It sounds as though shareholders can hope to receive a dividend? With regard to dividends, I would like to express my very sincere thanks to our shareholders, first of all, for their patience and loyalty. In the difficult phase after 2014, and during the necessary build up of capital base due to regulatory requirements, the payment of a dividend could not have been justified. As a result of our transformation program and very good full-year results, we have strengthened our capital position to such a degree that the Management Board will be able to propose a dividend of 0.62 euro per share to the Annual General Meeting for 2017.
Klemens Breuer resigned as Deputy Chairman of the Management Board on personal grounds at the end of October 2017. Following an intensive recruitment process and on recommendation of the Nomination Committee, the Supervisory Board appointed Andrii Stepanenko to the Management Board with responsibility for Retail Banking on 7 December 2017, and Lukasz Januszewski to the Management Board with responsibility for Markets and Investment Banking on 15 January 2018. These key appointment decisions taken by the Supervisory Board have strengthened RBI’s Management Board team in keeping with the strategic importance of our core markets in Central and Eastern Europe.
At the Supervisory Board Meetings, the Management Board was also given work assignments, the implementation and results of which were reported at subsequent meetings. The Management Board was also asked to provide ongoing reports on matters of priority for the Supervisory Board due to their importance for the company or strategic significance. This particularly concerned business and risk developments, the digitalization strategy and development of Group subsidiaries, with a focus on Raiffeisen Bank Polska.
The regional Raiffeisen banks (Raiffeisen Landesbanken and Raiffeisenverband) provide liquidity balancing and other central services for the Raiffeisen banks in their area of activity.
As RBG’s central institution, RBI AG is a member of the federal IPS whose members, in addition to the regional Raiffeisen banks, include: Raiffeisen-Holding Niederösterreich-Wien regGenmbH, Posojilnica Bank eGen (formerly ZVEZA Bank), Raiffeisen Wohnbaubank AG, and Raiffeisen Bausparkasse GmbH. The federal IPS is subject to regulatory requirements. It was within this framework that the responsible supervisory authorities, the ECB and FMA, granted authorizations that pursuant to Article 49 (3) CRR, the regional Raiffeisen banks are not required to deduct their shareholding in RBI AG from capital and that receivables between federal IPS members may be risk weighted at zero per cent pursuant to Article 113 (7) CRR. Consequently, capital requirements must also be met on a consolidated basis at federal IPS level.
A total of 24 equity analysts and 19 debt analysts (at 31 December 2017) regularly provide investment recommendations on RBI, making RBI the Austrian company with the largest number of analyst teams regularly reporting on it. In 2017, 448 analyst reports on RBI were published.
With a value date of 24 January 2018, RBI placed € 500 million of perpetual additional tier 1 capital (AT1). The security has a coupon of 4.5 per cent p.a. until mid-June 2025 which will be reset thereafter. Numerous investor calls took place leading up to the transaction. Therewith, RBI completed its planned AT1 issuance program.
RBI attaches great importance to responsible and transparent business management in order to maintain the understanding and confidence of its various stakeholders – not least capital market participants. Hence, RBI is committed to adhering to the Austrian Corporate Governance Code (ACGC or “the Code”) as laid out in the version dated January 2015, while taking any legal changes relating to the L Rules (Legal Requirement) in 2017, into consideration. The ACGC is publicly available on the Austrian Working Group for Corporate Governance website (www.corporate-governance.at) and on the RBI website (www.rbinternational.com → Investor Relations → Corporate Governance). RBI does not have any capital market-oriented subsidiaries which are obliged to publish a corporate governance report due to local statutory regulations.
Up until the Annual General Meeting of 22 June 2017, Bettina Selden and Kurt Geiger were free float representatives on the Supervisory Board of RBI AG according to C Rule 54 of the ACGC. Since the Annual General Meeting of 22 June 2017, Bettina Selden, Eva Eberhartinger and Birgit Noggler have been free float representatives on the Supervisory Board of RBI AG. These members of the Supervisory Board are neither a shareholder with a shareholding of greater than 10 per cent, nor do they represent the interests of such shareholders.
The Working Committee held eight meetings in the 2017 financial year. The Audit Committee met twice, the Personnel Committee twice, the Remuneration Committee three times, the Risk Committee four times, and the Nomination Committee seven times.
Members of the management boards of subsidiary banks and branches affiliated to RBI AG 70,277 1,472,655 54,437
On the reporting date, contingent shares for the last 2013 tranche still outstanding were allocated. At 31 December 2017, the number of these contingent shares was 321,268. The number of contingently allocated shares originally announced changed due to various personnel alterations in Group units. It is shown on an aggregated level in the following table: SIP 2013
Report on measures taken by the company to promote women to the Management Board, the Supervisory Board and into executive positions and a description of the diversity strategy (§ 80 of the Austrian Stock Corporation Act (AktG)) as laid down in § 243c (2) 2 and 2a of the UGB Description of the diversity strategy Prejudice and discrimination have no place in RBI. This is also clearly stated in the Code of Conduct which is valid across the entire Group. RBI instead advocates equality, and in keeping with its corporate identity, it offers equal opportunities for equal performance within the company, regardless of gender or other factors. This begins with staff selection, which must be without prejudice, and where the same standards must always be applied.
The proposals made by the European Commission for the revision of the Capital Requirement Directive IV/Capital Requirement Regulation, as well as of the Bank Recovery and Resolution Directive (BRRD), are currently being discussed by European legislators. The proposals relating to third country equivalence with respect to capital instruments issued are of particular interest to RBI as a bank active on a cross-border basis. The capital and liquidity waivers relating to the application of capital and liquidity requirements also have a high degree of significance, as they are prerequisites for the efficient allocation of capital and liquidity within the Group. Other important issues are the limits under the Minimum Requirement for Own Funds and Eligible Liabilities (MREL), changes in market risk and favorable regulatory treatment of software. RBI was extensively involved in the consultation process in 2017. The regulations are expected to take effect from 2021 or 2022.
In January 2013, the Basel Committee on Banking Supervision issued 14 general principles for risk data aggregation and risk reporting for credit institutions (BCBS 239). The objective is to strengthen the risk management of credit institutions and is in accordance with the conclusions of the Basel Committee that the issues of data and data quality play a major role at banks.
RBI AG has a Group recovery plan, in accordance with BaSAG requirements. Potential measures to ensure operational capability in a financial stress situation are set out in the recovery plan. Along with the monitoring of the major Key Performance Indicators for early identification, the recovery plan forms a comprehensive governance structure for stress situations. The recovery plan is produced by RBI AG and examined by the regulator (ECB).
In July 2017, RBI postponed the IPO of its Polish subsidiary, Raiffeisen Bank Polska S.A., Warsaw. The IPO is based on a commitment made by RBI to the Polish regulatory authority in connection with the purchase of Polbank. The postponement was due to an insufficient level of interest in the offer on terms that met the parameters of RBI’s commitment to the Polish regulatory authority to float shares in Raiffeisen Bank Polska on the Warsaw Stock Exchange. The Polish regulatory authority has set a new deadline of mid-May 2018 for the IPO.
In the Central Europe segment, net interest income increased 44 per cent, or € 294 million, to € 960 million. The increase mainly resulted from the reclassification of Poland from the NonCore segment to the Central Europe segment (€ 266 million). In Hungary, net interest income rose € 24 million, primarily due to liquidity-related optimization. In the Southeastern Europe segment, net interest income fell 1 per cent, or € 10 million, to € 727 million. All countries in this segment – with the exception of Romania (up € 7 million) and Serbia (up € 1 million) – reported declines. In contrast, in the Eastern Europe segment, net interest income increased 9 per cent, or € 77 million, to € 941 million. Russia posted the largest rise, with a mainly currency-related increase of € 84 million. Ukraine also reported a € 15 million increase in net interest income, mainly as a result of interest rate adjustments relating to customer deposits, while net interest income in Belarus was € 22 million lower than in the previous year due to a fall in market interest rates. In the Group Corporates & Markets segment, net interest income continued to decline and was down € 102 million due to a dividend
Staff expenses rose € 43 million in the fourth quarter to € 409 million. This was mainly due to higher bonus provisions at several Group units, as well as adjustments to provisions for employee benefits at RBI AG and an increase in the number of staff in Russia.
Compared to the third quarter, net provisioning for impairment losses was up € 43 million to € 127 million. This was mainly attributable to an increase in individual loan loss provisions due to one large individual case in the corporate customer business at RBI AG.
Throughout the year, consolidated monthly reports are produced for the Group’s senior management. The statutory interim reports conform to the provisions of IAS 34 and are published quarterly in accordance with the Austrian Stock Exchange Act. Before publication, the consolidated financial statements are presented to senior managers and the Chief Financial Officer for final approval and then submitted to the Supervisory Board’s Audit Committee. Analyses pertaining to the consolidated financial state
The strong economic growth that Central Europe (CE) achieved in 2017 should continue in 2018. Growth looks set to remain broad based, with increasing export demand, mostly supported by solid economic growth in Germany and in the euro area, rising investment spending and a pick-up in private consumer demand in the region’s markets. Significant GDP growth of between 3.8 per cent and 4.6 per cent is expected for the Polish, Slovakian and Slovenian economies in 2018. Hungary and the Czech Republic should also enjoy continued growth of over 3 per cent. Accordingly, the CE economies are projected to grow at a rate of 4.1 per cent in 2018, following 4.4 per cent in 2017.
Net fee and commission income 557 389 43.0% 146 137 6.6%
Recurring other net operating income in the segment remained almost unchanged at € 26 million.
Net provisioning for impairment losses (133) (112) 18.5% (79) (15) 426.9%
Changes in equity of companies valued at equity (6,819) 0 (6,819) 0 0 0
Net gains (losses) reclassified to income statement 0 0 0 0 1 The own default risk fair value option position as at 1/1/2017 was previously booked through the income statement.
Net income from disposal of group assets 80 (11) (3,775) 2,066
Further details about the changes shown above are reported in the notes under (33) Equity.
Gains (losses) from disposals of tangible fixed assets and financial investments [7, 9] (30,240) (177,926)
The Southeastern Europe segment comprises Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Romania and Serbia. In these markets, RBI is represented by banks and leasing companies, as well as separate capital management and asset management companies and pension funds in some markets. In Albania and Bulgaria, financial services are offered across all business areas. In Kosovo, RBI also offers a comprehensive product range. In Bosnia and Herzegovina the emphasis is on small and medium-sized enterprises, while also including a wide range of products for retail customers. In Croatia, the focus is on large and medium-sized corporate customers and also on retail customers (including pension funds business). In Romania, a broad range of financial services is offered via a tightly knit branch network. Moreover, the Moldovan corporate customer market is also served from Romania. In Serbia, the market is serviced by a universal bank and leasing companies.
Details on risk provisions are shown under note (16) Impairment losses on loans and advances and note (42) Risk report.
The increase in money market business was mainly due to an increase in repurchase and securities lending transactions by a total of € 4,720 million to € 8,094 million in connection with the optimization of the liquidity position, notably in the Czech Republic and in Russia.
Group's interest in net assets of investee as at 31/12 19,041 146,557 7,509 10,154 63,117 1 Consolidated financial statements: Profit and equity is after deduction of non-controlling interests. CCSB: card complete Service Bank AG, Vienna (AT) LLI: LEIPNIK-LUNDENBURGER INVEST Beteiligungs AG, Vienna (AT) NTB: NOTARTREUHANDBANK AG, Vienna (AT) OEHT: Österreichische Hotel- und Tourismusbank GmbH, Vienna (AT) OeKB: Oesterreichische Kontrollbank AG, Vienna (AT)
Deposits from customers break down as follows: Corporate customers – large corporates 29,519,684 28,560,874
Deposits from customers classified regionally (customer domicile) are as follows: (27) Debt securities issued
Longevity at age 65 for current members aged 45 - males 24.7 24.6
The following table shows the actuarial assumptions used to calculate the net defined benefit obligation: Future pension basis increase 2.7 2.7
In the reporting period, expenses on subordinated capital totaled € 156,496 thousand (2016: € 160,549 thousand).
Pursuant to Section 169 of the Austrian Stock Corporation Act (AktG), the Management Board has been authorized from the Annual General Meeting of 4 June 2014 until no later than 25 August 2019 to increase the capital stock – in one or more tranches – by up to € 446,793,032.95 by issuing up to 146,489,519 new common bearer shares with voting rights against contributions in cash and/or in kind (including by way of the right of indirect subscription by a bank pursuant to Section 153 (6) of AktG) and to fix the offering price and terms of the issue with the approval of the Supervisory Board. The Management Board is further authorized to exclude shareholders’ subscription rights, with the approval of the Supervisory Board, (i) if the capital increase is carried out by contributions in kind or (ii) if the capital increase is carried out by contributions in cash and the shares issued under the exclusion of subscription rights do not exceed 10 per cent of the company’s capital stock (exclusion of subscription rights).
In the Annual General Meeting held on 26 June 2013, the Management Board was authorized pursuant to Section 174 (2) of the Austrian Stock Corporation Act (AktG) to issue – with the approval of the Supervisory Board – convertible bonds in a total nominal amount of up to € 2,000,000 thousand, also in several tranches, within five years from the date of the resolution, which grant holders conversion or subscription rights for up to 39,101,024 common bearer shares of the company with a pro-rata share
Raiffeisen Bank Polska S.A. (RBPL) had been preparing for an initial public offering (IPO) with a free float of 15 per cent of its shares to be listed on the Warsaw Stock Exchange. This was a commitment to the Polish regulator when Polbank was acquired by
Members of the management board of the company 52,718 1,104,706 36,168
In the financial year 2017, no shares were bought back for the share incentive program.
Bonds, notes and other fixed-interest securities 5,187,914 324,321 9,970 1,935,030 1,972,712 51,322
Loans and advances to banks 0 8,306,323 6,124,854 14,431,177 14,347,385 83,792
Loans and advances to customers 0 16,937,571 59,768,219 76,705,789 78,140,866 (1,435,076)
Loans and advances to customers 0 17,216,090 47,722,814 64,938,904 65,609,350 (670,445)
The following table shows the development of impairment losses on loans and provisions for liabilities off the statement of financial position during the financial year and the corresponding asset classes: in € thousand As at 1/1/2017
Compared to year-end 2016, the credit exposure for all asset classes showed a € 23,343,787 thousand increase to € 169,916,936 thousand (of which € 21,498,095 thousand caused by the merger of RZB AG into RBI AG in the regions Austria, Central Europe and Other European Union).
The cornerstones of the economic liquidity risk framework are the Going Concern (GC) and the Time to Wall (TTW) scenario. The Going Concern report shows the structural liquidity position. It covers all main risk drivers which could detrimentally affect the group in a businessasusual scenario. The Going Concern Models are also the main input factor for the liquidity contribution to the internal Funds transfer pricing model. On the other hand, the Time to Wall report shows the survival horizon for defined adverse scenarios and stress models (market, reputational and combined crisis) and determines the minimum level of the liquidity buffer (and/or the counter-balancing capacity) of the Group and its individual units.
Group funding is founded on a strong customer deposit base supplemented by wholesale funding. Funding instruments are appropriately diversified and are used regularly. The ability to procure funds is precisely monitored and evaluated by the Treasury ALM units and the ALCOs.
Letters of credit (documentary business) 993,936 1,257,133 855,442 298,217 103,474 0
The following table contains the funds managed by the Group: Retail investment funds 26,236,924 5,265,851
The increase in operating leases from the lessor’s view was attributable to the merger of RZB AG and RBI AG.
Based on an annually undertaken Supervisory Review and Evaluation Process (SREP), the European Central Bank (ECB) instructs RBI by way of an official notification to hold additional CET 1 capital to cover risks which are not, or not adequately, considered under pillar I.
Share-based payments comprises adjustments for the SIP tranches launched up to 2013 (see share-based remuneration in the notes under (33) Equity).
Hannes Mösenbacher 18 March 2017 28 February 2020 1 Effective as of 10 October 2010
BUILDING BUSINESS CENTER DOO NOVI SAD, Novi Sad (RS) 559,220,792 RSD 100.0% FI
PARO Raiffeisen Immobilien Leasing Ges.m.b.H., Vienna (AT) 36,400 EUR 100.0% FI
ZUNO AG, Vienna (AT) 5,000,000 EUR 100.0% OT 1 Company type: BA Bank, BR Company rendering banking-related ancillary services, FH Financal holding, FI Financial institution, OT Other companies, VV Insurance,
Central Depository and Clearing Company, Inc., Zagreb (HR) 86,925,000 HRK 0.1% FI
LLC Scientific-Production Enterprise Assembling and Implementation of Telecommunication Sytems, Dnepropetrovsk (UA) 500,000 UAH 10.0% OT
A financial asset is derecognized when the contractual rights to the cash flows arising from a financial asset have expired, when the Group has transferred the rights to the cash flows, or if the Group has the obligation, in case that certain criteria occur, to transfer the cash flows to one or more receivers. A transferred asset is also derecognized if all material risks and rewards of ownership of the assets are transferred. The Group has in place a write-off policy based on the principle that the bank being the creditor of loans where the group does not expect any recovery/payment either on the entire exposure (full write-off) or on a part of the exposure (partial write-off). Furthermore the loans have to be either fully impaired in amount of the entire exposure or, in case of collateralised loans, they are imapired in the extent no being collateralised. There are set detailed pre-conditions in the workout and accounting policies in order to ensure same understanding and application within the Group.
counting, the change in the value of the hedged asset or liability is shown as a separate item in other assets/liabilities. The hedged amount of the hedged items is determined in the consolidated financial statements including sight deposits (the rules of the EU carve-out are therefore applied).
A tangible fixed asset is derecognized on disposal or when no future economic benefit can be expected from the continued use of the asset. The resulting gain or loss from the sale or retirement of any asset is determined as the difference between the proceeds and the carrying value of the asset and is recognized in other net operating income.
IFRS 9 contains a new classification and measurement approach for financial assets that reflect the business model in which assets are managed and their cash flow characteristics.
The calculation of expected credit losses requires the use of accounting estimates which, by definition, will rarely equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
The criteria above have been applied to all financial instruments held by RBI and are consistent with the definition of default used for internal credit risk management purposes. The default definition has been applied consistently to model the Probability of Default (PD), Exposure at Default (EAD) and Loss given Default (LGD) throughout RBI Group’s expected loss calculations.
 Retail mortgages and other retail lending the default profile is generated using parametric survival regression in competing risk frameworks. Forward looking information is incorporated into the probability of default using satellite models.
The expected credit loss is the product of PD, LGD and EAD times the probability not to default prior to the considered time period. The latter is expressed by the survivorship function S. This effectively calculates future values of expected credit losses, which are then discounted back to the reporting date and summed. The calculated values of expected credit losses are then weighted by forward looking scenario.
As part of the credit risk monitoring process, the bank checks if there is any indication of impairment and therefore whether an individual loan loss provision is needed. This includes assessing whether the customer can fully fulfill the contractually agreed repayments without the need of realizing collaterals.
For fair value instruments for which no quoted prices or only insufficient observable market data is available, fair value is determined using internal models based on the assumptions and parameters within these models. Due to the leverage inherent in derivatives, market values of derivatives can be subject to significant fluctuation.
Finally, we assessed whether the disclosures in the notes regarding the liabilities at fair value were appropriate and complete.
Kosovo Raiffeisen Bank Kosovo J.S.C. Rruga UÇK, No. 191 10000 Pristina Phone: +381-38-22 222 2 Fax: +381-38-20 301 130 SWIFT/BIC: RBKOXKPR www.raiffeisen-kosovo.com
Austria Raiffeisen-Leasing International GmbH Am Stadtpark 3 1030 Vienna Phone: +43-1-71 707-2071 www.rli.co.at
RBI Representative Office Zhuhai Room 2404, Yue Cai Building No. 188, Jingshan Road, Jida Zhuhai, Guangdong Province 519015, P.R. China Phone: +86-756-32 3-3500 Fax: +86-756-32 3-3321