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Raiffeisenbank has announced its IFRS financial results for the first nine months of 2016

AO Raiffeisenbank announces its financial results for 9 months of 2016. All figures are provided in accordance with International Financial Reporting Standards (IFRS) and may differ from the data on Russia in Raiffeisen Bank International AG (RBI) financial report as a result of the difference arising from consolidation and translation to Euro.

  • Net profit growth by 15.1% to RUB 20,082.7 million at the end of 9M2016
  • High profitability ratios: ROE before tax was 32.7% (+4.5 p.p. compared to 9M2015), ROE after tax exceeded 25%
  • Decrease in the loan portfolio by 5.9% compared to the end of 2015 resulted from negative revaluation of foreign currency loans
  • Improved asset quality: the cost of risk decreased to 1.4%
  • Substantial liquidity cushion: around 30% of the assets are liquid and this allows to continuously outperform the CBR liquidity requirements
  • Growth of capital adequacy: H 1.0 was 15.2% as of 01.10.2016 (compared to the required minimum of 8.0%)

Main financial results

9 months 2015,
RUB million
9 months 2016,
RUB million
change, %
Net interest income before provisioning for impairment losses 32 591.6 31 702.6 -2.7%
Charge of provision for loan impairment (9 809.5) (5 611.0) -42.8%
Net fee and commission income 8 707.6 10 029.3 15.2%
Trading result 7 421.2 6 135.1 -17.3%
Administrative and other operating expenses (18 063.6) (17 283.6) -4.3%
Profit before tax 21 572.6 25 465.5 18.0%
Net profit 17 450.0 20 082.7 15.1%
Cost/income ratio 36.6% 35.7% -0.9 p.p.
ROE before tax 28.2% 32.7% +4.5 p.p.
ROE after tax 22.8% 25.8% +3.0 p.p.

For the first 9 months of 2016 the profit before tax reached RUB 25,465.5 million, exceeding the figure for 9M2015 by 18.0% due to significant reduction in charge of provision for loan impairment and growth of the net fee and commission income.

After three quarters of 2016, the return on equity (ROE before and after tax) of the Bank remained at a high level: 32.7% and 25.8%, respectively (showing growth as compared to the same period of 2015 by 4.5 and 3.0 percentage points).

«Raiffeisenbank continues to deliver strong financial results throughout the year and this reporting period is no exception, — says Sergey Monin, CEO, AO Raiffeisenbank. — We managed to boost our profitability ratios while maintaining the high quality of our assets and sticking to the conservative approach to liquidity and capital management. I am pleased to note the remarkable results of our retail division — rapid growth of our mortgage portfolio, as well as steady positive dynamics of loan portfolio in middle business».

During nine months of 2016 charge of provision for loan impairment amounted to RUB 5,611.0 million, which is by 42.8% lower than charges in the same period of 2015 (RUB 9,809.5 million). These dynamics resulted from significantly lower additional provisioning in the retail segment (RUB 2,632.8 million for 9 months of 2016 compared to RUB 6,122.9 million for the same period of 2015) due to the improving portfolio quality. Risk cost1 continued to decline and after the first three quarters of 2016 amounted to 1.4% (-0.4 percentage points compared to the first half of 2016 and −1.3 percentage points compared to the end of 2015).

Net fee and commission income increased by 15.2% to RUB 10,029.3 million due to the higher fee and commission income on settlement transactions of SME clients and the income gained from the sale of insurance products.

Net interest income before provisioning for impairment losses remained almost unchanged compared to the first 9 months of 2015 (down 2.7%) and amounted to RUB 31,702.6 million. Such dynamics is mainly explained by reduction in the net interest income on derivative financial instruments due to lower volumes of foreign exchange swaps and lower market interest rates in 2016.

Trading result2 for the first 9 months of 2016 amounted to RUB 6,135.1 million, which is by 17.3% lower than the figure for the same period of 2015, mainly due to a lower result on items related to foreign exchange transactions and revaluation3 (RUB 5,508.8 million for 9M2016 and RUB 6,171.1 million for 9M2015) and reduction in the gains on securities at fair value through profit and loss (from RUB 1,018.6 million for 9M2015 to RUB 144.2 million for 9M2016).

The Bank’s operating income before provisioning for impairment4 for the first 9 months of 2016 amounted to RUB 48,364.0 million, having declined by 2.1% compared to 9 months of 2015.

Operating expenses decreased by 4.3% and amounted to RUB 17,283.6 million. Cost control measures allow the Bank to maintain the cost/income ratio (CIR) at a low level: for the first 9 months of 2016 CIR was 35.7% (down by 0.9 percentage points compared to the same period last year).

Statement of financial position

RUB million
RUB million
change, %
Assets 858 545.6 795 422.6 -7.4%
Liquid assets 242 316.4 231 536.0 -4.4%
Loans and advances to customers before provisions: 558 071.4 525 054.1 -5.9%
Retail customers 181 915.5 183 939.8 1.1%
Small and micro businesses 14 807.0 14 851.0 0.3%
Medium businesses 20 183.0 21 156.3 4.8%
Large businesses 341 165.2 305 106.8 -10.6%
Customer accounts 581 270.4 566 870.3 -2.5%
Term borrowings from the Parent bank 55 241.4 36 885.4 -33.2%
Equity 94 712.5 112 704.0 19.0%
Share of loans individually determined
to be impaired in total loan portfolio
8.2% 8.0% -0.1 p.p.
Total Basel III capital adequacy ratio 20.6% 25.0% +4.4 p.p.
H 1.0 capital adequacy ratio
(calculated in accordance with the CBR methodology)
13.9% 15.2% +1.3 p.p.

By the end of September 2016, the share of liquid assets was 29.1% (up 0.9 percentage point compared to the end of 2015). The Bank continuously outperforms CBR’s liquidity requirements: as of 01.10.2016, the H2 ratio was 98.0% (compared to the required minimum of 15%), H3 was 214.6% (compared to the required minimum of 50%), and H4 was 42.2% (compared to the required maximum of 120%).

The loan portfolio before provisions decreased for 9 months of 2016 by 5.9% and amounted to RUB 525,054.1 million. Such dynamics is explained by negative revaluation of corporate foreign currency loans due to lower ruble exchange rate (total loan portfolio remained almost unchanged in real terms). Other business segments experienced loan portfolio growth: the portfolio of small and micro business +0.3% to RUB 14,851.0 million, the portfolio of middle business +4.8% to RUB 21,156.3 million, retail loan portfolio +1.1% to RUB 183,939.8 million.

Within retail loan portfoliomortgage loans grew at the most rapid rate (+21.4% to RUB 62,506.0 million as of 30.09.2016). For the first 9 months of 2016, consumer loans remained virtually unchanged (RUB 89,099.6 million as of 30.09.2016), the portfolio of credit cards gained 4.1% to RUB 18,643.6 million, car loans continued to be amortised (down 41.5% compared to the end of 2015) .

The share of loans individually determined to be impaired in the total loan portfolio of the Bank was 8.0% as of the 3rd quarter of 2016, having dropped by 0.5 percentage points compared to the previous quarter.

Customer accounts slightly decreased compared to the end of 2015 (-2.5%) and amounted to RUB 566,870.3. million due to the impact of the negative revaluation of foreign currency accounts (increase by around 4% was observed in real terms). Retail deposits dropped by 5.1% in nominal terms, while a growth by about 2.2% was observed in real terms. Corporate accounts increased by 2.1% to RUB 217,445.5 million due to the growing balances on current accounts by 12.7%.

Loan-to-deposit ratio was 92.6% as of 30.09.2016.

Term borrowings from parent bank were RUB 36,885.4 million, down 33.2% compared to RUB 55,241.4 million at the end of 2015 due to partial prepayment and currency revaluation effect. The share of the term funding from parent bank in total bank’s liabilities dropped to 5.4% as of 9 months of 2016.

The bank’s equity rose by 19.0% or RUB 17,991.5 million compared to the end of 2015 reaching RUB 112,704.0 million due to the net profit received in 2016.

The Bank enjoys considerable capital adequacy and fully meets the regulatory capital requirements. H 1.1 and H 1.25 capital adequacy ratios remain on the high level and as of October 1, 2016 were 9.7% and 10.6%, respectively (up 0.8 and 0.7 percentage points compared to 01.01.2016, compared to the required minimum of 4.5% and 6.0%). H 1.0 ratio was 15.2% on the same date (compared to the required minimum of 8.0%).

Total Basel III capital adequacy ratio continued to grow during the third quarter of 2016 and as of 30.09.2016 amounted to 25.0% compared to the required minimum of 8.0% (up 4.4 percentage points compared to the end of 2015). The tier-1 capital adequacy ratio was 20.2% (+5.4 percentage points compared to 14.8% as of 31.12.2015, the required minimum — 4.5%).

1 A relation of charge of provision for loan impairment during the period to the average loan portfolio for the period. Annualized.

2 Trading result includes: gains less losses from trading securities; gains less losses from other securities at fair value through profit or loss; gains from redemption of investment securities available for sale; gains less losses from trading in foreign currencies; unrealized gains less losses/(losses, net of gains) from derivative financial instruments; realized gains less losses from derivative financial instruments; losses less gains from foreign exchange translation; ineffectiveness of hedge accounting.

3 Includes the following items: gains less losses from trading in foreign currencies; unrealized gains less losses from derivative financial instruments; realized gains less losses from derivative financial instruments; losses less gains from foreign exchange translation; ineffectiveness of hedge accounting.

4 Calculated by subtracting from «Operating income» the following items: «Charge of provisions for loan impairment», «Provisions for credit related commitments», «Provisions for investment securities held to maturity».

5 Calculated on the basis of Basel III requirements in accordance with the methodology of the Central Bank of the Russian Federation.

AO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 14th among the Russian banks in terms of assets, based on Q3 2016 results (Interfax-CEA). According to the same Interfax-CEA data, AO Raiffeisenbank ranked 10th in terms of liabilities of individuals and 7th with regard to consumer lending.

Raiffeisen Bank International AG (RBI) regards both Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialised financial service providers in 14 markets. In total, more than 51,000 employees service 14.9 million customers through more than 2,600 business outlets, the great majority of which are located in CEE. Raiffeisen Bank International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Oesterreich AG (RZB). RZB indirectly owns around 60.7 per cent of the shares, the remainder is in free float. RBI’s shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country’s largest banking group, and serves as the group head office of the entire RZB Group, including RBI.


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