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RBI Q2 profit surges YOY amid provision release

Raiffeisen Bank International AG reported second-quarter consolidated profit of €367 million, up from €96 million earned in the year-ago period.

Net interest income amounted to €792 million, up from €738 million in the second quarter of 2016. Net fee and commission income also increased on a yearly basis to €433 million from €372 million. Net provisioning for impairment losses amounted to a release of €4 million, compared to a charge of €297 million a year ago.

Second-quarter net trading income increased to €69 million from €56 million a year ago.

For the six months to June-end, RBI posted a consolidated profit of €587 million, compared to the year-ago consolidated pro forma profit of €236 million and published profit of €210 million. RBI said historical pro forma data is based on the combined bank resulting from the merger between Raiffeisen Bank International and Raiffeisen Zentralbank Österreich AG.

EPS for the period was €1.79, compared to 72 cents a year ago, for both the pro forma and published results.

Consolidated ROE was 12.9% for the half, compared to a pro forma ROE of 5.6% and published ROE of 5.3% a year earlier. The bank has a consolidated ROE target of about 11% in the medium term.

Net interest income amounted to €1.59 billion, compared to pro forma income of €1.57 billion and published income of €1.46 billion. Net fee and commission income totaled €842 million, up from pro forma income of €773 million and published income of €719 million in the first half of 2016.

Net provisioning for impairment losses in the half declined 81% year over year to €76 million from €403 million on both pro forma and published basis. RBI said it expects 2017 net provisioning for impairment losses to be "significantly" below the €758 million level in 2016.

The bank's NPL ratio stood at 7.3% at June-end, compared to a pro forma ratio of 8.7% and a published ratio of 9.2% as of Dec. 31, 2016. The Austrian lender expects the NPL ratio to reduce further in the medium term. The NPL coverage ratio was 70.5% as of June 30, compared to a pro forma ratio of 75.2% and a published ratio of 75.6% at 2016-end.

At June-end, the bank's common equity Tier 1 ratio was 12.9% on a transitional basis, compared to a pro forma ratio of 12.7% and a published ratio of 13.9% at the end of 2016. The bank's fully loaded CET1 ratio stood at 12.8% at June-end, compared to a pro forma ratio of 12.4% and a published ratio of 13.6% at 2016-end. RBI is targeting a fully loaded CET1 ratio of about 13% in the medium term.