Raiffeisen Bank International AG ($RBI)

Good afternoon, ladies and gentlemen, and welcome to the Q1 Results 2026 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 Strobel, Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today for our first quarter update. Alex and I are delighted to be joined by Kamila Makhmudova , our CFO and Board member since January this year. This is a very exciting time for RBI, and we are very fortunate to have her on board. Let me start with an overview of our key figures in the first quarter, and I refer to Slide #4 in our presentation. The operating result of the group, excluding Russia, came in at EUR 760 million, up 3.2% versus the last quarter and up 12% versus the same period last year. This speaks to the strength of our core rating business, driven by the demand, stable margins and the strong fee business. Consolidated profit stands at EUR 209 million, largely impacted by effects below the operating results. A large portion of the 2026 bank levies booked in the first quarter, and we will not see the same effect in the coming quarters. Risk came at 36 basis points, and our guidance for 2026 is confirmed around these levels. Provision in Poland in Q1, Reapit, above assumed duly run rate. Nevertheless, our full year guidance here is unchanged for now. We confirm our return on equity target for the group, excluding Russia at around 10.5% despite an optical low 5.2% this quarter. Finally, our CET1 ratio Assuming a full loss of the Russian equity stands at 14.9%, reflecting decent loan growth in the quarter. In recent weeks, we have announced 2 strategic transactions, which have the potential to improve our market position in 2 key markets, and we comfortably fit in our capital plan. Let's take a closer look at each of these. I'm turning to Slide 5, and we want to talk about Romania. The acquisition of Garanti in Romania. We announced at the end of March that we intend to acquire this bank in Romania and merge with our own business there, rationally straightforward. We are very positive about the Romanian market, and our teams there have done a remarkable job for many years, consistently delivering a market-leading return on equity. We have witnessed some consolidation in the market, and we clearly see the benefits of scaling up. With this transaction, we break into the top 3 or 4 in Romania and add over 200,000 new active customers. The business case is also straightforward, whereas the integration cost will largely be booked in 2027. The profit accretion will be visible as early as 28 million at around EUR 90 million and increasing thereafter. The impact on RBI CET1 ratio, excluding Russia, is around minus 60 basis points and will materialize in Q4 later this year. We believe that we are paying a reasonable price for a good asset and which our teams in Romania will do an excellent job integrating it. My colleagues will update you on the progress in coming quarters. And with that, let us now move to my next slide, 6, Addiko. Let's take a closer look at the voluntary tender offer for Addiko, which we announced in early April. First of all, I am pleased to announce that our offer is being reviewed by the Austrian Decor Commission, and we expect it to be made public at the latest on the 19th of May. We intend to acquire any and all article shares for EUR 23.05, subject to achieving a minimum of more than 75% of shares outstanding. We commissioned an independent valuation and our 23 purchase offer represents a 20% premium over the intrinsic value determined by Ernst & Young on the basis of public available information. We also announced that we plan to enter into a transaction agreement with 1 of Addiko's shareholders at the group based in Serbia. Under the terms of this agreement, if the voluntary tender offer is successful, RBI is committed to selling 4 of the co subsidiaries to Addiko. These are the banks in Serbia and Montenegro and 2 banks in Bosnia and Herzegovina. For completeness, I should mention that this agreement does not require the group to participate in the tender offer. It's only binding on RBI if the tender offer is successful. Addiko Group owns just under 10% of Addiko directly and has entered into share purchase agreements covering another close to 20% or so. Although these shares purchase agreements have not been completed. For the purpose of this transaction, it is our understanding that a total of 29.59% of Addiko shares attributed to Ulta Group. We appreciate that this tender and envisaged carve-out is uncommon, and I would like to spend a few words on the pricing mechanism, including in the carve-out. This mechanism has been designed to ensure that all Addiko shareholders are treated equally. The carve-out price for the 4 non-new banking subsidiaries will be floored at the level which reflects the same price to book multiple for which we are acquiring Addiko Group. We will also ensure that Addiko Bank obtains an independent and individual valuation of each of the 4 banking subsidiaries to be carved out. The purchase price offered to it will be the higher of the 2 independent valuation or the pricing using the floored price book multiple. The applicable mechanism will be determined jointly for all the carved-out subsidiaries. If any of the 4 subsidiaries is sold and transferred at the independent valuation an additional payment to Addiko shareholders who tendered their shares in the takeoff over offer will be made to compensate for the difference. We believe that with this mechanism, all shareholders of Addiko will benefit equally from an increased fair market value of the carve-out subsidiaries. Let's now look at the rationale and impact on RBI. We have communicated an initial impact of around 45 basis points on the CET1 ratio, excluding Russia. I should mention that this impact will depend on the opening balance valuation. This means that in the event of any fair value adjustments, the initial CET1 impact could be higher. The final impact is expected to be much lower, however, following the carve out of Serbia, Montenegro and Bosnia, Addiko. Viewed comprehensively and assuming a successful completion of the carve-out, this transaction would lead RBI to become the fourth largest bank in Croatian reenter Slovenia for a very modest 10 basis points impact on RBI CET1 ratio, excluding Russia. Similar to the acquisition in Romania, we expect the bulk of the integration cost to be booked in 2027 and visible profit accretion in 2028. In the coming days, we expect to sign the transaction agreements and to publish our voluntary tender offer. We also look forward in the coming days to engaging with Addiko shareholders. We believe that our takeover offer comes with a rather high transaction certainty and that for many stakeholders, our proposal provides a solution to a long-standing problems. Once the offer is published acceptance periods last 10 weeks, by end of July, we should have a good idea if we are successful in achieving more than 75% participation. If we reach the minimum acceptance quarter, the acceptance winter will be extended by 3 months. In parallel, we will seek the necessary regulatory approvals. According to this timeline, we expect settlement and closing in Q4 this year. Let me stop here for now, and I'm sure you will have questions on these topics in a few minutes. Let's move to Slide 7, Russia. We are making progress in reducing the business in Russia, and first of all, I think you might have noticed that we adjusted our reporting and especially in the loans to customers. We now exclude loans to general government, which are, in fact, placements with the Russian deposit insurance agency. These are so-called C accounts and refer to coupons and dividends paid by Russian corporates and blocked for investors located in what the Russian authorities defined as unfriendly countries. Russia acts as a paying agent and received the coupons and dividends from Russian corporate customers, and this required to place these with the Russian deposit insurance agency. There are a report -- they are reported as loans to general governments and the loans to customers on the balance sheet. Since June 2024, these have increased from 0 to almost EUR 2 billion to date. DC account volumes are excluded from the rundown targets agreed with. I believe that this adjustment reveals the true scale of run down since the start of the war, our loan book is down 78% in ruble terms, and we now have less than EUR 2.25 billion in euro terms loans remaining. More generally, all the restrictions, which have introduced to Russia will remain in place for the foreseeable future. I'm sure you will also ask for an update on our claim for damages against user. First of all, allow me to repeat what I told you last time. We have not filed our claim yet but we will absolutely do so at the time of our choosing. We continue to explore solutions, which limit the risk of retaliation on our business and equity in Russia. Progress has been slowed but we believe it is our duty to explore all possibilities. If we now move to Slide 8, the macro development. What you find here is that we have adjusted our forecast due to the geopolitical conflict. And with that, I would also move to Slide 9, inflation and rates. And you see here also some few adjustments. We believe that in the core of our regions, the non-Europe countries. There is no rush to increase rates but maybe rate decreases will slow down a little bit. We have built in a little rate hike from the ECP, maybe 2 steps of each 25. Let me now move to Slide 10, our outlook. And we confirmed the 2026 outlook largely unchanged since last time. Of course, the CET1 ratio is adjusted as this reflects the 2 acquisitions, which we plan to do. And Kamila will discuss our outlook, CET1 outlook in more detail. And with that, let me hand over to Kamila. Kamila, please.

Thank you. Good afternoon, ladies and gentlemen. I'm delighted to join you today, and I look forward to meeting many of you in person in the coming months. Let's turn to the key P&L and balance sheet developments this quarter, stating with the overview slide on Slide #12. We Loans to customers are up around 3.5% in the quarter, driven by encouraging trends across most of our markets and in line with the good momentum which we experienced in the second half of the last year. Net interest income up 2% quarter-on-quarter, whereas fee income was down 2%. On fees, there is always an element of seasonality in Q1. When comparing to the same period last year, we see an improvement of more than 11%, and we expect another decent increase this year. OpEx were stable quarter-on-quarter in most of our markets, except for Austria. In Q1, head office suffered from a base effect in Q4 last year, which included a few positive effects in Q4. There is also a small one-off from the higher deferred bonus provisions. More importantly, we can confirm our guidance for financial year 2026. OpEx at around EUR 3.6 billion, slightly above 5% year-on-year increase, an improvement of cost/income ratio to around 52.5%. Let's take a closer look at each of these, starting with NII on Slide 13. As mentioned, NII is up 2% on the quarter, driven by further balance sheet growth in the core markets. Rates and margins remained broadly stable. Looking ahead to the rest of the year, we should expect less headwinds from the coming key rates with perhaps an exception in Hungary. More encouragingly, the rate development has changed noticeably since the beginning of the March. Curves have steepened, which means that we will be rolling our model books into a better rate. And we might even see some rate hides, which are not -- which were not expected earlier this year. For now, we have chosen to keep our NII guidance unchanged at around EUR 4.4 billion, excluding Russia with an upside between EUR 50 million to EUR 100 million, depending on how rates, volumes as well as customer behavior will develop. Moving to the fee and commission income. As I mentioned, we saw a 2% decrease in the quarter but 11.4% increase over the Q1 last year. I'm happy to report that the increase is broad based, coming from all key products across all markets. Also here, we confirm our guidance of EUR 2.1 billion. Moving to the balance sheet. The loan growth specifically, the good trend which we observed at the end of last year continued the first quarter with 3.5% growth in the quarter. Loan portfolio is now 9% larger than at this point last year. In retail, we see 2% growth in the quarter with very good trends in consumer loans in all of our markets. Personal and consumer loans are up 16% compared to the March last year. And in the first quarter, new business was particularly strong in Czech Republic, Slovakia and Romania. In mortgages, we see 7% growth year-on-year, while new business generation in Q1 was a little bit slower than Q4. It remains to be substantially higher than in all of the previous quarters last year. Here, I would like to highlight the Czech Republic, where Q1 origination is up 15% versus Q4. The corporate book is up 2% in the quarter and 8% year-on-year with all products contributing very nicely. In Austria, I should flag that a large portion of the reported loan growth is coming from reports and other short-term nonstrategic business. In the core of the business, the actual growth is closer to 1%. Focusing on countries. Clearly, the Czech Republic stands out with 2.7% growth. And if you consider the weaker Checaruna in the quarter, loan growth is actually closer to 4%. Likewise, Slovakia, Romania and Hungary grew at similar rate. Looking ahead of the remainder of the 2026, our loan growth guidance is confirmed at 7%, and this excludes any of the announced acquisitions. Some of the short-term business will revert, and we will sense that the torrid growth rates in retail might ease up a little bit. Finally, the macro uncertainty cannot be ignored. On our macro outlook slide, you see that we have revised GDP for 2026, and we cannot exclude that this might feed to our corporate loan demand. Let's briefly jump to the Slide 16 and take a look at the deposits from customers, which continue to tick up nicely into the quarter. Included is the 5%, which you see here. In this 5%, we have some effects from repo and short-term activities, especially in head office in Czech Republic. More relevant, however, is retail deposits, which are between 1% to 2% up in all of our markets. Considering how much these have contributed to our margin and NII improvement, we are encouraged to see these trends continue. And with that, let's now take a look at the CET1, Slide 17. We can report a core CET1 ratio, excluding Russia and just inside 15%. As reported last time, there was a change in the Russian operational risk treatment on January 1 with the impact of 29 basis points. So from starting point of 15.2%, the development in the quarter is largely coming from the loan growth and the dividend accrual. Moving to my next slide and the assumptions for the worst-case scenario in Russia. At this point, you are very familiar with the approach, and there is little for me to add, however, I would like to add in 1 point circling back to the Russian operational risk, which I just mentioned. In Russia worst-case scenario, we do not assume any immediate relief from the [indiscernible] coming from our Russian business. This is a very conservative assumption and has an impact of 114 basis points. To put it differently, if you -- if we were to lose our Russian bank and obtain relief from the operational risk, our CET1 ratio would be 114 basis points higher than shown here. On my next slide, I'll spend a few minutes on our CET1 ratio going forward. On the left-hand side, this is how we think about the capital generation, largely driven by earnings in the next 9 months as well as some balance sheet optimization, including further securitization. And on the right-hand side is how we think about capital allocation. Portfolio development is largely driven by loan growth, but also includes possible rating migration. We have, of course, included 2 acquisitions, which we are targeting for the later this year. As Johann mentioned, there remains to be some uncertainty as to initial capital impact of the Addiko takeover subject to the opening balance valuation. For 2026, despite strong loan growth in M&A, we continue to assume a payout ratio of 40%, equal to roughly EUR 1.8 per share. This is what we accrue in our CET1 ratio in Q1 through Q3. [indiscernible] Q4. More generally, at 14.3%, we will be slightly below our medium-term target of 14.5%. Clearly, we intend to revert back to 14.5% in the following quarters. Solid capital buffers have been built up over the years, and I believe that the current opportunities were on the expense. Some of you might know that I spent a large portion of my career in emergence and acquisitions, leading RBI corporate development. Building on this experience, I am a firm believer in the merits of organic growth. I will be the first 1 to say that acquisitions need to be opportunistic always with a very careful eye on the valuation. Capital allocation will be 1 of my highest priorities as CFO, and you can count on me to pay very close attention on how we deploy it. There are no changes in our capital requirements shown on Slide 20, and I will skip ahead to Slide 21, NREL and funding plan. Starting with the NREL Resolution Group Austria. From January, a subordination requirement has been added now at a level of 26.69% of the 3 years. This subordination requirement will not materially change our funding plan. First of all, we currently run a comfortable buffer with eligible subordinated liabilities of 22.78%. Furthermore, our stock of our capital instruments, CET1, AT1 and Tier 2 largely satisfied with subordination requirements. Structurally, this means that we no longer. That we will only require modest amount of senior nonpreferred. Moving to funding plan. It has been a busy start of the year both in Vienna and in the subsidiary level. Looking ahead for the rest of the year, Out of the head office, we are looking for a possible Tier 2 ahead of the next year maturities and after some possible senior preferred depending on the loan growth. In Slovakia, Satra Banco will look to issue senior preferred for MREL purposes in the coming months and the covered bond after the summer. In Romania, scheduled maturities as well as acquisition of Garanti Bank will drive issuance domestically and probably in euro benchmark format also after the summer. Moving to the final slide and the legacy portfolio in Poland. In the first quarter, we booked EUR 77 million of provisions. This is in part driven by temporary effects, which are expected to reverse later in the year. There is also an element of volatility as the model reflects changes in FX and Polish interest rates, which are used for discounting. This means that the provision through the income statement will not be linear every quarter. In Swiss francs, the trend of new litigation cases is very much in line with the downward assumptions in our model, both for active and repaid loans. In euros, we do not have the same propensity model, and we base our provisions on the absorbed inflows. These have ticked up slightly, but we are still within the range of our expectations. Accordingly, our guidance for 2026 is unchanged at about EUR 200 million. And this is what we have booked into ROE targets. With that being said, we have been rolling out a range of settlement offers across the portfolio, including in euros. In the coming months, we will see to what extent this is possible to accelerate the resolution of this legacy portfolio. If we find it cost-effective and legally found ways to bring forward an end to this issue, we certainly will consider that. I would like now to hand over to Hannes for the risk report. Thank you.

Thank you very much, Kamila. Good afternoon, ladies and gentlemen. Thank you for your interest this afternoon. There are 2 topics which I would like to update you on today. The first, of course, is the geopolitical environment and how we think about this in our portfolio. The second is a brief walk-through of our provisioning in the first quarter, which is illustrated on Slide 25. Let's start with how the events in the Middle East over the past 2 months have impacted our portfolio. Direct exposure is negligible and no direct impact or risk costs to report. More generally, we are looking at second round effects, including higher oil and gas prices, maybe even shortages. The affected industries are the ones you might have expected. Oil and gas traders, construction, materials and mining, chemicals, automotive and so on. We have reviewed 5 individual customers across these industries and updated credit ratings were required. The impact so far is very limited. We have downgraded a handful of customers for a net exposure of just around EUR 500 million. Beyond that, a slightly larger list of customers have been put on the watch list still only representing around EUR 800 million of exposure at default. All to be clear, we are talking about a watchlist for a potential rating review and not invent or even stage 2 shifts. For over 90% of our exposure in the affected industries, there is no action dated, and we do not expect rating downgrades from today's perspective. This is due to a combination of factors. Supply chains are decently diversified. Cost pass-through is largely expected. And finally, we see very good hedging policies on individual customer levels. Clearly, this is encouraging. The bigger question is how long this will last and how high energy prices can go if the Strait of Harmuz remains all but shop. To this effect, we have also conducted an internal stresses where oil for its far above current level with the expected severe follow-on inflation and GDP drop. Clearly, the result would be harsh but still better than the impact we reported in last year's EVAS presides, and where we rank in the stock fear among European banks, overall demonstrating the robustness of our portfolio against further adverse developments. In light of all these uncertainties, risk cost guidance remains unchanged at around 35 basis points. Still on this page, you will see that our stock of overlays is largely unchanged at around EUR 400 million for the core of the group, excluding Russia. Let's now take a look at the risk cost in Q1. Turning to Slide 25. Starting with the first column where we show net releases in stage 1 and 2. This needs to be looked adding construction with Stage 3 risk costs. If we were doing our job correctly by the time a customer reaches Stage III, there should already be a decent amount of Stage I and stage 2 provisions booked. The shift to Stage III leads to a release of the stage 1 and 2 provisions and new provisions in Stage 3. This is, to a large extent, what happened here. I could also mention some relay from securitization just for the sake of completeness. At the same time, the 3 risk costs of EUR 62 million. I have out evenly split between retail and nonretail, with the nonretail defaults coming from the C&M segment. The biggest swing is coming from the macro model update with allocations of EUR 74 million, excluding Russia. You saw at the beginning, the precision is softer GDP inflation forecast across all our key countries. These same trends are captured in our macro model and led to increased provisions in Hungary, Slovakia, Romania and Czech Republic. On the positive side, if the upswing in 2027 is confirmed, then some of these provisions could only be temporary. Ladies and gentlemen, we're opening the floor for questions. I would like to thank our CEO, Dr. Johann Strobl for the many years presenting sharing and explaining the deep insight to the financial performance and dynamics of RBI Group. Johann thank you very much. We all learned so much from the way you share your thinking. And now you al, we're ready to take your questions.

This comes unexpected. Moderator, please give us the questions.

[Operator Instructions] We will now start with our first question, and this is from Benoit Petrarque from Kepler Cheuvreux.

Yes. Johann, for your very strong insights and all the best, obviously. So just a few questions on my side. the first 1 will be actually on the net interest margin, which remains very stable actually in the quarter. So I was wondering if you could comment maybe on whether that's a trend you expect to continue into the coming quarters. So roughly stable net interest margin. And I was wondering if you could also comment on potentially competitive pressure you do expect in the coming months. Some competitors talked about a bit of pressure on liability margin in some countries. So I was wondering if you've seen the same trend. The second question is on loan growth. Very strong loan growth in the first quarter at plus 3% quarter-on-quarter. When you look at the macro developments, do you expect your loan growth momentum to remain positive? And are you still comfortable with the 7% loan growth target for the full year. So that's number two. Number 3 is actually on the fees because you've got a very strong start of the year on the fees. You've not upgraded the guidance but if we analyze Q1, it seems that your fee guidance is actually quite conservative. So I was wondering if you expect something negative on the fee side as soon this year? Or Yes, it's just a bit of conservatism you prefer to put on your side at the beginning of the year. So those are my questions.

Thank you. First, let's come back to NIM. Yes, we do expect the NIM to remain largely stable at 2.3% for 2026. There might be a small fluctuation in 1 or the other market but overall, nothing material that would move any needle for the entire group. So when you're talking about the competitiveness and what we observed in various countries, I think it's worth mentioning 3 countries, first of all, Romania. We observed some pressure on the asset side from the competition, which led to a lower average margin across credit products, most personal loans and specialized finance -- in addition, we had MREL issuance in Q1, which also weighted on NIM. On the other hand side, Q1, we have a lower number of days, which also add into a bit lower performance. In Czech Republic, this is a traditionally very competitive market, and we successfully attracted new deposits in the last few quarters to attract new customers, thereby accepting some pressure on the liability margin. Overall, we do, however, not expect that this will have a very meaningful impact over 2026, and we see that the NIM will only slightly be lower compared to 2025. And the last country to mention is Croatia, quarter-on-quarter decrease, yes. So it was driven by repricing of the -- on the liability side. Overall, we also do not see a broader trend here. So we expect that NIM is relatively stable. Loan growth, your second question. So on the loan growth, indeed, we show quite a good development in Q1 plus quarter-on-quarter. But as I mentioned, that there is a lot of short-term repo transactions, so at about EUR 1.2 billion. So if we adjust for these terms, loan growth was about 1.7%. And it's still a positive development and both in head office and in the network. But taking this into account, we feel comfortable with the guidance of 7% for this year on the loan growth. When it comes to fee and commission income, I think to a certain extent, is a level of conservative. We confirm the guidance of 6% growth. Indeed, we've seen in the first quarter year-on-year growth of 11%. And -- but -- and we see some upside. So -- but assuming a similar trend like in 2025 the Q2 and Q4 average fee and income is usually higher by 9%, 10% versus Q1. So this is equivalent of the run rate of EUR 550 million per month -- per quarter, sorry, and this would bring maybe additional EUR 30 million to EUR 35 million upside.

We will now move to our next question. This is from Máté Nemes from UBS. Next question is from Ben Maher from KBW.

Three questions, please. First 1 is on the risk cost in the first quarter. I think in the additional information prior to the results. Are you guiding to EUR 59 million in Stage 1 stage provisions largely coming from the macro updates obviously booked EUR 74 million. I'm not sure as the like-for-like figures to compare against but just interested why -- what was the reason behind the larger figure? Second question is just on the deposit competition in Czech. You saw very good growth Q-on-Q but several of your competitors have flagged worsening deposit competition. Just interested in your thoughts on how you think that market is behaving. And then my final question is just on Russia. This still accounts for a large headline P&L comes up just under half of the PBT for the headline Group, a got interested in how you see that evolving for the remainder of this year as 2027.

Thank you very much. Let me start Ben, with the risk costs in our guidance for the full year. If we look at our macro models, shared also with this audience more than once the biggest relevant, statistically relevant factors, the GDP growth, our long-term bond rates, and for retail, also, of course, it's really vital to have a view on the unemployment rate. So these 3 is what is driving our macro dynamics in this you could say we put the new updated numbers into our model and then we came to this EUR 74 million. What you can see is on Page 8, and Johann was talking about our updated macro parameters in the countries which are most affected by this update is Hungary when allocating this microbe is hungry with EUR 30 million is love. In Romania, is around about EUR 10 million each. In a regular quarterly reporting, you would also see somewhere around Page 60, some further details on how we think about these macro models are in the impact. Thanks for the question, Ben.

I will comment on the deposit competition. Indeed, in the market, we see a very competitive environment. and especially in Czech Republic, which stands out comparing to any other markets in our jurisdictions. So in Czech Republic, we feel that we are generally benefiting from the current process, and we are gaining market share. We are currently paying a very competitive rate but with a number of conditions at that, we usually ask for a number of payments to be made or volume of investments has to be made. Also, we have to highlight the excellent mobile banking offering that is making a difference comparing to our competitors. We also see a very encouraging cross-selling trends. We're paying higher rates converting to the products like turnover and current accounts and consumer loans and even mortgages. Thank you.

Yes. And I'll take your third question, which is the contribution to the overall group profit from our bank in Russia. And yes, I could explain that we have -- you've seen it in the presentation at your steering approach, which are clearly shows the development of the bank, of course, also the contribution. But what you see is that focusing mainly or almost all on the core. You see that in the overall relevance, the numbers are of less importance. And of course, to see that it's consistently reduced over time. This in combination with probably lower interest rates will reduced the contribution overall. And finally, there is the specifics, the seasonality of the first quarter in the core groups. Unfortunately, we have so many bank taxes, which, to a large extent, have to be paid in the first quarter. So as I said, this will not repeat itself in the coming quarters. Then again, the relative part will change significantly. Thank you for your questions.

We will now take our next question. This is from Gabor Kemeny from Autonomous Research.

Thank you from me to Johann as well for all your contributions and the pleasure to be talking to you coming as well. And my first question will be on M&A. I mean it's interesting to see Raiffeisen's franchise evolving with the proposed acquisitions. On Addiko in particular, how confident are you that the tender offer we have been successful in it of another a counterbid being made for the same bank. My other question would be on your profitability, where I believe you commented that Q1 was depressed for a few reasons. But I think even if we adjust for this kind of upfronting, you were at an 8% or return on equity, if you could just walk us through the drivers of how you are planning to get to the 10.5% target for the full year, please? And just coming back to Hannes' comment on the sensitivity to higher energy prices, yes, I believe the EPA tests may have assumed a significant capital impact from a harsh macro scenario but just -- if we think about your core provisioning, how do you think it could evolve at these current energy prices? Any flavor on that would be helpful.

Thank you, Gabor. I start with your first question about Addiko. We cannot comment on the offers by the other competitor. We haven't seen it. We just have read about their announcement, which is of less detailed than what we have but what we know is that our -- we believe strongly that we can offer a very high transaction certainty. This is, I think, important for all of the shareholders as we had a quite difficult situation for the shareholders in recent months. And yes, I also explained that the -- 1 of the core shareholders Alta Group is not is not obliged to tender into our offer. But on the other hand, we know that last time he did not tender in the offer what was proposed at that time. And yes, we have an agreement if our offer is successful, then there would be further transactions in which we obviously is interested in.

On the second question on bridging the ROE. So first of all, we see a higher quarterly run rate for both net interest income and fee and commission income. First quarter is always the shortest and the impact from the number of days adjustment leads to a quarterly NOI rate closer to EUR 1.90 billion, excluding positive impact from the loan growth in Q4 which will come on top. So I've already mentioned that we have a stable margin at 2.3% and the growth for the year expected. Secondly, average fee and commission income in Q2, Q4 is usually higher by 9%, 10% versus the Q1, and that leads to a quarterly run rate of approximately EUR 550 million per quarter in Q2, Q4. And finally, I think we need to bear in mind the impact of the average equity when it comes to ROE. In Q1, the underlying average equity is at around EUR 13.8 billion, not reflecting the payout -- dividend payout which occurs in April. So for the year -- financial year 2026 estimation, the ROE and the calculation would be based on the underlying average equity at around EUR 13.4 billion. So that's how we reach it. I hope that answers the question.

Gabor, let me take the third question when it comes to bit of higher energy prices. As already indicated with regards to the question from Ben, we have in our macro models, the GDP growth, long-term bond rates and for retail portfolios, we also consider, of course, the unemployment rates. But if you would look at the function, you would see that the highest weight is on the GDB perception. We look in our sensitivities. And you also can see them on Page 66 in our quarterly reports towards 3 scenarios. We give the biggest weight to the you could say the going concern to the base case scenario and then we give 25% weighted pessimistic case and 25% to the optimistic case. So if in this distribution, we would see a complete reversion of the current situation and confirming again this positive GDP outlook, in which we have started towards this year. We would see a release of provisions of around about EUR 70 million. If the best mastic scenarios would turn out, which means the Strait of Harmuz stays closed oil price stays at elevated level. GDP going down, rates going even further up, inflation pressure is here to stay. We would have to use another EUR 135 million in addition. This is all what you can anyway find in the reporting asset starting onwards from Page 66. Just one thing, what is for me very clear, if really this negative scenario would turn out of this additional EUR 135 million, it's more than fair to assume that, in this case, also, we would use part of our management overlays to give you a complete picture. Thank you, Gabor, for your question.

We'll now take the next question. This is from Mate Nemes from UBS.

Can you hear me now?

Yes, we can hear you.

Excellent. Apologies for the audio issues. So First of all, I would like to first say thank you to Johann as well for his insights and kind help over the years. And my first question actually would be to you. You and your team managed Ara through a very challenging last 4 years and put the company back on a profitable growth path backed up by solid asset quality and RECONNECT from capital position. Did this call being your last one, and it responsible to delivery [indiscernible] in here. What are the key opportunities that you see for the group in the next 5 years in broad terms? What would be when it comes to RBI. That's the first question. And the second question would be a question for Kamila, and I'm looking forward to working with you. I was wondering if you could share some color on the rollout of in court settlement strategy for the FX made mortgage loans in Poland. What does this mean for your provisioning approach? You, I think, alluded to the fact that it might be a bit more volatile. But if you could elaborate a little bit on the details, that would be helpful.

I start again. Can you hear me? Give me, please give me a feedback if you can hear me.

We hear you loud and clear.

Thank you. So Matte, thank you very much for your kind words. Maybe I cannot repeat now my by many things, there will be another opportunity. I'd like to work with. Coming to your question I think you see in the numbers but I would not take quite a long period of time to talk I think the bank is in a very good shape, and I'm not talking about the financials but the skills which have been developed over the last couple of years, which you have seen in a fantastic organic growth I think the group is also very good in integrating whenever there as Kamila said, good opportunistic targets. So I'm please that we are in the right region for this good business, and I think we have a new fantastic management. So I think they will soon explain to all of you how the next couple of years will be. But I tell you the potential is really huge.

Thank you. I would address -- do you hear me? Just to check. Yes. Okay. to address the second question on the rollout of the settlement in Poland. We are now targeting much more broadly, both in Swiss franc but also in euros. We, of course, attempt to settle with those borrowers who are already in court but we're increasingly having programs to target the borrowers before they filed in court. As soon as we have some indication that they are intending to file, we approach them with an attractive offer. If successful, this could bring forward some provisions from next year into this year but it's too early to say. So for now, we maintain the guidance at EUR 200 million for 2026. Hope that answers the question.

We will now take the next question. This is from Chris Dubey from Barclays.

So hope you can hear me well.

Yes, we can hear you.

Thank you for bearing with us on long Russia questions. the calls and thanks for guiding us through this time. And I have 3 questions. Just starting first on the GC&M. I guess the NIM -- the NIM margin in the business seems to be very volatile. If you would -- if you can comment on how should we think about the NIM margin for GC&M business? And also the fee growth in business is very strong this quarter. And is that partly due to the off late, like you have done a few collaborations have kind of got a few joint ventures. Are those kind of bearing fruits for you in GCM. Second is on the NIM overall. I guess you talked about pressure points in Czech Republic with your liability margin in Romania on the asset side. Could you talk us through what are the positives which you are seeing for the NIM margin for the rest of the year? And lastly, third just on the steam. I know you haven't filed the claim. And then thanks and welcome Kamila thanks a lot for talking about 40% payout ratio. I guess, narrowing the range now for us to do the work. And in a sense, if you get -- if hypothetically, if the claim comes true, how would you be trying to allocate declaim money? And should we take 40% as a base for a dividend payer.

Let me first comment on the NIM in GC&M segment. So on NII side, the liability margin is under pressure in Q1, and we could fully compensate by volume -- we could not fully compensate by volume increases. And therefore, we see a slight decrease in Q4 -- Q1, sorry, at minus EUR 4 million. In addition, interest-bearing assets include a high proportion of low-margin business repo business, this is the short-term business, it can lead to some swings in NIM -- just for your information, we have reported a 3% increase in the in the volumes. However, as I mentioned already, the core business increase actually at 1.7% and the rest was rather a short-term repo business at a very low margin. And this repo business is EUR 1.2 billion, as I mentioned. On the full year basis, given that everything we know as of today, we expect that there would be no significant drop compared to year-end 2025. When it comes to your second question on the fees. Increase mainly comes from the strong debt capital markets business, institutional clients and sovereign issuances, which are up EUR 12 million quarter-on-quarter. Secondly, we saw a positive development in corporate lending primarily structured finance and the asset manager in Austria, so refreshing capital management. It's primarily driven by average fund volumes that increase. When it comes to year-on-year in addition to the mentioned drivers on the Q-on-Q development, we saw higher volumes from the banknote business on the back of the increased volumes, growth in custody and increased transaction volumes generally increased client activity in payment business as well. NIM generally, what positive you see for the rest of the year. I have mentioned that on the NIM side, we are stable relatively so. And here, we guide you through the NII of EUR 4.4 billion. So I don't see that there is a lot of NIM positivity but NII generally will be supported by key rates increase that we expect. And I mentioned already in my speech the sensitivity of the NII upside of EUR 50 million to EUR 100 million. As [indiscernible] I would give a thought to...

That's nice. That's very kind. So unfortunately, I have to say, I do not expect that we see the money in my term as CEO, unfortunately. But I think you can trust that the management team has a very, very strong understanding of shareholder wishes of decent capital allocation, and they have all the tools in their boxes. So I trust the team fully. And in the future, this are there to say I would also enjoy good dividends but this is up to the management. And 40% dividend payout ratio is answered by Kamila, but it sounds good.

Yes. We have confirmed a payout ratio estimation for 2026 at 40%. And which is roughly EUR 1.8 per share. And this is what we accrue in Q1 and Q3. And in Q4, we will review based on the development.

We will now move to our next question. This is from Simon Nellis from Citibank.

Thank so much for the opportunity. Just maybe 2 last remaining questions from me would be, can you just outline what are the drivers of the higher tax rate in the quarter, if there's anything else other than Ukraine. And what's your expectation for the effective tax rate going forward? That would be my first question. And I saw that it's very high fee income growth at the GCN division. Just wondering having that, and is that sustainable? Also NIM contraction of GC&M was also quite pronounced. If you could also comment on that and what the outlook going forward is for NIM in that division.

Okay. So first, let me comment on the higher tax rate. Higher tax rate is mainly due to the increased tax rate in Ukraine, which is up 50% from the 25% of -- this replaces the windfall tax, which was previously charged in the fourth quarter. Additionally, we have a bank live in Slovakia, which is booked in the income tax line. Overall, we currently expect that the effective tax rate a bit lower than 25% for the full year 2026. So there would be a realization after -- for the entire year. So how sustainable are GC&M fees. Currently, we see them as sustainable going forward in line with the 2025. As I've mentioned, Q1 shown that you see has increased interest-bearing assets due to a short-term business repo transactions, which are very low margin, and therefore, there is a pronounced difference in Q1 but we see that through the year, the DC& sorry, about interest income and [ commissioning. ] So on the DCNM fees, there were the fees were caused by business in primarily and as well as, as I mentioned, in the asset manager. Here, there would be a certain volatility to the extent -- I mean, to propose similar development throughout the year that we see probably difficult but we are very optimistic on the further positive development going forward. When commenting on the third question is the drop in NIM. This is what I started to answer. Here is primarily driven by the short-term business that we see in Q1, which are the repo transactions. And the new contraction generally driven by lower NII in the quarter. NII is down by EUR 3 million quarter-on-quarter due to slightly lower liability margin. It's dilution from the high proportion of low-margin repo business, yes. And at the same time, average interest-bearing assets were up, and this resulted to a relatively low NIM.

Next question today comes from Riccardo Rovere from Mediobanca.

And again, I just want to join gratings to for having compounded us throughout all these years and all this complicated situation. And maybe for in the first question. Maybe it's my fault, but I haven't read anything in particular with regard recently at least with regard to the possible unfreezing of Russian assets in Europe. Do you think that the change in the government in Hungary could eventually change and maybe speed up and this could eventually be a positive for you. I just want to know your opinion on this? Second question I have is for Karol say. Just on 5% that in your slide, you indicate as a medium-term target. When you say medium term, is what you have in mind this is the appropriate level of capital that RBI ex Russia should have as a sort of target? Or is what -- where you think the capital will land after Romania and eventually Addiko after the conclusion of all the transactions. Just -- and if it is the first one, why 14.5%, why not 14 or 15 or 13. Then I have a question for Hannes. This quarter, if I understand correctly, you charge the 7, if I'm not mistaken, on related to the macro update of the models. Now this is an exercise that is not per se and correct me if I'm wrong, a one-off, but maybe EUR 74 million in a quarter is a one-off, not by nature, but maybe by magnitude. But your guidance is unchanged at 35 basis points. quarterly charge around 36%, if I remember correctly. So implicitly, it's like you're saying that you expect some deterioration of asset quality throughout the rest of the year. And then maybe a final question, if I may, still related to capital somehow. One day, Russia should not be part of the group anymore is already consider not be part of the group anymore. Now is -- but still represents a fairly large amount of the profit of RBI is not immaterial at all. Are you planning to use the capital to replace Russia with other transactions, which basically means buying earnings. I was a bit surprised, honestly, to see 2 transactions one after the other in such a short period of time. And just to have an idea if that could be eventually a way of using your capital.

Yes, Riccardo, thank you for your questions. I mean, unfortunately, we have not been successful to convince the European government that it would be in the interest of Europe to unfreeze this shares. It's -- it's an interesting dynamic, which always, of course, when a new sanctioned package is under negotiation, decreasing would be a very, very clean way forward, bringing Esperia in Austria, the court is, and I have explained this many times creates some risks for us in Russia. We will not be able now to fully solve this or reduce this risk, but we are working on that as well. I mean the change in the government in Hungary, I think it's -- we assume it will now create the flow of funds, which had been blocked. Time is difficult but definitely this could be beneficial to the Hungarian economy to Russia itself. I haven't thought I find your way of thinking interesting. I have to admit I haven't thought and would not immediately expect something from this side. And with this, I would hand over to Kamila.

Thank you, Ricardo, for your question. We believe that 14.5% is a prudent level to which we run the bank, excluding Russia. This is almost 250 basis points above our SREP requirements, and we expect to be back on this level in the course of will dip as we've mentioned, to 14.3% at the end of 2026 but we will be building it up back to 14.5% throughout the year. Hannes, your risk question?

Yes. Thank you very much, Kamila. Ricardo, on the risk side, what is very important, let me distinct between the macro part of the provisioning and the overlay. The macro, as I explained beforehand goes very nicely with GDP, with long-term rates in this unemployment when considering the retail models. The overlays is where we accept that our current risk models do not completely comprise a current situation. An example, which I had to give, unfortunately, more than once in this setting is, for instance, a war situation like Ukraine, no modeling out there who can deal with this was and has it in the database memory, so to say. So that's the reason if I look at the EUR 103 million what we have printed in the Q1, and we deduct the overlays of the EUR 74 million. I was talking about the shift from Stage 1, Stage 2 to Stage 3. So releasing Stage 1, it's true because this was a company where we already have booked Stage 2 provisions, company defaulted. Therefore, we released it in Stage 1, Stage 2, and we had to build up a comparable number for the state III. And then I was also talking about that the total Stage 3 risk costs that we could split them up by about 50-50 in the retail, nonretail, the EUR 62 million. In the retail part, you could almost assume that for a full year, we have somewhere around risk cost for retail for the retail portfolio, around, let's say, EUR 180 million to EUR 220 million. This is what you have to assume in the remaining part, summing up to the part of the corporate side. I would not yet dare to speak about the duration, as you indicated because at the end of the day, if I take from the 1 or 3 total risk cost, I deduct the makers of EUR 74 million, and I should then also consider Stage 1, Stage 2. But we have at least EUR 29 million of additional risk costs or I said, Stage 3, EUR 31 million. So for me, this I cannot yet indicate a deterioration across the entire portfolio. It was even sharing that we have done a review of 500 group of connected customers and only a handful, we had to adjust our rating. We have put some others on the watch list. But for me, this would be way too early, Ricardo, already call out any structural deterioration. Having said all this, if the local situation in the Middle East start settling and year '27, '28, economic forecast is being confirmed. And here, we have a sort of a rolling model where the most actual update on macro, of course, counts the highest. We, as I also said in my introductory speech, part of this micro overlay hopefully could be released hopefully, I did not tie too deep, but this is my current way of thinking. So to reiterate, no confirmation that I see already a repression of the portfolio. Part of the macro overlay could be released by the year-end. If GDP and trade outlook has been confirmed towards year-end.

Yes, sorry, sorry, can you late -- last but not least, if I understand correctly, there is a question on the redeployment of the capital taken out of Russia. So here, we can look at it from twofold, yes. So one thing is redeployment of the capital, which is being from potential sales and so on and so forth. This is the timing is unclear, and the amount is not very clear. So we will talk about it when there would be a little bit more certainty. But when it comes to the second part of the recovery effort is the claim from Respira, so EUR 2.4 billion, which in damages we have a claim that we need to file. First of all, we need to bear in mind that it might take up to 2 years from the time we file the claim for the recovery. So any damages suffered in Russia will be rather a recovery will be in medium term. When it comes to how do we redeploy it, I mean it's always quite a standard toolbox. Some portion will be, of course, reserved for the dividend, quite a substantial portion should be reserved for the organic growth. We see a very good trend on the organic growth throughout our markets. And hopefully, that will continue in the midterm as well. I mean only to notice the personal loan growth year-on-year, 16% overall growth of the loan portfolio at 7%. So I think it's a very encouraging thing. And of course, M&A will be also part of the toolbox. And here, as I mentioned, we always have to be very careful when it comes to valuations. Currently, we see quite a high valuations in the attractive markets. So if you find an opportunities for successful and value accretive redeployment of the capital in the M&As, we will pursue them as you've seen it now.

We will now take the next question. This is from Robert Brzoza from PKO BP Securities.

During the presentation, I appreciated. Luckily, most of my questions have already been answered, except for one. Curious what has happened with the other and trading income in the Russian subsidiary, even though it's in a way gated, could you comment whether you have lost permanently some income stream there for what reason? Or this has been purely due to market conditions? .

Yes, we are aware or that we made you aware that our business is shrinking, and this also leads to a reduction in the trading income, of course, trade flows are changing also. So I think it's over time, a declining business. But I would like to say that it's -- given what we have, it's -- yes it's a combination of valuation and reduced business. And of course, you have a very volatile FX market. So it's not the end, but it's in a reduction.

Got it. So in other words, the revenue stream related to servicing is still, I suppose, intact, isn't it. .

Sorry. And could you repeat your late .

I was just wondering if this drop in the trading income because I don't know where you book it but according to the press commentary is you are making quite a nice key or trading result on the team servicing fees. So I was just wondering whether this drop is somehow related to this business line or not?

No. What we do is if whenever there are international gas payments, we asked for licenses from the U.S. as well as from the Europeans -- and this is it simply depends on the overall development of the demand for Russian gas. So this is -- but this I mean that's not -- historically, that was not a big money. And I don't think that it will be in the near future. So it's rather that it comes from mixed sources but declining, as I said.

[Operator Instructions] We will now take the next question -- this is from Riccardo Rovere from Mediobanca.

Quick, very quick follow-up. Again, on loan growth, if I may, 1 second. -- do you think that the robust loan growth that we have been seeing in the first quarter could have been somehow supported by corporations or in general, by the need or the will to upfront funding and liquidity ahead of possible higher rates in the future or more difficult macro conditions in the future somehow inflated by that? Or do you think it's organic, natural, robust underlying growth.

Ricardo, the , I think there was yesterday also a beautiful statistic out there from the where you have seen that if you look at PMA from the manufacturing sector, that some of the counterparts and the corporates are now beefing up their warehouses and their stock of goods. This, I think, was one. And the second one, as we indicated already in Q4, and many of you have asked Johann 2 or 3 times, if you're really sure that we can show this good trajectory we haven't already seen in our buyer plans that there was really good structural demand also on the corporate side. So I think it's threefold. It's what we have promised in Q4 is being now delivered. The second 1 is that working capital is increased and also sort of pre-loading of goods to be available. I think 1 again would like to experience a situation like in 2020 or 2022 to have any supply chain shortages. So these are the 3 things where we see such a strong support. But I would not just like to allocate it to the situation in Iran. We really had also a very good supported, but there is work started much earlier in the materialized in Q1.

Thank you. We now conclude the Q&A session. And with this, I hand back to Mr. Johann Strobl.

Yes. Thank you, operator. Dear ladies and gentlemen, as this is my last call with you, I want to thank you. It was a great time with you. I enjoyed all these calls but also the meetings, which I had with you personally, all the events. So there has been many all of your questions, I love very much. Your view on RBI is always very good, very detailed always excited looking also when to your assumption on the next earnings. And yes, I I'm deeply, deeply impressed how you understand and I wanted to thank you for all your efforts. You took and all the efforts you do to explain Yes. Your thoughts about our bank to your customers and our investors. So thank you for all this. I believe, as I could say earlier, the bank is in a very good shape. The cells what the banks have, the markets where we are in but also the new management team is very skilled, very ambitious. So I'm looking forward to see you somewhere, and I wish you all the best. Thank you. Thank you, operator, as well. Bye.

Thank you, and you may now disconnect.