Raiffeisen Bank International AG (RBI) Earnings Call Transcript & Summary

Ladies and gentlemen, as Chairman of the Supervisory Board, I take the chair pursuant to section 116, para. 1 of the Austrian Stock Corporation Act and open today's Annual General Meeting of Raiffeisen Bank International AG. After thorough consideration, the management were decided to conduct today's AGM as a virtual meeting in view of the COVID-19 pandemic in order to protect the health of shareholders and other participants. Therefore, today's AGM, on the basis of section 1 of the Federal Act on special measures in corporate law pursuant to COVID-19 act as amended, and the regulation of the Federal Minister of Justice on details regarding the conduct of meetings without physical presence of participants and on resolutions passed by other means, the so-called COVID-19 regulation, as amended, will be held in the form of a virtual meeting pursuant to section 3, para. 1 of the COVID-19 regulation without the physical presence of the shareholders. It is explicitly pointed out that unlike at the AGM of the company held on October 20, 2020, and as provided for as a possibility in section 4, para. 4 of the COVID-19 regulation, the presence of special proxies pursuant to section 3, para. 4 of the COVID-19 regulation has not been provided for this AGM. This is due to the fact that shareholders are able to participate remotely, section 102, para. 3.2 of the Austrian Stock Corporation Act and to vote remotely via the AGM portal, according to relevant legislation. I welcome the shareholders of our company and our guests who are following the AGM on the Internet. The AGM will be webcast until the end of the presentation of agenda item 1. The conduct of today's AGM as a virtual AGM, in accordance with the COVID-19 Act and the COVID-19 regulation, the use of the AGM portal, the absence of special proxies pursuant to section 3, para. 4 of the COVID-19 regulation and the possibility offered for the first time for shareholders to exercise their right to information and to speak, pursuant to section 118 of the Stock Corporation Act by telephone in real-time during today's AGM, results in modifications of the procedures of the AGM as compared to an AGM with physical attendance and as compared to the AGM on October 20, 2020, as well as to modifications of the rights of shareholders. This was stated in the convocation and the separate document about the organizational and technical requirements for participation in the virtual AGM of RBI on April 22, 2021. Both documents have been made available on the company website and will be explained by notary Brix in the following. Let me now give you a short overview of the structure of today's AGM. First of all, the reports and proposed resolutions on all agenda items will be presented en bloc. After that, any motions submitted via the AGM portal will be read out. This will be followed by the general debate. Questions will be read out by me and answered by the members of the management Board. During the general debate, shareholders can also dial in by telephone to exercise their right to information and to speak. Votes on all agenda items will be taken after the end of the general debate. The voting procedure will be dealt with separately. I now note that the convocation to today's AGM was published in due time in compliance with the provisions of section 106 of the Stock Corporation Act in the Wiener Zeitung of March 23, 2021, and that, furthermore, pursuant to section 107, para. 3 of the Stock Corporation Act, was distributed electronically in Europe by euro adhoc on the same day. Pursuant to section 180, para. 2 of the Stock Exchange Act, the convocation was simultaneous transmitted in machine-readable form via the intermediary chain to the ultimate intermediaries for distribution to the shareholders. The documents to be disclosed pursuant to section 108, para. 3 and 4 of the Stock Corporation Act were made available on the company website on March 30, 2021, in particular, information on the organizational and technical requirements for participation in the virtual AGM, pursuant to section 3, para. 3, in conjunction with section 2, para. 4 of the COVID-19 regulation, a question form -- a proxy form pursuant to section 114 of the Stock Corporation Act. Notary Brix is requested to notarize the resolutions of today's AGM, to supervise the voting procedure and to take minutes in accordance with section 120 of the Stock Corporation Act. I would now ask notary Brix to explain the modalities for the exercise of shareholder rights at today's virtual AGM and the procedure to be followed in the conduct of the AGM, as already made available on the company website.

Yes. I'll do that. Shareholders, in the convocation to the AGM published on March 23, 2021, it was announced that today's AGM will be held as a virtual AGM, without physical presence of shareholders. The information on the organizational and technical requirements for participation in the virtual AGM, pursuant to section 3, para. 3, in conjunction with section 2, para. 4 of the COVID-19 regulation, was made available on the company website on March 30, 2021. Today's AGM will take place in the presence of the Chairman of the Supervisory Board, Erwin Hameseder; the members of the management Board: Johann Strobl, Andreas Gschwenter, Lukasz Januszewski, Peter Lennkh, Hannes Mosenbacher, Andrii Stepanenko; and myself as the certifying notary. The State Commissioner, Alfred Lejsek, is present virtually, as representatives of the auditors KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Wilhelm Kovsca and Rainer Hassler, can be reached by telephone and e-mail to answer any questions. They're following the AGM via the livestream. Michael Knap from the association representing investor interests is present as an independent proxy of the IVA. Now about the AGM portal. Shareholders whose deposit certificates were received by the company in due time have received upon request access data for access to the AGM portal for participation and exercise of shareholder rights. The AGM portal enables registered shareholders to participate in the AGM by means of an audio and visual connection in real time to exercise their voting rights, submit motions for resolution, raise objections, exercise the right to information and appoint one or several proxies. The AGM will be conducted in German. The entire AGM will be translated from German into English. In this respect, we ask you to connect to the livestream on the English language website. A few words about participation and exercise of voting rights at the AGM. Registered shareholders can participate in the AGM by means of an audio and visual connection in real time and exercise their right to vote themselves. The time during which voting rights can be exercised at the AGM via the AGM portal will be determined by the Chairman during the virtual AGM and announced in due time. A vote button is provided on the AGM portal for casting votes. Submission of motions for resolutions. Every shareholder has the right to submit motions on any item on the agenda of the AGM. The point in time up to which motions can be submitted via the AGM portal will be determined by the Chairman during the virtual AGM and announced in due time. The Submit Motion button is provided for this purpose on the AGM portal. Shareholders' right to information and to speak. The right to information and to speak, pursuant to section 118 of the Stock Corporation Act, can be exercised at today's virtual meeting by shareholders themselves exclusively electronically via the AGM portal, by e-mail or by telephone in real time. [Operator Instructions] For an expeditious conduct of the meeting, questions should be submitted in due time before the AGM to the above e-mail address. The company reserves the right not to answer questions that cannot be allocated to a specific shareholder. A few words about raising objections to be recorded in the minutes. Shareholders who have exercised their voting rights can raise objections to resolutions of the AGM electronically via the AGM portal until the end of the AGM. The Submit Objection button is provided for this purpose on the AGM portal. To grant a proxy, pursuant to section 113 of the Stock Corporation Act, every shareholder entitled to participate in the virtual AGM has the right to appoint a proxy who participates in the virtual AGM on behalf of the shareholder and who has the same rights as the shareholder whom he or she represents. The button Proxy for Authorized Representatives is provided for this purpose on the AGM portal. Shareholders can also use the AGM portal to change or revoke any proxy granted as well as give instructions during the AGM until voting begins. Participation in the virtual AGM by the proxy by means of electronic connection via the AGM portal requires that the proxy receives individual access data to the AGM portal from the shareholder having granted the proxy. As a special service, a representative of the Austrian Shareholders Association, IVA, Feldmühlgasse 2020 (sic) [ Feldmühlgasse 22 ] in Vienna, Michael Knap is available to shareholders as an independent proxy for exercising voting rights and other shareholder rights at the AGM. In any case, the IVA must be given instructions for the exercise of voting rights. Without such explicit instructions, the voting right will not be exercised. Even if the independent proxy of the IVA is authorized, the proxy must be sent to the company, as described in the convocation or entered via the AGM portal. For this purpose, the button Proxy and Instructions for IVA is provided in -- on the AGM portal. It is pointed out that the representative of IVA, Michael Knap, is not a special proxy pursuant to section 3, para. 4 of the COVID-19 regulation. We will also have technical support during the AGM in the event of technical or organizational questions regarding the use of the AGM. Every shareholder can contact the hotline during the AGM either by telephone at 0043 or, from Vienna, (0) 1 3750 215 extension 17. You can see in the number now or by e-mail at [email protected]. As regards to the general debate. At today's AGM, questions by shareholders will be read out by the Chairman of the Supervisory Board and answered by the management Board. The Chairman will structure the conduct of the AGM in the same way as for an AGM, both shareholders physically present and will, in particular, announce in due course a specific time up to which questions can be asked. The Chairman will announce the time up to which shareholders can submit motions for resolutions to the AGM portal. The Chairman will also announce the point in time after which voting rights can be exercised. It should be pointed out that votes will be taken by means of the addition method in a single procedure. The vote will be taken en bloc on all items of the agenda, and the Chair will explain details immediately before the vote.

Thank you very much to the notary for these explanations. As the Chairman, I instruct that today's AGM be conducted in the way that has been set out in the convocation of 23 March 2021 and in the document information on the organizational or technical requirements for participation at the virtual AGM of Raiffeisen Bank International AG of 22 April 2021. Both documents have been made available on the website of the company, and this procedure has not been explained in detail by the notary. The list of attendance will be completed before the general debate. I will sign it, and I will then inform you of the presence of today's meeting. Shareholders have the possibility via the AGM portal to inspect the list of attendance. I will then point out as soon as the button List of Participants and Available Documents is available as the first information. Let us now start with the agenda. Agenda item 1, presentation of the adopted financial statements and management report, the group financial statements and the group management report as per 31 December 2020 and the proposed appropriation of profit, the special nonfinancial report, the report of the Supervisory Board for the business year 2020 and the corporate governance report of the management Board. The adopted financial statements and management report, the proposed appropriation of profit and the group financial statements and the group management report as per 31 December 2020, the separate nonfinancial report, the report of the Supervisory Board on the business year 2020 and the corporate governance report have been made available on the website of the company pursuant to section 108, para. 3, sub-para. of the Stock Corporation Act. Dear shareholders, as the Chairman of the Supervisory Board, at the beginning of today's AGM of Raiffeisen Bank International AG, which is again being hosted in a virtual format this year given the COVID-19 pandemic, I'd like to report to you from the perspective of the Supervisory Board on the past business year and about current issues of concern to our bank. COVID-19. After a truly successful start, the business year 2020 was fully marked by efforts to cope with the largest world economic crisis since the Second World War. The measures adopted to retain -- contain the COVID-19 virus and the lockdown measures were necessary to protect the people and to stabilize the health system, [ a world without ] alternative. And the economic consequences for our national economies, for businesses, households and also for the banking industry were quite without example in history. State rescue programs, intervention of central banks have been made use of in never-seen scale in order to cushion the massive reductions of economic performance. For the banking industry and for RBI, the market environment was more than challenging, characterized by a persisting low interest environment and also by a low demand for loans given to the recession in the economy and, on the other hand, by increasing risk costs. In spite of this difficult and challenging framework, RBI in the business year 2020 was able to reach a result of EUR 804 million. Although this means a decline of about 1/3 compared to the previous year, however, if you look at the significant and massive economic disruptions caused by the COVID-19 pandemic, is put in a more relative perspective. Especially in comparison with many other banks, RBI has been able to score a respectable and satisfactory result. On the revenue side, depreciations of currencies, decreases in the crime rate and lockdown measures affected development of core revenues. And this is reflected in the decline of the surplus of interest and commissions from -- of minus 5% and minus 3%, respectively. The economic impact of the COVID-19 pandemic, at the same time, led to a tangible increase of risk costs to EUR 630 million. One large part of that increase is due to risk provisionings, credit risk provisions, in particular, owing to post-model adjustments to fully map the economic impact of the pandemic. As a positive example, I'd like to mention that even in those very difficult times, RBI always had a very sound capital ratio and had a CET1 ratio of 13.6% as per year-end 2020. The Supervisory Board will continue to place attention to a stable capital development. Overall, I think it is fair to state that the satisfactory result for 2020 is now a good basis for coping with the current challenges. This excellent performance in the past business year and the successful customer-oriented measures taken by RBI have been taken up by international media positively and has led to 36 distinctions being awarded to the RBI Group in 2020. For the fifth consecutive time, RBI was rated as the Best Bank in Central and Eastern Europe by Financial Times' The Banker. Also, I'd like to mention the regional distinctions of subsidiaries in Slovakia and Ukraine, which both were given the award as being the Best Bank. And then EMEA Finance awarded the performances and achievements of RBI by electing it the best bank in the region for the 12th consecutive times. At this moment in time, I'd like to congratulate all staff members of RBI for their excellent work. As capital representative on the Supervisory Board of RBI, I clearly am of the opinion that owners need to participate in the success of a company. Looking at the current situation of crisis and economic forecasts, reaching regulatory parameters is one requirement for opening up a possibility of paying out moderate dividends following a recommendation of ECB last year to refrain from paying out dividends and redeeming our own shares. The European Central Bank has slightly loosened its de facto mandatory recommendation, and year-end dividend payouts are now allowed at a very moderate scale. The loosening of this recommendation, however, can only be a first step. An extension of this recommendation by the European Central Bank beyond late 2021 should, however, not happen. Given the fact that we're seeing increased vaccinations against the virus and the economy is recovering, we are now dealing with a proposed resolution, according to which an amount of EUR 0.48 per share is to be distributed to the shareholders of RBI. This proposed dividend is the maximum payout amount and is in compliance with the recommendation of the ECB that is limited until autumn 2021. Dr. Strobl will then provide us with further details on this proposed resolution. However, we have been giving some thoughts to paying out an additional dividend once this recommendation has come out of force, if the business development of RBI, as such, allows within the framework of an extraordinary meeting to propose that for authorization and to make this payout -- dividend payout to the owners of the bank. Given this very difficult economic year, I would like to point out that stable shareholdership, in particular, for coping with a crisis such as the COVID-19 pandemic is an important, reliable pillar for management in order to be able to adopt measures with the required level of consistency. To cope with the crisis, as the owner representative, I can say that a sound and sustainable development of the value of RBI, which should be reflected in the share price, is our absolute target. Consistently, the Supervisor Board supports measures to this effect adopted by the management Board. And this is manifested in the most recent acquisitions in Czech Republic. In the business year 2020, the Supervisory Board was in close exchange with the management Board. Supervisory Board and its committees carried out their work in compliance with the COVID-19 law and the COVID-19 company regulation. And they quickly adjusted their procedures to the new requirements, both technically and organizationally. They were able to act and had a quorum at any time. We met in qualified video conferences. We had hybrid meetings, always taking account of the health-related and safety-related provisions and requirements imposed by the Austrian government. During those meetings, the members of the Supervisory Board, together with the management Board, discussed the current challenges and adopted the decisions that were necessary based on informed facts and after critical debate for the interest and benefit of RBI. We had close cooperation, in particular, at the beginning of the COVID-19 pandemic starting in March 2021. The management Board informed the Supervisory Board on an underlying basis and, if necessary, in extensive special reports on the development of the financial risk, capital and liquidity situation. Moreover, the Supervisory Board and its committees, first and foremost, the Risk Committee dealt in every meeting intensively with the scenarios and the impact of the COVID-19 pandemic to the portfolio of RBI both from an industry perspective and a customer perspective. At this point, I'd like to thank, in particular, our Board members and the CEO, Dr. Johann Strobl, for the excellent and trust-based cooperation with the Supervisory Board in the past business year. I now move on to changes on the Board. At the last AGM, Dr. Heinz Konrad and Mr. Reinhard Mayr were elected by the AGM for a term of 5 years to the Supervisory Board. Mr. Reinhard Mayr was also elected to the Audit Committee and to the newly setup Digitalization Committee. In addition, Dr. Andrea Gaal was elected to new chairperson and Mr. Martin Schaller as the Deputy Chair of the Digitalization Committee. Moreover, at the AGM, Klaus Buchleitner and myself were elected for a further term of 5 years to the Supervisory Board. And I was confirmed by the Board in my capacity as Chairman of the Supervisory Board. Moreover, at its meeting on 16 December 2020 and until December 2020, on the basis of a structured succession process, the Supervisory Board of RBI decided that the terms of Peter Lennkh, Andrii Stepanenko and Lukasz Januszewski be extended by 5 years on the management Board governance. Dear shareholders, in the business year 2020, the Supervisory Board and its committees met at a total of 32 regular and extraordinary meetings. During those meetings, all statutory, regulatory requirements and requirements according to our articles of association were met. On a positive note, I'd like to mention, in particular, the high level of commitment and dedication of individual members of the Supervisory Board. And this is reflected in an average attendance rate of 96%. Moreover, all Supervisory Board members were offered 4 separate meetings to prepare for Supervisory Board meetings to be able to take informed decisions. In addition, in 2020, there were 7 presidium meetings between the management Board and myself. The presidium of the Supervisory Board met for 9 meetings with the RBI management Board. In those meetings, we discussed technical matters to prepare the next meetings and also strategic considerations with the members of the management Board. In a total of 37 additional bilateral meetings with individual Board members, I was informed on relevant issues affecting the bank. 26 of these meetings were held with and in the presence of the CEO. To give you a more comprehensive picture of the business policy and risk development of the banking group, we have heard extensive reports from the CEOs of selected subsidiaries, subsidiary banks at the meetings of the Supervisory Board on the 17 June of 2020 on Raiffeisen Bank Russia; 16 September 2020, Raiffeisen Bank Czech Republic; and the 2nd December 2020 on Raiffeisen Bulgaria. At the last meeting of the Supervisory Board on 16 March 2020, we had a report on Raiffeisen Bank Serbia by its CEO, Zoran Petrovic. In addition, I can inform you that I had regular on-site visits with selected subsidiary banks of RBI. Together with the CEO in 2020, we had an on-site visit of Raiffeisen Bank in Serbia. And there were virtual visits of Raiffeisen banks in the Czech Republic and in Bulgaria. On the 19th February 2021, there was a virtual meeting between Dr. Strobl and myself and the chair -- CEO of Raiffeisen Bank in Belarus, where we discussed the development of business of the bank as well as current issues relating to the tight political situation. I now move on to the priority issues and themes, especially in times of uncertainty caused by the COVID-19 pandemic and a possible increase in nonperforming loans. Forward-looking risk management is essential. The Supervisory Board and, in particular, the Risk Committee, together with the management Board, discussed initiatives to control the various risks of RBI in compliance with the set of measures of the risk management to counteract the impact of the COVID-19 pandemic. Moreover, the members of the Supervisory Board in detail monitored the measures adopted by risk management, which were always in line with -- and in compliance with a conservative risk strategy. In addition to dealing extensively with risk management of RBI, the members of the Supervisory Board dealt towards the strategic development of RBI at length. For the first time on the 28th of September 2020, this strategy workshop was held between the Supervisory Board and the management Board. At that workshop, the overall strategy of RBI and related capital and RWA-related allocation issues as well as consequences of the COVID-19 pandemic to the strategy of RBI were discussed in detail and holistically. As already said, generating sustainable company value for the benefit of shareholders is a priority, a top priority for the management Board and the Supervisory Board. In this context, it makes sense to economically use unorganic growth opportunities as a major tool to reach those objectives. I'd like to point out here that the Supervisory Board places utmost attention to critically weighing risk perspectives and profitability aspects with potential acquisition and always considers affordability as a top priority when taking a decision. Against this backdrop, I am delighted that RBI has been successfully implementing M&A activities in the first quarter of this year. As an example, I'd like to mention the acquisition of the Czech Equa Bank. In this way, the market position of RBI on the Czech market was increased. Strategic synergies were harnessed, and the digital services of the banking group can be further improved. At an extraordinary meeting on the 2nd of February 2021, the Supervisory Board authorized the submission of a binding offer for the acquisition of Equa Bank. The signing was reported in the first week of February -- first half of February. Looking at the overall strategic direction of RBI, the management Board and the Supervisory Board are discussing in an open dialogue further M&A activities. Moreover, there is agreement between the management Board and the Supervisory Board that the consistent adjustment of the bank to customer needs in the form of a high-quality performing product and service offer needs to be taken forward. The Supervisory Board monitored the implementation of the digitalization initiatives by the members of the management Board and discussed with the management Board further strategic measures to improve cross-channel performance and service offers. At the same time, the Supervisory Board in the past business year monitored the actions taken by the management Board to strengthen information security and cybersecurity within RBI. Looking at the huge importance of a successful digital transformation of our bank for the future. The Supervisory Board at this meeting on the 16th of December 2021 decided to set up a Digitalization Committee. And through the work of this committee, the Supervisory Board wishes to deal with and focus more closely on current and future challenges in the area of digitalization, to act as an adviser to the management Board and to constantly monitor the implementation of strategic digitalization initiatives. As already mentioned, at the last AGM on 20 October 2020, the Supervisory Board, as part of its own activities, dealt extensively with the issue of sustainability, which is of great relevance for RBI. Sustainable and responsible action ever since Raiffeisen was founded is a guiding principle for everything we do and is manifested also in our regional roots and in our acting as responsible bankers and reliable partners, especially in difficult times. By signing the global principles for responsible banking, RBI has sent out message, a clear message. However, sustainability for RBI has always been one of the underlying principles and a holistic benchmark for the success of our company. RBI supports its customers at various levels, for instance, through attractive loans for sustainable financings. Also, the bank has implemented an internal ESG scoring system, by means of which corporate customers are rated using sustainability evaluation criteria. Also, on a positive note, I should like to highlight that RBI has the largest offers of green bonds among Austrian banks. In order to adequately take account of the importance of this issue, the Personnel Committee has defined at least one sustainability target for each member of the Board as part of the general agreement on objectives. Also, at its last strategy workshop on the 24th of March 2021, Supervisor Board comprehensively dealt with the issue of sustainability from a strategic business policy and regulatory perspective. At the next meeting on the 16th of June 2021, the Supervisory Board will discuss with the management Board the sustainability targets relating to fields of business. As the Chairman of the Supervisory Board, I'd like to highlight that a sustainable business policy of RBI is something very close to my heart and that we fully support the course that has been adopted by the Supervisory Board. Dear shareholders, I would like to now go on and move to compliance, which is an important issue for RBI and the management bodies. Knowing that in spite of extensive regulation at international and national level, international payments are still being abused by criminals for money laundering and terrorist financing. This is why a continued strengthening of RBI compliance is a top priority for the management Board and the Supervisory Board and that for many years. Compliance processes and systems of the bank have been strengthened at a high cost and financial and personnel input. And we had an external and internal review. And we implemented proposals for improvement. On the occasion of the negative media coverage relating to the FinCEN files concerning any assumed involvement of RBI in transactions with a suspected case of money laundering, which, and let me emphasize this, were all proven to be wrong, we did a comprehensive customer portfolio review of the banking group at request of the Supervisory Board. As part of that detailed review, all customers are being reviewed following strict intel compliance rules. And consistent measures will be implemented in case of noncompliance, up to ending the business relation. And such terminations of customer relations, of course, will mean that we lose revenues. And that is something we actually accept willfully because meeting highest compliance AML standards is of utmost importance for the management Board and the Supervisory Board, also to protect the reputation of our company. In addition to statutory requirements, RBI wants to establish a higher standard in the area of fighting money laundering together with other stakeholders. One aspect here is a proactive and committed exchange with national and European authorities to promote a meaningful improvement of the anti-money laundering provisions. The commitment of RBI to fight money laundering and the efforts of our banking group for a consistent compliance and further development of internal prevention measures are being set out and put to paper in this year's anti-money laundering declaration and the principles it contains. This declaration has been signed by the management Board and is fully supported and backed by the Supervisory Board. As part of its advisory and monitoring activities, the members of the Supervisory Board were in regular contact with the Head of Compliance and were informed by the management Board on the implementation of compliance measures regarding compliance with laws, relevant standards and that comprehensively and regularly and also timely. In this process, the Supervisory Board dealt with the measures to prevent money laundering as well as with other compliance issues, in particular, measures to comply with the financial sanction law provisions. And here, I'd like to highlight that both the Supervisory Board as well as the management Board here pursue a very conservative risk strategy and will invest significant resources into strengthening its monitoring systems. When it comes to financial sanctions and involving external consulting companies, we will be further developing and are developing internal systems. And for the future, we will -- so that we'll be able in the future to comply with the corporate standards of the European Union and the U.S. sanctions. Regarding potential sanction risks, the Supervisory Board extensively dealt with the political risk in the countries of RBI such as Belarus and discussed mitigation measures for risk management, together with the management Board. I'd also like to inform you that in my function as Chairman of the Supervisory Board, in addition, I have bilateral meetings where I'm informed by Head of Compliance on current compliance issues. Ladies and gentlemen, please rest assured that the Supervisory Board and the Management Board of RBI are -- will be devoting utmost attention to compliance and observance of all compliance provisions, in particular, when it comes to money laundering and financial sanctions. The trust of our customers in the Raiffeisen brand is a commitment for us to be strict and without compromise in our attitudes vis-à-vis money laundering and to fully comply with financial sanction provisions so as to continue to ensure and safeguard the financial -- the reputation of our company. I'd also like to inform you that the committees of the Supervisory Board, in particular, the Risk Committee and the Audit Committee, have fully met with all regulatory provisions and statutory provisions, the articles of association and the bylaws regarding their tasks. In order to strengthen the efficiency and effectiveness of the work of the Supervisory Board, we conducted in the business year a program to evaluate the work of the RBI Supervisory Board with external monitoring. And it was found that the activity of the Supervisory Board is -- was received in a positive light. The suggestions coming out of this process have already been implemented. Examples are the setting up of a digitalization committee report on selected subsidiary banks at every meeting of the Supervisory Board meeting and semiannual strategy workshops together with the management Board. The Supervisory Board also intensively dealt with the development and strategic initiatives of Austrian network companies such as Raiffeisen Bausparkasse or Raiffeisen Centrobank AG. And members of the Supervisory Board made use of the further education and training offers given to them in order to ensure they're being fit and proper. In the year 2020, 2 training events were offered to the members of the Supervisory Board where specific issues were dealt with. The attendance rate at those fit-and-proper workshops was 89%, which is quite encouraging. The financial statements. Ladies and gentlemen, the last point of my presentation relates to the financial statements. And I'd like to note that the financial statements and the management report of Raiffeisen International AG for the business year 2020 were audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. And the auditors did not find any complaints or criticisms and findings and, therefore, granted an unqualified audit opinion. Applying section 245a of the Austrian Companies Code (sic) [ Austrian Commercial Code ], applying the International Accounting Standards Board and the International Financial Reporting Standards, which are mandatory, we prepared the group financial statements and the group management report of RBI AG for the business year 2020. These were audited by KPMG and received an unqualified audit opinion. The report of the auditor and the group auditor were submitted to Supervisory Board. The Audit Committee reviewed the financial statements 2020 and the management report of the group financial statements 2020 and the group management report and prepared -- made the necessary preparations for the adoption of the financial statements by the Supervisory Board. The Supervisory Board reviewed all documents and the report of the Audit Committee. The Supervisory Board then agreed to the financial statements and the group financials in 2020 and adopted them for 2020, which herewith, pursuant to section 96, para. 4 of the Stock Corporation Act, are officially approved and adopted. Considering the fact that we are going to change our auditor, I'd like to thank, on behalf of the Supervisory Board, our statutory auditor, KPMG, for many years of constructive and trust-based cooperation, a big thank you. As already mentioned, the Supervisory Board, pursuant to rule 36 of the Austrian Corporate Governance Code, also dealt with the efficiency of its own work, its organization and its way of work. And self-evaluation was carried out. The compliance audit of the corporate governance report, pursuant to section 243c Austrian Companies Code, was carried out by KPMG. A separate consolidated nonfinancial report was prepared pursuant to section 267a Companies Code for RBI, which also contains information pursuant to section 243b of the Austrian Companies Code, and this was audited by KPMG. This report was audited and checked by the Supervisory Board, pursuant to section 96, para. 1 of Stock Corporation Act. Both for the corporate governance report as well as for the nonfinancial report, there was no reason for complaint of criticism. In accordance with the Austrian Corporate Governance Code, I am under a duty to inform the AGM on the principles of the remuneration system. I refer to the extensive presentation on remuneration of the members of the management Board and the Supervisory Board and the remuneration report for 2020, which has been published for the first time this year. And I ask for your understanding that I need not read out this report. Dear shareholders, although there are many uncertainties for the business year 2021 still, we should be optimistic looking into the future. The forecasts show satisfactory development of the economy on the markets in which RBI operates. And following the spirit of solidarity of Friedrich Wilhelm Raiffeisen, RBI will continue to be a reliable and responsible partner for its customer and a system at any time to be able to cope with the economic impact of the COVID-19 pandemic together. In line with the vision of RBI, even stronger customer centricity, together with promotion of digital transformation of RBI, are a major building block to be and become the most frequently recommended financial services provided by 2025. At the same time, the Supervisory Board will put attention to further strengthening cybersecurity and promoting the resilience of the IT systems. In the business year 2021, RBI wants to promote organic growth on its market together with a conservative risk appetite. In line with the overall strategic orientation of RBI and on the basis of sustainable company value development, we will be reviewing organic growth opportunities in 2021, always ensuring adequate capital base and carefully weighing all risks. Considering the difficult revenue situation and uncertainties of the general economy, what we need is a high cost discipline and effective cost management all across the group. This is indispensable to strengthen the profitability of RBI. As a central institute, RBI has a major role to play on the Austrian Raiffeisen sector. And together with the sector, we can implement selective cooperations and harness efficiency potentials for the benefit for our customers. As the Chairman of the Supervisory Board, I would like to thank on behalf of the management of the Supervisory Board, the management Board led by Johann Strobl and all staff members for their considerable achievements and their excellent commitment in a highly difficult environment in the business year 2021. Could I now ask our CEO, Dr. Johann Strobl, for his presentation on development of business of RBI?

Erwin, thank you very much. Shareholders, ladies and gentlemen, I too would like to welcome you most cordially to the AGM of Raiffeisen Bank International. I'd like to thank you, shareholders, for having been loyal to us and for having taken the time today to participate in the AGM. Unfortunately, this is the second time that our AGM is conducted virtually. Last time, in October 2020, we got positive feedback. It worked well. For some participants, it was a first possibility to join us at the AGM because of geographic distances. Nevertheless, for me and for my colleagues on the management Board, we would be much happier if we could have an AGM with physical presence of shareholders, perhaps in a hybrid form. Ladies and gentlemen, it's due to the pandemic that we have to act the way we are acting today, and this may be with us for quite some time still. When we look at our financials, we can see that the pandemic has left its traces not only in what we are doing and how we are feeling, but also in our financials. Before I move on to the financials, permit me to describe briefly what we've been doing as a bank, as a company to cope both these difficult times and what we are still doing. Very quickly, we came to the conclusion that in view of the dangers of the pandemic for all people, health and safety is our foremost priority for the employees of the bank and for the customers of the bank. Therefore, in mid-March already, we went into an internal lockdown. In recent years, we had invested a great deal in our technical infrastructure. And overnight, it was possible for our employees to work from home. And there were times when central functions were working from home to an extent of more than 99%. Nevertheless, everything worked extremely well. Our customers experienced that. Our customers, of course, they were concerned about their own safety and about their own businesses. But they were also reflecting on ways and means of coping with their financial situation. At the beginning of April, it was extremely difficult to assess how governments would react to the spread of the pandemic, how customers would react. And it was important for us to take clear steps. And despite the fact that almost everybody was working from home, we maintained intensive contacts with our customers. In some areas, relations became even more intensive. We were able to show how competent we are in preserving liquidity, in dealing with government support programs that provide support for individual business. And we were always there for our retail customers who were worried as well about their jobs, about how to cope with the crisis. For our employees, this was an enormous extra burden working from home, being available to customers and, in many cases, acting as a teacher, as a kindergarten teacher, being there for their own children. That was very demanding, and I use the occasion to express my heartfelt thanks to our employees for the special efforts made in such unusual times. I also thank my colleagues on the management Board, who, during these difficult months, helped the crisis -- get through the crisis. My thanks are also due to the members of the Supervisory Board, to Chairman Hameseder, the Vice Chairman, the chairpersons of the committees. Chairman Hameseder, in his report, made it very clear how much time it took for the Supervisory Board to engage in exchanges with the management Board to discuss this unusual situation. They had difficult situations to go through, and I would like to thank the entire Supervisory Board for this enormous effort. My thanks also go out to our customers because ultimately, we're here for our customers. And it's great to see for us and for our employees that in difficult times, the expertise, the skills of our employees are in high demand and that we were able to achieve great successes together with our employees for our customers. So thank you for this expression of confidence. As I said at the beginning, the pandemic has left its traces in our financials, bearing in mind that this global economic downturn is the most severe one in decades, in many decades. When we bear that in mind, we must be happy to be present in a geographic region where our core countries managed the crisis surprisingly well. When you look at the figures, I can remind you that except for Croatia, in all the countries we operate in, the economic downturn was less drastic than in Austria and in the Euro area. And when we compare the present crisis with the Great Depression, then I -- or the financial crisis in 2008 and 2009, at that time, the downturn for us was more severe than it was for us during this crisis. You may wonder why. Let me mention a couple of factors. I think it was important, and I'm sure some of you have been following that very closely, in these markets, financial discipline was extremely high during the years before the pandemic. Therefore, the initial situation was characterized by budget surpluses or reduced indebtedness, which meant that great potential was available for support measures and for coping with the crisis. Another point needs to be mentioned here. I referred to Croatia earlier. The economic structure in these countries is different from Austria or Croatia. Tourism is far less important. And therefore, the impact of lockdowns and restrictive measures were less severe. In addition, on account of the division of labor and economic interaction, the steep rise in industrial production had led to positive performance, particularly in the Eastern countries of the European Union. And one last point which I'd like to mention in this context, and this is important for the development of banks in these markets, we had a nice upswing before it was interrupted by the pandemic. But there were no major fault lines, no major disturbances. And this makes us confident that we can cope with this crisis well. Governments, parliaments also took substantial measures in different forms in different markets, but they helped a great deal everywhere. Of course, there were effects that were important, debt moratoria, for example, which for businesses and for retail customers at the beginning of the pandemic were particularly important. Also, from the emotional point of view, at a time when people are worried about their health, about their own business, it's important not to have to think too much about the financial situation. Of course, for banks, this creates a great deal of uncertainty because you never know how individual borrowers are doing. Are they getting through the crisis unscathed? Will they be able to repay their loans at the end of the debt moratoria? Our employees used this time for intensive contacts. We talk to each and every business several times, and we also talk to many of our retail customers. So during that phase, we not only had an excellent overview. In the meantime, we've also gained confidence and are now aware of the fact that numerous customers, out of prudence, make use of the moratorium. But only a few of them will have problems repaying their debt at the end of the moratorium. One last point. Central banks at an -- reacted at an incredible speed, reduced interest rates to an enormous extent. I can't remember a time when interest rates were reduced so drastically at such a shorter period of time. In countries where interest rates were already at 0 or negative, other measures were taken. Asset purchase programs were launched. To an extent, that is unique in history. Well, ladies and gentlemen, that had positive economic effects. But there are 2 groups who have to pay the price. One group are savers who deposit money with us, and the other groups -- other group, other banks because now they are fields of business where we can't earn money. This is reflected in our figures. And now let me move on to these figures. Erwin Hameseder already pointed out that we are looking back to difficult times, a performance which is below our expectations. But we have to be modest and take note of the fact that the initial situation of RBI at the beginning of the pandemic was excellent. And our performance has only been possible thanks to this excellent starting position. Our net income is down by 1/3 from the previous year to EUR 804 million. We have a group return on equity of 6.4%, which is way below our level. Our CET1 ratio has remained almost unchanged at 13.6%, which is slightly above our minimum target of 13%. And the net provisioning ratio is remarkably low, considering the extent of the slump. It's 68 basis points. This is particularly good because more than half of it is due to the so-called post-model adjustments. Those are forward-looking provisioning measures, things you may expect on account of the economic situation but that are not yet reflected in customer behavior. As Mr. Hameseder said, because of the economic downturn, because of the restrictions, we see our revenues go down. Net fee and commission income has gone down by 3%. Net interest income has gone down by 5%. However, you have to bear in mind that this is an average for the year. And the difficulties due to the pandemic only began in the second quarter of 2020. The first quarter of 2020 was excellent. This is important in order to assess the basis for future developments correctly. We have been able to reduce costs. Personnel expenses and nonpersonnel expenses have gone down. When we take a look at the balance sheet, this is probably what you expected to see. Loans and advances to customers have remained almost unchanged, expressed in euro. In the local currencies, however, we succeeded far more, far better. But individual currencies devalued considerably. And that means in euro, that loans and advances to customers have gone down. At the same time, we can see that liquidity has gone up enormously amongst older customers. And here again, FX developments come in amongst older customers have gone up by 6%. And markets are much more equipped with liquidity, as is reflected in amongst older banks. Ladies and gentlemen, this is a challenge for banks, but it's also an essential source of optimism, optimism that makes us look to the coming quarters with confidence. And I'm sure money that is in the hands of our customers will find its way back to the market. Depending on the lockdown measures, demand for loans is subject to substantial fluctuations. And this the second argument in underpinning my optimism. When the lockdown measures ends, when a high level of immunization has reached -- has been reached among the population, we will soon be returning to a normal economic activity. And that will be felt in all our markets. I already mentioned the CET1 ratio. It's significantly above the regulatory requirements. Let's take a quick look at the development of CET1. FX effects had a substantial impact on the capital ratio. As regards credit risk provisioning, the economic downturn resulted in reassessments. And each and every customer is rated every year. And when our customer's net income goes down, when their indebtedness goes up, we -- this is reflected in the rating and in credit risk provisioning. There were some factors that helped us in the regulatory area. For example, a modest attempt, but still an attempt, to create a uniform basis by international comparison. The reduction of software deductibles was reduced, which has a positive impact on capital. And as it should be, both bank-retained earnings, of course, also contributed to the improvement. As Erwin Hameseder mentioned, we will submit a proposal to the AGM to distribute the maximum dividend. In the figures you can see here, in the CET1 ratio, it's also been taken into account that the EUR 1 per share, which we wanted to pay out last year already, will not be counted towards the regulatory equity ratio. And we hope that it can be paid out toward the end of the year. As you may have gathered from what I've said so far, we had a satisfactory development of nonperforming loans, nonperforming exposures. What you can see here may be surprising. We're below 2% with a very good coverage ratio, and this makes us optimistic as regards the coming quarters. And what about the Czech Republic? You know our strategy. The Czech Republic, as far as loans to customers are concerned, it's our biggest subsidiary. We have a leading position in digitalization and cross-selling. And in 2020, and for that, I'd like to thank the employees of our Czech bank and our colleagues on the management Board, we launched an efficiency initiative. We had an opportunity to acquire the Equa Bank, and we succeeded in doing that. This is going to strengthen our market position in the Czech Republic, and we expect to have 1.75 million customers by 2023. A bank's success depends on the number of customers, and I think we are doing rather well. A few words about the Equa Bank. It has 480,000 customers. 300,000 customers are regular users of digital banking services, and 50% of revenues are digital. It's a good fit with our Czech bank. There will be synergies in terms of technological development and in terms of know-how in certain market segments, which Equa has. Of course, there will always be optimization possibilities in the branch network because there are branches close to each other. So synergies can be lifted there. ESG is an essential element in this strategy of RBI in the public debate and in the development of markets. As Mr. Hameseder said, we are the biggest issuer of green bonds in Austria. We're proud of being #2 in the arrangement of green bonds and sustainable bonds in Central and Eastern Europe. We have strict requirements as regards coal for thermal power plants because we want to contribute towards the attainment of the climate targets of the European Union. And each and every management Board member has his own ESG target to attain. As regards the guideline for coal for thermal power plants, we want to reduce that and exit from coal by 2030 because we think that customers can either restructure or redeem. It's also been said that we have exceeded to the UNEP FI Principles for Responsible Banking. This is a self-imposed obligation, and I'm sure we're going to attain this target. Ladies and gentlemen, I'd like to conclude my presentation with an outlook. I spoke about the impacts in 2020. The delays in the recovery, of course, mean that in 2021, we will not be able to compensate for the decline in 2020 in our markets in 2021. In Central Europe, we will be able to almost compensate the downturn, not quite in Eastern Europe. In Southern Europe, a region which proved to be quite resilient, we are confident that there will be growth in excess of the downturn in 2021. In fact, everything depends on the further development of infections. Of course, we are placing great hopes in the vaccination strategies of the countries. We hope that a major part of the population will be vaccinated in the second quarter and that further progress will be achieved in the third quarter. Of course, governments are subjected to criticism, a lot of criticism. But I think the flexible way of dealing with lockdown measures is the right one. The economic downturn is less severe than it would be if other scenarios had been chosen. I think given the developments I outlined, economic growth and loan growth will be moderate in the first half of 2021. But it should pick up in the second half. As regards credit risk provisions, we remain prudent. We want to stay with the 75 basis points. Perhaps we can be more confident and more optimistic in the second half of the year. But we have to be prudent because government measures have to be taken into account, which now still have a positive impact. But they are going to expire as the pandemic ends. The cost-to-income ratio, given under pressure on net interest income, is a difficult issue, but we stick to our target of reaching less than 55%. And we may succeed in reaching that target already in 2022 if the economy recovers. As regards profitability, we expect 2021 to be better than 2020, and we stick to our 11% target. As regards return on equity, the CET1 ratio target is 13%. And for the coming years, this means a confirmation of our dividend policy. We intend to pay out between 20% and 50% of consolidated net income. And this takes me to perhaps the most interesting part for our shareholders 48% per share (sic) [ EUR 0.48 per share ], this is the dividend proposal for today, and the dividend accrued of EUR 1 per share hopefully for the fourth quarter. Now this is an outlook for our financial calendar. Once again, thank you very much for having joined us. Thank you for being loyal to RBI and stay healthy.

Shareholders, I'd like to thank Dr. Strobl most cordially for his report on agenda item 1. At this point, I can only thank everybody. Once again, I take this opportunity once again to express my sincere thanks to the management Board and all staff members of our bank, to thank them for the work accomplished in the year of report. I give the floor once again to Mr. Strobl, and he will give us a report pursuant to section 65, para. 3 Stock Corporation Act on holdings of own shares. You have the floor, sir.

Thank you very much, Erwin. So ladies and gentlemen, with your permission, I will now read out this report from my seat here. That is the report on section 65, para. 3 of the Stock Corporation Act on holdings of own shares. At the regular General Meeting of the company of 20 October 2020, the Board of the company was authorized to acquire own shares pursuant to section 65, para. 1, sub-para a of Stock Corporation Act and to redeem them if and when necessary. This authorization to acquire own shares has not been made use of by the management Board to date. RBI, therefore, has 322,204 own shares. Raiffeisen Centrobank AG, a subsidiary of the company, for the purpose of market making, holds currently 207,907 RBI shares; in the business year 2020 altogether, 14,085,841 shares, representing a share of 4.28% of the share capital of the company. And the subscribed capital in euro was EUR 1,003,365,844.05 or 328,939,621 shares. And an amount of EUR 226,480,549 were bought or acquired and 14,041,000 shares representing 4.27% of the then share capital and an amount of EUR 220,080,984 were sold. Altogether, the company and related companies currently hold of 530,111 own shares, which is 0.6% of the share capital of the company.

Thank you very much. Ladies and gentlemen, shareholders, I would like to inform you that the public broadcast of our AGM will end here. I'd like to say bye-bye to all listeners, and thank you for your interest. We have now 1-minute break. [Statements in English on this transcript were spoken by an interpreter present on the live call.]