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Operator: 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 would like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead.
Johann Strobl: 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 growth across the region, which continued the pace in the third quarter. We can report a consolidated profit of EUR 1.027 billion for the first 9 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 RBI and exclude both Russia and Poland, we have achieved a 13.5% ROE in the first 9 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, our CET1 ratio remained stable at 15.7%. On Slide 5, we can report 3% loan growth in the first 9 months of this year and the positive momentum that we have seen across our network in Q3 leads us to confirming our 6% to 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 to 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 our 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's a little I can share with you by way of an update on our claim against Rasperia 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 7. I'm happy to report a 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 the group corporates and markets. On the next slide, let's take a closer look at loan growth in the quarter with 3% to 5% loan growth in our key CEE and SEE markets, a positive momentum, which we observed early in the year is confirmed. Notably, retail lending in Czech 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 GCM remained 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 9. 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 is -- what this would mean for 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 MREL 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, but the cost/income ratio at [indiscernible]. Overall, we can confirm our ROE for the group, excluding Russia, 10%. And looking through the future -- into the future of about 13%, excluding Russia and Poland. And with this, I turn to Hannes, please.
Hannes Mosenbacher: 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&A. Johann has just mentioned the positive trends in the new business generation, both in retail and in 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, and 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 de-risk 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 this quarter. Defaults and insolvency remain very low, leading to a very few Stage 3 provisions. Furthermore, we made minor changes to our models and benefited from some of our securitizations. After 9 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, and 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 a 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. Well, ladies and gentlemen, this was my very brief update, and we are now more than happy to take your questions.
Operator: Our first question comes from Benoit Petrarque with Kepler Cheuvreux.
Benoit Petrarque: So a few questions on my side. The first one will be maybe just to get an update on this European Commission process to size Russian 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-a-vis the STRABAG shares. So that's the first question. And I will not ask any questions on Rasperia. On 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 '26? So that's the second question. The third one is actually on the CET1 ratio expected at 15.2% by year-end. That suggests very important growth and loan growth in the fourth quarter. So just trying to understand the moving parts between the 15.7% to 15.2%. And then just lastly, just on the NII, a few questions on Czech Republic, which was very strong. Just wondering here if it's just a very strong loan growth in Czech Republic or are there other items? And on the contrary, the Corporate and Market division on NII was a bit weak. We were down EUR 20 million quarter-on-quarter. I just wanted to understand what happened there.
Johann Strobl: Thank you. So I agreed with Hannes that we share the questions and, of course, the answers. And I start with the Rasperia, STRABAG and the sanction package. I assume you're referring to the 19th sanctioned package. Our way of viewing it is that yes, 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 sanctioned STRABAG shares. So if this would have happened, and I have to say, then we would very quickly could recover a big part of the damages depending then on some results. We have to -- I understand that the whole -- our whole topic is viewed on a large broader scale than we have thought. So with as many, many discussions in general about sanctioned assets. Again, I see the connects, but it has happened during that discussion. We will see if we can make progress maybe in the future, potentially around 20 sanctioned package if it would come. But I don't give here any guidance or probability of 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 would take much longer and it's with some -- yes, with some challenges, of course, in moving along the procedures what we have. So that would be my view on your first question. I hand over to Hannes for your Poland question.
Hannes Mosenbacher: Well, Poland, just to reconfirm the guidance for 2025, it's, as I said, this round about EUR 300 million, maybe a touch above. When thinking about 2026, I think you have to keep in mind that we now see also a little bit more dynamic when it comes to inflows towards euro. So 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.
Johann Strobl: Yes. 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. 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. So this will come with additional RWAs. But you're right, there are some, some elements also from rating migrations in it. So still some corporates are feeling some, some pressure with all these geopolitical and trade developments and whatever you have. So 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. So we had seen picking up the mortgage business, but also what we saw is a good consumer loan growth. So both we are more than happy what we have seen there. And one has to say that also liability, 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 growth. When talking about the second part of your question, GC&M, so the Austrian business, if I may say so, why is NII down? Yes, it's -- the report here, I agree it's a little bit difficult to read because here, it's not only the entity level, but it's also built on funds transfer pricing and similar. But of course, we have seen also a lower loan book as well. So it's both elements, which needs to be considered.
Operator: We'll take our next question from Gabor Kemeny with Autonomous Research.
Gabor Kemeny: My first question is on NII, I believe, decent growth in your core NII in Q3, together with loans and you even expanded 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. And 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 was the likelihood of recurrence in the coming period? And 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?
Johann Strobl: Thank you, Gabor. Coming to your first question. I -- we -- at this point in time, we do not speak too much about the outlook in 2026. So I'm sure, as you're following so long, you are not that much disappointed or surprised. What we can share is that, yes, 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. So this is the one. And as I indicated before, also incorporates, we see some adjustments. You have seen our assumptions on the -- in the presentation on the rate development, okay, there we see some negative impact on the NII. But we still assume now, I would say, as of today, a slightly improvement and, of course, also in the NFCI.
Hannes Mosenbacher: Gabor, I was once sharing with you that when we look at Ukraine, we have -- we look in the -- at Ukraine in sort of 3 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. And since we now see an increase of the FX over the entire Ukraine, we have thought that it's prudent to increase our overlay provisions in Q3 by this EUR 15 million, given that this dividing the country in these 3 zones only is not anymore good enough. So this was a motivation for increasing the overlay bookings by EUR 50 million for the entire Ukraine. Thanks for the question. Yes. And then there is a question which is 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. But I hope this is more speak than real action.
Operator: We'll take our next question from Riccardo Rovere with Mediobanca.
Riccardo Rovere: 2 or 3, if I may. The first one is on -- again, sorry, in loan growth. RBI core, excluding Russia and Belarus year-on-year, the book is up just a little less than in 4% according to your Excel file. And what could bring -- why that should go to kind of 6% to 7% in only 3 months. This is the first question. The second question I had is on deposit growth, which is honestly amazing because it's doubling -- double debt of loan book at the moment, more than 7%, if I'm not mistaken. I was 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 is back to 2.3%. So basically, you're not suffering any kind of margin pressure over the past 6 months. And given that rate cuts should be more or less done, not everywhere, but in most of the countries where you operate or affecting most of your loan book. Is it fair to assume that it is hard to believe that severe margin pressure should be visible on the next and medium term. Thank you.
Johann Strobl: Riccardo, so to your first question, loan growth, indeed, that's -- given where we are and what is ahead of us, it's -- it's very optimistic. I agree. On the other hand, how do we judge it. We have seen that retail is still doing fine, and so they will contribute their part -- but of course, the bigger volume now has to come from the corporate books and -- we have a strong pipeline. This does not mean that the end of the day, we will get all what we have now in the pipeline as competition is significant in this area as well. . But 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 to volume for sure. But also we see quite good pipelines in most of the corporate areas of our retail -- of our network banks. Now to the deposit growth. Yes, we see that customers are earning nicely, and they put quite a lot of their wages on their account. So this is the drivers, quite good liquidity in many of the markets. So forward looking, is there some risk that 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. So -- 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, yes, we compare then banks have their model books, have their historic run rates in the book. So probably you always have a combination of all this, but it looks positive as of today. Thank you.
Operator: We'll take our next question from Máté Nemes with UBS.
Mate Nemes: I have 3 questions, please. The first one would be on overlays. Hannes, you mentioned that you see no reason that overlays presently. Can I ask you about the approach to overlays in 2026? What would drive your decision 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 GC&M. You clearly mentioned that the bulk of the corporate lending growth in Q4 would have 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? And the last question is on Poland and the euro mortgages. The numbers I 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?
Hannes Mosenbacher: Well, Máté, thanks for all the questions. I may start with the question number one, when you're talking about the overlays on 2026. So just to remind the audience, we have some EUR 100 million of overlays for Ukraine. And we have another EUR 100 million of overlays for Russia, which remains for the core group of RBI Group and overlay of around about EUR 300 million. So when would we release and also before I go to the details on when and why we would release or why we would see 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, uncertainty index stays elevated. So when would we feel encouraged to release some of these overlays. This would be, of course, if we see materialization on Stage 3, if we see a clear change in the risk perception. And of course, whenever there is a substantial change towards sanctions in war-related risks, we would be more than eager to adjust our overlays in our overlay amounts what we have created. So this is our thinking when it comes to the overlays. Johann, if this is final, I also would immediately take the #3 question, Poland, Euro and our current way of thinking how do we come to this EUR 225 million, EUR 200 million, a little bit up to EUR 225 million, EUR 250 million, maybe. The one is we always we are sharing with you our Swiss franc guidance, and this was always around about EUR 150 million, EUR 170 million. And if I look at how you have modeled this number into your assessment, I think we have been well understood. And what has been now new, Máté, is that we see that the in the local industry, when it comes to litigation provisions, have now moved on also on the euro part of the portfolio. So we see not yet an elevated inflow, but we see a higher inflow of euro litigation, and 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. But that's the reason why we added this round about EUR 80 million on the euro side, and 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 one, the FX-related devaluation part is a smaller one. But this is our way of thinking how we come to this guidance on EUR 220 million to EUR 250 million. So the 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, Máté.
Johann Strobl: Yes. And to your other question now in GC&M, where should it come from? I would say, broad over all sectors with some larger tickets, of course, as well. So people will be busy, but I cannot in the head office here, pick out a specific industry or so where we would see it. It's rather broadly, and of course, larger tickets than what we have in the network banks but also in the network banks, the corporate part is lining up. And given the size of what they have in some of them significantly, I mean maybe I was not so precise enough that the retail -- we recently have been growing above the market. And I think this, this at least will continue till end of the year. So from all areas positively supported.
Operator: We go next to Ben Maher with KBW.
Benjamin Maher: I just got 2. I think you mentioned you were growing ahead of the market in particularly retail lending. I was just interested to get your thoughts on why that is, that's around pricing or something else? And then my second question is just on fee growth. That's been very strong, particularly this quarter. Again, 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. And I know you're reluctant to give any numbers for next year, but if there's any color you think you can give for next year, that would be helpful. .
Johann Strobl: Yes. I think our -- we got it right in retail. Recently, I would say we had periods where we are holding back with the mortgage business as for a period of time, margins were very, very thin. And as the margins are now in an area where we are fine with it, so we can -- we can get to our market potential or slightly above. So I think what paid off is that we -- usually, when you hold back, then it takes quite some time until the customers perceive you that you are back again in the market. And this, we have achieved in the beginning of this year, and we are building on that. And with the margin in this business, we are fine. The fees, what you're referring in the Q3, indeed, they were good for us. And what can I say? I think -- and I did cut 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 as in our region, sorry, and some also from the tourism and therefore, the FX. Yes. And 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 of part of the transaction tax, what you have in Hungary goes also in this line. But overall, we are very fine with the development.
Operator: [Operator Instructions] We'll go next to Riccardo Rovere with Mediobanca.
Riccardo Rovere: 2, if I may. The first one is it is on cutting Russian exposure. You mentioned at the beginning of the call that you're running ahead of schedule that you have agreed with your supervisor. Still looks to me that over the last quarter, at least, the decline, especially in the deposit side seems to have come to a sudden stop, if I may say so. 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 2025, what kind of target do you think the bank should have assuming Russia one day will be solved?
Johann Strobl: Thank you, Riccardo. To your first question, the development of deposits. I mean, one has to say, of course, this is always driven by opportunity costs, what customer face. And it's more than difficult to -- I mean, if you look at to forecast, if you look at the reduction, 38% is huge. Nevertheless, it could have even been more. So it's -- I think it's less -- for us, it's not a big thing as usually when you think about the runoff of deposits, it's then the question to long-term funding and liquidity. You have seen that there is no need for this. So it's from the income, it's rather opportunistic. It's placed with the Russian Central Bank. So difficult to say what keeps -- this opportunity cost keeps customer with us. I would not make any, any forecast to this, how this develops further. We have done everything to incentivize and now I have to say the rest is in the hand of the customers. When talking about the capital at year-end, so the 15.2%, we are comfortable with this. I think we are -- we are a little bit away from the scenario you outlined about Russia. And then of course, it's also a question of how will then be the operational RWA impact from Russia be treated by the, the Central Bank, but we are around 15% is for this point in time, a good number, I think.
Riccardo Rovere: Sorry for follow-up. On both questions, if I may. The first one, your -- are you basically saying that what RBI is measured on is more the reduction of the loan book than on the deposit side when it comes to cutting the Russian exposures because 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. So is this the way the supervisor looks at things? Or do they want also you to bring the deposit down? And the second question is a follow-up, 15.2% is a high number. So I was wondering, do you think this is the target of the bank in normal conditions or could it be lower given the risk profile of RBI excluding Russia?
Johann Strobl: 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 -- what is done in other hands being it by institutions who give us a framework where we can act in our customers. Now in the loan book, we have the planned run down. So the expected rundown, the quality of the portfolio is very good. Customers are repaying to a large extent as scheduled. And -- but not more. I mean, you might be -- you might remember that in the past, we had quite a lot of fixed rate loans. And whenever the, the rate cycle went down then customers were very quick in refinancing at a lower rate. Now given the rate level where we have, so this is not to be expected also not in the near future. So we had seen in the corporate loan book, some faster repays than were scheduled, but everything else is according to the schedule. So and we don't grant new loans, so this is why this is following that. And as I said, we have to offer in Russia and account and then it's the only thing we can do that we don't pay interest for none of the accounts. And then as I said, it's the decision of the customers how much money they keep with us. And this is communicated analyzed and also shared by the Russian -- by the ECB or supervisor. So this is clear. Now probably it's 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. And yes, you point us in a direction to adjust it somewhere in the future. And when we feel the point in time we will then speak about it. Thank you.
Operator: [Operator Instructions] We'll go next to Simon Nellis with Citibank.
Simon Nellis: Just a quick one from me. Can you perhaps share some thoughts on the dividend that you're 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. And also, it'd be interesting to know what the dividend accrual for the first 9 months was in your capital that you reported?
Johann Strobl: Yes, I'll start with the second part, and this is we accrued EUR 1.20 per share. So in the first 9 months. So as this is a very mechanical thing, you then see also that we just formally will accrue also until the end of the year, another EUR 0.40, so EUR 1.60. This is what we have in our calculation and talks with at least on my level with the supervisor have not started yet. So yes, that's always an interesting discussion -- what is the parameter for this discussion group, core group or all this. So work in progress starting at a later point in time.
Operator: [Operator Instructions] As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.
Johann Strobl: Thank you, moderator, and thank you to all participants for showing interest, devoting sometime. I wish you a good afternoon. Thank you. Goodbye.
Operator: You may now disconnect.