Raiffeisen Aktie

Good afternoon, ladies and gentlemen, and welcome to the Q2 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. Michael Hollerer, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. I am very pleased to speak to you today, and I look forward to meeting you personally in the coming months. I also look forward to working closely with you in the years to come. While this may be my first investor call, I'm not new to the bank. Prior to my appointment as CEO, I have sat on RBI Supervisory Board for the past 4 years. Before that, I was RBI's CFO, and I've spent most of my career within the organization. I am humbled by the responsibility and confident in the future that lies ahead.

Before we dive into the results and recent developments, I would like to share with you my first priorities for the bank. Since March, I've been meeting with our leaders, both in Vienna and across the network. I have also met with our supervisors and many of our partners. End of May this year, I've launched a strategic review, and we are now finalizing our preliminary assessment. In the coming weeks, we will define clear ambitions together with the road map with tangible targets and deliverables.

At the end of September, this will be presented to our senior management. And in the course of Q4, the implementation will begin. I look forward to updating you on these developments at our next results call on the third of November.

More importantly, however, we will hold the Capital Markets Day in February next year, following our full year 2026 results. Much of what we present will be based on the strategic review, which I have just outlined. There are some key elements, which I can already share with you today. Based on my initial assessment, and will guide our ambitions and strategy.

First of all, RBI is ready for growth, and the time has come to execute on it. I appreciate that for the past 4 years, 2 major legacy issues have impacted the business in different ways. In our home market, Austria, growth has also been sluggish at times. What I see is that the legacy issues are behind us, that our capital base is strong and our balance sheet is healthy. I see a lot of potential to grow faster in our CE and SEE markets, and we are ready to reallocate capital to make this happen.

Furthermore, I believe that the SME and mid-market segment provides opportunities. In retail, there is huge potential for wealth management products in our region, and we will capture our fair share. I also see potential to streamline our products across all our subsidiaries, while also making them ready for AI and the future of banking. What I have also observed in our retail business is that we do an excellent job at acquiring new customers, where we can improve is on the next step, engagement. There will be a particular focus on reducing the churn in our portfolio, and I'm confident that this will transform our retail business.

Putting this all together, this means that we will grow our customer base, grow our balance sheet and improve market share in our key markets. This also means earnings per share growth, which brings me to my next priority, focus on profitability. I am familiar with the impact that the legacy issues have had on our profitability. And adjusting for this, I accept that the core of the bank is currently capable of earning a 13% ROE. I want [indiscernible] my words. This is not enough. Like each one of you, I look to our peers, and I see what is expected of us. I won't set targets here today or mention any numbers. but let there be no doubt. Improving the profitability of the core of the business has highest priority. I will take a very close look at efficiency and spending.

We intend to review and challenge some of our spending. I've also asked Kamila, our CFO, to review our capital allocation. and make sure that we are as efficient as possible here. This will include products, segments and geographies. It is, of course, exciting to think about redeploying the potential Rasperia windfall, but I first want to make sure that our capital allocation is sound and that we are efficient with the resources that we have.

In [GCNM], specifically, I expect us to be more selective with better focus on cross-sell and wallet share. I believe that growth and profitability will go hand-in-hand. Our drive for better efficiency will not prevent us from gaining market share and that better capital allocation will, in fact, enable better sustained growth variates technological transformation. In parallel to this, I expect technology to transform how we serve our clients and how we operate as a bank. This is not new, and this is not unique for RBI. But I'm sure that we must capture all the possibilities and opportunities available to us. This transformation will also drive growth and efficiency.

Our transformation in this respect will focus on 3 pillars. The first is customer interaction and marketing, where we are already making great strides with our mobile assistance and where customer journeys and experiences will increasingly be enhanced by AI. Marketing and how we approach and engage with new customers, will also be transformed. We expect to see a material increase in positive outcomes while simultaneously reducing the effort and resources.

Product delivery is already being transformed, and we have very promising proof cases. Going forward, we need to scale this individual success into sustainable delivery across teams and products. In practice, this will mean developing software much faster and with less effort. Finally, we will continue to digitize our processes and increasingly move towards AI-native end-to-end processes.

We see tremendous potential across the risk and operations chain. I will not spend any more time on this here today. For now, I simply wish to share with you my priorities.

Let us now move to my next slide and how we plan to approach the Russia topic. First of all, I would like to acknowledge all the efforts that have been made in the past 4.5 years. I could see firsthand how much was invested in sanction monitoring and compliance and how much of the business in Russia has been derisked. With that being said, my priorities for Russia will be as follows.

First, the rundown will continue and will remain our base case until further solutions can be found. All the restrictions that we have placed on our Russian bank will remain in place, and you can expect to see the loan book shrink further. I think the numbers here speak for themselves. Loans are down 80% since the start of the war and deposits are down 40%. Our commitment to shrinking and derisking should not be questioned.

Second, we will continue to explore ways to extract value and to recover what we can of our equity, which is [structure]. It is our duty to shareholders. This includes the [Esperia] litigation, which I will comment on shortly. I will be reviewing all that has been attempted too far, and I've asked my team to double down on this effort.

Third, I'm aware of the many negotiations to sell our Russian subsidiary, and I understand the difficulty to obtain the required approvals. There is no easy way to execute on this. but we need to keep trying, however, and we will try harder. This is also an area where I have instructed my team to double down, and you can expect me to follow this very closely.

Before we move on, let me give you a brief update on the Rasperia case. Time has come, and we took decisive steps. I'm happy to report that we filed the claim yesterday in Vienna. We are seeking EUR 3.15 billion in damages, reflecting the EUR 2.4 billion, which were taken from us in Russia and including penalty interest and loss of profits.

First of all, we are confident that we will prevail in court, and we expect a favorable outcome. Our claim is based on European sanction legislation. Second, because our claim largely reflects the terms of the anti-suit injunction which was pronounced by court in Russia and threatened our Russian business we have good reasons to believe that the proceedings in Austria will not be acrimonious. This means that we can expect to receive the proceeds within the next 6 to 12 months. There's a little more I can say here today, and we'll keep you updated as the situation develops.

Let's now turn to the 2 acquisitions, which we announced earlier this year and which are progressing. Let's begin with our voluntary takeover offer for [Addiko]. On Wednesday this week, we announced preliminary final results of at least 56.8% participation to our offer. In the coming days, we will receive the final numbers, and participation may still increase slightly if there are any last minute instructions, which have not been processed yet. In any case, I'm happy to report that our voluntary takeover offer is successful, and we can now move to the next phase.

In the coming months, we will seek regulatory approval and merger clearance. In parallel, there is an additional acceptance window from August 3 until November 3. Shareholders who have so far not tendered into our offer may still do so. It's my hope that in the coming weeks, investors who tendered into the competing offer will now switch to ours. While our offer might not be as financially attractive, we firmly believe that we can provide the execution certainty required to get this deal over the line. We also are convinced that our offer provides a fair solution to investors who have not received a dividend in years.

Let's briefly turn to my next slide and look at our other ongoing acquisition, concerning the acquisition of PBB Garanti in Romania, I'm happy to report that the approval process is progressing well. We expect to close in early October, and we are already mapping out the integration steps. The merger into our Romanian subsidiary will lead to higher MREL requirements locally. And you can expect Rivers on Bank Romania to issue a euro senior nonpreferred benchmark bond in the third quarter. There is a little more to report today. And on our next call, I look forward to announcing the successful closing.

Moving to my next slide. Allow me to spend some words on business in Q2, stepping away from Russia, M&A and strictly looking at our core business. Record fees, loan growth ahead of our peers in nearly all key markets and products, excellent capitalization, I believe we have many reasons to be excited. We closed the second quarter with year-to-date profits of EUR 708 million, with a strong second quarter right around EUR 0.5 billion, and the loan book continues to grow nicely across markets, segments and products. Included in the 0.7% year-to-date, is still some short-term business, whereas if we focus on the core customer business, we stand at 5% in the first half of the year.

Our CET1 ratio, excluding Russia, of course, is back near recent highs at 15.5%, we are in a great place to begin the second half of the year and close the 2 acquisitions in progress. Finally, our adjusted return on equity where we look past our legacy issues stands at 12%. I will briefly walk you through our current macro outlook before finishing with our financial outlook for the year. Energy price volatility in line with the situation in the Middle East remains the biggest unknown this year. At the same time, sentiment indicators and high-frequency economic data data suggest resilience in many countries. This is visible in the industrial sector. Also, there may also have been some front-loading of production due to perceived supply chain risks.

On the other hand, the services sector has been more

reactive to the energy price shock. To summarize. Weak external demand, higher energy costs and interest rates as well as ongoing uncertainties slow down growth, but do not trigger a slump in economic activity, at least in some countries such as Hungary, domestic factors play an important and positive growth. Inflation is expected to remain entrenched in 2026 and 2027. And as mentioned, volatile energy prices defining inflation in 2026.

Secondary effects of higher energy costs have been moderate so far. But some cost-driven inflation should not come as a surprise in the coming months. In addition, persistent domestic price pressures in the services sector from decent wage growth in recent years continue to post midterm challenges to central banks. Recurring geopolitical headwinds and have not altered the overall solid landing trend across the core CE and SEE region. Still, there is a difference between the uniformly strong retail segment and more uneven corporate lending dynamics. Precautionary monetary tightening mid-temp credit demand in the second half of 2026 in larger markets, which brings me to my final slide, our outlook for full year 2026.

We have seen better NII trends in recent months. and we now expect to land somewhere between EUR 4.4 billion and EUR 4.5 billion. Kamila will expand on this in just a minute. Fee business is broadly sustainable and will remain strong in the second half. I expect fees to land close to EUR 2.2 billion for full year 2026.

Now in the we are expecting some one-offs in the second half relating to Rasperia litigation. I'm not concerned by this considering the expected payoff. This will take OpEx closer to EUR 3.8 billion in 2026. Accordingly, our cost income ratio will temporarily rise to 55%. And risk cost up to 35 basis points, and Hannes will walk you through our expectations here. We leave organic loan growth unchanged [indiscernible]. But in fact, above 9.5%, including already guaranted BBVA transaction. The CET1 ratio always assuming the worst case in Russia is unchanged around 14.3%. The -- this dip is explained by both acquisitions going through our results in the fourth quarter this year. And in any case, our CET1 ratio will remain at a very good level. Our return on equity is also impacted by the slightly higher OpEx, and we now guide for 9.5% for the core, excluding Russia.

Also here, you should note that the repeal litigation costs will have an impact. If you look at the clean profitability for RBI, we are, in fact, above 12.5%. I will finish on this, adjusting for both Russia and Poland should give a good sense of the future footprint and business of RBI.

In recent years, as you can see here on Slide 11, that this has ranged between 13% and 15.5% and could continue to achieve these levels. This is not good enough, however -- and in the coming months, I look forward to sharing with you how we intend to transform RBI and improve our profitability. Thank you.

Good afternoon, ladies and gentlemen. Thank you for your interest today. I will be brief. As you just heard from Michael, we are happy to report a strong second quarter in the core of the business. in addition to a very good bottom line loan growth and CET1 ratio that was just mentioned, we also show further topline strength and stable OpEx.

Let's go through this one by one before moving to our CET1 outlook. Starting from net interest income, which is up 3.2% in the quarter and 6% for the half year 2026 versus the same period last year. Interest-bearing assets were up 2.5% in the quarter. Loan growth, of course, but also some growth in the treasury bond portfolios with NIM slightly up. We also saw rate hikes in [Tier Caruna], although this did not come through to our margins yet. Competition for liabilities among the banks remains likely. And I shared it with you last time, we are aware at times the ones driving this. we have been willing to pay up for the deposits, but always subject to a high number of customer engagement requirements.

For one, this has been a successful customer acquisition strategy; and two, we have made a lot of progress in cross-selling. Going forward, we sense that there will be a bit less pressure to reprice and we expect our liability margins to stabilize. The other market I need to mention in Romania, where we have been running customer acquisition campaigns and offering attractive saving rate. While dilutive to NIM, we are still expecting the volume effect to be positive to -- and NII should prove resilient from here. And of course, we are attracting new customers, which is positive in the long term. With that being said, group-wide, I'm encouraged by the loan growth as well as the continuing deposit collection trends, especially in retail. As you just heard from Michael, we are now guiding for a net interest income between EUR 4.4 billion and EUR 4.5 billion, including some EUR 50 million upside from rates, which we were guiding for the last time.

Moving to the fee income, which is up 5.6% in the quarter and over 10% versus the half year last year. As you saw in our guidance, we are now expecting fees close to EUR 2.2 billion, nearly 10% increase versus the last year. I'm happy to see that the growth in the coming -- is coming from the range of products and businesses. And it's with very, very few exceptions, this appears sustainable into the year-end. Loan growth, again, was very strong, up 2.2% in the quarter and 5.7% year-to-date. There is some short-term business included here, but also EUR 700 million decrease in Poland due to accounting policy change.

Putting this all together, our true customer business is up around 5% year-to-date. Retail demand continues to be very strong. And what is particularly encouraging is that we are growing above the market rate in all of our key markets. New product origination was very strong in the quarter in our key markets. In Czech Republic, we saw record new mortgage production and near record new consumer loans, like parts in Slovakia, in Romania and in Hungary.

In the Corporate segment, we are also very good new business plans, notably in the Czech Republic, Slovakia, Hungary and Serbia. GC&M was a bit slower this quarter after a very strong start in Q1. On the liability side, we continue to see very good inflows, especially in retail, where the margins were more attractive. In Czech Republic, retail deposits are up 4% in the quarter, 7% in Hungary, 2% in Slovakia and 4% in Croatia.

Let us now jump to Slide 20 and look at our CET1. As always, the starting point is our price books year of the consolidation scenario, which assumes a complete loss of Russian business. With 15.5%, we are back to recent highs, and we still expect to generate around 90 basis points of CET1 in the next 6 months. We are, of course, aware that we plan to close both of our announced acquisitions still this year, both in the fourth quarter. If we factor in our loan growth guidance, dividend, and this brings us to around 14.3% at the year-end, slightly below our medium-term target of 14.5%. It is, of course, too early to get into 2027 guidance, but I would simply point out to our solid capital generation and a deco carve-out as the clear drivers back to about 14.5%. Needless to say, proceeds from Rasperia litigation would come on top of this.

Now moving on to Slide 22, very briefly on our issuance plans. In the coming months, you can expect us to issue Tier 2 out of head office. We have 3 maturities in the coming years, and we look to refinance this. Michael also mentioned Romania, where we will be issuing senior nonpreferred for the local [indiscernible] requirements. And with this, let us move to my final slide, Poland. We are making good progress in settlement, and we have expanded our strategy.

Now we offer settlements for euros as well as Swiss franc, and we approach borrowers at different stages of the litigation process.

Finally, we are exploring new channels through which we engage with borrowers. The benefits of settlements come primarily from the savings that we realized on legal costs, court fees and penalty interest.

Looking at the provisioning, we've got for around EUR 220 million this year. We introduced an accounting policy change in Q2, bringing us in line with the market practice in Poland, with the added benefit that has led to a risk cost release of around EUR 24 million. This means that the bottom line impact from provisions in Poland in year 2026 will remain around initial EUR 200 million guidance. This accounting policy change led also to around EUR 400 million credit risk-weighted assets release.

Finally, I know you will ask about this. The first half run rate is not to be extrapolated in the second half of the year. The primary driver of the provisions is the inflow of the new cases, and Swiss franc cases are clearly declining, whereas euro are peaking and also expected to decline from here. There is also a timing mismatch on [indiscernible. We immediately book loss from [indiscernible], and there is a delay in booking a counterclaim, which we'll receive from the borrower. This will partly reverse in half year 2026 and second half year 2026. And on this basis, we can confirm EUR 220 million guidance.

With that, it all from my side, and I will give the floor to Hannes.

Thank you, Kamila. Ladies and gentlemen, thank you for joining us today. Allow me to briefly run you through a few risk trends before we open for Q&A, starting with risk costs. with 4 basis points in the quarter and 20 basis points year-to-date, we are running well below our guidance of 35 basis points for the year. Clearly, there is a potential down the shoot here, but the broad economic environment remains sufficiently uncertain.

In Q2, we saw 2 factors behind the risk cost result, which offset each other and resulted in 4 basis points or EUR 7 million. On the one hand, we released around EUR 43 million of overlays, partially due to the improvements in our retail risk models. And to a large extent, simply because events, which had justified the overlift have failed to materialize. Romania is a good example.

In retail, we had anticipated layoffs, which never happened and defaults from higher rates and inflation, which also never came through. This is also one or the other case where a corporate default leads to the release of an overlay, which, of course, is more than offset by corresponding new Stage 3 provisions. We continuously review our overlay portfolio. And if we determine that potential risks are sufficiently covered by the credit market models, we will adjust.

As a matter of principle, it is my preference to see potential risk captured by our credit and macro models, and overlay should only be created as a last resort. The second factor we mentioned in the quarter is the Stage 3 development where we saw a combination of new defaults in line with usual course of business, but also a few top-ups to the provisioning on existing defaults. SEE also improved coverage ratio.

Finally, the accounting change in Poland led to the release of around EUR 24 million of Stage III provisions on the legacy Swiss franc portfolio. Beyond risk costs, our focus remains firmly on the macro environment, and we keep a careful eye on spillover effects from the war in the Middle East. I mentioned to you last time that we had conducted a review of more than 500 of our corporate counterboards with exposure to energy price volatility and we have continued with this effort throughout the second quarter.

The temporary brief in energy prices and the moderation of inflation dynamics were welcome. Nevertheless, we still downgraded around 30 names from the 40%, which we had previously put a negative watch. Since the start of the war, we have downgraded less than 10% of the names on our 500 name watch list. And as we review our exposure and commitments in people, I'm confirmable that as of today, this will not affect our portfolio quality in any visible way.

Finally, this quarter, we have also finalized the Jubilee stress test with ECB publication of the report just a few hours ago. The results are encouraging. [indiscernible] reached a prescribed depletion in year 1 and remains above the minimum requirements. The scenario design and framework were assessed as reasonable and in line with our business model and complexity. Both the portfolio review of energy exposed customers and the geopolitical stress tests confirm that our provisioning is accurate, and there was no cause for any overlays or even any significant stage 2 shifts.

On the [indiscernible] side, we have optimized the balance sheet with further securitization, and in Poland, achieved a credit risk relief. At the same time, these RWAs have been redeployed into customer business across the region. -- closing with the obvious but still important message from my side. NPE ratio remained stable at 1.6% and at a historically low and with a 4% to 7% coverage ratio.

Having said all this, ladies and gentlemen, thank you for your interest, and we now look forward to your questions.

[Operator Instructions] This is from the line of Benoit Petrarque from Kepler Cheuvreux.

Yes. Good afternoon. So thanks, Michael, for sharing your priorities and for your strategy also. I wanted to come back on the Rasperia claim -- so what is your thing -- what do you think the time frame of the Austrian core decision will be -- I think you indicated 6 to 12 months for cash settlement -- but could that be a matter of a couple of weeks, you think or a much shorter time frame than 6 months? And do you expect the settlement to take place in the form of cash or Stroback shares -- because in the past, we've seen that settlement in the form of flowback chart could result in a risk-weighted asset number. Also, I'm curious to understand all the basically, the EUR 3.5 billion cash will be redeployed. Do you have any views on that at this stage? Would that be higher distribution form of cash to shareholders? Or do you have more M&As in mind? The following question also is on Rishi. I think you want to try either to exit Russia. Does the Rasperia court case change your view for a potential exit? Will you consider to exit at a lower price to book given that you will get cash from Rasperia. Just wanted to understand your thinking around that. And the last question is on the NIM trajectory into basically the H2. I think you have stable NIM. I just wanted to check with you what you have in mind and whether the NI growth will be a function of volume growth going forward?

So thank you for your questions. Coming back on the Rasperia claim, and the time frame and the court case in Austria. As I said, we filed the case yesterday. And this case is now reviewed by the competent judge. And we expect, as a next step that defendant to be notified soon. then a lot will depend on how much rasperity decides to oppose our claim in Austria. The legal basis for our claim is in the European sanction law. That is why we are very confident to prevail.

As for the settlement, this is not yet decided. What is clear, however, is that we are not looking to become a shareholder of Strabag and we expect the shares to be sold one way or another. And we are seeking for the proceeds of the sale. The RWA offset would clearly be temporary.

Coming to a potential positive outcome for RBI and the redeployment of the, so to say, the windfall. I have to say, first of all, we are now taking step by step in this process. We are looking ahead on every single step. As you can imagine, this is a complex way forward. So it is too early to start discussing how we spend, how much when and where. But looking at our core business, looking at our organic growth opportunities, also looking at perhaps potential inorganic growth opportunities, this would give us here space to go ahead.

And finally, we could also consider a special dividend. But as I said before, this is too early to answer and discuss now as we now do step by step in terms of the Rasperia litigation case.

Third question about the exit from Russia. If these changes are the view on a potential exit I would say that the Rasperia claim is a very important step forward for us. But I would say exit from Russia is, as I said, and I mentioned several times, a very important point, a very important cornerstone for our strategy ahead. It could be relief for all steps ahead. But now we focus on the Rasperia claim and then take the next steps.

On NIM, from here onwards, we expect NIM to remain stable for the remainder of the year at 2.3%. So yes, NII growth will be a function of volume growth. And in our guidance, we have included around EUR 50 million benefit from higher euro rates, and this is on the lower rate of the estimate that we were given last time of EUR 50 million to EUR 100 million.

We will now take our next question. And this is from the line of Gabor Kemeny from Autonomous Research.

Thank you. It's a pleasure to be talking to you, Mr. Hollerer. In your introductory comments, you mentioned turning more selective in the GCM segment as an aspiration. Can you share a few thoughts in what ways you think you should be more selective and what time line you have in mind to divest some of the less profitable exposures?

My other question would also be on your introductory remarks and the comment when you said that excluding Russia and Polish FX is a good proxy for your franchise going forward. Does this mean that you exclude in entering new markets in the foreseeable future? And here, I'm also including some of the Balkans markets, where I believe RBI has perhaps less scale than the option than the optimal level.

And my final question would be a follow-up on Kamila's comment on the stable NIM outlook. Can you drill down a little bit and tell us if you factor in any pressure on customer spreadsm and how you think about your income on hedges and securities?

Thank you very much. Coming to the first 2 questions, the question on GCM. First of all, I've shared today with you my first priorities. So the first assessment we did now, we are working on the strategy ahead. Now we are working on a prioritization. So I will not share today. I cannot share today with you more details. But what is, of course, very relevant is that we really raise profitability that we are more select that we have an efficient allocation of capital looking the business and especially also to improve cross-sell in this segment in this regard.

Secondly, the -- sorry, it's coming to your second question. If looking to new markets, so far, there are no concrete plans to enter new markets, but I would not exclude to do so when we look at the final version of our strategy. But also here, are actually working on this and then coming back at the Capital Markets Day in February with a clear target picture on that. and concerning the Balkans, as we have now, so far, no concrete plan to enter a new market. There is also no plan to exit from any market so far.

Thank you. When it comes to our NIM development and.

how we are looking at the stability of Indeed, our security and bond investments will help to stabilize NIM. As I said, we expect it to be stable from now on around 2.3. Generally, the net interest income development will come from volume growth primarily. You've seen a 5% growth in the first half year. We guide for 7% growth. here, I've already mentioned that we have the EUR 50 million upside potential from the better interest rates. Obvious question would be why we are relatively conservative on our loan growth, yes, so from 5% to only 7% for the full year. It is clearly the case that we are seeing asset margin pressure, especially in the retail, and we will be selective when it comes to the growth, so we would like to preserve the stability of our net interest margin going forward. I hope that answers the question.

It does, indeed.

We will now take our next question. This is from Mate Nemes from UBS.

I have a couple of questions, please. The first one would be on strategic priorities. Michael, you clearly outlined priorities on Slide 4. Thank you for that. And I was wondering, would you be able to provide a qualitative description of how you intend to see RBI at the end of your mandate? How would you describe an ideal condition in the bank if your plans pan out and intended? What will be the cornerstone? That's the first question.

The second question would be on the CET guidance for Kamila. The CET1 ratio was at 15.5% and the of June, you're guiding for 14.3 million at year-end. There's a 110 basis point M&A impact, and that means there is a guided 10 basis points cetanerosion despite an implied roughly EUR 600 million net profit in the second half, just judging by your guidance. What is the meaningful offset here? Your flag in portfolio development, roughly 50 basis points on Slide 20. Is this simply organic RBI growth? Or are there any organic non-M&A type of effects in here? And also, if you could just help us understand why there is significantly higher AT1 dividend coupon dividend impact in the second half, roughly double that in the first half.

And finally, your last question, if I may. And that's on deposit trends and deposit pricing. You clearly flagged some asset price or asset margin erosion, especially in retail. Can you comment on deposit trends or inflows? Any shift between side and term savings deposits? And what do you see in the key markets in competition also beyond perhaps Czech and Romania. Thank you.

So thank you very much for your question. referring to this now at the beginning of my mandate concerning the strategic priorities, perhaps to start with this. We have to become excellent in our core business. Secondly, we have to do, of course, some homework, especially in some segments that are not on the profitability level we want to see. And thirdly, of course, the transformation from AI, from new technologies have to bring us. And there, we have to manage to become more efficient and speed up. how I see RBI at the end of my mandate, I think what we have to focus on is passion for business to go into the needs of our customers to deliver best products, best services and the best-in-class coverage. And technology, we have to take use of to transform into a more -- in a stronger and better market position.

And finally, what I sense and what we can see is Arvin is 1 of the strongest brands in the region, and this we will remain. And this -- as a result, we will see a better market share in an excellent position on our core markets. This is how I see very short, of course, in the next 2 years and in a long-term horizon.

On CET1 guidance and development generally, it is outlined on the Slide 20. We are largely referring to loan growth in the second half of the year, captured by the portfolio development and in line with our 7% organic growth guidance. There is no any other inorganic moves to be flagged here. All M&A is reported separately below, and we have nothing further than the BBA in the guarantee. Points that you see on the Slide 18 and 46 million that you see on Slide 20 is is the difference because in Slide 18, we refer to 20 basis points, which is in the quarter -- second quarter. It's a quarterly accrual. And 46 basis points that you see further, it is a half year accrual that we will have in the second half of the year.

So here, we are broadly guiding in for the payout ratio of 40%, as we've already indicated in the past. So however, the final decision will be made in the fourth quarter once we are ready to settle on our capital allocation. When it comes to the deposits, so happy to comment on that as well. Yes. So here, if I take it country by country. In Czech Republic, we are still among top 3 banks. Here when it comes to attractive saving rates offering. As I said, we are quite conscious about it.

Yes, this is a key element of our strategy to attract new customers. And we aim for the cross-sell to these customers and it's proven to be a success for our Czech operations so far. The high rate is, however, tied to certain conditions always such as a number of transactions per month and so on and so forth. So it ensures quite an active engagement of the customers and means that the average rate for this portfolio is much lower comparing to the external offer that we have.

Overall, we see liability margins stable here. When it comes to Romania, we have been offering attractive rate, such as rates as I mentioned already, our customer acquisition campaign. And this was dilutive to the NIM. We also see customers moving from current accounts more into the interest-bearing accounts. So here the pressure on the NIM is there, but we are seeing -- we are expecting it to stabilize from now on.

When it comes to Slovakia, [Czech] and Hungary, I will put it all together because there's development is relatively uneventful. We see very steady deposit inflows in all the markets and more pronounced in Hungary and currently no major shift in terms of product mix and liability side. Anything -- does it answer your question? Are you -- we would like to have further clarification.

It certainly does. If I may, one more follow-up, please. And that is on the $4.4 billion, $4.5 billion NII guidance for the year. Is that delta perhaps the -- between the top end and low end, primarily the function of loan growth? What are the assumptions you have for deposit flows and deposit pricing? It sounds like deposit liability margin is broadly stable and continued deposit flows. So is it coming back just to your loan growth?

Yes. This is primarily loan growth, yes. So we guided on 7% loan growth. You've seen it 5% in the half year and 7% in the full year. As I said, we will be selective because we a pressure on the asset margin. However, there might be a big upside, and we've already counted with EUR 50 million due to the higher interest rates. So this is the result in this range, EUR 4.4 million to EUR 4.5 million.

We will now take the next question. This is from Simon Nellis from Citi.

Many of my questions have been answered. I do have 1 follow-up on Rasperia, just wondering if you see any technical issues and actually getting access to the cash once a settlement is done, as you are I think co suing along with Raiffeisein Bank AO in Russia. How confident are you that you definitely get that cash outside of Russia. Then I would have a Polish litigation costs, you've given clear guidance for this year, but wondering where you think those costs might go here? And then for the new CEO. Welcome. It was quite interesting to hear your introductory remarks. I think it's what the market wants to hear. I'm interested in your experience working in the London's banks. And if there are any issues around their vision for particularly the GCM and I mean at one point, that was not part of the raise Bank International. So just wondering if you could answer that if you could.

Okay. Thank you. I want to start with your first question. I think this is rather clear as we filed the claim in Austria. The Austrian court that is clear that we will also keep the proceeds in Austria. And on the third question coming from your side on the GCM business and potential overlaps, whatever with the Austrian Raiffesein Bank Group. There, I see no disagreeing or whatever on our priorities so far. As I said, we have just started to elaborate on this, and we have to optimize and have a clear profitable picture on RBI side. So on this side, I would see no disagreeing from their side so far.

When it comes to Poland and the guidance on the Poland cost, I mean we clearly see a decline in Swiss franc cases and quite visible and confirmed from our side. And in euros, we have a good reason to believe that the new cases also have peaked, and we will decline from here. Roughly, we can guide that the litigation provisions in pole in 2027 will drop by half, and hopefully by half again in 2028.

We will now take the next question. This is from Riccardo Rovere from Mediobanca.

2 or 3, if I may. The first one is on sort get back to Rasperia, but I remember, and correct me if I'm wrong, that in the last call, to stated that somehow RBI failed to convince Europe that, that was the right thing to do. And it also flagged in other occasions, the possibility of having middle risks in Russia. I don't know exactly what he was referring to what comes to my mind, the first thing that comes to my mind is, as in the past, they basically imposed EUR 2 billion fine in Russia. I was wondering whether they could retaliate and do exactly the same thing they've done maybe in our larger scale on your Russian bank, which is still your asset. So just more because on the Rasperia case, it seems to me a very, very -- I can [indiscernible] respect of only 3 months ago. This is my first question.

The second question I have is on [indiscernible]. You're now control around, if I'm not mistaken, 50 to 6 or something. I was wondering whether the governance of Addiko that is shaping up at the moment, you're happy with that. It could be an issue for you.

And then maybe a question for Hannes. This quarter, credit as a kind of flattish. You mentioned SRPs. I was wondering if you still have room to use this tool. And when it comes to us tool overlays, should we expect this amount to go progressively to zero, if nothing or [indiscernible] happens on this planet.

Thank you for your questions. I will start with Rasperia and Rasperia block. So I think on the European sanction regime, you have to come from 2 directions. We base now our claim on the European sanctions framework on the European sanctions regulations. As there was an amendment in front of the Russian court coming from Rasperia on the anti-suit injunction that's now allowed us to take the decision to claim in Austria.

On the other hand, we always tried that was also working on this heart as [Johannes Schuster] said in his last call to amend the European sanction framework to give us without any Russian amendment, the opportunity to file a claim in Austria. So now we took the -- we took the -- so to say, the first option as this was now possible coming from Raspberry. Second question, the legal risks in Russia.

Our claim is largely in line with this antis injunction pronounced by the Russian court. The difference is that we are claiming EUR 3.15 billion, what we believe to be the full damages, and this is higher than the EUR 2.85 billion allowed in the antifuse injunction. It is so finally possible that our Russian subsidiary will face a claim for this EUR 300 million difference.

Beyond this, we do not expect more risks to our Russian equity. Coming to Addiko and Addiko governance, I think it is premature to comment here. The first step now was successful. We now move to the second step, which means regulatory approval and the closing of the transaction. And we where we hope to see an increase in the tender participation from here. But the commenting on the governance, I would see at a later stage of this transaction.

Riccardo, on your guidance regarding the overlay story. I think as I also said in my short introductory note, it's a matter of principle and that we only have overlays as a last resort. So where credit risk models, lower market risk models are being capable to capture the current environment. I think there is 1 thing that still will remain for until further notice, is overly in Ukraine. But elsewhere, we are more than happy to review our overlay over the next 2 or 3 quarters and the only will prevail where it really is well justified. So this is, I think, the best what I can share with you at this point in time. Hopefully, this is good enough for guidance.

Yes, very good. It's good enough. And then on SRTs?

Well, I think we have been as an RBI group, we have been a solid user of significant risk transfers. And maybe Kamila would like to take or because this is a capital metric.

Yes. From that perspective, we have entered in the securitization transaction relief is approximately EUR 1 billion. We intend to enter and another 2 transactions in Q4, which are covering -- which are more or less site transactions. It's just divided into due to the currency. So it will be a securitization of the personal loans in Slovakia and in Czech Republic, overall relief gross relief is around EUR 720 million. And yes, it will be in total -- the total increase from SRTs would be around 75 basis points in our CET1.

We will now take our next question. This is from the line of Ben Maher fromKBW.

I'm just interested for your initial views on what are the main [indiscernible] to the 30% ROE look through target that you currently have? Second question is just are there any markets you're particularly excited about with both in your existing footprint, but also outside of that? And then my third question is the drag in the corporate center still remains quite high, the plans to optimize this is this going to be a potential thing that's looked at?

Sorry, the acoustics were quite bad may I kindly ask you to repeat the questions? I'm sorry for that.

No worries. The first one was just on the -- what you see as the main drags to the current 13% look through ROE. Second question was on any markets that you're excited about, both within your existing footprint, but also outside of that? And then the third question was just on the corporate center drag, it's still quite high. I'm just wondering if there are any plans to try and optimize that?

On the ROEs and 13% guidance going forward and in terms of what are the drags going forward. I think we are largely beyond the drag. So on our ROE simply because the Poland legacy to the more less significant impact. Russia is also less impacting. So we are coming to the basically performance of our core business, which I'd rather see as positive and don't see that much of a drag that is coming from going forward. So I see a very -- actually positive development. We see a very good growth momentum and rather stable margins yes, there is a pressure on asset side, on asset margin and liability margins, but we are very nicely compensating it with the volumes. And we also have entered into quite a good strategic position and our bond portfolio provides us with the stability of our net interest income going forward. When it comes to the new markets, I will let Michael to comment on that.

Thank you. As I already answered before on our footprint, first of all, there are no concrete plans at the moment to enter new markets or to exit markets. And working on the strategy, working on our priorities. We will come back also to give you here a guidance on our geographical footprint at the Capital Markets Day.

We will now take the next question. This is from Alexander Kantarovich from Roma Capital. Alexander Kantarovich, Rome Capital. I'm not hearing any response, let's move on to the next question. One moment, please. Next question from Krishnendra Dubey from Barclays.

This is Krishnendra from Barclays. And Michael, welcome. I guess just starting with the first one on the Russia. I guess you talked about renewing effort to sell the entity. So what are the key milestones that we should be looking at -- and also, I guess, just trying to understand about the upstreaming of dividend. So -- are there any plans to upstream dividend from that entity? And the second question is on fees. I guess you have EUR 2.2 billion of fees for this year, second half run rate is roughly EUR 550 million, which is 10%, 11% growth. How should I think about this going into the next year?

I know you will have a CMD in February we talk about it just trying to understand what the drivers for the growth rate for the second half of the year and which division particularly drives it? And lastly, on the risk cost, I guess, Hannes, you talked about talked about this overlay as a last resort, you still carry 346. I understand some of them for Ukraine, you would try and keep it. But in a normal business cycle, how should we think about cost of risk going forward? And I understand this would be answered in CMD, but still trying to gauge what should we look at?

Thank you. So I will start again with Rasperia and the Russian -- the questions on Russia. But are our key milestones now. First of all, as also presented the reduction of business where we have a clear way forward, shrinking the balance sheet, shrinking the business completely in line with the sanction framework. Secondly, the Rasperia claim as we now started the tiger process over the next -- over the months, next month to go consequently ahead. And third, of course, if there is opportunity if we have -- and we will do, of course, intensify our efforts in this respect if there is a possibility to exit Russia, we will do, and we will work on this on the milestones so far.

Upstream plans to upstream dividends from Russia. As I said, it's, of course, our target to extract as much value as possible out of Russia, but there are no plans in this direction so far I can comment on.

On the fees and the question to the fees, we are seeing a very positive development in the first half, and we expect to be quite similar development in the second half. If you ask me if there is a bit of a conservative vision in our assumption, to a certain extent, maybe simply because we usually see the second half EBIT better performing. However, we want to be cautious simply because the growth in the first half was quite exciting. When it comes to 2027, I would not comment it. It's too early to comment on how it will look in 2027. However, what I can comment is that we see the fee increase not concentrated neither in the geographies nor on the product. It is spread throughout the product, it's spread throughout the geographies with a slight deep in Southeast Europe simply because there were some one-off events in the previous year. So you would not see it just mathematically comparing the total amount. But overall, growth is sustainable, and we see it very sustainable throughout -- until the year-end. And I have a very positive expectations towards 2027 that it will remain throughout the geographies and throughout the product.

Well, I may take the question regarding the normalized cost of risk to the business cycle as said in my speech, the 35 basis points, we adjusted our guidance only minorly but with a big impact, we were seeing up to 35 basis points. And I was also saying that, of course, there is room that we are clearly undershoot to 35 basis points. So I think 2026 should be more than well explain for your models and for your guidance, but throughwards the entire business cycle. The entire business, actually, we have risk costs around about 45, 50 basis points. But for the next 1, 2 years, we could think about risk costs coming in slightly below the -- through the cycle risk costs, but more so to say, on the Capital Markets Day. Thanks for the question.

We'll now take our next question, and this is a follow-up from Riccardo Rovere from Mediobanca.

Taking my follow-up. Michael, again, on Rasperia, at the beginning of the call, you mentioned the Pastaria might eventually appeal or take some legal action in case your claim is successful. Could this eventually slow down the whole process in your mind? And then I have another question a few weeks we rather impressed about banks operating in Romania being possibly find on fixing, I haven't seen anything since enable. I was wondering whether this could be an issue if you have taken any provisions. I don't think so. I don't see anything in particular, but I just wanted to hear what you have to say on this. And then finally, I may Michael, you stated that you expected to get the proceeds from Rasperia the next 6 to 12 months. Is this the reason why the Capital Markets Day is expected to be in February? Are the 2 things somehow linked?

Thank you. I will start with your last question. No, there is no link. We decided to make the capital markets based on the figures 2026, we can show you here also already the steps we could take forward in terms of the acquisitions. Coming back to Rasperia, if a counteraction in Russia would slow down the process in Austria, no, this would be not the case. And in general, it is unknown for us. how Rasperia will behave or will oppose our claim in Austria. If in Austria, they would oppose this claim, this, of course, could slow down the process in Austria, which is -- this could be the case, yes.

So could they feel in Austria? Could they appeal in Vienna?

Yes. It's we filed a claim against Transpara in Vienna. So of course, they have the right to pose.

Let me comment on the robot and the effect of it in our P&L. Basically, it is -- the investigation has started by remaining Competition Council in 2022. And in May 2026, they have concluded and started investigation against all participating banks, which are contributing to Robor. So from that perspective, they issued a report and concluded that there was a collusion between the banks simply because based on the Central Bank system, the costs of each and every bank was visible to others.

We are one of the banks which were contributing to rubber and part of this investigation. From our side, we have not booked any provisions and to our best knowledge, none of the banks have booked any provisions. At least I don't have any information so far that there were any provisions booked by any of the banks. This is also confirmed by our auditors simply because we are very confident in -- and we expect to appeal this in court, and we are very confident that there is no ground for such a provision?

The next question is from Alexander Kantarovich from Roma Capital. Please try the line again for Alexander Kantarovich from Rome Capital. Please ensure that you are not our line is open. No response from this line. I would like to thank you all for your questions. [Operator Instructions] As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.

Thank you so much.

Thank you. Goodbye.

Thank you.

You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Q1 Results 2026 Conference Call of Raiffeisen Bank International.

[Operator Instructions] Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today for our first quarter update. Hannes 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 operating business, driven by decent loan 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, a bit, above assumed yearly 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. The rationale is 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 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, 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 Takeover Commission, and we expect it to be made public at the latest on the 19 of May. We intend to acquire any and all Addiko shares for EUR 23.05, subject to achieving a minimum of more than 75% of shares outstanding. We commissioned an independent valuation, and our EUR 23 purchase offer represents a 20% premium over the intrinsic value determined by Ernst & Young on the basis of publicly available information.

We also announced that we plan to enter into a transaction agreement with one of Addiko's shareholders, Alta group, based in Serbia. Under the terms of this agreement, if the voluntary tender offer is successful, RBI is committed to selling 4 of Addiko's subsidiaries to Alta Group. 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 Alta Group to participate in the tender offer. It's only binding on RBI if the tender offer is successful. Alta 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 Alta 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-EU 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 takeover 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 carved-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, Bosnia and Herzegovina. Viewed comprehensively and assuming a successful completion of the carve-out, this transaction would lead RBI to become the fourth largest bank in Croatia and re-enter 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 quota, the acceptance window 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.

Raiffeisen 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 today. The C account volumes are excluded from the rundown targets agreed with ECB. I believe that this adjustment reveals the true scale of rundown 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 Rasperia. 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 slow, 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 conflicts.

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 ECB, 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, sticking 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 the 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 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 hikes, 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 in 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 repos 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 Czech koruna in the quarter, loan growth is actually closer to 4%. Likewise, Slovakia, Romania and Hungary grew at similar rate. Looking ahead to 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 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 into our corporate loan demand.

Let's briefly jump to the Slide 16 and take a look at the deposits from customers, which continue to pick 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 at 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 op risk [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] in 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 warrant the expense. Some of you might know that I spent a large portion of my career in mergers 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 one to say that acquisitions need to be opportunistic always with a very careful eye on the valuation.

Capital allocation will be one 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. MREL and funding plan. Starting with the MREL Resolution Group Austria. From January, a subordination requirement has been added now at a level of 26.69% of the TREA. This subordination requirement will not materially change our funding plan.

First of all, we currently run a comfortable buffer with eligible subordinated liabilities of 32.78%. 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 non-preferred.

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, Tatra banka will look to issue senior preferred for MREL purposes in the coming months and the covered bonds 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 observed 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 sound 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 high 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 500 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 watch list for a potential rating review and not an event or even Stage 2 shifts. For over 90% of our exposure in the defected industries, there is no action needed, 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 Hormuz remains all but shut. 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 EBA stress test, and where we rank in the top tier 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. These need to be looked at in construction with Stage 3 risk costs. If we were doing our job correctly by the time a customer reaches Stage 3, there should already be a decent amount of Stage 1 and stage 2 provisions booked. The shift to Stage 3 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 release from securitization just for the sake of completeness.

At the same time, Stage 3 risk costs of EUR 62 million are about evenly split between retail and non-retail, with the non-retail defaults coming from the GC&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 revision 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 all, 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. Thank you Johann, for your very strong insights and all the best, obviously. So just a few questions on my side. the first one 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 at some point 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 it is at about EUR 1.2 billion. So if we adjust for these terms, loan growth was about 1.7%. It's still a positive development, yes 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.

I got three questions, please. First one is on the risk costs in the first quarter. I think in the additional information prior to the results. Are you guiding to EUR 39 million in Stage 1 stage, stage 2 provisions largely coming from the macro updates? You booked EUR 74 million. I'm not sure of 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 Czechia. 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. Again, just interested in how you see that evolving for the remainder of this year and 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, are 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 three are 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 macro, really it is Hungary with EUR 30 million in Slovakia and Romania, it's 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 Czech 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, Kamila 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 will be successful of another counter bid being made for the same bank. My other question would be on your profitability, where I believe you commented that Q1 was weaker for a few reasons. But I think even if we adjust for this kind of upfronting, you were at around 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 EBA stress test 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 -- one 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 NII rate closer to EUR 1.90 billion, excluding positive impact from the loan growth in Q2, 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 of 7%.

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 GDP 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% weight to 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 pessimistic scenarios would turn out, which means the Strait of Hormuz 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 Máté 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 RBI through a very challenging last 4 years and put the company back on a profitable growth path backed up by solid asset quality and capital position. With this call being your last one, and without the inevitable responsibility to deliver and [indiscernible] analysts chasing you. What are the key opportunities that you see for the group in the next 5 years in broad terms? What would you be the most excited about 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 unlimited mortgage loans in Poland. What does this mean for your provisioning approach? 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 Máté, thank you very much for your kind words. Maybe I cannot repeat now my 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 pretty sure 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 file 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 Krishnendra 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 on 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 the GC&M business is very strong this quarter. And is that partly due to the of late, like you have done a few collaborations have kind of got a few joint ventures. Are those kind of bearing fruit for you in GC&M. 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 Rasperia claim. I know you haven't filed the claim. And 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 the claim money? And should we take 40% as a base for a dividend payout?

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. As this is a 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 Raiffeisen Capital Management, it's primarily driven by average fund volumes that increased.

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.

Rasperia claim 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 I dare 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.

Thanks 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 GC&M 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% last year. This replaces the windfall tax, which was previously charged in the fourth quarter. Additionally, we have a bank levy 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 GC&M fee. Oh sorry, I was about interest and income. I mean, so on the GC&M fees, there were the fees were caused by business in primarily in DCM and as well as, as I mentioned, in the asset manager. Here, there would be a certain volatility to the extent -- I mean, to promise similar development throughout the year that we see in Q1, 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 NIM 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 in greetings to Strobl 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 Kamila, I will say. Just on 14.5% 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 13.5%.

Then I have a question for Hannes. This quarter, if I understand correctly, you charged the EUR 74 million, if I'm not mistaken, on million 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. This quarter, you charged around 36%, if I remember correctly. So implicitly, it's like you're saying that you expect some underlying 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 to 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 the STRABAG shares. It's -- it's an interesting dynamic, which always, of course, when a new sanctioned package is under negotiation. Defreezing would be a very, very clean way forward, bringing Rasperia 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 EU 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, Riccardo, 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 2027. We 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. Riccardo, 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 model is 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 EUR 74 million. I was talking about the shift from Stage 1, Stage 2 to Stage 3. So release in Stage 1, Stage 2 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 3. 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, non-retail, 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, somewhere 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 deterioration, as you indicated because at the end of the day, if I take from the 103 total risk cost, I deduct the macros overlays 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. I 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, Riccardo, to 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 macro overlay hopefully could be released hopefully, I did not dive too deep, but this is my current way of thinking. So to reiterate, no confirmation that I see already a deterioration 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.

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 Rasperia, 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 TurkStream servicing is still, I suppose, intact, isn't it. .

Sorry. And could you repeat your last .

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 commentaries, you are making quite a nice fee or trading result on the TurkStream 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 ask 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, one 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.

Riccardo, there is, I think there was yesterday also a beautiful statistic out there from the ECB, where you have seen that if you look at [PMI] 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 pipelines 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 no one 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 support, 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 have been many all of your questions, I love very much. It's your view on RBI is always very good, very detailed. I'm 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 skills 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.

Good afternoon, ladies and gentlemen, and welcome to the Preliminary Results 2025 Conference Call of Raiffeisen Bank International. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir.

Good afternoon, ladies and gentlemen. Thank you for joining us today. We are happy to report a good set of results for the fourth quarter and all in all, a very satisfactory full year 2025. .

We finished the year with a consolidated profit, excluding Russia of EUR 1, 443 million, and a return on equity of 10.6%, slightly ahead of our guidance. The business year 2025 was again impacted by litigation provisions in Poland, although to a lesser extent than in previous years, and we expect further improvements here in 2026 and beyond. When we look at the future of the group and what it is capable of achieving as we exclude Russia and the legacy portfolio in Poland, what we see is a bank that achieved a 13.4% ROE in 2025. We are confident that the underlying business model is strong, that the balance sheet is healthy and well capitalized and that we are ready to grow for years to come.

We finished the business year 2025 with 6% loan growth in line with our guidance. And while the first 2 quarters were slow, we are encouraged by the momentum that has built up in the second half of the year. We start 2026 in full swing with a solid CET1 ratio, improving liquidity costs and most importantly, good demand from our customers.

Moving to Slide 6. We're happy to share with you the dividend proposal for 2025. With EUR 1.6 per share, we would like to see our shareholders participate in the good results of the past year. Please note that this is, of course, subject to the audited figures and will be voted on at our Annual Shareholder Meeting on April 9.

RBI Supervisory Board has also announced changes to the Board of Management in 2026. First of all, Michael Hollerer will replace me as CEO for the first -- from the 1st of July. [ Magi ] knows RBI inside and out. He has previously held the role of CFO at RBI and prior to that, headed our Asset Management business. As for me, I will be turning 67 and with my mandate expiring in February next year, I'm happy to hand over at this time. RBI is in great shape and ready for growth, and I'm excited to see what the future holds.

The Supervisory Board has also appointed Kamila Makhmudova as CFO and member of the Board of Management since January 1. Kamila has been with RBI for over 20 years and most recently was our CFO in the Czech Republic. Prior to that, she led our internal M&A and corporate development departments.

Finally, the Supervisory Board has also appointed Rainer Schnabl to the Board of Management effective of March 1, where he will be responsible for corporate and investment banking products and solutions. For the past few years, Rainer was the CEO of our Bosnian subsidiary and prior to that, CEO of our asset manager. In the coming weeks and months, I expect you will get the chance to meet this accomplished new leadership team, and I'm certain that you will be as excited as I am about our future.

Moving to the next slide, where we can show the good progress in the rundown of our Russian business. First of all, in terms of loans to customers, we finished the year having reached the targets that were set. Going forward, there are no new targets, but more importantly, all the measures and restrictions that we have implemented will remain in full force. This goes for our loans, for payments, for deposit collections, for liquidity investments and so on.

Accordingly, you can expect the rundown to continue, and we will continue to update our regulators and investors on the progress. You can see how this rundown, which started on day 1 of the war and accelerated in 2024 has transformed the balance sheet in Russia. As of year-end, there was nearly 30% more equity than loans on the balance sheet. The loan-to-deposit ratio is now below 30% and the LCR above 500%. While the rundown remains our base case scenario, we do continue to explore transactions with interested parties. So far, we have not been able to identify a structure which meets the requirements of the local authorities, but we will not give up.

And on the litigation side, I'm sure you are aware that a second court decision in December in Russia led to a further EUR 339 million penalty to be paid by our Russian subsidiary. This penalty can be added to the value of our claim for damages in Austria now equivalent to EUR 2.4 billion. And as to the Austrian claim and court proceedings, there's little I can say today. We have not filed it yet, but we will absolutely do so at the time of our choosing. The other option, which is to see our claim for damages satisfied in the next EU sanction package remains in discussion. I do not want to exaggerate the likelihood of this year today as it remains unlikely even though this would be in everyone's interest, not least of which our European partners.

Let us now move to the next slide, the quarterly development, starting with the main revenue trends on Slide 8. Net interest income is broadly stable quarter-on-quarter and up slightly year-on-year with some modest interest rate headwinds throughout the year and the large part of the loan growth coming later in the year, we are satisfied with the stable development. More interesting, however, is our outlook for 2026. For one, these interest rate headwinds should become more neutral or possible even turn supportive. And more importantly, the good momentum in the loan growth is visible from the very beginning of the year and contributes to an expected 5% or so NII improvement this year.

Fee income continued to tick up nicely in Q4, and we finished the year just over EUR 2 billion, up 8.5% versus 2024. Looking ahead, our initial guidance for 2026 is around EUR 2.1 billion.

On Slide 9, we show the balance sheet development, and this is encouraging. I have mentioned the good loan growth and it's always good to see that it is being driven by key markets, including Czech Republic, Slovakia and Romania. In mortgages, specifically, we also see good progress in Hungary where retail expansion is important to our business mix. More importantly, corporate business in GC&M has picked up nicely, and the pipeline for 2026 looks equally promising.

On the liability side, we see further deposit inflows and notably mid-single-digit growth in retail deposits in our network units. Slide 10. I'd be short. Liquidity ratio remains solid across the group, including, of course, in each of our key markets and in head office.

Turning to Slide 12, our CET1 ratio, assuming a worst-case scenario in Russia, with 15.5% at year-end, we slightly exceed our guidance. I should also draw your attention an increase to an increase in the Russian op-risk RWAs with January 1. You may recall from previous presentations that in our worst-case scenario, we do not assume immediate derecognition of the op-risk RWAs stemming from the Russia business. The reason for this is that op risk is calculated on the group, fully consolidated basis and not booked at the individual unit level. This means that in any part of the -- if any part of the business is sold are deconsolidated -- the relief on the corresponding op-risk RWAs is not immediate.

In 2025, we had agreed with our regulator to cap the Russian op risk which was retained in this price book zero scenario. This agreement expire at year-end and from January, we had recognized the full EUR 3.9 billion RWAs. The effect of this increase is around 29 basis points meaning that our CET 1, excluding Russia, is at 15.2% with January 1.

On the right hand of the slide, you will see our capital stack also under the worst-case scenario in Russia. The AT1 bucket does not reflect the note, which was issued in January and where we added EUR 150 million to our AT1 stack all else equal.

On the next Slide, 13, our CT1 ratio guidance for 2026, always under the assumption of a worse case in Russia. No surprises here. We continue to steer the bank to around 15% and above. Now let's jump to Slide 15, the MREL and funding plans. On MREL, first of all, with the start of the year, we have a subordination requirement of 26.71%. Considering the own funds in our AT1 capital stack. This new subordination requirement does not change our issuance plans. We have also issued a few senior nonpreferred in previous years, which add to the buffer year. I mentioned a moment ago AT1 note, which we issued earlier this month. And as you also mentioned, the senior issuance out of our Romanian subsidiary. This was their first Euro benchmark issuance and I would like to thank those investors who participated. For the rest of the year, we expect 1 to 2 senior preferred notes from Vienna and potentially a senior deal out of Croatia. The other MREL needs which you see here for 2026 across our countries are expected to be covered domestically.

Moving now to Slide 16 and 17. On the following slides, we have shared our macro update, which I will let you go through at your leisure. Let's turn to our 2026 outlook on Slide 18, and starting with core revenues. We expect 4% to 5% improvements in NII and fees and a similar impact on the OpEx side. We aim for a small improvement in cost/income ratio next year to around 52.5%. The initial guidance on risk cost is around 35 basis points, and Hannes will share his thinking later on. We expect loan growth to continue in line with the positive trends that we have seen in the past few quarters and target 7% growth in 2026.

As mentioned, we expect our CET1 ratio, excluding Russia to remain above 15%. For the group, excluding Russia, we expect a stable ROE around 10.5%. On the one hand, we expect improvements in the operating results and few litigation costs on the Polish legacy portfolio. This, however, is largely offset by larger bank levies and windfall taxes as well as the normalization of the risk costs.

When we look to the future of the group, excluding both Russia and Poland and illustrated here with the yellow line, we expect to be closer to 12.5%. In this case, the improvements in operating income are not enough to offset the announced increases in bank leverage and the high assumed risk costs. Going forward, however, we continue to expect that the core of the group will sustainably earn 13% and above.

And with that, allow me to hand over to Hannes.

Thank you very much, Johann. Good afternoon, ladies and gentlemen, and thank you for spending your Friday afternoon with us here today. I guess that by now, you have seen the numbers, and I will keep it short. We finished the business year 2025, with risk costs of EUR 192 million, down EUR 95 million from a year ago. In basis points, this is a provision ratio of 20 basis points for full year 2025 which I'm happy to report is inside our guidance. Overall, we remain very satisfied with the quality of our portfolio and our nonperforming exposure ratio is at record lows. We continue to make good progress on our workout strategy, as you can see with the further drop in NPE volumes.

Beyond NPEs, the trend in the performing book are healthy, and we continue our proactive workout strategy. In Q4, we released the overlays, which we have built up in Russia, where the bank is so well capitalized and the loan book has shrunk so much that the overlays have become redundant. In the core of the group, we have made minor adjustments leading to around EUR 45 million of releases in Q3 versusQ4.

Going into 2026, we still have EUR 413 million of overlays available to us, equal to more than 1 years' worth of standardized risk costs. Risk cost guidance for 2026 is around 35 basis points, which, as you know, always includes a degree of prudency this early in the year. I do not need to remind you of the geopolitical turbulences that we have witnessed in 2025 and since the start of the year, which also led us to start the year with a modicum of caution in our risk cost guidance.

Away from asset quality, let me touch briefly on Poland, where the trend is clearly improving and where we believe that the worst of the litigation provisions are behind us. The inflow of new Swiss franc claim continues to decline, while the inflow of Europe claims has stabilized. Uncertainties remain, not least coming from the craft law, which aims to accelerate settlements in court proceedings. For 2026, we assume somewhere between EUR 200 million to EUR 220 million of litigation provisions, which is around 60% coming from Swiss franc and another 40% or so coming from euro-denominated loans. Having said all this, we are now more than happy to take your questions.

[Operator Instructions]

And our first question comes from Benoit Petrarque with Kepler Capital.

Yes, Benoit Petrarque from Kepler Cheuvreux. I've got a couple of questions. So the first one will be on the net interest income. Looking at your guidance and also your loan growth guidance, it looks like you still expect net interest margin to remain relatively stable in '26 and therefore, NII to be mainly driven by volume growth. We see some key rate cuts in '26. So I wanted to check with you if the margin pressure will be indeed relatively limited as per your forecast in '26.

The second question is on the operational risk in Russia. I was wondering if it's purely a mechanical process? Or is there any rationale behind or any discussions with the regulator? Do they fear any operational risk from Russia? Or is there any discussions on that item? Or this is pure mechanical adjustment based on your income generated in Russia?

The number three will be on M&A. And I think you commented on the fact that you might be looking into Romania. Just wondering if you could update us on your M&A appetite now that, clearly, the group is focusing on its own future. And then finally, on the bank levies, we have a big step-up in '26 in Hungary. And I was wondering if your first look on this is that it's going to be a one-off item, i.e., recovering in '27 or you assume kind of stable high bank levies going forward also in '27, '28?

Thank you for your questions. And I start with the NII guidance. I mean, you're definitely right. I mean when you look at the Q4, you might maybe need some 1 or 2 adjustments to get the run rate of the Q4. So there was a minor one-off of minus [ EUR 7 million ] in Czechia. If you add this as part of the run rate and if you then consider that you have at the very end of the quarter, the loan book was really building up, then probably the run rate is closer to EUR 1.70 billion and if you analyze this, okay, here, we assume then also, to some extent, stable net interest margin to 4.3% or maybe a touch less, and then you have a 7% growth again with a net interest margin range of around 2.3% or so, then you achieved this EUR 4.4 billion.

Yes, I think the rate cuts are partly still covered by these model books and by investments. On the other hand, I see your point that if competition moves more and more to price topics as well, which as of this point in time, I do not expect at a very intensive level, then it could be that there is some pressure on that as well. But as of now, we are optimistic on that. Hannes?

Johann and [ colleagues ], the question regarding the op risk on Russia. You know that there has been quite some adjustment on the CRR3 and so therefore, we're using the regular op risk approach within the CRR approach where you have 2 main components, the one is the operating income, and you have seen the numbers and also, of course, which must be partly incorporated legal provisions. So it means Rasperia I and II are also now included in the 2025 RWA basis. Thanks for the questions.

So then coming to your M&A appetite here, I would -- I hope you understand that I will not comment on recent rumors, but what I confirm is that we have, in some markets interest and would appreciate to participate and also be successful when we participate and the countries are well known. So it's -- Romania is on this list. I always said, Hungary is quite difficult because of the competition, one might expect Slovakia, it's not a must, but still could be of interest. Serbia achieved something, but still, yes, in the past, I also said that Croatia may be difficult, but it would help the development of our bank for sure. Czechia is in these days, very expensive, but it will be good for our development here. So it would depend on the structure. To your question -- to your last question about Hungary, difficult to say. I have no indication that it will continue also in 2027. And I hope it is as I expect. So only '26.

And our next question is by Ben Maher with KBW.

I just have a couple. That's just on the Czech NII, which was down a lot Q-on-Q. I think you mentioned there was a one-off negative. Can you to give a bit more color on what was that one-off? The loan growth guidance appears quite conservative given you're already delivering close to 6% ex-Russia and you're seeing potentially a positive turnaround occurring in Austria. So I was wondering about just some of the cost of risk [indiscernible], has that just been prudent at the beginning of the year? Or do you expect a slowdown in kind of your wider footprint? And then I was just hoping if you could give any guidance on the overlay usage in 2026. That would just be helpful to kind of frame that.

Well, I may start with the question on the overlay releases. I think what I have said in my statement, the 35 basis points is the guidance what we may use for the regular business, so not just the running business. If things would really [indiscernible] are, we would also be tempted to make use of the overlays, which are being available to us. And a big part of overlays is anyway to be attributed to our Ukrainian operations, and that's the way how we think about using and making use of our overlays. Thanks for the question.

Yes. To your Czech question, this was a sort of reclassification between trading result and net interest income. So this is to the small amount, yes, unfortunate. But I think with this correction, we see the right number.

So I think if you then add the EUR 7 million, as I said when answering your question before you then get a better understanding of the run rate also in Czechia.

Now to your second question, the loan growth guidance of 7% seems conservative. Yes, indeed, we have mixed signals. So we see some loan growth forecast for the overall market, which is even below the 7% from research. On the other hand, I can confirm that given the base what we have so far, it's strong.

On the other hand, if you go a little bit deeper than for example, in Slovakia, you have seen an enormous and enormous growth in mortgages. And here, the question is to what extent is this somehow front loaded or how shall I say, the demand came strongly in questionable here if it continues. So the one or the other market might be below this 7% and then in combination. So if it would be a little bit more, we'll be happy and celebrate. But I think, the 7% is to be achieved.

And our next question is by Mate Nemes with UBS.

I have 2 questions, please. The first one would be a follow-up on the risk cost guidance of 35 basis points for '26. Hannes, would you mind elaborating on the drivers of this and then perhaps shedding some light on the conservative assumptions going into this guidance? Where do you feel you've been conservative when issuing this guidance? And which trends you would need to see perhaps to revise this?

And the next question is on loan growth, particularly in Group Corporates & Markets. I was just wondering if you could talk a little bit about what sort of loan growth you're seeing in the business? And what is your expectation into '26? And how do you see the outlook for the business in general after a slower period, I think, in the past couple of years?

Thanks again for giving me the opportunity to talk about the risk cost guidance for 2026. I'm really sure you can recall that when we talk about standardized risk cost, we talk at a level of around about 40, 45 basis points. So this would be a through-the-cycle risk cost guidance. So what made us coming in slightly a bit lower with 35 basis points.

On the one hand side, as you can see in our macroeconomic outlook, we see in many countries that the macroeconomic environment is getting better, first thing. Second thing, a big part of our portfolio is also being built up on a retail portfolio. And of course, a very, very strong employment rate, a very low unemployment rate in our market is very much supporting a very robust credit loan growth.

And secondly, also a really benign risk cost development in the mortgage business anyway, but even more so also on consumer lending. Then we see good demand on consumer lending and some investment needs and ask for money. We have EUR 430 million of overlays. We have EUR 10 billion of significant risk transfers outstanding. And yes, Mate as you said, if all things turn and if I would be terrible wrong with my 35 basis points, we still have our overlay pool available. Hopefully, this gives some hints what was the thinking and the mechanics, how we came to the 35 basis points.

And yes, you're right, we again came in slightly below risk cost guidance for the year-end, but I also gave you the reason. One of them was that we have -- that we released our overlays in Russia, and I was giving the background having more capital than loans outstanding, we felt that this is an appropriate time to release the overlay in Russia. Johann?

Okay. Now to the GCM, what type of business would we expect also for 2026. So we have -- I have to state -- you are aware of it, but let me state it that GCM is not only Austrian large corporate, but this is our international portfolio. And this comes partly from Austrian customers, partly from customers being in the Western countries, so not necessarily in our core markets, but with a relationship to our markets.

And finally, the international customers in the CE countries. Here, we usually support and we split the -- so if there is a local take Czechia, if one has a big demand in one of these loans, then part of it we take also here. And the areas what we do, this can be project finance. We are very proud of something -- I mean, it still in Bosnia, where I say energy part. So it goes throughout the range. I think all of all, quite healthy business.

Yes, quite a lot of competition. And if there would more come I would be very happy. So what gives you some numbers what I touched before, I think in corporate, if the -- overall the markets where we are in can achieve from market research, we wouldn't expect more than some 4% to 5%. And we are optimistic that -- and this is built also on the pipeline, what we have or what we are closing to be in the business what we book here. So in the GC&M and yes, the level where we have, we see some markets in corporate where we see in our books where we hope for an increase, which is Czechia, which would be very important.

And then also maybe Croatia, okay, it's not big, but it will improve and Romania. Romania has been strong in the recent years. I mean you didn't ask for retail, but let me share some flavor as well. So I think that in the smaller countries, you still could expect double-digit loan growth and in the others, 8%, 9% like this. And if we achieve that, then the combination will be 7%. And if we are lucky, a little bit more. Thank you for your question.

And our next question is by Gabor Kemeny with Autonomous Research.

I have a question on your ROE guidance, please. You are guiding 12.5% core excluding any Polish Swiss franc charges. Can you give us a sense of what you expect to drive the expansion towards 13 plus beyond 2026. The drivers that would be interesting.

And the other question I had was a technicality on the ROE guidance. I see it on Page 37 that you assume EUR 13.3 billion of average equity for 2026. I believe your end '25 equity core was EUR 13.8 billion. So if you could elaborate on this, why you assume less than that?

And the other -- the final question would be if you could give us an update on Russian litigation, please? And what is the likelihood of recurrence of the litigation provisions in the coming quarters?

So let me start with the guidance and where do we expect? What are the drivers for 2026, if I may start with this. Yes, if we achieve the net interest income, as I have outlined, then this could be positive for our ROE, maybe by 1.5% yes, and then the others, relatively small fee and commission income, EUR 0.6 billion. Net trading income, which was more or less 0 coming in 2025, coming from credit spread and the one or the other topic, we assume that this negative effects will not reoccur, and then we would be back at around 60, what we usually should have, so 0.5. So if you add these up, you might come to 2.7 improvement. We also -- I mentioned it, have OpEx increase by 4% to 5%. So minus 1.2%, something like this.

Other results improving by 0.6, governmental measures, minus 0.5. And then I have the normalization, what Hannes talked about impairment losses, which might be minus 1.5 -- 1.4, sorry. So little bit more income taxes probably. And yes, then we would be at some -- I would have explained I guess, the developments, what you would expect. And as I said, in the coming years, '27, '28, yes. Maybe the one or the other headwind comes from the extra bank tax. We'll see. Of course, here, Croatia is good attitude, but taking example, Austria, there was a tax increase from EUR 23 million to EUR 70 million something, so up EUR 50 million. This was at least still now limited for 2 years. So '25, '26. If they keep and we are aware, they have huge needs, then this should drop by EUR 50 million something.

And so one or the other, we talked about Hungary that we still believe or hope that it's this huge increase is a one-off. So part of it comes from the bank levies being reduced. The other part comes from the Polish improvement, where we then hope that the litigation goes down from 200 to 100. And finally, yes, we see a further improvement in the GDP growth in '27 and beyond. And maybe even that then the cycle in some rate decrease, cycle in some countries might still go on in '27, but in others, it might even turn around. So a combination of what we have.

Now to your quite difficult question. And here, I -- can I come back to this a little bit later to see the average, it's -- give me a few moments that I find my, here, I would have a look to my notes. Before that, I would come to the other question, which is further litigation and balances in Russia in the coming quarters. That's very difficult to answer for one reason. And the reason is I was negatively, very negatively surprised by the second Rasperia litigation and penalties. And this is really a very negative development in Russia in that area. Because the first litigation, at least from my view, covered everything. So coming back again with a second litigation.

Okay. There had been some reasoning which a judge might accept. Economically, it's impossible. That's the negative signal. The positives are that this second litigation is the only one which we have seen and where we say, okay, it's difficult to explain anything else so far did not happen. So this gives us some hope in the balanced view.

Now to the equity. It's calculated on '26 budget numbers and did not fully include the year-end and OCI effect. So you are right that we will redo this and give in the course of the time some more detailed information.

Our next question comes from Riccardo Rovere with Mediobanca.

Two if I may. The first one is that your NII guidance '26 is up versus '25, about 5%. The loan growth is 7%. So it looks like you embed some margin pressure. Now we've been talking about margin pressure for quite a long time. It has never really come through. I was wondering while all of a sudden, given the rate environment provided the rate environment in consensus expectation and market expectation is kind of correct, why that should happen over the course of '26?

And the second question I have is how much of your time and managerial time now is devoted to dealing with Russia after 4 years. Does it take a good part of your working days? Just to be curious on that.

Yes. Indeed, when we talk about margin pressure, I think it's very different from market to market. But what you see, what you see is everyone is going for additional customers. We did so one way to achieve this is by whatever offer you can have in mobile banking, whatsoever.

And the other way, I think we have been successful is your liabilities part, so offering nice term deposit whatsoever. This can be at a significantly competitive levels. And this is the type of margin pressure what we see. And the other is in the mortgage business. So we have been very successful. Sometimes in some markets, it happens that then for 1, 2, 3 quarters, it's really difficult. This comes and goes. So there is no long-term strategy what we see from competitors, but it's adjusted.

And here, when we talk about margin pressure, there is always the uncertainty. Is it just one who has more appetite and keep the others cool? Or are they defending and then -- so this is the core of questions what we have when we talk about -- it's more about -- when I talk about margin pressure. So we have the 2 elements. The one is if the Central Bank rates go down, then of course, the everything what is on the current accounts is under pressure. And here, it depends then on the model books, what we have and the investment books and more of the timing. Still here in '26, we have a positive impact still from earlier hedgings and therefore, we -- I was not so much worried about these developments for 2026. And as I said, the other is coming from these topics of competition. We'll see.

And to your second question, management time spent on Russia. It's nowadays mainly me when we talk about potential transactions. And of course, to some extent, then Hannes as being responsible for compliance issues now and then there come topics. But it has reduced significantly compared to earlier years. So I dare to say it's fairly stable in 2025 for we didn't have any questions from authorities on the business. So all these, which are also time consuming has diminished significantly. So not big time anymore.

Thanks, Johann. If I may get back one second to your competitive pressure statement, why competitive pressure in 2026 should be more as a burden than it has been in 2025. I mean with 7% loan growth that you project, it sounds like with the pie seems to be large enough for many banks operating in those countries. So I was wondering why all of a sudden in 2026, the competition should be heavier than we have seen so far. I mean margins at the very end of the day were kind of stable in Q4. Is there any...

You are fully right. If the pie grows by 7%, then I should not be concerned at all. I had seen the one or the other research where I was rather thinking of maybe 5%. And then we -- it would mean that we continue to get market share and then I mean the good thing about Raiffeisen is, the good thing and they're not so good thing. The good thing is that in the big markets, our market share is not that huge. So increasing our market share is not too much painful to others. But you're right, if we see the 7%, 8% growth all over the markets in the loan book, then no need for any margin pressure. So yes, I agree with you.

Our next question comes from Krishnendra Dubey with Barclays.

I think I have 3. To start with, just on Hungary, I guess, there was this big negative in the trading. So how should I think about this in terms of the rate cuts or no rate cuts that's going to happen in Hungary? That's the first.

Second question is around the dividend payout. I believe the payout this year is around 40%. And then I guess you have a bigger range, which is 20% to 50%. For the future years, how should we think about the payout? And aligning to the ROE question, just trying to understand when you're trying to guide to greater than 13% ROE, does that have inbuilt some M&A or like reduction of capital via buyback or anything? Or is primarily like outside the scope?

And the last one is on -- just on the M&A, just staying on the M&A bit, I guess you had in last 5 years, you had 2 acquisitions, one in Serbia, one in Czech Republic. If you could remind us like what was your cost takeout or what are the cost synergies that you were able to extract from those deals?

Yes. Thank you for your questions. I probably did not fully get your question around Hungary. Was it just to confirm, was it again on this increased bank tax? Or I didn't get your first question?

On the trading part, like the negative was bigger this quarter. And so just trying to understand like on the trading result, it was a bigger negative compared to the -- or the first 3 quarters. So what was driving it?

Now, I understand. I -- there is -- this is a valuation issue, and it comes from what the Hungarian calls baby loans. So this is sort of subsidized loan where the banks had to take over the part of the subsidies, which came from the state. And yes, this led to a reduction of the profitability of this product, which had to be considered in the valuation and therefore. So it's not trading what you presume from the typical capital markets trading also, but it's a valuation from this loan book, the baby loans.

To your second question, the dividend payout. Yes, we are close to the 40% this year. And if we assume that maybe this for '26, you would keep this or so, then you might go up slightly. A couple of more cents might be possible. I mean our current thinking is we will see over time that when we -- it's too early to say now, but probably when we talk about Q1 we might have deducted a dividend of EUR 1.8 something of pro rata, but look, it's still January. So a little bit early to speak about this.

In the -- all the targets what we give are without any impact on M&A. So it's pure organic what we had. And yes, it -- what we could say is in the recent M&A activities, what we did in Serbia and in Czechia, we could take out a considerable part of it. So you always say some -- what could be depending on the 50% maybe even more, depending on the overlap in the branches and so a couple of things. But you could -- if it's like -- it's quite similar to what we have in the geographic and local footprint and then it might be even more than 50% of the cost base maybe up to 70%.

And yes, the second part is there are also some positive synergies. So why we would also like acquisition is it's -- what we have found in the last few months, it was very inspiring for the organization. So the organization itself improved also quite a lot. So it has not only the cost synergies, but here, there are some more benefits. Thank you for your questions.

I was just asking about this, the impact that you highlighted on the op-risk RWA, like earlier if you would deconsolidate it, it would go away. So does that mean if you deconsolidate the impact is going to be bigger ?

Yes, yes, sorry. So you were talking about the deconsolidation of Russia and when will we lose the -- was this your question, the operational risk RWAs? So as Hannes tried to answer, it's in the, let's say, worse of base case, we have to assume that it's a very formal process, which over a period of 3 years, it reduced. We have currently a significant amount of this, not just consider this from EUR 2.6 billion to EUR 3.9 billion. So this EUR 1.3 billion adds to 30 basis points. So you can easily figure out what it means, but this means also that over 3 years, CET1 ratio, which is now decreased in January 1 from 15.5% to 15.2% should every year like-for-like increase by this 30 basis points over 3 years. If the regulator would be generous, it could grant us also within 1 year, but we report the very cautious one.

We'll go next to Benoit Petrarque with Kepler Capital.

Just to follow up on 2 questions actually. First on Hungary, the elections there. I mean, what do you expect? And could that change also your view on the local business depending on the outcome? I mean, is that a catalyst to think for '26 for RBI or not? And then just on Rasperia, the court case, what is your strategy? And why are you waiting now to file a claim and how long you will take to take a decision there?

Yes. I'm -- to your first question, I'm not a political expert. So I read, of course, I read, and we have many sources which say their outcome might be close or there might be a change or not a change whatsoever. I think what -- I don't know what could be the difference is that maybe funds would flow easier if a regime change would come. We'll see. But our view is quite political. And we -- as we want to term there. And we of course, we always adjust to the situation, but it would not -- it does not change overall the direction.

As I said earlier, I mean, for Hungary, it's important that we grow our retail business. So I believe we have a good corporate business and the mix could be a little bit more to the side of retail. And this dates back that for years, we were -- I dare to say, underperforming. We -- I think we more and more fix these issues.

Recently, we have found some very attractive offers for our customers. What is also important when we talk around business, we're back in mortgages where we haven't been there for a long period of time, quite a lot of room for us to improve, but the '26 was quite good. And if we can build on that, then I think over time, it will independent from the elections go. I have no forecast now if there would be a governmental change if this significantly would then at the end of the day, change the windfall taxes and whatever we have. This is always to be seen then later on. Yes, I think that's currently the bad situation in Europe that banks are used to compensate for too much spending from governments.

To your second question, the strategy and why we are waiting to file the claim. Look, the point is like this. There are 2 different views on this claim. And let me start with the Rasperia 1, the Russian 1. From the Rasperia perspective, they say, you have received the claim on the shares. And from Russian perspective, you have even received the shares. And for that reason, don't sue us, neither in Austria nor somewhere else. You have the shares. And if you're not able to get the share stock to your governments to Brussels whatsoever, but don't sue us. Because if you sue us, we might perceive this that you want more. You have the shares and you want more.

Now the challenge is to find an understanding that we do not want more just the compensation for the claim. And as we are not able to solve this with, as I said in my incoming statement, now we need to file a lawsuit. Now I don't know if we can reach an understanding with Rasperia, which would take off the risk of anti-suit injunction what we currently face in Russia or not? We have a 3 years' time, definitely, if we neither get the unfrozen nor the agreement, the understanding with Rasperia and okay, I would recommend to my successor to file.

So there is no reason to give up. The question is only can we get compensation for the damage without taking the risk of more damage? Or is it yes -- but we will, at some point in time, we will have to file a lawsuit if [ Russia ] does not defreeze these shares.

We'll take our next question from Simon Nellis with Citi.

Actually, one of my questions was around the Rasperia case, so I got an answer there. But actually, I'd be interested in any thoughts on the outlook for Russian earnings going forward. I know it's not something you tend to do, but there's obviously a portion of the market that thinks peace might occur, and this business will have value in the future. So any kind of broad brushed comments you can make on the outlook. And I guess related to that, are you looking to kind of further reduce the exposure of going forward and by how much?

Yes. So when we talk about Russia, look at the balance sheet, what we have. So we don't grant new loans, so there is a runoff. The corporate portfolio, the runoff was around, I think, 90% or so. So there is a small amount there. And then you have the mortgage business, which is running off as well. But yes, according to the repayment schedule, there is, for the time being, no reason for the customers to early repay. The mortgages were granted in an rate environment, which was significantly lower than what we have now.

So these are fixed.

One moment, ladies and gentlemen, we have lost our phone line. We are reconnected. Go ahead, sir.

Thank you. So Simon, I was -- I don't know when I dropped out. But coming back to your question and with the first part, I try to be shorter, so we have the runoff of the loan book from there, less and less will come. So the main earning comes from the money which is the surplus liquidity as well as the equity, which both are placed with the Central Bank. And of course, with the declining interest rates, the revenues will decline.

The second part is -- and this is a little bit more difficult to forecast. You see that we make still some money in trading. So from the FX business, and here, this comes with international payments. And as we are restrictive there as well, it's a question of time to what extent we are perceived still as a partner in that field. So it's -- but I would say the bigger part comes from here, what you see as a future interest -- key interest rate from the Central Bank.

And we still would expect some outflow in deposits, which might also reduce the surplus liquidity, which is placed at the Central Bank. So declining revenues with -- mainly driven by the key rate reduction.

Yes, sorry. The second was the future outlook of Russia. It depends purely on the -- on 2 things, I would say, peace in Ukraine. This would be very important. And for us, the most important part, the second part is then what is the position of the Europeans because you see, we have all these restrictions from the European authorities. And it's unclear to what extent the Europeans will adjust. I think if there is peace, the rest of the world definitely will adjust relatively fast Europeans come to see

[Operator Instructions] As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.

Thank you all to the participants for your time, your interest.

Thank you very much. Goodbye.

Have a good afternoon. Bye-bye.

You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Q3 2025 Conference Call of Raiffeisen Bank International. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead.

Thank you very much. Good afternoon, ladies and gentlemen. Thank you for being with us this afternoon. We are pleased to report a good set of results this morning and in particular growth across the region, which continued the pace in the third quarter. We can report a consolidated profit of EUR 1.027 billion for the first 9 months of the year, excluding Russia, equal to a return on equity of 10%, in line with our guidance for 2025.

When we think about the future of RBI and exclude both Russia and Poland, we have achieved a 13.5% ROE in the first 9 months. We can confirm our ambition to earn around 13% on this basis in 2025 and beyond. We will discuss this again on the outlook slide.

Finally, our CET1 ratio remained stable at 15.7%. On Slide 5, we can report 3% loan growth in the first 9 months of this year and the positive momentum that we have seen across our network in Q3 leads us to confirming our 6% to 7% loan growth guidance for 2025. NII and NFCI have performed well, and the guidance is unchanged here as well.

OpEx have increased 7% year-on-year to September 2025, which combined to some headwinds in trading income mainly from the moves in our own credit spreads lead to a slight deterioration of our cost income ratio target to 53%. Let's now move to our slide on the rundown in Russia. First of all, I can confirm that we are ahead of schedule when measured against the milestones agreed with our supervisor. It is worth taking a step back to see how significantly we have shrunk our business in Russia. Since the start of the war, the loan book in ruble terms is down nearly 60% and deposits from customers are down almost 40%.

Our payments business out of Russia is merely a fraction of what it was, and this is entirely reported to our supervisor. The balance sheet of our Russia business now carries more equity than loans to customers. Our corporate loan book specifically is down nearly 85% in ruble terms since the start of the war and is now under EUR 1 billion.

There's a little I can share with you by way of an update on our claim against Rasperia in Austria to be precise, on our right to file a claim in Austria to seek compensation for the damages that our Russian subsidiary has suffered there. I hope you will understand that we cannot discuss our litigation strategy here, but I would also like to reconfirm our belief in the strength of our claim and our intention to file it at the appropriate moment. Thank you for your understanding.

Moving to Slide 7. I'm happy to report a decent NII result in the third quarter, largely driven by better volumes on both the asset and liability side, and we are seeing less headwinds from rate cuts across our markets. As mentioned, I can confirm our guidance for NII in 2025 at around EUR 4.15 billion. Fee income was stable in the quarter, driven by good FX volumes in the third quarter, good inflows in asset management and encouragingly, fees from loan commitments and guarantees in the group corporates and markets. On the next slide, let's take a closer look at loan growth in the quarter with 3% to 5% loan growth in our key CEE and SEE markets, a positive momentum, which we observed early in the year is confirmed.

Notably, retail lending in Czech and Slovakia was strong and across most of our markets, we could grow above market average. Corporate activity is improving across most markets, while group GCM remained sluggish, impacted by some repayments in the quarter as well as lower repo volumes. On the bright side, we are starting to see a healthy pipeline in our GC&M segment, which will help us to meet our 6% or so guidance for 2025.

On the liability side, we're seeing strong retail deposit inflow, which further strengthens liquidity, but also will support NII. Speaking of liquidity, let's flip to Slide 9. where our ratios are all very stable, both on group level, but also for each major unit, including head office. I won't spend much time on Slide 10 and 11, showing stable CET1 development for the group, excluding Russia and our price book zero scenario, where we assume a worst case out of Russia and what is -- what this would mean for CET1 and our full capital stack, including AT1 and Tier 2. On Slide 12, our CET1 ratio outlook, excluding Russia is unchanged with the strong credit growth explaining most of the RWA increases expected in Q4.

Let's jump to Slide 14 with our MREL ratios above target in all countries. On the funding side, 2025 plan is complete and 2026 has started. I should mention that we still may consider issuing a senior preferred bond still in Q4 to get a head start on 2026.

Moving to our macro outlook on Slides 15 and 16, we are generally encouraged by the growth trends ahead. Of course, the environment remains uncertain, not least from trade policy and geopolitics.

Finally, our outlook is broadly unchanged with slightly better risk costs expected, but the cost/income ratio at [indiscernible]. Overall, we can confirm our ROE for the group, excluding Russia, 10%. And looking through the future -- into the future of about 13%, excluding Russia and Poland.

And with this, I turn to Hannes, please.

Thank you, Johann. Good afternoon, ladies and gentlemen. Thank you for joining us today. Allow me to briefly run you through a few risk items before we open up the call for Q&A. Johann has just mentioned the positive trends in the new business generation, both in retail and in corporate. And I'm also encouraged by these dynamics. Growth in the region appears to be well established, and I'm glad to see that we are capturing our share, and I'm satisfied that the new business that we are underwriting is comfortable within our risk appetite.

At the same time, the risks from trade restrictions and, of course, geopolitical developments have not disappeared. On de-risk specifically, we continue to review our portfolio and besides minor rating adjustments, there has been no deterioration in our assessment. We booked overlays earlier in the year. These remain available to us, and we do not see the need to add to them. Risk costs were again very low this quarter. Defaults and insolvency remain very low, leading to a very few Stage 3 provisions.

Furthermore, we made minor changes to our models and benefited from some of our securitizations. After 9 months this year, our provisioning ratio for the year stands at 14 basis points. We currently do not foresee the need to aid overlays in the fourth quarter, and we can, therefore, bring our risk cost guidance down to around 30 basis points. Asset quality continues to improve and our NPE ratio has reached a new low for us at 1.7% with a Stage 3 coverage ratio stable around 50%.

In Poland, we have booked a further EUR 66 million of provision for litigation on FX mortgages, bringing us to a EUR 295 million year-to-date. In the fourth quarter, we do not expect significant model changes. And on the positive side, we expect to be able to release some of the provisions for penalty interest. Accordingly, we can confirm our guidance of around EUR 300 million for 2025 or perhaps a touch above.

Well, ladies and gentlemen, this was my very brief update, and we are now more than happy to take your questions.

Our first question comes from Benoit Petrarque with Kepler Cheuvreux.

So a few questions on my side. The first one will be maybe just to get an update on this European Commission process to size Russian assets, especially the STRABAG shares. I think behind the screen, there have been a lot of political negotiations. I just wanted to get the latest on that. What is the intention from, let's say, Europe vis-a-vis the STRABAG shares. So that's the first question. And I will not ask any questions on Rasperia. On the second question will be on Poland. If you think the EUR 300 million will be kind of enough? Or do you expect still some remaining losses or litigation provisions in '26? So that's the second question.

The third one is actually on the CET1 ratio expected at 15.2% by year-end. That suggests very important growth and loan growth in the fourth quarter. So just trying to understand the moving parts between the 15.7% to 15.2%. And then just lastly, just on the NII, a few questions on Czech Republic, which was very strong. Just wondering here if it's just a very strong loan growth in Czech Republic or are there other items? And on the contrary, the Corporate and Market division on NII was a bit weak. We were down EUR 20 million quarter-on-quarter. I just wanted to understand what happened there.

Thank you. So I agreed with Hannes that we share the questions and, of course, the answers. And I start with the Rasperia, STRABAG and the sanction package. I assume you're referring to the 19th sanctioned package. Our way of viewing it is that yes, sanctions follow several goals, and we had assumed that within these goals, it would be reasonable to suggest and promote the idea to unfreeze the sanctioned STRABAG shares.

So if this would have happened, and I have to say, then we would very quickly could recover a big part of the damages depending then on some results. We have to -- I understand that the whole -- our whole topic is viewed on a large broader scale than we have thought. So with as many, many discussions in general about sanctioned assets. Again, I see the connects, but it has happened during that discussion. We will see if we can make progress maybe in the future, potentially around 20 sanctioned package if it would come.

But I don't give here any guidance or probability of whatsoever. I can only confirm what I said in my introduction. We believe we have a very good case here in the Austrian court being aware that it would take much longer and it's with some -- yes, with some challenges, of course, in moving along the procedures what we have. So that would be my view on your first question. I hand over to Hannes for your Poland question.

Well, Poland, just to reconfirm the guidance for 2025, it's, as I said, this round about EUR 300 million, maybe a touch above. When thinking about 2026, I think you have to keep in mind that we now see also a little bit more dynamic when it comes to inflows towards euro. So we believe that 2026 guidance should be lower than the EUR 300 million, which were needed for the year 2025.

At the same time, usually, we give detailed guidance on the Q4 call. But at this moment, I think you could think a bit lower than the EUR 300 million, could be in the range of EUR 220 million, EUR 250 million, somewhere around these numbers. This is our current thinking. We will be more precise or confirming this range by the Q4 call. Thanks for the question, Johann.

Yes. Thank you. Coming to your next question, which is the explanation where is the loan growth indeed. Why is the CET1 where comes the RWA growth and therefore, the drop in the CET1 compared to end of Q3. A bigger part of that, of course, comes from the increasing loan book. I mean, clear, we have said that having now reached year-to-date 3%, and we are aiming for 6 or maybe a little bit more. So this will come with additional RWAs. But you're right, there are some, some elements also from rating migrations in it. So still some corporates are feeling some, some pressure with all these geopolitical and trade developments and whatever you have. So we have built in some migration impact as well.

Moving to your fourth question, which is the NII in Czechia indeed, we see in some countries, especially in Czechia, also in the recent quarters, a significant increase in the loan growth, mainly in the retail area. So we had seen picking up the mortgage business, but also what we saw is a good consumer loan growth. So both we are more than happy what we have seen there.

And one has to say that also liability, on liability in this normal rate environment, you can earn a little bit. But the average volume, if you compare Q3 with Q2, then it was a nice growth. When talking about the second part of your question, GC&M, so the Austrian business, if I may say so, why is NII down? Yes, it's -- the report here, I agree it's a little bit difficult to read because here, it's not only the entity level, but it's also built on funds transfer pricing and similar. But of course, we have seen also a lower loan book as well. So it's both elements, which needs to be considered.

We'll take our next question from Gabor Kemeny with Autonomous Research.

My first question is on NII, I believe, decent growth in your core NII in Q3, together with loans and you even expanded your net interest margin a bit. Can you share your initial thoughts on the NII outlook going into 2026, shall we model NII growth which is kind of aligned with loan growth, for example. And that's the first one.

Second one on the overlay provisions you flagged from Ukraine. I believe the wording is that you increase the risk zone Ukraine. Can you elaborate a little bit further on this? Why this triggered additional -- how this triggered additional provisions? And was the likelihood of recurrence in the coming period?

And my final question is on Czechia, New government is being formed with some maybe more populistic measures on its agenda. What do you think is the likelihood of a bank tax maybe a more effective bank tax being introduced in the near future?

Thank you, Gabor. Coming to your first question. I -- we -- at this point in time, we do not speak too much about the outlook in 2026. So I'm sure, as you're following so long, you are not that much disappointed or surprised. What we can share is that, yes, in all the markets, we see -- we expect loan growth in retail area because the employment rate is good in all the markets, which means in combination with wage increases. This gives a higher potential for customers to also take more loans. So this is the one.

And as I indicated before, also incorporates, we see some adjustments. You have seen our assumptions on the -- in the presentation on the rate development, okay, there we see some negative impact on the NII. But we still assume now, I would say, as of today, a slightly improvement and, of course, also in the NFCI.

Gabor, I was once sharing with you that when we look at Ukraine, we have -- we look in the -- at Ukraine in sort of 3 regions, green, where there's almost no war-related activity, yellow, where there is war-related activity and red where there is really intense fighting. And since we now see an increase of the FX over the entire Ukraine, we have thought that it's prudent to increase our overlay provisions in Q3 by this EUR 15 million, given that this dividing the country in these 3 zones only is not anymore good enough. So this was a motivation for increasing the overlay bookings by EUR 50 million for the entire Ukraine. Thanks for the question.

Yes. And then there is a question which is difficult for me to answer. It's about Czech politics, let us observe the coming weeks and then come to a final comment on that. I would agree with you that -- we are in a situation that every country feels encouraged to increase bank tax. But I hope this is more speak than real action.

We'll take our next question from Riccardo Rovere with Mediobanca.

2 or 3, if I may. The first one is on -- again, sorry, in loan growth. RBI core, excluding Russia and Belarus year-on-year, the book is up just a little less than in 4% according to your Excel file. And what could bring -- why that should go to kind of 6% to 7% in only 3 months. This is the first question.

The second question I had is on deposit growth, which is honestly amazing because it's doubling -- double debt of loan book at the moment, more than 7%, if I'm not mistaken. I was just wondering what is driving that? And if you think this will have to slow down at some point. The other question I have is on NIM. It was 2.31% in Q1. Then fell a little bit to 2.27% in Q2 now is back to 2.3%.

So basically, you're not suffering any kind of margin pressure over the past 6 months. And given that rate cuts should be more or less done, not everywhere, but in most of the countries where you operate or affecting most of your loan book. Is it fair to assume that it is hard to believe that severe margin pressure should be visible on the next and medium term. Thank you.

Riccardo, so to your first question, loan growth, indeed, that's -- given where we are and what is ahead of us, it's -- it's very optimistic. I agree. On the other hand, how do we judge it. We have seen that retail is still doing fine, and so they will contribute their part -- but of course, the bigger volume now has to come from the corporate books and -- we have a strong pipeline. This does not mean that the end of the day, we will get all what we have now in the pipeline as competition is significant in this area as well. .

But the best what we can say is it seems to be possible. And this is, of course, a bigger part has to come from head office in absolute to volume for sure. But also we see quite good pipelines in most of the corporate areas of our retail -- of our network banks.

Now to the deposit growth. Yes, we see that customers are earning nicely, and they put quite a lot of their wages on their account. So this is the drivers, quite good liquidity in many of the markets. So forward looking, is there some risk that one or the other market, the Central Bank might reduce a little bit the liquidity and thus putting also on the pricing of deposits, some pressure, this can happen.

And we also see now an increasing competition even without the special impact, what I have mentioned. So -- to your third question, NIM, very stable. Can there be the way I understood it -- could there be pressure coming from somewhere. Indeed, as I said, competition could be one pressure. The other is, yes, we compare then banks have their model books, have their historic run rates in the book. So probably you always have a combination of all this, but it looks positive as of today. Thank you.

We'll take our next question from Máté Nemes with UBS.

I have 3 questions, please. The first one would be on overlays. Hannes, you mentioned that you see no reason that overlays presently. Can I ask you about the approach to overlays in 2026? What would drive your decision to either add or potentially to release some of these substantial overlays for the ex-Russia business? That's the first one.

The second one would be on corporate loan growth and the pipeline in GC&M. You clearly mentioned that the bulk of the corporate lending growth in Q4 would have to come from there. Can you talk a little bit about the nature of the pipeline? What sort of deals -- what sort of lending do you expect materializing?

And the last question is on Poland and the euro mortgages. The numbers I mentioned below the EUR 300 million guidance for this year, so something around EUR 220 million or EUR 250 million, if I'm not mistaken. Can you talk about the assumptions or the expectations for those provisions in 2026? What would drive them? Where do you feel the adequate provisions level would be?

Well, Máté, thanks for all the questions. I may start with the question number one, when you're talking about the overlays on 2026. So just to remind the audience, we have some EUR 100 million of overlays for Ukraine. And we have another EUR 100 million of overlays for Russia, which remains for the core group of RBI Group and overlay of around about EUR 300 million.

So when would we release and also before I go to the details on when and why we would release or why we would see good motivation for releasing. I'm now referring to the financial stability report, and I think you all have seen that, of course, some leading indicators, PMIs are looking constructive.

At the same time, uncertainty index stays elevated. So when would we feel encouraged to release some of these overlays. This would be, of course, if we see materialization on Stage 3, if we see a clear change in the risk perception. And of course, whenever there is a substantial change towards sanctions in war-related risks, we would be more than eager to adjust our overlays in our overlay amounts what we have created. So this is our thinking when it comes to the overlays.

Johann, if this is final, I also would immediately take the #3 question, Poland, Euro and our current way of thinking how do we come to this EUR 225 million, EUR 200 million, a little bit up to EUR 225 million, EUR 250 million, maybe. The one is we always we are sharing with you our Swiss franc guidance, and this was always around about EUR 150 million, EUR 170 million. And if I look at how you have modeled this number into your assessment, I think we have been well understood.

And what has been now new, Máté, is that we see that the in the local industry, when it comes to litigation provisions, have now moved on also on the euro part of the portfolio. So we see not yet an elevated inflow, but we see a higher inflow of euro litigation, and this was the reason for us not to leave you in the belief that the EUR 150 million is good enough for the next year. But that's the reason why we added this round about EUR 80 million on the euro side, and it could come mainly from the active euro loans outstanding.

Of course, here, amounts would be less pronounced than compared to the Swiss franc. First, the portfolio was a smaller one. And second one, the FX-related devaluation part is a smaller one. But this is our way of thinking how we come to this guidance on EUR 220 million to EUR 250 million. So the confirming the previous guided EUR 150 million for the Swiss Franc but being more prudent when talking about euro, hope this helps in understanding our thinking. Thanks for the question, Máté.

Yes. And to your other question now in GC&M, where should it come from? I would say, broad over all sectors with some larger tickets, of course, as well. So people will be busy, but I cannot in the head office here, pick out a specific industry or so where we would see it. It's rather broadly, and of course, larger tickets than what we have in the network banks but also in the network banks, the corporate part is lining up.

And given the size of what they have in some of them significantly, I mean maybe I was not so precise enough that the retail -- we recently have been growing above the market. And I think this, this at least will continue till end of the year. So from all areas positively supported.

We go next to Ben Maher with KBW.

I just got 2. I think you mentioned you were growing ahead of the market in particularly retail lending. I was just interested to get your thoughts on why that is, that's around pricing or something else? And then my second question is just on fee growth. That's been very strong, particularly this quarter. Again, I just want to get a better understanding of what's driving that and whether you expect that momentum to continue into the final quarter. And I know you're reluctant to give any numbers for next year, but if there's any color you think you can give for next year, that would be helpful. .

Yes. I think our -- we got it right in retail. Recently, I would say we had periods where we are holding back with the mortgage business as for a period of time, margins were very, very thin. And as the margins are now in an area where we are fine with it, so we can -- we can get to our market potential or slightly above. So I think what paid off is that we -- usually, when you hold back, then it takes quite some time until the customers perceive you that you are back again in the market. And this, we have achieved in the beginning of this year, and we are building on that. And with the margin in this business, we are fine.

The fees, what you're referring in the Q3, indeed, they were good for us. And what can I say? I think -- and I did cut comes to some extent also in Q3 because of the tourism season, which is good in some of our quarters and with this also some as in our region, sorry, and some also from the tourism and therefore, the FX. Yes. And of course, you always have to be aware that part of this is, how shall I say, a little bit higher than the core of it because of part of the transaction tax, what you have in Hungary goes also in this line. But overall, we are very fine with the development.

[Operator Instructions] We'll go next to Riccardo Rovere with Mediobanca.

2, if I may. The first one is it is on cutting Russian exposure. You mentioned at the beginning of the call that you're running ahead of schedule that you have agreed with your supervisor. Still looks to me that over the last quarter, at least, the decline, especially in the deposit side seems to have come to a sudden stop, if I may say so. So I was wondering what is driving that? This is the first question.

The second question is on your capital, the way you see your capital at the end of 2025, what kind of target do you think the bank should have assuming Russia one day will be solved?

Thank you, Riccardo. To your first question, the development of deposits. I mean, one has to say, of course, this is always driven by opportunity costs, what customer face. And it's more than difficult to -- I mean, if you look at to forecast, if you look at the reduction, 38% is huge. Nevertheless, it could have even been more. So it's -- I think it's less -- for us, it's not a big thing as usually when you think about the runoff of deposits, it's then the question to long-term funding and liquidity. You have seen that there is no need for this. So it's from the income, it's rather opportunistic.

It's placed with the Russian Central Bank. So difficult to say what keeps -- this opportunity cost keeps customer with us. I would not make any, any forecast to this, how this develops further. We have done everything to incentivize and now I have to say the rest is in the hand of the customers. When talking about the capital at year-end, so the 15.2%, we are comfortable with this. I think we are -- we are a little bit away from the scenario you outlined about Russia. And then of course, it's also a question of how will then be the operational RWA impact from Russia be treated by the, the Central Bank, but we are around 15% is for this point in time, a good number, I think.

Sorry for follow-up. On both questions, if I may. The first one, your -- are you basically saying that what RBI is measured on is more the reduction of the loan book than on the deposit side when it comes to cutting the Russian exposures because I understand at some point, it's the customer decision to withdraw money from you or not, while maybe you have more control on the loan side. So is this the way the supervisor looks at things? Or do they want also you to bring the deposit down?

And the second question is a follow-up, 15.2% is a high number. So I was wondering, do you think this is the target of the bank in normal conditions or could it be lower given the risk profile of RBI excluding Russia?

Coming to your first question the whole story about Russia is always what is totally in our hands or let's say, in the hands of the Russian bank and what is -- what is done in other hands being it by institutions who give us a framework where we can act in our customers.

Now in the loan book, we have the planned run down. So the expected rundown, the quality of the portfolio is very good. Customers are repaying to a large extent as scheduled. And -- but not more. I mean, you might be -- you might remember that in the past, we had quite a lot of fixed rate loans. And whenever the, the rate cycle went down then customers were very quick in refinancing at a lower rate.

Now given the rate level where we have, so this is not to be expected also not in the near future. So we had seen in the corporate loan book, some faster repays than were scheduled, but everything else is according to the schedule. So and we don't grant new loans, so this is why this is following that. And as I said, we have to offer in Russia and account and then it's the only thing we can do that we don't pay interest for none of the accounts. And then as I said, it's the decision of the customers how much money they keep with us.

And this is communicated analyzed and also shared by the Russian -- by the ECB or supervisor. So this is clear. Now probably it's not the right point in time to think about the different CET1 ratio for the group without Russia as Russia is -- the Russian bank is still with us. And yes, you point us in a direction to adjust it somewhere in the future. And when we feel the point in time we will then speak about it. Thank you.

[Operator Instructions] We'll go next to Simon Nellis with Citibank.

Just a quick one from me. Can you perhaps share some thoughts on the dividend that you're looking to pay out of this year's earnings and the negotiations or discussions with the regulator, given that your performance is quite nice. I assume that you think you can deliver a nice increase in the dividend. And also, it'd be interesting to know what the dividend accrual for the first 9 months was in your capital that you reported?

Yes, I'll start with the second part, and this is we accrued EUR 1.20 per share. So in the first 9 months. So as this is a very mechanical thing, you then see also that we just formally will accrue also until the end of the year, another EUR 0.40, so EUR 1.60. This is what we have in our calculation and talks with at least on my level with the supervisor have not started yet. So yes, that's always an interesting discussion -- what is the parameter for this discussion group, core group or all this. So work in progress starting at a later point in time.

[Operator Instructions] As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.

Thank you, moderator, and thank you to all participants for showing interest, devoting sometime. I wish you a good afternoon. Thank you. Goodbye.

You may now disconnect.