RZB Group posts pre-tax profit of around € 824 million in 2009
- Pre-tax profit in 2009 is 38 per cent higher than in 2008
- Consolidated profit (after tax and minorities) improves to € 433 million from € 48 million in 2008
- € 12.3 billion in own funds (+14 per cent)
- Income tax amounts to € 254 million (+54 per cent)
- Excellent market positioning in home market (Austria and Central and Eastern Europe)
- Strategic option of a merger of RZB and Raiffeisen International is being evaluated
The Raiffeisen Zentralbank Österreich AG (RZB) Group achieved a pre-tax profit of € 824 million in 2009 (all figures unaudited and preliminary). This represents an increase of 38 per cent against the preceding year. RZB's results represent a significant accomplishment when seen against the backdrop of a difficult overall economic environment – most of the countries in the RZB Group's home market experienced recession in 2009 – and the consequences of the financial crisis.
This is particularly true for Central and Eastern Europe, in which Raiffeisen International Bank-Holding AG, a member of the RZB Group, is active. Raiffeisen International posted a pre-tax profit of € 368 million in 2009. While this marks a decrease of 74 per cent against the preceding year, this result nevertheless underlines the strength of the company's operative business and business model when seen in light of the sharply deteriorated economic environment and the record result that Raiffeisen International posted in 2008. Raiffeisen International's consolidated profit (after tax and minorities) declined in parallel by 78 per cent to € 212 million. The quality of this result is also confirmed by the fact that it came in 41 per cent above the analyst consensus.
Improved cost efficiency and solid capital adequacy
The positive development of the RZB Group's cost/income-ratio, which improved by 0.9 percentage points to 51.9 per cent in 2009, provides further proof that the Group is on a good track. The RZB Group's overall amount of own funds increased by 14 per cent to € 12.3 billion, while its core capital rose by 17 per cent to € 8.9 billion. The RZB Group enjoys excellent capital adequacy, also in comparison to its peers, which is apparent in its excess own funds ratio of 64 per cent, its own funds ratio of 13.1 per cent and its core capital ratio (Tier 1), total risk, of 9.4 per cent (all as per 31 December 2009).
"The RZB Group managed to post a solid performance even during what had been the worst year of the crisis so far. Our annual profit rose considerably, even as we continue to follow a conservative policy towards loan loss provisioning," said RZB CEO Walter Rothensteiner. "These results provide proof of the strength of our business model, the quality of our governance measures in crisis times, and the strong cohesion within the Austrian Raiffeisen Banking Group."
Strategy development process
"The current market conditions and the market changes that can be expected in the future make it indispensable for a Managing Board that takes its responsibilities seriously to continuously investigate what possibilities exist to ensure the organization's optimal corporate structure. To that end, we are investigating a range of options within the framework of a strategy development process," Rothensteiner said. "Our goals are to continuously improve the benefit for our clients, to optimize our cost efficiencies and to strengthen our positioning on our home market, which consists of Austria and Central Europe."
This process is complex and not yet finished. Accordingly, no decisions have been reached at the Board level, nor have any been initiated at the level of the supervisory boards and the shareholders meetings. At this time, the basis for such decisions is being developed.
Merger as a strategic option
A merger between RZB AG and Raiffeisen International would be one of the possible strategic options. One variation thereof would be to hive off the business associated with RZB's function as central institution of the Austrian Raiffeisen Banking Group into a new bank holding. The merger would aggregate RZB AG's other main business areas – above all the one with Austrian and international corporate customers – with those of Raiffeisen International.
"An integrated refinancing structure coupled with the stock-listing of the merged bank would create broader means of accessing the capital, money, and debt markets. This in turn would support the utilisation of long-term growth opportunities, as well as offering better preconditions for fulfilling possible Basel III-requirements", said Herbert Stepic, CEO of Raiffeisen International and Deputy CEO of RZB.
"By minimizing parallel structures, synergies could be used and the governance of the whole group could be further improved. Add to these advantages an easier group-wide risk management, as well as a better risk diversification of the listed unit due to the inclusion of the stable business in Austria," Stepic added. The merged bank would also bring together the Emerging Markets-business in Asia that up to now RZB AG has been doing on a very selective basis with Raiffeisen International's business in Central and Eastern Europe.
Clear focus and even better service for multinational customers
Should the structure with a new bank holding and a merged bank be implemented, each of the two new entities would have a clear focus: one on servicing the Austrian Raiffeisen Banking Group, the other on doing business with corporate customers, financial institutions and private individuals (the latter in CEE, where Raiffeisen International already services 15 million customers). A merged bank would also optimise the basis for providing products and services to multinational corporate customers throughout the entire geographical scope of this entity.
RZB.AT - RZB Group posts pre-tax profit of around ? 824 million in 2009
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