Q1 earnings above exp. but guidance has been revised

• RBI’s reported net income came to EUR 1,455 mln, 2% ahead of the consensus. The quarter was marked by lower contribution from Russia partially due to ruble depreciation and very strong Core operation despite another round (EUR 109 mln) of CHF litigation costs.
• NII down by 3% q-o-q and increased by 5% y-o-y as a result of EUR rates feeding through interest income while deposit repricing stabilized in CZ, RO. NIM as a result also increased to 2.98% or 23 bps y-o-y. Weaker net F&C was a result at Core business reduction as q-o-q fees of Russia increased by 12%. In the first quarter, risk cost was very low.
• Other operating income was low y-o-y because of the sharper reduction in the Group’s own credit spread as a consequence, the negative valuation results increased EUR 29 million to minus EUR 36 million.
• Operating result improvement was also attributed to lower OPEX, apart from FX tailwinds in RU, lower PR and promotional and office expenses in the first quarter also caused a quarterly drop. Overall, operating result was 9% lower q-o-q.
• The NPE ratio, at 1.9 per cent, remained unchanged q-o-q and the NPE coverage ratio slightly decreased by 1.6%ppts to 50.1%. Risk cost guidance for the Group is unchanged and around 50bps at Core.
• Capital ratio: Fully loaded was at 17.3%(CET1), excluding Russia assuming zero P/B deconsolidation would be 14.6%.