Yves Biewer, chairman of Raiffeisen Bank, says that the bank’s business has only been marginally affected by the crisis in Ukraine. Photo: Guy Wolff/Maison Moderne

Yves Biewer, chairman of Raiffeisen Bank, says that the bank’s business has only been marginally affected by the crisis in Ukraine. Photo: Guy Wolff/Maison Moderne

Raiffeisen Bank reported positive figures for the year 2021. Commenting on the results, Yves Biewer, chairman of the executive board, discussed the impact of the war in Ukraine on the bank’s business and announced a strengthening of equity capital.

Raiffeisen Bank, which specialises in savings, loans and investments, presented its annual results for 2021 on Thursday, indicating a net interest income of 3.3%. Net commissions, on the other hand, recorded an increase of 13.8%. Last year was also particularly favourable for the bank with regard to securities investments.

Raiffeisen announced a net banking product, a metric designating the added value created through the bank’s activities, which showed an annual progression of 5.1%. The bank explained this result by the temporary nature of the savings made in 2020 and the investments made in digital tools.

What is always very important at Raiffeisen Bank, and this does not change whether there is a crisis or a pandemic or something else, is to be in proactive contact with its customers. There is always a way to get in touch with a manager, whether it's via a branch or via digital tools.
Yves Biewer

Yves Biewerchairman of the executive committeeRaiffeisen Bank

While discussing the topic of digitalisation, , board chair, said of the bank’s approach: “What is always very important at Raiffeisen Bank, and this does not change whether there is a crisis or a pandemic or something else, is to be in proactive contact with its customers. There is always a way to get in touch with a manager, whether it's via a branch or via digital tools.” The bank had 34 traditional branches and one online branch last year.

As of 31 December 2021, Raiffeisen reported that its balance sheet total has increased by 5.4% compared to 2020, reaching nearly €10.2bn.

A subordinated loan

With regard to its liabilities, Raiffeisen noted an increase of 6% in funds entrusted by non-banking customers, equivalent to €505m, of which €284m are related to household savings. Non-banking services generally constitute a range of services and products legally distributed by banking institutions, without being their core business.

In terms of its non-banking clientele, the bank said that large institutional depositors have strengthened its liquidity position, with a contribution of €226m as well as an extension of the duration of deposits.

Regarding assets, the credit institution experienced a growth of 4.3%, or €308m, in its customer loans activity. This can be explained in part by the 6.2% increase in its main activity, in this case the financing of access to property. However, this trend must be put into perspective with the slowdown in business investment as a direct consequence of the commodity crisis which is causing disruptions in global supply chains.

Thanks to the level of the liquidity reserve with the Luxembourg Central Bank, which has shown a certain stability compared to the end of 2020, Raiffeisen’s cash investments have grown by 8.5% over the year. This amounted to €209m.

“Why doesn’t the bank show spectacular results? We put a lot of money in reserve, simply because we don’t need to pay a dividend to shareholders.… In our case, the results are hoarded and that is how we finance our growth.”
Yves Biewer

Yves Biewerchairman of the executive boardRaiffeisen Bank

In the presentation of its results, Raiffeisen Bank also stated that it had increased its equity by 4%. This is due in part to the retention of net profits, but at the same time it allows the bank to maintain its solvency level which allows the bank to continue its financing activities. Biewer explains that the launch of a subordinated loan is currently being prepared. “We have demand from our customers who want to participate in the growth of our organisation.”

“Why doesn't the bank show spectacular results?” asked Biewer, adding: "We put a lot of money in reserve, simply because we don’t need to pay a dividend to shareholders.… In our case, the results are hoarded and that is how we finance our growth.”

Macroeconomic consequences

In view of the health crisis, Biewer comments on the result achieved in 2021: “We are a very prudent bank. We are known for that. There are never any extravagances and you can see from our figures that there is always continuity.” As a result, he stressed: “We are not looking to maximise our profit, we are looking to have continuous growth. Whether there is a crisis or not is less important.”

However, the current economic reality has led the bank to create value adjustments and sectoral provisions. With the war in Ukraine, Biewer foresees a series of direct consequences regarding clients: “At some point, the electricity bill, food prices, rent go up, there is not enough money left at the end of the month to repay the loans, leading to a default.”

A local market with little exposure

The commercial and industrial world will also be affected. “Inevitably, companies that consume a lot of energy will not achieve the results they were expecting in a normal situation,” says Biewer. He adds that “it’s the same thing with agricultural production, where fertiliser prices are exploding”. And “without fertiliser, no harvest, I weigh my words”, he concluded, indicating that it will therefore be necessary “to set up moratoria to try to allow customers to work in relatively comfortable situations, despite the global situation.”

We work on an exclusively local market. We know our market, we have never ventured abroad. We are dealing with a rather well-off clientele in a country that has a certain number of means to provide aid.
Yves Biewer

Yves Biewerchairman of the executive committeeRaiffeisen Bank

The European macroeconomic situation also has indirect consequences for the bank. “The European Central Bank considered the increase in inflation, especially in the second half of last year, to be a temporary phenomenon. Now we realise that it is far from being a temporary phenomenon,” said Biewer. While inflation forecasts have been revised upwards, the Raiffeisen chairman expects interest rates to rise slightly by the end of the year. “We are in a situation of stagflation”, he insisted, indicating that “if rates rise, there will be hope for savers on savings books”.

However, in view of the current crisis, Biewer is keen to put the impact on the Luxembourg market into perspective: “We work on an exclusively local market. We know our market, we have never ventured abroad. We are dealing with a rather well-off clientele in a country that has a certain number of means to provide aid.” Also, in terms of the bank’s activities, "we do not have any risks in sectors with major problems and certainly not abroad”.

This story was first published in French on . It has been translated and edited for Delano.