Good afternoon, ladies and gentlemen, and welcome to the preliminary results 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, sir.
Good afternoon, ladies and gentlemen. Thank you for joining us today. We are happy to report a good set of results for the fourth quarter and all in all, a very satisfactory full year, 2025. We finished the year with a consolidated profit, excluding Russia, of EUR 1,443 million, and a return on equity of 10.6%, slightly ahead of our guidance. The business year 2025 was again impacted by litigation provisions in Poland, although to a lesser extent than in previous years, and we expect further improvements here in 2026 and beyond. When we look at the future of the group and what it is capable of achieving, as we exclude Russia and the legacy portfolio in Poland, what we see is a bank that achieved 13.4% ROE in 2025.
We are confident that the underlying business model is strong, that the balance sheet is healthy and well-capitalized, and that we are ready to grow for years to come. We finished the business year 2025 with 6% loan growth in line with our guidance, and while the first two quarters were slow, we are encouraged by the momentum that has built up in the second half of the year. We start 2026 in full swing with a solid CET1 ratio, improving liquidity costs, and most importantly, good demand from our customers. Moving to Slide 6, we're happy to share with you the dividend proposal for 2025. With EUR 1.6 per share, we would like to see our shareholders participate in the good results of the past year.
Please note that this is, of course, subject to the audited figures and will be voted on at our annual shareholder meeting on April 9. RBI Supervisory Board has also announced changes to the Board of Management in 2026. First of all, Michael Höllerer will replace me as CEO from July 1. Michael knows RBI inside and out. He has previously held the role of CFO at RBI, and prior to that, headed our asset management business. As for me, I will be turning 67, and with my mandate expiring in February next year, I'm happy to hand over at this time. RBI is in great shape and ready for growth, and I'm excited to see what the future holds. The Supervisory Board has also appointed Kamila Makhmudova as CFO and member of the Board of Management since January 1.
Kamila has been with RBI for over 20 years, and most recently was our CFO in the Czech Republic. Prior to that, she led our internal M&A and Corporate Development department. Finally, the Supervisory Board has also appointed Rainer Schnabl to the Board of Management effective as of March first, where he will be responsible for corporate and investment banking products and solutions. For the past few years, Rainer was the CEO for our Bosnian subsidiary, and prior to that, CEO for our asset manager. In the coming weeks and months, I expect you will get the chance to meet this accomplished new leadership team, and I'm certain that you will be as excited as I am about our future. Moving to the next Slide, where we can show the good progress in the rundown of our Russian business.
First of all, in terms of loans to customers, we finished the year having reached the targets that were set. Going forward, there are no new targets, but more importantly, all the measures and restrictions that we have implemented will remain in full force. This goes for our loans, for payments, for deposit collections, for liquidity investments, and so on. Accordingly, you can expect the rundown to continue, and we will continue to update our regulators and investors on the progress. You can see how this rundown, which started on day one of the war and accelerated in 2024, has transformed the balance sheet in Russia. As of year-end, there was nearly 30% more equity than loans on the balance sheet. The loan-to-deposit ratio is now below 30% and the LCR above 500%.
While the rundown remains our base case scenario, we do continue to explore transactions with interested parties. So far, we have not been able to identify a structure which meets the requirements of the local authorities, but we will not give up. On the litigation side, I'm sure you are aware that a second court decision in December in Russia led to a further EUR 339 million penalty to be paid by our Russian subsidiary. This penalty can be added to the value of our claim for damages in Austria, now equivalent to EUR 2.4 billion. As to the Austrian claim and court proceedings, there's little I can say today. We have not filed it yet, but we will absolutely do so at the time of our choosing.
The other option, which is to see our claim for damages satisfied in the next new sanction package, remains in discussion. I do not want to exaggerate the likelihood of this here today , as it remains unlikely, even though this would be in everyone's interest, not least of which our European partners. Let us now move to the next Slide, the quarterly development, starting with the main revenue trends on Slide 8. Net interest income is broadly stable quarter-on-quarter, and up slightly year-on-year. With some modest interest rate headwinds throughout the year, and a large part of the loan growth coming later in the year, we are satisfied with the stable development. More interesting, however, is our outlook for 2026. For one, these interest rate headwinds should become more neutral or possibly even turn supportive.
More importantly, the good momentum in the loan growth is visible from the very beginning of the year and contributes to an expected 5% or so NII improvement this year. Fee income continued to tick up nicely in Q4, and we finished the year just over EUR 2 billion, up 8.5% versus 2024. Looking ahead, our initial guidance for 2026 is around EUR 2.1 billion. On Slide 9, we showed the balance sheet development, and this is encouraging. I have mentioned the good loan growth, and it is always good to see that it is being driven by key markets, including Czech Republic, Slovakia, and Romania. In mortgages specifically, we also see good progress in Hungary, where retail expansion is important to our business mix.
More importantly, corporate business in GC&M has picked up nicely, and the pipeline for 2026 looks equally promising. On the liability side, we see further deposit inflows and notably mid-single-digit growth in retail deposits in our network units. Slide 10. I'll be brief, liquidity ratio remains solid across the group, including, of course, in each of our key markets and in head office. Turning to Slide 12, our CET1 ratio, assuming a worst-case scenario in Russia, with 15.5% at year-end, we slightly exceed our guidance. I should also draw your attention to an increase in the Russian OpRisk RWAs with January first. You may recall from previous presentations that in our worst-case scenario, we do not assume immediate derecognition of the OpRisk RWAs stemming from the Russia business.
The reason for this is that OpRisk is calculated on the group fully consolidated basis and not booked at the individual unit level. This means that in any part of the business, if any part of the business is sold or deconsolidated or the relief on the corresponding OpRisk RWAs is not immediate. In 2025, we had agreed with our regulator to cap the Russian OpRisk , which was retained in this P/B 0 scenario. This agreement expired at year-end, and from January we are to recognize the full EUR 3.9 billion RWAs. The effect of this increase is around 29 basis points, meaning that our CET1, excluding Russia, is at 15.2 with January 1. On the right end of the Slide, you will see our capital stack also under the worst-case scenario in Russia.
The 8.9% AT1 bucket does not reflect the note, which is, was issued in January, and where we added EUR 150 million to our AT1 stack, all else equal. On the next Slide, 13, our CET1 ratio guidance for 2026, always under the assumption of a worst case in Russia. No surprises here. We continue to steer the bank to around 15% and above. Now, let's jump to Slide 15, the MREL and funding plans. On MREL, first of all, with the start of the year, we have a subordination requirement of 26.71%. Considering the own funds in our AT1 capital stack, this new subordination requirement does not change our issuance plans. We have also issued a few senior non-preferred in previous years, which add to the buffer here.
I mentioned a moment ago, AT1 note, which we issued earlier this month, and I should also mention the senior issuance out of our Romanian subsidiary. This was their first euro benchmark issuance, and I would like to thank those investors who participated. For the rest of the year, we expect 1-2 senior preferred notes from Vienna and potentially a senior deal out of Croatia. The other MREL needs, which you see here for 2026 across our countries, are expected to be covered domestically. Moving now to Slide 16 and 17. On the following Slides, we have shared our macro update, which I will let you go through, at your leisure. Let's turn to our 2026 outlook on Slide 18. Starting with core revenues. We expect 4%-5% improvements in NII and fees, and a similar impact on the OpEx side.
We aim for a small improvement in cost-income ratio next year to around 52.5%. The initial guidance on risk cost is around 35 basis points, and Hannes will share his thinking later on. We expect loan growth to continue in line with the positive trends that we have seen in the past few quarters and target 7% growth in 2026. As mentioned, we expect our CET1 ratio, excluding Russia, to remain above 15%. For the group, excluding Russia, we expect a stable ROE around 10.5%. On the one hand, we expect improvements in the operating results and fewer litigation costs on the Polish legacy portfolio. This, however, is largely offset by larger bank levies and windfall taxes, as well as the normalization of the risk costs.
When we look to the future of the group, excluding both Russia and Poland, and illustrated here with the yellow line, we expect to be closer to 12.5%. In this case, the improvements in operating income are not enough to offset the announced increases in bank levies and the high assumed risk costs. Going forward, however, we continue to expect that the core of the group will sustainably earn 13% and above. With that, allow me to hand over to Hannes.
Thank you very much, Johann. Good afternoon, ladies and gentlemen, and thank you for spending your Friday afternoon with us here today. I guess that by now you have seen the numbers, and I will keep it short. We finished the business year 2025 with risk costs of EUR 192 million, down EUR 95 million from a year ago. In basis points, this is a provision ratio of 20 basis points for full year 2025, which I'm happy to report is inside our guidance. Overall, we remain very satisfied with the quality of our portfolio, and our non-performing exposure ratio is at record lows. We continue to make good progress on our workout strategy, as you can see, with the further drop in NPE volumes. Beyond NPEs, the trend in the performing book are healthy, and we continue our proactive workout strategy.
In Q4, we released the overlays, which we have built up in Russia, where the bank is so well capitalized and the loan book has shrunk so much that the overlays have become redundant. In the core of the group, we have made minor adjustments, leading to around EUR 45 million of releases in Q3 versus Q4. Going into 2026, we still have EUR 413 million of overlays available to us, equal to more than a one year's worth of standardized risk costs. Risk cost guidance for 2026 is around 35 basis points, which, as you know, always includes a degree of prudency this early in the year.
I do not need to remind you of the geopolitical turbulences that we have witnessed in 2025 and since the start of the year, which also led us to start the year with a modicum of caution in our risk cost guidance. Away from asset quality, let me touch briefly on Poland, where the trend is clearly improving and where we believe that the worst of the litigation provisions are behind us. The inflow of new Swiss franc claims continues to decline, while the inflow of euro claims has stabilized. Uncertainties remain, not least coming from the draft law, which aims to accelerate settlements in court proceedings. For 2026, we assume somewhere between EUR 200 million-EUR 220 million of litigation provisions, which is around 60% coming from Swiss franc and another 40% or so coming from euro-denominated loans.
Having said all this, we are now more than happy to take your questions.
Thank you, gentlemen. Ladies and gentlemen, we may now start the Q&A session. If you wish to ask a question today, you will need to press star 1 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 1. If for any reason you need to remove yourself from the queue, you can do so by pressing star 2. We will pause for a moment in order to allow a queue to assemble. And our first question comes from Benoit Pétréquin with Kepler Cheuvreux. Please go ahead.
Yes. Benoit Pétréquin from Kepler Cheuvreux. Good afternoon. I've got a couple of questions. So the first one will be on the net interest income. Looking at your guidance and also your loan growth guidance, it looks like you still expect net interest margin to remain relatively stable in 2026 and therefore NII to be mainly driven by volume growth. We see some key rate cuts in 2026, so I wanted to check with you if the margin pressure will be indeed relatively limited as per your forecast in 2026. The second question is on the operational risk in Russia. I was wondering if it's purely a mechanical process or is there any rationale behind or any discussions with the regulator?
Do they fear any operational risk from Russia, or is there any discussions on that item, or this is pure mechanical adjustment based on your income generated in Russia? The number three will be on M&A, and I think you commented on the fact that you might be looking into Romania. Just wondering if you could update us on your M&A appetite.
Now that, yeah, clearly the group is focusing on, on his own future. And then finally, on the bank levies, we have a big step up in 2026 in Hungary, and I was wondering if your, your first look on this is that it's going to be a, a one-off item, are you recovering in 2027 or, or you assume, a kind of stable high, bank levies going forward also in 2027, 2028? Thank you.
Thank you for your questions, and I start with the NII guidance. I mean, you're definitely right. I mean, when you, when you look at the, the Q4, you might, maybe need some one or two adjustments, to get the, the run rate off, of the Q4. So there was a, a minor one-off of minus EUR 7 million in, in Czechia. If you add this, as part of the run rate, and if you then consider that you have, at the very end of the, of the quarter, the loan book was really building up, then, then probably the run rate is closer to EUR 1.07 billion.
And if you analyze this, here we assume then also, to some extent, stable net interest margin to 4.3%, or maybe a touch less, and then you have a 7% growth, again, with a net interest margin range of around 2.3% or so, then you achieve this, EUR 4.4 billion. Yeah, I think the rate cuts are partly still covered by these model books and by investments. On the other hand, I see your point that if competition moves more and more to price topics as well, which as of this point in time, I do not expect at a very intensive level, then it could be that there is some pressure on that as well. But as of now, we are optimistic on that. Hannes?
Johann, and colleagues, the question regarding the Op risk on Russia. You know that there have been quite some adjustment on the CRR III, and so therefore, we're using the regular Op risk approach within the CRR approach, where you have two main components. The one is the operating income, and you have seen the numbers, and also, of course, which now must be partly incorporated, are legal provisions. So it means Rasperia I and II are also now included in the 2025 RWA basis. Thanks for the questions.
So then, coming to your M&A appetite here, I would, I hope you understand that I, I will not comment on recent rumors, but, what I confirm is that we have, in some markets, interest and would appreciate to participate and, and also be successful when we participate, and, and the countries are well known. So it's, Yeah, Romania is on this list. I always said Hungary is quite difficult, because of the competition one might expect. Slovakia, it's not a must, but still could be of interest. Serbia, we achieved something, but still, yeah, in the past, I also said that, yeah, Croatia may be difficult, but, it would help the development of our bank for sure. Czechia is, in these days, very expensive, but, it would be good for our development here.
It would depend on the structure. To your question, to your last question about Hungary, difficult to say. I have no indication that it will continue also in 2027. And I hope I, I hope it is as I expect, so only 2026. Thank you.
Thank you.
Our next question is by Ben Maher with KBW. Please go ahead.
Hi, thank you for taking my question. I just have a couple, that's just from the Czech NII, which was down a lot, Q on Q. I think you mentioned that was a one-off negative, which are you able to give a bit more color on what was that, that one-off? The loan growth guidance, it appears quite conservative, given you're already delivering, you know, close to 6% ex-Russia, and you're seeing potentially a positive turnaround occurring in Austria. So I was wondering if that's just, you know, simply cost risk guidance. Has that just been proved into the beginning of the year, or do you expect to slow down in kind of your wider C footprints? And then I was just hoping if you could give any guidance on the overlay usage in 2026.
That would just be helpful to kind of frame that. Thank you.
Well, I may start with your question on the overlay releases. I think you know what I have said in my statement, 35 basis points is the guidance what we may use for the regular business, so not, you know, just the running business. If things would really turn risk, turn sour, we would also be tempted to make use of the overlays which are being available to us. And a big part of overlays is anyway to be attributed to our Ukrainian operations, and that's the way how we think about using and making use of our overlays. Thanks for the question.
Yeah, to your tech question, this was a sort of reclassification between trading result and net interest income. So this is to the small amounts, yeah, unfortunate, but I think with this correction, we see the right number. So I think if you then add the EUR 7 million, as I said when answering a question before, you then get a better understanding of the run rate also in Czechia. Now, to your second question, the loan growth guidance of 7% seems conservative. Yeah, indeed, we have mixed signals, so we see some loan growth forecasts for the overall market, which is even below the 7%, from research.
On the other hand, I can confirm that, given the pace, what we have so far, it's, it's strong. On the other hand, if you go a little bit deeper, for example, in Slovakia, you have seen an enormous growth in mortgages. And here the question is, to what extent is this somehow front-loaded, or how shall I say? The demand came strongly in questionable here if it continues, so the one or the other market might be below this 7% and, and then in combination. So if it would be a little bit more, we'll be happy and celebrate, but I think the seven is to be achieved. Thank you.
Thank you. And our next question is by Máté Nemes with UBS. Please go ahead.
Good afternoon, and thank you for the presentation. I have two questions, please. The first one would be a follow-up on the risk-cost guidance of 35 basis point for 2026. Hannes, would you mind elaborating on the drivers of this and then perhaps shedding some light on the conservative assumptions going into this guidance? Where do you feel you've been conservative when issuing this guidance, and which trends you would need to see perhaps to revise this? And the next question is on loan growth, and particularly in group corporates and markets.
I was just wondering if you could talk a little bit about what sort of loan growth you're seeing in the business, and what is your expectation into 2026? And how do you see the outlook for the business in general after a slower period, I think, in the past couple of years? Thank you.
Want to thank you again for giving me the opportunity to talk about the risk-cost guidance for 2026. I'm pretty sure you can recall that when we talk about standardized risk costs, we talk a level of around about 40-45 basis points. So this would be a through-the-cycle risk cost guidance. So what made us coming in a slightly a tick lower with 35 basis points? On the one hand side, as you can see in our macroeconomic outlook, we see many countries that the macroeconomic environment is getting better, first thing. Second thing, a big part of our portfolio is also being built up on a retail portfolio, and of course, a very, very strong employment rate.
It is a very low unemployment rate, and our market is very much supporting a very robust credit loan growth, and secondly, also a really benign risk cost development in the mortgage business anyway, but even more so also on consumer lending. Then we see good demand on consumer lending and some investment needs and ask for money. We have EUR 430 million of overlays. We have EUR 10 billion of significant risk transfers outstanding. And yes, sir, but as you said, if all things turn sour, and if I would be terribly wrong with my thirty-five basis points, we still have our overlay pool available.
Hopefully, this gives some hints what was the thinking and the mechanics how we came to the 35, 35 basis points. And yes, you're right, we again came in slightly below risk cost guidance for the year-end, but I also gave you the reason, one of them was that we released our overlays in Russia, and I was giving the background, having more capital than loans outstanding, we felt that this is an appropriate time to release the overlay in Russia. Johann?
Okay. Now to the GC&M, what type of business would we expect also for 2026? So we have... I have to state you are aware of it, but let me state it, that GC&M is not only Austrian large corporate, but this is our international portfolio. And this comes partly from Austrian customers, partly from customers being in the Western countries, so not necessarily in our core markets, but with a relationship to our markets. And finally, the international customers in the CE countries. Here we usually support... and we split the so if there is a local, take Czechia, if one has a big demand in one of these loans, then part of it we take also here. And the areas what we do, this can be project finance.
We are very proud of something. I mean, it, yeah, still in Bosnia, where I say energy part. So it goes throughout the, throughout the range. I think, all of all, quite healthy business. Yeah, quite a lot of, competition, and, and if, if there would more come, I, I would be very happy. So what give you some numbers, what I touched before. I think in corporate, if the overall the markets where we are in can achieve... So from market research, we wouldn't expect more than, than some 4%-5%. We are optimistic that, and this is built also on the pipeline, what we have or what we are closing to be in, in the, business, what we book here, so in the GC & M, yeah, at the, the level what we have.
We see some markets in corporate where we see in our books, where we hope for an increase, which is Czechia, which would be very important. Then also maybe Croatia. Okay, it's not big, but it will improve. And Romania. Romania had been strong in the recent years. I mean, you didn't ask for retail, but let me share some flavor as well. So I think that in the smaller countries, you still could expect a double-digit loan growth, and in the others, 8%-9% like this. And if we achieve that, then the combination will be 7, and if we are lucky, a little bit more. Thank you for your question.
Thank you very much.
Thank you. Our next question is by Gábor Kemeny with Autonomous Research. Please go ahead.
Hello. Thank you for your thoughts so far. I have a question on your ROE guidance, please. You are guiding 12.5% core, ex excluding any Polish Swiss franc charges. Can you give us a sense of what you expect to drive the expansion towards 13+ beyond 2026? The drivers, that would be interesting. The other question I had was a technicality on the ROE guidance. I see on page 37 that you assume EUR 13.3 billion of average equity for 2026. I believe your end-2025 equity call was 13.8. So if you could elaborate on this, why you assume less than that?
The final question would be if you could give us an update on Russian litigation, please, and what is the likelihood of a recurrence of the litigation provisions in the coming quarters? Thank you.
Okay, so let me start with the guidance and, where do we expect, what are the drivers for, 2026, if I may start with this. Yeah, if we achieve the net interest income as I have, outlined, then this could be positive for our ROE, maybe by, by 1.5%, yeah. And then the others, relatively small fee and commission income, 0.6. Net trading income, which was, more or less zero, coming in 2025, coming from credit spread and, the one or the other topic, we assume that these negative effects will not reoccur, and then we would be very back at around 60, what we usually should have, so 0.5. So if you add this up, you might come to 2.7 improvement.
We also, I mentioned it, have OpEx increase by 4%-5%, so minus 1.2%, something like this. Other results improving by 0.6. Governmental measures, minus 0.5. And then, I have the normalization, what Hannes talked about, impairment losses, which might be minus 1.5, 1.4, sorry. So little bit more income taxes, probably. And yeah, then we would be at the, at the some... I would have explained, I guess, the developments, what you would expect, and as I said, in the coming years, 2027, 2028, yeah, maybe the one or the other headwind comes from the extra bank tax. We'll see.
Of course, here, cautious is good, good, good attitude, but take an example. As example, Austria, there was a tax increase from 23 to 70-something, so up 50. This was at least till now, limited for 2 years... So 2025, 2026, if they keep and we are aware they have huge needs, then this should drop by 50-something. And so one or the other, we talked about Hungary, that we still believe or hope that it's this huge increase is a one-off. So part of it comes from the bank levies being reduced. The other part comes from the Polish improvement, where we then hope that the litigation goes down from 200 to 100.
And finally, yeah, we see a further improvement in the GDP growth in 2027 and beyond, and yeah, maybe even that then the cycle in some rate degree cycle in some countries might still go on in 2027, but in others it might even turn around. So a combination of what we have. Now to your quite difficult question, and here I can come back to this a little bit later to see the average. It's a give me a few moments that I find my. Here, I would have a look to my notes. Before that, I would come to the other question, which is further litigation and penalties in Russia in the coming quarters. That's very difficult to answer for one reason.
And the reason is, I was negatively, very negatively surprised by the second Rasperia litigation and penalties, and this is really a very negative development in Russia in that area, because the first litigation, at least from my view, covered everything. So coming back again with a second litigation, okay, there had been some reasoning which a judge might accept, economically, it's impossible. That's the negative signal. The positives are that this second litigation is the only one which we have seen, and where we say, okay, there it's difficult to explain. Anything else so far did not happen, so this gives us some hope in the balanced view. Now to the equity. It's calculated on 26 budget numbers and did not fully include the year-end and OCI effect.
You are right that we will redo this and give in the course of the time some more detailed information.
Understood. Thank you, Johann.
Thank you. Our next question comes from Riccardo Rovere with Mediobanca. Please go ahead.
Thanks, thanks for taking my question. Two, if I may. The first one is, your NII guidance, 2026, is up versus 2025, about 5%. The loan growth is 7%, so it looks like you embed some margin pressure. Now, we've been talking about margin pressure for quite a long time. It has never really come through. I wonder, I was wondering why all of a sudden, given the rate environment, provided with the rate environment, you know, in consensus expectation, the market expectation is kind of correct, why that should happen over the course of 2026? And the second question I have is, how much of your time, managerial time now is devoted to dealing with Russia after 4 years? Does it take a good part of your, of your working day? Just, just, just to be curious on that. Thanks.
Yeah, indeed. Indeed, when we talk about margin pressure, I think it's very different from market to market. But what you see is everyone is going for additional customers. We did so. One way to achieve this is by whatever offer you can have in mobile banking, whatsoever. Another way, I think we have been successful is your liabilities part, so offering nice term deposit whatsoever. This can be at significantly competitive levels, and this is the type of margin pressure what we see. And the other is in the mortgage business. Now, so we have been very successful, sometimes, in some markets, it happens that then for one to three quarters, it's really, really difficult.
This comes and goes, so there is no long-term strategy, what we see from competitors, but it's adjusted. And here when we talk about margin pressure, there is always the uncertainty. Is it just one who has more appetite and keep the others cool? Or are they defending and then it. So this is the core of questions, what we have when we talk about. It's more about when I talk about margin pressure, so we have the two elements. The one is if the central bank rates go down, then, of course, everything what is on the current accounts is under pressure, and here it depends then on the model books, what we have, and the investment books, and more the timing.
Still here in 2026, we have a positive impact, still from earlier hedgings and therefore, we—I was not so much worried about these developments for 2026. And as I said, the other is in coming from these topics of competition. We'll see. And to your second question, management time spent on Russia, it's nowadays, mainly me when we talk about potential transactions. And of course, to some extent, then Hannes as being responsible for compliance issues. Now and then, there come topics, but it has reduced significantly compared to earlier years. So I dare to say it's fairly stable. In 2025, we didn't have any questions from authorities on the business, so all this, which also time-consuming, has diminished significantly.
So not, not big time anymore. Thank you.
Thanks, Johann. If I may get back one second to your competitive pressure statement. Why competitive pressure in 2026 should be more as a burden than it has been in 2025? I mean, with 7% loan growth that you project, it sounds like the pie seems to be large enough, you know, for many banks operating in those countries. So I was wondering, why all of a sudden in 2026, the competition should be heavier than we have seen so far? I mean, margins at the very end of the day were kind of stable since Q4. Is that, I mean, so-
Riccardo, you are fully-
Yeah.
You are fully right. If the pie grows by 7%, then I should not be concerned at all. I had seen the one or the other research where I was rather thinking of maybe 5%. And then we—it would mean that we continue to get market share. And then... I mean, the good thing about Raiffeisen is the good thing and the not so good thing. The good thing is that in the big markets, our market share is not that huge, so increasing our market share is not too much painful to others. But you are right. If we see this 7%-8% growth all over the markets in the loan book, then no need for any margin pressure.
Here I agree with you.
Very clear. Thank you.
Our next question comes from Krishnendra Dubey with Barclays. Please go ahead.
Thanks for taking my questions. I think I have, I have three. To start with, just on Hungary, I guess there was this big negative in the trading. So how should I think about this in terms of the rate cuts or no rate cuts that's gonna happen in Hungary? That's the first. Second question is around the dividend payout. I believe the payout this year is around 40%, and then I guess you have a bigger range, which is 20%-50%. For the future years, how should we think about the payout? And aligning to the ROE question, just trying to understand, when you're trying to guide to greater than 13% ROE, does that have inbuilt some M&A or, like, reduction of capital via buyback or anything, or is primarily, like, outside the scope?
And the last one is on, just on the M&A, but just staying on the M&A bit, I guess you had in the last five years, you had two acquisitions, one in Serbia, one in Czech Republic. If you could remind us, like, what was your cost takeout, or what were the cost synergies that you were able to extract from those deals? Thank you.
Yeah. Thank you for your questions. I probably did not fully get your question around Hungary. Was it just to confirm, was it again on this increased bank tax, or I didn't-
No, no.
Get your first question.
On the trading part, like, the negative was bigger this quarter, and so they're just trying to understand, like, on the trading result, it was a bigger negative compared to the year or the first three quarters of what was driving it.
Ah, now I understand. I'll. There is a—this is a valuation issue, and, and it comes from what the Hungarian calls baby loans. So this is a sort of subsidized loan, where the banks had to take over the part of the subsidies which came from the state. And, yeah, this, this led to a reduction of the profitability of this product, which had to be considered in the valuation and therefore. So it's not trading what you presume from typical capital markets trading or so, but it's valuation from this loan book, the baby loans. To your second question, the dividend payout. Yeah, we are close to the 40% this year, and if we assume that, maybe this for 2026, you would keep this or so, then you might go up, slightly.
A couple of more cents might be possible. I mean, our current thinking is we will see over time that I mean, it's too early to say now, but probably when we talk about the Q1, we might have deducted a dividend of EUR 1.8 something, so pro rata. But look, it's still January, so a little bit early to speak about this. In all the targets what we give are without any impact on M&A. So it's pure organic, what we had. And yeah, it... What we could say is, in the recent M&A activities, what we did in Serbia and in Czechia, we could take out a considerable part of it.
So, you always say some, what could it be, depending on the 50%, maybe even more, depending on the overlap in the branches and so a couple of things. But you could, if it's like it's quite similar to what we have in the geographic and local footprint, and then it might be even more than 50% of the cost base, maybe up to 70%. And the second part is there are also some positive synergies. So what we would also like, acquisition is, it's what we have found in the last few months, it was very inspiring for the organization. So the organization itself improved also quite a lot. So it has not only the cost synergies, but here and there are some more benefits.
Thank you for your questions.
Thank you.
Our next question-
No, you can go ahead, sorry.
No, go ahead.
I was just asking about this, the impact that you highlighted on the Op risk RWA. Like earlier, if you would deconsolidate it, it would go away. So does that mean if you deconsolidate-
Uh, sorry.
The impact is gonna be bigger?
Yeah, yeah, sorry. So you were talking about the deconsolidation of Russia, and when will we lose the—was this your question—the operational risk RWAs?
Yes.
So as Hannes tried to answer, it's in the, let's say, worst or base case, we have to assume that it's a very formal process, which over a period of three years, reduced. We have currently a significant amount to this. Now, just consider this, from 2.6 to 3.9. So this 1.3 adds this 30 basis points, so you can easily figure out what it means. But this means also that over three years, the CET1 ratio, which is now decreased in January first from 15.5 to 15.2, should every year, like for like, increase by this 30 basis points over three years. If the regulator would be generous, he could grant us also within one year. But we report the very cautious one.
Thank you. Thanks a lot.
Thank you. We'll go next to Benoit Pétréquin with Kepler Cheuvreux.
Just to follow up on, I have two questions, actually. First, on Hungary, the elections there, I mean, what do you expect? And could that change also your view on the local business depending on the outcome? I mean, is that a catalyst, you think, for 2026, for RBI or not? And then just on Rasperia, the court case, what is your strategy, and why are you waiting now to file a claim? And how long will you take to take a decision there? Thank you.
Yeah, I'm to your first question. I'm not a political expert, so I read, of course, I read, and we have many sources which say the outcome might be close or there might be a change or not a change whatsoever. I think what I don't know what could be the difference is that maybe EU funds would flow easier if a regime change would come. We'll see. But our view is quite apolitical, and we as we want to term there, and we, of course, always adjust to the situation, but it would not - it does not change overall the direction.
As I said earlier, I mean, for Hungary, it's important that we grow our retail business.
I believe we have a good corporate business. The mix could be a little bit more to the side of retail. I mean, it, this dates back that for years we were, I dare to say, underperforming. I think we more and more fixed these issues. Recently, we have found some very attractive offers for our customers. What is also important when we talk a loan business, we are back in mortgages, where we hadn't been there for a long period of time. Quite a lot of room for us to improve, but the 2026 was quite good, and if we can build on that, then, then I think over time, it, it will, independent from the elections, go.
I have no forecast now if there would be a governmental change, if this significantly would then, at the end of the day, change the windfall taxes and whatever we have. This is always to be seen then later on, yeah. I think that's currently the bad situation in Europe, that banks are used to compensate for yeah, too much spending from governments. To your second question, the strategy and why we are waiting to file the claim. Look, the point is like this, there are two different views on this claim, and let me start with the Rasperia I, the Russian one. From the Rasperia perspective, they say, "You have received the claim on the shares, and from Russian perspective, you have even received the shares.
And for that reason, don't sue us, neither in Austria nor somewhere else. You have the shares. And, if you're not able to get the shares, talk to your governments, to Brussels, whatsoever, but don't sue us. Because if you sue us, we might perceive this, that you want more. You have the shares, and you want more." Now, the challenge is to find an understanding that we do not want more, just the compensation for the claim. And as we are not able to solve this with, as I said in my ingoing statement now, we need to file a lawsuit. Now, I don't know if we can reach an understanding with Rasperia, which would take off the risk of an anti-suit injunction, what we currently face in Russia or not. We have a three years time.
Definitely, if we neither get the unfrozen nor the agreement, the understanding with Rasperia, then okay, I would recommend to my successor to file. There is no reason to give up. The question is only: Can we get compensation for the damage without taking the risk of more damage or is it... Yeah. But we will, at some point in time, we will have to file a lawsuit if Brussels does not defreeze these shares. Thank you.
Thank you.
Thank you. We'll take our next question from Simon Nellis with Citi. Please go ahead.
Hi, thanks for the opportunity. Actually, one of my questions was around the Rasperia case, so I got an answer there. But actually, I'd be interested in any thoughts on only outlook for Russian earnings going forward. I know it's not something you tend to do, but there's obviously a portion of the market that thinks, you know, peace might occur, and this business will have value in the future. So any kind of broad, brushed comments you can make-
Mm-hmm.
on the outlook? And I guess related to that, you know, are you looking to kind of further reduce the exposure going forward, and by how much? Thank you.
Yeah. So, when we talk about Russia, look at the balance sheet, what we have. So we don't grant new loans, so there is a runoff. The corporate portfolio, the runoff was around, I think, 90% or so. So there, there is, small amounts, there. And then you have the, mortgage business, which is running off as well. But at the... Yeah, according to the, to the repayment schedule, there is, for the time being, no reason for the customers to early repay. The mortgages were granted in a rate environment which was significantly lower than what we have now. So these are fixed.
One moment, ladies and gentlemen, we have lost our feed line. One moment. ... We are reconnected. Go ahead, sir.
Thank you. So, Simon, I was, I don't know when I dropped out, but coming back to your question, and I, with the first part, I try to be shorter, so we have the run off of the loan book. From there, less and less will come. So the main earning comes from the money, which is the surplus liquidity as well as the equity, which both are placed with the central bank, and of course, with the declining interest rates, the revenues will decline. The second part is, and this is a little bit more difficult to forecast.
You see that we make still some money in trading, so from the FX business, and here this comes with international payments, and as we are restrictive there as well, it's a question of time to what extent we are perceived still as a partner in that field. But I would say the bigger part comes from what you see as future interest key interest rate from the central bank. And we still would expect some outflow in deposits, which might also reduce the the surplus liquidity, which is placed at the central bank. So declining revenues with mainly driven by the key rate reduction.
That's helpful. Best in your future endeavors.
Thank you.
Sorry, the second was the future outlook of Russia. I mean, it depends purely on two things, I would say: peace in Ukraine, this would be very important, and for us, the most important part, the second part, is then what is the position of the Europeans? Because you see, we have all these restrictions from the European authorities, and it's unclear to what extent the Europeans will adjust. I think there, if there's peace, the rest of the world definitely will adjust relatively fast. Europeans, come to see. Thank you.
Very much.
Thank you for all your questions. If you have any more, please remember to press star 1 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. As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.
Thank you, all, to the participants, for your time, your interest.
Thank you very much. Goodbye.
Have a good afternoon. Bye-bye.