Good afternoon, ladies and gentlemen, and welcome to the Q3 2025 conference call of Raiffeisen Bank International . Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead.
Thank you very much. Good afternoon, ladies and gentlemen. Thank you for being with us this afternoon. We are pleased to report a good set of results this morning, and in particular, loans growth across the region which continued the pace in the third quarter. We can report the consolidated profit of EUR 1,027 billion for the first nine months of the year excluding Russia, equal to a return on equity of 10% in line with our guidance for 2025. When we think about the future of R BI and exclude both Russia and Poland, we have achieved a 13.5% ROE in the first nine months. We can confirm our ambition to earn around 13% on this basis in 2025 and beyond. We will discuss this again on the outlook slide.
Finally.
This meeting is being transcribed.
Remains stable at 15.7%. On slide five, we can report 3% loan growth in the first nine months of this year. The positive momentum that we have seen across our network in Q3 leads us to confirming our 6% - 7% loan growth guidance for 2025. NII and NFCI have performed well and the guidance is unchanged here as well. OpEx have increased 7% year on year to September 2025, which, combined with some headwinds in trading income, mainly from the moves in our own credit spreads, lead to a slight deterioration of our cost-income ratio target to 53%. Let's now move to our slide on the rundown in Russia. First of all, I can confirm that we are ahead of schedule when measured against the milestones agreed with the supervisor.
It is worth taking a step back to see how significantly we have shrunk our business in Russia since the start of the war. The loan book in ruble terms is down nearly 60% and deposits from customers are down almost 40%. Our payments business out of Russia is merely a fraction of what it was and this is entirely reported to our supervisor. The balance sheet of our Russia business now carries more equity than loans to customers. Our corporate loan book specifically is down nearly 85% in ruble terms since the start of the war and is now under EUR 1 billion. There is little I can share with you by way of an update on our claim against STRABAG in Austria, to be precise, on our right to file a claim in Austria to seek compensation for the damages that our Russian subsidiary has suffered there.
I hope you will understand that we cannot discuss our litigation strategy here, but I would also like to reconfirm our belief in the strength of our claim and our intention to file it at the appropriate moment. Thank you for your understanding. Moving to slide seven, I'm happy to report the decent NII result in the third quarter, largely driven by better volumes on both the asset and liability side, and we are seeing less headwinds from rate cuts across our markets. As mentioned, I can confirm our guidance for NII in 2025 at around EUR 4.15 billion. Fee income was stable in the quarter, driven by good FX volumes in the third quarter, good inflows in asset management, and encouragingly, fees from loan commitments and guarantees in group corporates and markets. On my next slide, let's take a closer look at loan growth in the quarter.
With 3% - 5% loan growth in our key CEE and SCE markets, a positive momentum which we observed early in the year is confirmed. Notably, retail lending in Czechia and Slovakia was strong and across most of our markets we could grow above market average. Corporate activity is improving across most markets while Group SO GCM remains sluggish, impacted by some repayments in the quarter as well as lower repo volumes. On the bright side, we are starting to see a healthy pipeline in our GC& M segment which will help us to meet our 6% or so guidance for 2025. On the liability side, we're seeing strong retail deposit inflow which further strengthens liquidity but also will support NII. Speaking of liquidity, let's flip to slide nine where our ratios are all very stable both on group level but also for each major unit including head office.
I won't spend much time on slide 10 and 11 showing stable CET1 development for the group excluding Russia and our price book zero scenario where we assume a worst case out of Russia and what this would mean for a CET1 and our full capital stack including AT1 and Tier 2. On slide 12, our CET1 ratio outlook excluding Russia is unchanged with the strong credit growth explaining most of the RWA increases expected in Q4, let's jump to slide 14 with our [Emerald] ratios above target in all countries. On the funding side, 2025 plan is complete and 2026 has started. I should mention that we still may consider issuing a senior preferred bond still in Q4 to get a head start on 2026. Moving to our macro outlook on slides 15 and 16, we are generally encouraged by the growth trends ahead.
Of course, the environment remains uncertain not least from trade policy and geopolitics. Finally, our outlook is broadly unchanged with slightly better risk costs expected. The cost-income ratio does help. Overall, we can confirm our ROE for the group excluding Russia at 10% and looking into the future of about 13% excluding Russia and Poland. With this I turn to Hannes, please.
Thank you, Johann.
Good afternoon, ladies and gentlemen. Thank you for joining us today. Allow me to briefly run you through a few risk items before we open up the call for Q and A. Johann has just mentioned the positive trends in the new business generation, both in retail and corporate, and I'm also encouraged by these dynamics. Growth in the region appears to be well established, and I'm glad to see that we are capturing our share. I'm satisfied that the new business that we are underwriting is comfortable within our risk appetite. At the same time, the risks from trade restrictions and of course geopolitical developments have not disappeared on derivatives. Specifically, we continue to review our portfolio, and besides minor rating adjustments, there has been no deterioration in our assessment. We booked overlays earlier in the year.
These remain available to us, and we do not see the need to add to them. Risk costs were again very low these quarters. Defaults in insolvency remain very low, leading to very few stage three provisions. Furthermore, we made minor changes to our models and benefited from some of our securitizations after nine months this year. Our provisioning ratio for the year stands at 14 basis points.
We currently do not foresee the need.
To aid overlays in the fourth quarter, we can therefore bring our risk cost guidance down to around 30 basis points. Asset quality continues to improve, and our NPE ratio has reached a new low for us at 1.7%, with a Stage 3 coverage ratio stable around 50%. In Poland, we have booked a further EUR 66 million of provision for litigation on FX mortgages, bringing us to EUR 295 million year to date in the fourth quarter. We do not expect significant model changes, and on the positive side, we expect to be able to release some of the provisions for penalty interest. Accordingly, we can confirm our guidance of around EUR 300 million for 2025 or perhaps a touch above. Ladies and gentlemen, this was my very brief update, and we are now more than happy to take your questions.
Thank you, ladies and gentlemen. We may now start the Q and A session. If you wish to ask a question today, you will need to press star one on your telephone keypad. Please ensure that the mute function on your telephone is turned off, or we will not receive your signal. Once again, if you wish to ask a question, you will need to press star one. If for any reason you need to remove yourself from the queue, you can do so by pressing star two. We will pause for a moment in order to allow a queue to assemble. Our first question comes from Benoît Pétrarque with Kepler Cheuvreux.
Yes, good afternoon. Benoît Pétrarque from Kepler Cheuvreux. A few questions on my side. The first one will be maybe just to get an update on this European Commission process to, you know, to seize recent assets, especially the STRABAG shares. I think behind the screen there have been a lot of political negotiations. I just wanted to get the latest on that. What is the intention from, let's say, Europe vis-à-vis the STRABAG shares? That's the first question and I will not ask any questions on the Rasperia file. The second question will be on Poland, if you think the EUR 300 million will be kind of enough or do you expect still some remaining losses or litigation provisions in 2026. That's the second question. The third one is actually on the CET1 ratio expected at 15.2% by year end.
You know, that suggests very important growth and loan growth in the fourth quarter. Just trying to understand the moving part between the 15.7% and 15.2%. Then just lastly, just on the NII, a few questions on Czech , which was very strong. Just wondering here if it's just a very strong loan growth in Czech or other items. On the contrary, the corporate and markets division on NII was a bit weak. We were down EUR 20 million quarter on quarter. I just wanted to understand what happened there. Thank you.
Thank you. I agreed with Hannes that we shared the questions and of course the answers. I start with the Rasperia STRABAG and the sanction package. I assume you were referring to the 19th sanction package. Our way of viewing it is that sanctions follow several goals and we had assumed that within these goals it would be reasonable to suggest and promote the idea to unfreeze the sanctions STRABAG shares. If this would have happened, I now have to say we would very quickly recover a big part of the damages depending then on some results. I understand that our whole R topic is viewed on a larger, broader scale than we have thought. With this, many discussions in general about sanctioned assets, again I see the context, but it has happened during that discussion.
We will see if we can make progress maybe in the future, potentially around the 20th sanction package, if it would come. I don't give here any guidance or probability or whatsoever. I can only confirm what I said in my introduction. We believe we have a very good case here in the Austrian court, being aware that it will take much longer and it's with some challenges of course in moving along the procedures we have. That would be my view on your first question. I hand over to Hannes for your Poland question.
Poland, just to reconfirm the guidance for 2025. It's as I said, this roundabout EUR 300 million, maybe a touch above. When thinking about 2026, you have to keep in mind that we now see also a little bit more dynamic when it comes to inflows towards zero. We believe that 2026 guidance should be lower than the EUR 300 million which were needed for the year 2025. At the same time, usually we give detailed guidance on the Q4 call, but at this moment I think you could think a bit lower than the EUR 300 million, could be in the range of EUR 220 million- EUR 250 million, somewhere around these numbers. This is our current thinking. We will be more precise or confirming this range by the Q4 call. Thanks for the question, Johann.
Yeah, thank you. Coming to your next question, which is the explanation where is the loan growth? Indeed, why is the CET1? Where comes the RWA growth and therefore the drop in the CET1 compared to end of Q3? Yeah, a bigger part of that of course comes from the increasing loan book. I mean, clear, we have said that having now reached year to date 3% and we are aiming for 6% or maybe a little bit more. This will come with additional RWAs. You are right, there are some elements also from rating migrations in it. Still, some corporates are feeling some pressure with all this geopolitical and trade developments and whatever you have. We have built in some migration impact as well. Moving to your fourth question, which is the NII in Czechia.
Indeed, we see in some countries, especially in Czechia, also in the recent quarters a significant increase in the loan growth, mainly in the retail area. We had seen picking up the mortgage business, but also what we saw is a good consumer loan growth. Both we are more than happy what we have seen there. One has to say that also on liability in this normal rate environment you can earn a little bit, but the average volume, if you compare Q3 with Q2, then it was a nice, nice growth. When talking about the second part of your question, GC & M. The Austrian business, if I may say so, why is the NII down? It's that the report here, I agree, it's a little bit difficult to read. Here it's not only the entity, but it's also built on funds, transfer pricing and similar.
Of course, we have seen also a lower loan book as well. It's both elements which need to be considered. Thank you for your questions.
Thank you.
We'll take our next question from Gabor Kemeny with Autonomous Research.
Hi, my first question is on NII, please. Decent growth in your core NII in Q3 together with loans, and you even extended your net interest margin a bit. Can you share your initial thoughts on the NII outlook going into 2026? Shall we model NII growth which is kind of aligned with loan growth, for example? That's the first one. Second one on the overlay provisions you flagged from Ukraine. I believe the wording is that you increase the risk zone. Ukraine. Can you elaborate a little bit further on this? Why this triggered additional, how this triggered additional provisions, and what is the likelihood of recurrence in the coming period. My final question is on Czechia. New government is being formed with some maybe more populistic measures on its agenda.
What do you think is the likelihood of a bank tax, maybe a more effective bank tax being introduced in the near future? Thank you.
Thank you. Gabor, coming to your first question, at this point in time we do not speak too much about the outlook in 2026. I'm sure as you following so long, you are not that much disappointed or surprised. What we can share is that in all the markets we see we expect loan growth in retail area because the employment rate is good in all the markets, which means in combination with wage increases this gives a higher potential for customers to also take more loans. This is the one and as indicated before, also in corporates we see some adjustments. You have seen our assumptions in the presentation on the rate development. There we see some negative impact on the NII, but we still assume now I would say as of today a slightly improvement in the NII and of course also in the NFCI.
Gabor, I was once sharing with you that when we look at Ukraine, we look at Ukraine in sort of three regions: green, where there's almost no war-related activity; yellow, where there is war-related activity; and red, where there is really intense.
Fighting.
Since we now see an increase of the attacks over the entire Ukraine, we have thought that it's prudent to increase our overlay provisions in Q3 by EUR 15 million. Given that dividing the country in these three zones only is not anymore good enough, this was our motivation for increasing the overlay bookings by EUR 50 million for the entire Ukraine. Thanks for the question.
Yeah. There is the question which it's difficult for me to answer. It's about Czech politics. Let us observe the coming weeks and then come to a final comment on that. I would agree with you that we are in a situation that every country feels encouraged to increase bank tax. I hope this is more speak than re-election.
Thank you.
Fair enough.
Thank you.
We'll take our next question from Riccardo Rovere with Mediobanca .
Thanks.
Thanks a lot for taking my questions. Two or three, if I may. The first one is on loan growth, RBI core, excluding Russia and Belarus, year on year, the book is up just a little less than 4% according to your Excel file. What could bring, why that should go to kind of 6%- 7% in only three months. This is the first question. The second question I have is on deposit growth, which is honestly amazing because it's double that of the loan book at the moment, more than 7% if I'm not mistaken. We're just wondering what is driving that and if you think this will have to slow down at some point. The other question I have is on NIM. It was 2.31% in Q1, then fell a little bit to 2.27% in Q2. Now it's back to 2.3%.
Basically you're not suffering any kind of margin pressure over the past six months. Given that rate cuts should be more or less done, not everywhere, but in most of the countries where you operate or affect most of your loan books, is it fair to assume that it is hard to believe that severe margin pressure should be visible in the medium term. Thank you.
Thank you, Riccardo. To your first question, loan growth indeed. That's given where we are and what is ahead of us. It's very optimistic. I agree. On the other hand, how do we judge it? We have seen that the retail is still doing fine and so they will contribute their part. Of course, the bigger volume now has to come from the corporate books and we have a strong pipeline. This does not mean that at the end of the day we will get all what we have now in the pipeline. Competition is significant in this area as well. The best what we can say is it seems to be possible and this is, of course, a bigger part has to come from head office in absolute volume for sure.
We also see quite good pipelines in most of the corporate areas of our retail, of our network banks. Now to the deposit growth. We see that customers are earning nicely and they put quite a lot of their wages on their account. This is the driver, quite good liquidity in many of the markets. Forward looking, is there some risk that in one or the other market the central bank might reduce a little bit the liquidity and thus putting also on the pricing of deposits some pressure? This can happen and we also see now an increasing competition even without the special impact what I have mentioned. To your third question, NIM, very stable. Can there be, the way I understood it, could there be pressure coming from somewhere? Indeed, as I said, competition could be one pressure.
The other is, we compare, then you know banks have their model books, have their historic run rates in the book. Probably you always have a combination of all these. It looks positive as of today. Thank you.
Thanks. Thanks a lot.
We'll take our next question from Mate Nemes with UBS .
Yes, good afternoon and thank you for taking my questions. I have three questions please. The first one would be on overlays. Hannes, you mentioned that you see no reason to add to overlays presently. Can I ask you about the approach to overlays in 2026? What would drive you to either add or potentially to release some of these substantial overlays for the ex Russia business? That's the first one. The second one would be on corporate loan growth and the pipeline in GCNM. You clearly mentioned that the bulk of the corporate lending growth in Q4 has to come from there. Can you talk a little bit about the nature of the pipeline? What sort of deals, what sort of lending do you expect materializing? The last question is on Poland and the euro mortgages.
The numbers mentioned below the EUR 300 million guidance for this year, so something around EUR 220 million or EUR 250 million if I'm not mistaken. Can you talk about the assumptions or the expectations for those provisions in 2026? What would drive them? Where do you feel the adequate provisions level would be? Thank you.
Mate, thanks for all the questions. I may start with question number one when you're talking about the overlays on 2026. Just to remind the audience, we have some EUR 100 million of overlays for Ukrainian. We have another EUR 100 million of overlays for Russia, which remains for the core group of R B I group, an overlay of around EUR 300 million. When would we release? Also, before I go to the details on when and why we would release or why we would seek good motivation for releasing, I'm now referring to the Financial Stability Report and I think you all have seen that of course some leading indicators, PMIs, are looking constructive. At the same time, the uncertainty index stays elevated. When would we feel encouraged to release some of these overlays?
This would be, of course, if we see materialization on stage three, if we see a clear change in the risk perception, and whenever there is a substantial change towards sanctions and war-related risks, we would be more than eager to adjust our overlays and our overlay amounts we have created. This is our thinking when it comes to the overlays. Johann, if this is fine, I also would immediately take the number three question, Poland euro. In our current way of thinking, how do we come to these EUR 225 million, EUR 200 million. A little bit up to EUR 225 million, EUR 250 million maybe. The one is, you know, we always were sharing with you our Swiss franc guidance and this was always round about EUR 150 million, EUR 170 million. If I look at how you have modeled this number into your assessment, I think we have been well understood.
What has been now new, Mate, is that we see that in the local industry when it comes to litigation, provisions have now moved on also on the euro part of the portfolio. We see not yet an elevated inflow, but we see a higher inflow of euro litigation. This was the reason for us not to leave you in the belief that the EUR 150 million is good enough for the next year. That's the reason why we added this roundabout EUR 80 million on the euro side. It could come mainly from the active euro loans outstanding. Of course, here amounts would be less pronounced than compared to the Swiss franc. First, the portfolio was a smaller one and second, the FX related is a smaller one. This is our way of thinking how we come to this guidance on EUR 220 million-EUR 250 million.
Confirming the previous guided EUR 150 million for the Swiss franc, but being more prudent when talking about euro. Hope this helps in understanding our thinking. Thanks for the question, Mate.
Yeah, and to your other question now in GCM, where should it come from? I would say broad over all sectors with some larger tickets of course as well. People will be busy. I cannot in the head office here pick out a specific industry or so where we would see it's rather broadly, and of course, larger tickets than what we have in the network banks. Also in the network banks, the corporate part is lining up and given the size what they have in some of them, significantly, I mean, maybe I was not so precise enough that the retail we recently had been going above the market. I think this at least will continue till end of the year. From all areas, positively supported. Thank you.
Thank you.
We'll go next to Ben Maher with KBW.
Hi, thanks for taking my questions. I just got two. I think you mentioned you were growing ahead of the market, in particular retail lending. I was just interested to get your thoughts on why that is, if that's around pricing or something else. My second question is just on fee growth that's been very strong, particularly this quarter. I just want to get a better understanding of what's driving that and whether you expect that momentum to continue into the final quarter. I know you were reluctant to give any numbers for next year, but if there's any color you think you can get for next year, that would be helpful. Thank you.
Yeah, I think we got it right in retail recently. I would say we had periods where we were holding back with the mortgage business for a period of time. Margins were very, very thin. As the margins are now in an area where we are fine with it, we can get to our market potential or slightly above. I think what paid off is that usually when you hold back, then it takes quite some time till the customers perceive you are back again in the market. This we have achieved in the beginning of this year and we are building on that. With the margin in this business, we are fine. The fees, what you are referring in Q3, indeed, they were good for us.
What can I say, I think credit card comes to some extent also in Q3 because of the tourism season, which is good in some of our quarters and with this also some within our region. Sorry. Some also from the tourism and therefore the FX. Of course, you always have to be aware that part of this is, how shall I say, a little bit higher than the core of it because part of the transaction tax you have in Hungary goes also in this line. Overall, we are very fine with the development. Thank you.
If you have any more questions, please remember to press star one on your telephone keypad to place your question. The mute function on your telephone needs to be turned off so we can get your signal. We'll go next to Riccardo Rovere with Mediobanca .
Thanks.
Thanks for taking my question, two if I may. The first one is on cutting Russian exposure. You mentioned at the beginning of the call that you're running ahead of schedule, schedule that you have agreed with your supervisor. Still, it looks to me that over the past quarter at least, the decline, especially in the deposit side, seems to have come to a sudden stop if I may say so. I was wondering what is driving that. This is the first question. The second question is on your capital. The way you see your capital at the end of 2020, what kind of target do you think the bank should have assuming Russia one day will be solved?
Thank you.
Thank you, Riccardo. To your first question, the development of deposits, one has to say of course this is always driven by opportunity costs that customers face. It's more than difficult to, if you look at, to forecast. If you look at the reduction, 38% is huge. Nevertheless, it could have even been more, so I think it's less for us. It's not a big thing, as usually when you think about the runoff of deposits, the question is long term funding and liquidity. You have seen that there is no need for this. From the income, it's rather opportunistic here; it's placed with the Russian central bank, so difficult to say what keeps at this opportunity cost, keeps customers with us. I would not make any forecast to how this develops further.
We have done everything to incentivize, and now I have to say the rest is in the hands of the customers. When talking about the capital at year end, the 15%- 15.2%, we are comfortable with this. I think we are a little bit away from the scenario you outlined about Russia. It's also a question of how the operational RWA impact from Russia will be treated by the central bank. Around 15% is, for this point in time, a good number, I think.
Sorry to follow up on both questions if I may. The first one, are you basically saying that what R BI is measured on is more the reduction of the loan book than on the deposit side when it comes to cutting the Russian exposures? I understand at some point, it's the customer decision to withdraw money from you or not while maybe you have more control on the loan side. Is this the way the supervisor looks at the things or do they want also you to bring the deposit down? The second question is follow up. 15.2% is a high number. I was wondering.
Do you think?
Is this the target of the bank in normal conditions, or could it be lower given the risk profile of R BI excluding Russia?
Coming to your first question.
The whole.
Story about Russia is always what is totally in our hands or let's say in the hands of the Russian bank and what is done in other hands, being it by institutions who give us a framework where we can act in our customers. In the loan book we have the planned rundown, so the expected rundown. The quality of the portfolio is very good. Customers are repaying to a large extent as scheduled, but not more. You might remember that in the past we had quite a lot of fixed rate loans and whenever the rate cycle went down, customers were very quick in refinancing at the lower rate. Given the rate level where we have, this is not to be expected, also not in the near future.
We had seen in the corporate loan book some faster rebates than were scheduled, but everything else is according to the schedule and we don't grant new loans. This is why this is following that. As I said, we have to offer in Russia an account and then it's the only thing we can do that we don't pay interest for none of the accounts. As I said, it's the decision of the customers how much money they keep with us. This is communicated, analyzed, and also shared by the Russian center, by the ECPR supervisor. This is now probably not the right point in time to think about the different CET1 ratio for the group without Russia, as Russia is, the Russian bank is still with us. You point us in a direction to adjust it somewhere in the future.
When we feel the point in time, we will then speak about it. Thank you.
Fair enough. Fair enough. Thank you.
To ask a question, that's star one on your telephone keypad. We'll go next to Simon Nellis with Citibank .
Thanks very much. Thanks for the opportunity.
Just a quick one from me. Can you perhaps share some thoughts on?
The dividend that you were looking to pay out of this year's earnings and the negotiations or discussions with the regulator? Given that your performance is quite nice, I assume that you think you can deliver a nice increase in the dividend.
It'd be interesting to know.
What was the dividend accrual for the first nine months in your capital that you reported?
Thank you.
Yeah, I start with the second part and this is we accrued EUR 1.20 per share in the first nine months. As this is a very mechanical thing, you then see also that we just formally will accrue also till the end of the year another EUR 0.40, so EUR 1.60. This is what we have in our calculation. Talks with, at least on my level with the supervisor, have not started yet. That's always an interesting discussion. Clear. What is the barometer for this discussion group, core group or all this? Work in progress starting at a later point in time.
Thank you.
Very clear.
That is star one to ask a question. As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.
Thank you, moderator. Thank you to all participants for showing interest and devoting some time. I wish you a good afternoon.
Thank you.
Goodbye.
You may now disconnect.