to portfolio-based loan loss provisions and no consideration of individual loan loss provisions formed in 2014; findings from single loan file review considered in 2014 wherever appropriate Individual loan loss provisioning up EUR 614 mn y-o-y mainly driven by increases in Ukraine (up EUR 422 mn impacted mostly by Eastern Ukraine conflict and FX development), Asia (up EUR 229 mn) and Russia (up EUR 53 mn), while improvements recorded in SEE (down EUR 48 mn), Slovenia (down EUR 40 mn), Hungary (down EUR 31 mn) and Poland (down EUR 18 mn) Portfolio-based loan loss provisioning up EUR 6 mn; increases were recorded in Russia (up EUR 53 mn) while releases in SEE (down EUR 25 mn), head office (down EUR 18 mn) and Czech Republic (down EUR 11 mn) 25 March

34 Breakdown CHF Loan Exposures 2,831 CHF Loan Exposures (31 Dec 2014, in EUR mn) CHF NPL Ratio & NPL Coverage Ratio (31 Dec 2014) 87% 85% 66% 70% 50% 42% 80 2% 15% 18% 12% Poland Romania Croatia Hungary Serbia Poland Romania Croatia Hungary Serbia NPL Ratio NPL Coverage Ratio Poland, Romania, Croatia, Serbia: Exposure predominantly in Retail Solution exists for Hungarian CHF mortgage loans, remaining exposure predominantly Corporate CHF positions virtually all hedged (either match-funded or swapped) Neutral impact on Total Capital ratio from CHF volatility as RBI Group has CHF denominated Tier 2 securities outstanding Note: Hungary includes both corporate and retail, but excludes loans to be converted to HUF in the conversion scheme 25 March

35 Table of Contents Executive Summary Financials Risk Management Appendix March

36 RWA overview RWA overview by country in EUR mn 31/12/ /12/2013 Change (absolute) Change (in %) Czech Republic 5,114 5,271 (157) (3.0%) Hungary 3,987 4,938 (951) (19.3%) Poland 7,744 8,220 (476) (5.8%) Slovakia 5,373 5,497 (124) (2.3%) Slovenia (173) (26.3%) Reconciliation 73 (185) 258 Segment CE 22,777 24,400 (1,623) (6.7%) Albania 1,707 1,876 (169) (9.0%) Bosnia and Herzegovina 1,171 1,376 (205) (14.9%) Bulgaria 1,826 2,375 (549) (23.1%) Croatia 3,073 3,199 (126) (4.0%) Kosovo (18) (3.4%) Romania 4,140 4,276 (136) (3.2%) Serbia 1,299 1,531 (232) (15.2%) Reconciliation (61) (79) 19 (23.4%) Segment SEE 13,679 15,097 (1,418) (9.4%) Segment Russia 8,372 11,536 (3,164) (27.4%) Belarus 1,552 1, % Kazakhstan (13) (32.7%) Ukraine 3,047 4,646 (1,599) (34.4%) Reconciliation 0 (6) 6 Segment CEE Other 4,626 6,175 (1,549) (25.1%) Segment Group Corporates 12,636 13,846 (1,210) (8.7%) Segment Group Markets 3,937 5,614 (1,676) (29.9%) Segment Corporate Center 18,738 16,752 1, % Reconciliation (16,044) (13,523) (2,520) 18.6% Total RBI Group 68,721 79,897 (11,175) (14.0%) Decline of RWA mainly driven by Credit risk standard approach 34% Comments Credit risk RWA: reduction of EUR 8 bn due to volume reduction in many group units (EUR 4 bn), active management measures and calculation changes in accordance with CRR contributed EUR 3 bn and the FX effects (devaluation in RUB and UAH offset by USD revaluation) amounted to EUR 2 bn Market risk RWA: down EUR 1 bn due to lower trading volume in Russia and head office, reduction of open FX positions and calculation changes in accordance with CRR Operational risk RWA: down EUR 2 bn mostly from FX devaluation and a reduction of gross income RWA split Market risk 5% Operational risk 12% Credit risk CVA risk 1% Total: EUR 68.7 bn Credit risk internal rating approach 48% 25 March

37 Sale of Polish Operations Current Situation Poland is an attractive banking market with strong bank valuations Integration of Polbank successfully completed Top 8* player in a consolidating market Strong Corporate and Retail franchise with extensive nationwide distribution network Rationale Participating in market consolidation would require substantial additional financial resources EUR 7.7 bn of RWA release (incl. leasing) EUR 2.6 bn of head office funding release Limited revenue synergies with RBI network Key Figure Overview (in EUR mn) 1-12/2014 Risk-weighted assets (total) 7,744 Total assets 13,729 Employees 5,462 Intercompany funding 2,612 Profit after tax 84 *) Market share data per end 3Q/ March

38 Rescale/Exit Operations in Asia and the USA Rationale Reduction of the Group s complexity Reallocation of resources to the European franchise Reduction of cross-border funding and USD funding requirements Asian Branches Rescaling of operations with a targeted release of up to EUR ~2.5 bn RWA and EUR 2.2 bn of funding China: Mostly working capital/trade finance and multinational customers Singapore: 40% short-term structured trade finance; 40% asset-based lending (partly workout); 20% mediumterm corporate loans Key Figure Overview (in EUR mn) 1-12/2014 Risk-weighted assets (total) 2,528 Total assets 6,040 Employees 239 Intercompany funding 2,220 Loss after tax (236) USA Finance Company Sale or run-down of unit by 2016 releasing EUR ~1.0 bn of RWA and EUR 0.8 bn of funding Half of assets mature within two years Large part of assets tradable on secondary markets Key Figure Overview (in EUR mn) 1-12/2014 Risk-weighted assets (total) 1,013 Total assets 839 Employees 78 Intercompany funding 770 Profit after tax March

39 Other Initiatives Initiative Rationale/Management Action Review of Business Model of Hungarian Operation Review business model to reflect new domestic environment Streamlined universal banking concept with reduced branch network, focusing on corporate and affluent/mass affluent customers In line with positive economic development, NPLs have started to decline Solution exists for CHF mortgage loans, re-focus on new business Reduced banking levy anticipated from 2016 onwards Sale of Slovenian Operation Sale of Direct Bank Zuno Limited strategic relevance for the network High degree of banking market penetration Reduction of the Group s complexity Infrastructure requires scale not reachable without further investments RBI is building digital competence based on integrated channel management Streamline Leasing Leasing business to be reduced in line with the banking operations Securitization Foster securitizations (up to ~20bps of CET1 capital relief p.a.) 25 March

40 Earnings & Cost Contribution from Affected Businesses 1-12/2014 (in EUR mn) 1-12/2014 (in EUR mn) General Admin. Expenses General Admin. Expenses Profit/loss after tax Rescaling operations/reviewing business model Profit/loss after tax Exit/Substantial rescaling RWA (total) Poland ,744 - Slovenia 21 (25) 486 FY2015 loss expected Zuno 28 (19) 58 FY2015 loss expected Asia 47 (236) 2,528 USA ,013 - RWA (total) Comment Hungary 188 (398) 3,987 FY2014: EUR 251mn Settlement Act Russia ,372 - Comment FY2014: EUR 291 mn provisioning, FY2014: EUR 35 mn DTA write-off; Normalized profit after tax: EUR ~40 mn Ukraine 216 (290) 3,047 FY2014: EUR 533 mn provisioning Original cost management program fully on track Post-transformation cost base ~20% lower than 2014 (at constant prices and FX rates) 25 March

41 Geographic Footprint Central Europe (CE) Southeastern Europe (SEE) Austria, #3 Loans: 23.5 bn Customers: 8,040 Russia CEE Other Czech Republic, #5 Loans: 6.3 bn Customers: 481,804 Business Outlets: 127 Poland, #8 Loans: 9.8 bn Customers: 689,676 Business Outlets: 351 Russia, #10 Loans: 8.4 bn Customers: 2,940,532 Business Outlets: 212 Belarus, #6 Loans: 1.0 bn Customers: 744,935 Leading regional player with CEE presence of over 25 years Business Outlets: 3 Business Outlets: 97 Hungary, n.a. Loans: 4.7 bn Customers: 580,052 Business Outlets: 114 Slovakia, #3 Ukraine, #5 Loans: 2.7 bn Customers: 2,940,593 Business Outlets: 671 Romania, #4 Covering 16 markets (incl. Austria), of which nine are EU members and Serbia has candidate status Loans: 7.5 bn Customers: 926,903 Business Outlets: 178 Loans: 4.3 bn Customers: 2,089,544 Business Outlets: 529 Top 5 market position in 10 countries Slovenia, #12 Bulgaria, #6 Loans: 0.8 bn Customers: 63,426 Business Outlets: 14 Croatia, #4 Bosnia & Herzeg., #2 Albania, #1 Kosovo, #1 Loans: 2.2 bn Customers: 761,894 Business Outlets: 156 Serbia, #5 Strong market position with Austrian corporates focusing on CEE Loans: 3.2 bn Loans: 1.2 bn Loans: 0.9 bn Loans: 0.5 bn Loans: 1.1 bn Customers: 463,552 Customers: 499,973 Customers: 723,451 Customers: 278,432 Customers: 640,337 Business Outlets: 77 Business Outlets: 96 Business Outlets: 92 Business Outlets: 52 Business Outlets: 85 Note: Position based on loans and advances to customers as of Q All loan data in EUR. Additionally, RBI operates leasing units in Moldova and Kazakhstan. 25 March

42 Country and Segment Overview 1-12/2014 Total Assets (EUR mn) Share of Total Assets 1 Loan/Deposit Ratio (net) LLSFR 2 (network banks) Net Interest Margin Provisioning Ratio NPL Ratio NPL Coverage Ratio Czech Republic 8, % 95.4% 83.2% 2.98% 0.67% 6.0% 65.2% Hungary 6, % 88.3% 79.4% 2.62% 2.64% 25.7% 77.3% Slovakia 10, % 94.9% 84.0% 3.28% 0.76% 4.5% 70.8% Slovenia 1, % 144.5% 120.8% 1.22% 2.44% 25.2% 59.9% Poland 13, % 116.2% 94.3% 2.44% 0.26% 8.8% 56.9% Segment CE 40, % 101.0% 2.77% 0.94% 10.3% 68.0% Albania 1, % 48.0% 45.9% 4.70% 3.23% 18.6% 58.8% Bosnia and Herzegovina 1, % 72.5% 63.7% 3.67% 1.34% 13.1% 56.7% Bulgaria 3, % 91.3% 75.4% 4.00% 2.20% 14.7% 53.9% Croatia 4, % 92.3% 75.2% 3.71% 1.49% 14.8% 73.2% Kosovo % 76.7% 69.1% 5.31% 0.54% 10.2% 48.5% Romania 6, % 85.1% 69.2% 4.36% 1.95% 10.7% 71.7% Serbia 1, % 81.4% 67.0% 5.52% 1.76% 12.9% 81.4% Segment SEE 21, % 81.4% 4.27% 1.85% 13.2% 66.5% Segment Russia 12, % 109.9% 99.9% 5.92% 1.52% 5.9% 70.5% Belarus 1, % 117.6% 94.1% 8.08% 0.87% 3.0% 88.9% Ukraine 2, % 104.7% 73.3% 9.35% 17.77% 46.0% 86.9% Segment CEE Other 3 4, % 110.3% 8.92% 13.46% 33.7% 87.0% Segment Group Corporates 18, % 137.1% 2.31% 2.42% 10.5% 53.5% Segment Group Markets 17, % 192.1% 0.98% (0.04)% 2.2% 79.7% Segment Corporate Center 31, % Total RBI Group 121, % 106.7% 3.24% 2.13% 11.3% 67.4% 1) Excludes reconciliation of EUR 24.4 bn 2) Loans to local stable funding ratio for network banks in respective countries as of end-2014, according to definition of Austrian Finish recommended target of 110% in new business 3) Includes Kazakhstan 25 March

43 Country Financials (CE) Czech Republic In EUR mn Q4/2014 Q3/2014 Change Q2/2014 Q1/2014 Q4/ / /2013 Change Total assets 8,794 8, % 7,900 7,791 7,987 8,794 7, % Equity % % Loans and advances to customers 6,335 6, % 6,126 5,959 5,983 6,335 5, % - Hereof corporate % % 43.6% 0.7PP 43.7% 43.0% 44.0% 44.4% 44.0% 0.4PP - Hereof retail % % 55.8% (0.7)PP 55.7% 56.4% 55.6% 55.0% 55.6% (0.5)PP - Hereof FCY % 12.8% 12.5% 0.3PP 11.9% 11.4% 11.7% 12.8% 11.7% 1.1PP Deposits from customers 6,378 6, % 5,700 5,666 5,757 6,378 5, % Operating income (17.7)% (15.1)% - Net interest income (1.9)% (1.7)% - Net fee and commission income % (15.9)% - Net trading income (3) (1) 327.5% (1) 1 4 (5) 15 - Sundry net operating income (9) (0) 14 Net provisioning for impairment losses (10) (9) 11.6% (12) (10) (26) (41) (52) (21.3)% General administrative expenses (52) (51) 3.6% (48) (50) (95) (201) (277) (27.5)% Other results % 1 4 (4) 8 (6) Profit/loss before tax (59.7)% (31) % Profit/loss after tax 7 23 (68.4)% (22) % Return on equity before tax 2 6.0% 15.7% (9.8)PP 15.3% 16.2% 13.2% 7.6% 5.5PP Return on equity after tax 2 3.8% 12.9% (9.0)PP 12.5% 12.8% 10.4% 6.5% 3.9PP Net interest margin 2.85% 3.11% (26)BP 3.11% 2.89% 2.90% 2.98% 3.00% (2)BP Loan/deposit ratio (net) 95.4% 97.2% (1.8)PP 103.0% 100.8% 100.2% 95.4% 100.2% (4.8)PP Cost/income ratio 73.6% 58.5% 15.1PP 55.6% 59.8% 102.1% 61.3% 71.9% (10.5)PP Business outlets (0.8)% (1.6)% Number of employees 2,720 2,727 (0.3)% 2,732 2,749 2,773 2,720 2,773 (1.9)% Number of customers 481, ,818 (0.2)% 476, , , , ,909 (1.0)% Provisioning ratio 0.63% 0.57% 6BP 0.81% 0.66% 1.68% 0.67% 0.84% (17)BP NPL ratio 6.0% 6.1% (12)BP 6.4% 6.5% 6.8% 6.0% 6.8% (78)BP NPL coverage ratio 65.2% 65.4% (0.2)PP 64.8% 63.2% 61.2% 65.2% 61.2% 4.0PP Note: All data, except P/L, are dated to the end of the period 1) Sovereign as remaining share 2) Annualized 25 March