Speaker #1: Q3 results presentation. before we jump into the numbers and recent business developments, I would like to update you on our strategy review. In the past 3 months we have defined a strategic pillars and assembled a portfolio of initiatives.
Speaker #1: Which will transform the bank, and reset our financial ambition. We are now planning and preparing each of these initiatives for implementation. In corporate and investment banking, we intend to become the leading house bank in our region.
Speaker #1: This means better cross-selling and, in particular, focus on more efficient use of RWAs. We will prioritize growth in the more profitable segments, and be very disciplined with our hurdle rates.
Speaker #1: In retail, our digital offering has made remarkable progress in recent years, and we will continue to build on this. We will deepen customer relationships and improve engagement and monetization.
Speaker #1: I see enormous potential in both, SME and wealth management, and I expect these to contribute significantly to our growth engine. Across all our business lines, we are focused on the quality of our growth.
Speaker #1: I believe that the strategy and initiatives which are being finalized will do just that. Improving our profitability is one of our highest priorities. It is very important that our financial ambitions be met with initiatives which we can control, irrespective of the market conditions or interest rates.
Speaker #1: Cost discipline and capital allocation will serve us in any environment. Growth will, of course, be part of the story, and here I see two drivers.
Speaker #1: First, there remains significant untapped potential in our region, and we are well prepared to benefit from this. Second, we will have capital to deploy, and we are ready to absorb faster growth.
Speaker #1: But let me be clear: I expect our financial ambitions to be achieved through our own self-help, growth, and market momentum will come on top.
Speaker #1: On the 10th of February, next year, we will present to you our updated strategy, and financial targets for 2030, on the occasion of our capital markets day.
Speaker #1: This will be held in Vienna, and we look forward to welcoming you here. Let me now briefly update you on the two acquisitions which we have been working towards.
Speaker #1: First of which is Garant in Romania. I'm happy to announce, and we still did this today, that the transaction was successfully completed. We expect to become third largest bank in Romania.
Speaker #1: We will now work on the integration of the new businesses and we aim to merge it into Raiffeisen Bank Romania in the second half of next year.
Speaker #1: There is 2027 will be impacted by some restructuring and integration costs, from 2028 onwards we expect to see substantial contributions in Romania from this transaction.
Speaker #1: The acquisition of Addiko is also moving ahead. First of all, we have now reached the end of the additional tender period, and we have reached participation of nearly 95%.
Speaker #1: And this may still increase in the coming days, as more tender instructions are received. We are finalizing the regulatory approval process, and the dialogue with the respective authorities has been very constructive.
Speaker #1: We continue to assume that this transaction will complete still this year. Once we have received all the required approvals. At the same time, we now deem the carve-out to be unlikely, and this does not change our appetite for this transactions.
Speaker #1: If the carve-out does not go ahead, we will look forward to including all of Addiko's subsidiaries in RBI Group. This means, in Serbia, the inclusion of Addiko Serbia consolidates our top 3 market position and reconfirms our commitment to the market.
Speaker #1: In Bosnia, we already have a market-leading franchise, and we welcome the addition of Addiko's two subsidiaries there. And moreover, we will also now enter Montenegro.
Speaker #1: Financially, this will improve both our CT1 ratio and ROE. In both cases, we can now assume that all subsidiaries remain part of the group, and we can recognize the full benefit of the bad load.
Speaker #1: The full acquisition of Addiko has an impact of around 30 basis points on our CT1 ratio, excluding Russia. Down from an expected minus 50 basis points when we still assumed the carve-out would succeed.
Speaker #1: The one-time gain from the bad load on all of Addiko will also go through P&L and have a one-time positive effect of around 310 basis points on our ROE this year.
Speaker #1: Moving to my next slide, there are a rundown in Russia continues to progress nicely. Loans to customers are down to 2.2 billion euros, and in particular corporate loans which are down to less than 700 million euros.
Speaker #1: Our commitment to running down the bank is unchanged, and you should expect to see steady progress here in coming quarters. Equally important, we have made good progress in our claim against Raspberria.
Speaker #1: We now have a final verdict against Raspberria, and the damages that we have suffered have been recognized by civil court. In the next step, we will approach the Austrian financial market authority, and request the lifting of the freeze on Raspberria's Austrian assets.
Speaker #1: We cannot comment on the timing of FMA's decisions. But we believe we have a very strong case backed by European sanction legislation and by the final verdict by the already mentioned Austrian civil court.
Speaker #1: We expect to sell the Strabag shares directly from Raspberria's account, and will not take them onto our balance sheet. Please understand that I will not comment further on the timing or strategy of this liquidation.
Speaker #1: We will next update the markets as soon as we have a positive decision from FMA. Let us now take a look at the results year to date for the core of the group excluding Russia.
Speaker #1: Consolidated profit stands at around 1.1 billion euros, up 10% year on year. Loans to customers are up around 8% year to date, with strong momentum in retail in particular.
Speaker #1: Our CT1 ratio assuming a worst case in Russia remains strong at 15.4%. Finally, profitability remains in line with our guidance prior to the Addiko windfall, around 10%, and around 12.5% excluding the legacy issues.
Speaker #1: Camilla will comment later on in more detail on the result. Before we jump to the outlook, I would like to share with you a few highlights from Raiffeisen Research CE banking sector report for 2026.
Speaker #1: If you are not familiar with this publication or if you have not received it, I strongly recommend to get in touch with us, and we will send you a copy.
Speaker #1: GDP growth rates continue to improve across our region, and the convergence trend towards Western Europe remains strong. We also expect loan growth to remain strong.
Speaker #1: Close to 10% in nominal terms in both 2026 and 2027. Both of these trends are very supportive for our business, and as I mentioned a moment ago, we are very ready to grow.
Speaker #1: The banking sector itself remains in excellent shape. With remarkable asset quality, and structurally higher ROAs compared to Euro area banks. Finally, we see that households market investments are under 20% of GDP.
Speaker #1: Compare to nearly twice that in Western Europe. This is another tailwind for our business, and wealth management is key to our retail strategy. On the next two slides, I want to briefly comment on you can see the individual country GDP outlook.
Speaker #1: CE is expected to remain on the right path, and we see further improvements in SEE as well as in Austria and the broader Euro area.
Speaker #1: Inflation expectations for next year and key rates forecast in our main markets you can see also on slide 11. I won't speak much there, and you will anyway find more details from our CE banking sector report.
Speaker #1: And this brings me finally to the outlook for 2026. We now include both guarantee and Addiko very important to add always on the assumption that Addiko approvals have been obtained still in the last quarter this year.
Speaker #1: And with an assumed participation in Addiko of nearly 95%. The net interest income is now expected above 4.5 billion euros. And fee income confirmed around 2.2 billion.
Speaker #1: OPEX are now expected about 50 million higher, which with rounding brings us close to 3.9 billion. Risk cost guidance is unchanged with up to 35 basis points.
Speaker #1: Including Addiko, we can now guide for an ROA of around 13%. And if you also exclude the one-offs, we are around 16%. Please note that this includes the one-time gain from acquiring Addiko for less than the book value of equity.
Speaker #1: Loan growth should remain positive in Q4, and we expect to finish the year up around 9% organically, including the consolidation of the two transactions our loans to customers will increase by nearly 14% this year.
Speaker #1: And finally, CT1 ratio is expected around 14.5% excluding Russia. Which versus today's 15.4 is largely explained by the impact of the both acquisitions. Thanks for your attention, and I may now hand over to Camilla.
Speaker #2: Thank you, Michael. Good afternoon, ladies and gentlemen. Thank you for your interest today. I'm happy to report another steady quarter across all of our operating trends.
Speaker #2: Starting with NRI, we can report a record 1.16 billion euros this quarter, this equals to almost 4.5% growth quarter on quarter. Fee income is up around 1.5% quarter on quarter, and across both of these key revenue lines, we expect further decent growth into the year end.
Speaker #2: OPEX reflects legal and advisory fees relating to Raspberry case, so excluding this one-off, cost would actually have been down in this quarter. We have just learned from Michael that our guidance into the year end has been increased by around 50 million euros.
Speaker #2: This is largely driven by Addiko related expenses and integration costs. Which was not considered in our previous forecast. Let's look at this in more detail on the following slides.
Speaker #2: So I move on to slide 15 on NRI. NRI, this quarter benefits from further volume growth in both retail and corporate. But equally from a better Euro and Czech Koruna key rates, which is our main currency.
Speaker #2: These key rates moves also drive the name improvement this quarter, mainly on the liability side. Asset margins remain tight, in particular in the retail.
Speaker #2: Corporate margins have remained broadly stable. Looking at some of our key countries, I would comment on Czech Republic. In the Czech Republic, NRI was up 8% in the quarter.
Speaker #2: We see an improving deposit margin on the liability side, which is partially reflects our own decision not to compete as much. Retail margins remain under pressure.
Speaker #2: However, this is partially compensated by very robust volume trends. And these volume trends we see both in consumer loans and in mortgages. In Romania, margins have stabilized with pressure on the asset side offset by a better liability dynamics.
Speaker #2: Here, the shift from current accounts to term deposits has slowed, and the current accounts have stabilized. Volumes remain to remain supportive, especially in the new mortgage lending which continues to accelerate.
Speaker #2: Moving on to the next slide on the fees. Fee income remains very encouraging, visible in all countries and across range of products. We see a general pickup in transactions, positive trends in the corporate business, but also in asset management.
Speaker #2: Overall, we continue to expect around 2.2 billion euros of fees in 2026. On slide 17, you see loans to customers. Loans are up 2% quarter on quarter with good trends I mentioned in the Czech Republic and Romania.
Speaker #2: But equally, Slovakia where mortgages and consumer loans and also corporate lending are all up 3% in the quarter. Serbia also stands out in this quarter.
Speaker #2: Where retail loans are up 5% and the corporate loans up 4% this quarter. After nine months, we have around 8% loan growth in the entire group, although this also includes over a billion of short-term business, which normally rolls off before year end.
Speaker #2: Excluding this, our core lending business is up almost 7% in the nine months this year, and we can guide for around 9% organic core lending growth in 2026.
Speaker #2: Now we also include two acquisitions, Michael already mentioned, Garanti, which closed this morning, and Addiko, which we also assumed for Q4. Our loan book will grow nearly 14% in 2026.
Speaker #2: Finally, if we compare these two market trends, we are growing in line with our peers in corporate segments in most markets, and even well ahead in Hungary.
Speaker #2: On the retail side, I'm also pleased that we are growing above the market rates in all of our key markets. As we look ahead at the possible uses of excess capital, I'm encouraged that by our organic market share gains.
Speaker #2: Moving on to deposits on slide 18, deposits from customers are up 2% in the quarter. In retail, taking into account FX effects, deposits from households increased 1% quarter on quarter in Czechia and Hungary.
Speaker #2: In Romania and Serbia, deposits were up 2% each quarter on quarter in local currency. Liquidity ratios remain very comfortable across the entire group. On the following slides, we move on to the capitals.
Speaker #2: With a stable development this quarter, both good profitability side, but also on the lending growth. On slide 20, our CT1 ratio assuming a worst-case scenario in Russia and the assumption behind this ratio.
Speaker #2: On slide 21, you see our CT1 outlook into the year end. We are working on securitization of retail loans which are expected to close in Q4.
Speaker #2: This will provide us some further relief ahead of some maturities early next year. The biggest impact in Q4 is, of course, two acquisitions, equal to around 90 basis points of CT1.
Speaker #2: That's around 14.5%. We will be in line with our 14.5 mid-term target level. Briefly on slide 22, our threat ratios and requirements. Let me move on to the next slide on the EMREL.
Speaker #2: And generally funding funds. We can report very comfortable EMREL ratios in the resolution group Austria, but also in across all of our resolution groups.
Speaker #2: In Romania, we pre-funded EMREL impacts of Garanti and with a senior non-preferred note back in August, which explains unusually high buffer there as of Q3.
Speaker #2: Looking ahead to 2027, our subsidiary will be busy. We expect benchmark transactions out of Czech Republic, Slovakia, Hungary, as well as in Romania. And head office, we have a tier two up for call in September of the next year, and we will take a closer look in Q1.
Speaker #2: And we'll probably issue at least one senior preferred note. Moving on to my last slide, on Poland, we continue to guide for litigation provisions of around 220 million in 2026.
Speaker #2: As in previous years, provisioning is not linear. In Q3, provisions declined by 251 million, mainly due to lower Swiss franc inflows. And we would expect another slow quarter in Q4.
Speaker #2: We continue to see good progress in our settlement programs and overall provision requirements will continue to drop in 2027. Ladies and gentlemen, thank you for your attention.
Speaker #2: And now hand over to Hannes for a risk update.
Speaker #1: Thank you, Camilla. Good afternoon, ladies and gentlemen. Thank you for joining us this afternoon. And sorry for my bad voice. Allow me to briefly update you on risk trends this quarter.
Speaker #1: Starting with a few numbers. In the third quarter, we have booked 49 million euros of provisions. And year to date, it's 159 million euros of provisions.
Speaker #1: Also equal to 19 basis points. Our MPE ratio reaches a record low at 1.5% with a state's recoverage ratio of 48.6%. Our stock of overlays remains healthy, around 330 million euros, and we do not expect any material updates into the year end.
Speaker #1: For me, all this is confirming a benign asset quality. Risk cost guidance for the full year of 2026 is around 35 basis points. And before you ask, and I assume you will, the decision to keep the guidance well above the current run rate is based on three factors.
Speaker #1: The broader macro outlook remains challenging, and the reasons are well known to you. I believe this deserves a little bit of caution. The retail run rate is around 50 million euros per quarter, and we can already expect a few minor cases in the corporate book in Vienna.
Speaker #1: And finally, as said by Michael, and Camilla, we also included here the first time consolidation effect of both Garanti and Addiko. Let me move on to my next slide, risk cost and IFS provisioning for the Q3.
Speaker #1: I'm mainly driven by the releases to the macro model explained by an improving environment in Hungary among others, and 63 million euros of state's reallocation which is part of the regular course of business.
Speaker #1: I move on to the next page, Q3 2026 risk weighted assets development. You could say uneventful, mainly driven by corporate loan growth and to some extent retail as well.
Speaker #1: And looking ahead to next year, we expect around a billion of risk weighted assets increases coming from model reviews and updates. We expect some inflation to a large corporate IRB model in Vienna, and while it is too early to quantify, I'm confident that this will be comfortably be digested in our capital and growth plans.
Speaker #1: This already brings me to my last page. MPE ratios remains low across the group, and I'm sure you have recognized in Vienna we continue to make good progress in our work out portfolio with MPE volume down by 11% in the quarter.
Speaker #1: Ladies and gentlemen, thank you very much, and we are now more than happy to take your questions.
Speaker #3: Thank you. If you would like to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
Speaker #3: And to withdraw your question, you can press star 1 and 1 again. Please stand by while we compile the Q&A queue. Thank you. We will take our first question.
Speaker #3: This is from the line of Matty Nemez from UBS. Please go ahead.
Speaker #4: Yes, good afternoon, and thank you for taking my questions. I have three of them, please. Firstly, I wanted to follow up on your comments on the guidance change.
Speaker #4: I was wondering if you could give us a clear bridge for the change in full year 2026 guidance, specifically which elements reflect underlying operating performance and which reflect changes in rates or other macro assumptions.
Speaker #4: And what are the one-time effects in the guidance, specifically I'm thinking about NII and OPEX, I think, and OPEX you mentioned, roughly 50 million change.
Speaker #4: But if you could clarify that. Similarly, on NII. The second question is on the two acquisitions. On Garanti BBVA and Addiko, could you quantify the expected impact of each transaction in terms of uplift on ROE beyond the initial restructuring period or integration period, i.e. perhaps in 2028?
Speaker #4: What would be the ROE uplift coming from the transactions? And the last question is on the risk side. Hannes, you mentioned that you would expect a few default cases in the corporate book in Vienna in the fourth quarter.
Speaker #4: If you clarify if there is any unifying theme across those. And secondly, you mentioned stage three provisions or you wrote stage three provisions of 63 million in the third quarter.
Speaker #4: And referred to mainly household in Czech, Slovakia, and Romania. If you could give us a bit more color is that consumer lending, where are those stage three provisions coming from?
Speaker #4: Thank you.
Speaker #2: Thank you, Matt. Let me take your first question on the guidance of the change and decomposition. So in our guidance, organic NII improvement is approximately 70 million euros.
Speaker #2: And this is coming from Euro and Q and Czech Koruna rates. And the beta volume. Addiko adds approximately 20 million. When it comes to Garanti, it was already included in Q2 guidance.
Speaker #2: So here you would not see the change from our guidance coming from that. On the OPEX side, excluding Raspberry one-offs, we see approximately 50 million increase in the guidance, largely due to Addiko.
Speaker #2: And Addiko integration cost. However, with rounding, it takes us from 3.8 to 3.9 billion. So that's a rounding effect. Garanti, as I said, was already included in the previous guidance.
Speaker #2: Return on equity is largely reflecting expected backdrill from Addiko. Which alone contributes approximately 310 basis points one-off increase in ROE. Excluding Addiko, our guidance slightly better than Q2 with a core ROE of approximately 10% or 13% adjusted for Poland and Raspberry legal costs.
Speaker #2: I hope that provides the answer to the first question.
Speaker #5: Thank you. So I
Speaker #1: will take over the second question. The expected impact out of the two transactions. I will focus on the profit accretion in this respect. For Garanti, we expect a profit accretion of 90 million euros in 2028, increasing to 130 million by 2030.
Speaker #1: This should see Romania earning over 400 million after tax in the coming years. On Addiko, we need to first now complete the voluntary takeover.
Speaker #1: Once this is done, we will take a closer look at the different businesses in order to provide a better guidance to you as we had the most recent developments to take into account.
Speaker #1: So please give us your more time. Thank you. Matthew, thank you also for your question. Thank you for me the opportunity to give a little bit more insight to the risk cost thinking for the year end.
Speaker #1: The first one is, as I said, it's the broader macro outlook, which remains challenging. You could say this is the disclaimer because we have seen so many surprises.
Speaker #1: But let me also talk about things where we are pretty clear. 50 million euros of run rate on the retail, this is what we have seen in the last quarters.
Speaker #1: So I think this is pretty clear to confirm it here. The second one is the corporate book in Vienna because you touched it. We all have seen that interest rates are being up.
Speaker #1: And this means that on cash flow basis, I need to adjust here and there the one other ILP think about some 15, 20 million euros.
Speaker #1: But this is about it. And then the third one is the guidance is also including our first-time consolidation effect from both Garanti here we're talking around about 20 million, 22 million euros, and also Addiko around about 50 to 60 million euros.
Speaker #1: Hopefully this helps to have a better insight and a better understanding. Thanks.
Speaker #4: Yes, certainly. Thank you. If I may just one follow-up on the second question on the ROE uplift coming from Garanti BBVA. Given the numbers you mentioned, we have 90 million in 2028.
Speaker #4: Is it fair to state that this lifts ROE for the group ex-Russia by at least 100 basis point alone?
Speaker #1: I think this I would say it that way. We have now 2027 at the year of integration. And we will have a look at this now in one year, roughly one year, on this but given our ambitions on the way forward on the ROE, I would ask you to wait for our capital market stay in February where we bring in general our way forward on the ROE and we'll go here more in details.
Speaker #1: If this is fine for you.
Speaker #4: Absolutely. That's fair. Thank you very much.
Speaker #1: Thank you.
Speaker #3: Thank you. We will now take the next question. This is from Ricardo Rivera from Mediobanca. Please go ahead.
Speaker #1: Well, thanks a lot for taking my two or three questions if I may. The first one is on capital requirement so that the Austrian regulator decided to lower the OC buffer by 50 basis points also for you.
Speaker #1: I was wondering whether the 14.5% long-term aspiration does take that into account or maybe this is going to be replaced by something else. The second question I have is on the intention of the two can you exactly explain when those integrations should take place?
Speaker #1: Now, Garanti is done, so you will consolidate Garanti for, let's say, a couple of months from this morning if I'm not mistaken in the P&L.
Speaker #1: The balance sheet will be fully consolidated. It's not a clear to me. What is going to happen given the transaction is not yet completed, but you keep talking about possible impacts also towards the end of 2026.
Speaker #1: And then sorry to get back one second. Unless on the 35 basis point risk guidance, does this include one-off well, I don't know if one-off or not, but provisions related to the two acquisitions.
Speaker #1: It's not clear to me. Sorry. Sorry to ask that.
Speaker #5: Okay. Thank you, Ricardo. The sound was a little bit difficult. I hope we understood your questions very well. So referring to the first capital requirements changes in Austria, the first step happens actually in January 2027, minus 25 basis points.
Speaker #5: And the second one will follow in the January 28th. Another 25 basis points. So from that perspective, 50 basis points for the group and the RBI again in total.
Speaker #5: But we view this as quite a positive development. But we won't feel the immediate benefit itself. It would be quite limited because we will not change our medium-term CTO in one target from 14.5.
Speaker #5: So we will remain at that level going forward.
Speaker #1: And perhaps Ricardo sorry.
Speaker #4: No, no, no. Fine.
Speaker #1: Please go on. And perhaps coming to your second questions, I hope we understood you correctly about Addiko and the integration of balance sheet of the profits and everything.
Speaker #1: We were today presenting so the one-off, so the first step of the transaction. And as you know, the transaction has two steps. First, the step in as a shareholder.
Speaker #1: Second step as to do the carve-out. As now, given the latest developments, we do not deem the carve-out as realistic. And so we are looking to take over the and keep the subsidiaries with us.
Speaker #1: And on these topics, on these figures, on these details, we will have to have another look and a more detailed look. In our next presentations, you can be sure we will then present more detailed view on these topics.
Speaker #1: Sorry for this, but it's really a most recent development. And it is very difficult for us now to tell you already reliable figures on this.
Speaker #1: I understand, Michael. But just for me to understand, you think you will consolidate Addiko, the whole of it, 100% of it, before the end of this year, before 31st of December.
Speaker #1: Am I right?
Speaker #5: Ricardo, allow me to answer this. We are waiting for the approvals from the regulators. And as you understand, this involves a various entities and various regulators across the jurisdictions.
Speaker #5: So from that perspective, the consolidation will happen once we receive all the approvals. So that we will be able to close the transaction. But indeed, we will consolidate the entire perimeter of the transaction.
Speaker #5: Previously, we were expected to consolidate on the part which were intended to be taken over and the rest to be booked in FRS5. Now we see no reasons to book it currently at FRS5 and we will consolidate fully the entire perimeter of the transaction.
Speaker #5: Therefore, you see the impact.
Speaker #1: But in any case, Camilla, you will take some provisions in Q4 related to that? Even if you don't control it?
Speaker #5: Indeed, at the first time consolidation, what we do is we are doing opening balance adjustments. So basically, we are evaluating all the assets at the fair value with application of all of our standards and needs and the way how we are viewing this.
Speaker #5: And we will take all the impacts. And the capital impact estimations that you see as well as the uplift on the ROE include already estimated purchase price adjustments, yes, that we've seen.
Speaker #5: So the estimation, we are already running. Kind of a trial PPA, so purchase price adjustments. And this is our best estimate on the capital impact as well as ROE impact.
Speaker #1: Okay.
Speaker #5: Does it answer your question?
Speaker #1: No. No. Sorry. No.
Speaker #5: Okay. Allow me to do that one more time. So
Speaker #1: No. Because the bad wheel, the bad wheel is not insignificant. The bad wheel will not be insignificant. Okay. And the bad wheel could, but it could have an impact already in 2026 profit or not.
Speaker #5: We are able to recognize the bad wheel only upon consolidation. And consolidation can only happen when we close the transaction. The closing of the transaction will follow only upon receipt of all the approvals from all the regulators.
Speaker #1: All right. Okay. Okay. And that's financially okay. Okay.
Speaker #3: Ricardo. Why isn't line is quite challenged and difficult coming back to the risk cost question from your side? Of course, you immediately recognized the topic.
Speaker #3: So reiterate. My guidance or our guidance on the 35 basis points is on the one hand side, the unknown unknown because of the broader macroeconomic outlooks which remains challenging.
Speaker #3: I was talking about the 50 million euros run rate on retail. And then hinting to some minor cases in the corporate book here in Vienna.
Speaker #3: And I was giving as an argument interest rates went up and because of discounting effect of the cash flows, you would see maybe the one other ILP a little bit of increasing.
Speaker #3: And the last thing I was sharing beforehand was the first time consolidation effect. We are now, Camilla was digging so deep into the whole case guarantee is closed.
Speaker #3: So for sure we will have the plus 22 million euros. And on Addiko, depending on all the needed approvals, if we can consolidate and if we can close the transactions, we would have an impact of up to 60 million euros.
Speaker #3: So pure RBI guidance, the initial guidance we have started with the within this year on the first three bullets are relevant. The macro outlook, the retail run rate, and the minor cases here in the corporate book in Vienna.
Speaker #3: And the fourth one I was giving as a guidance, now we are including a first-time consolidation effect from guarantee plus 22 million euros in Addiko of up to 60 million euros.
Speaker #3: Hopefully, this helps Ricardo.
Speaker #1: Okay. Thanks, Anders. Just and then I'll close, I promise. The 20 and eventually the 20 million, and the 60 million, are they part of the PPA allocation or the run rate of provisions?
Speaker #5: Indeed, they are. Indeed, they are. Ricardo, possibly a clarification from my side. We are in our guidance plan to close the transaction still this year, yeah?
Speaker #5: So that's our basic assumption. But of course, from our perspective, this is subject to approvals, yeah? So from the timing perspective, this is what I wanted to clarify.
Speaker #5: And the PPA that we are showing you includes the risk cost which Hannah just mentioned.
Speaker #1: All right. Okay. Now that's clear. Thank you.
Speaker #5: Thank you.
Speaker #2: Thank you. We will now take our next question. This is from Krishnendra Dubey from Barclays. Please go ahead.
Speaker #4: Thanks for taking my question. Starting with the NII, on the NII, you explained the guidance had like 70 million improvement from core businesses 20 from better volumes.
Speaker #4: You're guiding for 4.5 billion. And if I take the implied run rate, it is still suggesting Q3 at like at Q4 level. Q4 is at Q3 level.
Speaker #4: Broadly, despite you including Addiko and a bit of bit of Addiko and guarantee as well, and also could you explain what drove the GC&M increase and how much of is it sustainable?
Speaker #4: You margin move? Second question is on cost. Thanks for explaining the cost. My ask is pretty simple, I guess. If you could just give us the cost excluding one-off, all the Raspberria claim, the M&A impacts on everything, what's the underlying cost that you think would be there for this year?
Speaker #4: And lastly, a broader question on the business trends, I think. You talked about strong retail volume. You're gaining market share. There is but the retail margins under pressure.
Speaker #4: Looking into 2027, I know you would not be giving guidance, but where do you see possibility of better growth and kind of and highest competitive pressure?
Speaker #5: Thank you for the all the questions. Let me address them in your one by one. So NII 70 million, it is our gaining improvement.
Speaker #5: As I said, primarily driven by euro and Czech corona rates, yeah? So and the better volume. So here, we are seeing a rather good development.
Speaker #5: If you ask me whether we are conservative, there is a level of conservativism is there, but currently, this is what we are comfortable with guiding you for.
Speaker #5: When it comes to your second question on the OPEX and the clean OPEX guidance, yeah? So we are guiding for the 3.8 billion of OPEX.
Speaker #5: So which is sorry, 3.9 billion of OPEX, which is increased from 3.8 previously. This is already includes the increase from the Addiko, yeah? So 50 million, and that's why we raised the guidance.
Speaker #5: Overall, from if we are excluding the Raspberria one-off, we are growing OPEX at about 8% year on year. So here, with if you exclude the 50 million of Addiko, so it would be slightly below.
Speaker #5: Sorry, I have to correct myself. It's 3.7 to 3.8 increase of our guidance on the OPEX side. When it comes to NII margin, something which you've basically asked about the how sustainable our NEEM going forward.
Speaker #5: We expect that 2027 and I will benefit from the steel volume growth across all of the markets, yeah? So here, it's probably too early to guide for the volumes, but generally, we expect to grow with a market and our region sees quite a substantial growth.
Speaker #5: Furthermore, we expect a tailwinds, of course, from the rolling of the fixed rate assets or mortgage loans, bonds into a higher rate. So here, and liability margins continue to benefit from the current interest rate levels, where we know that on the asset side and lending margins, we are rather cautious going forward.
Speaker #5: When it comes to.
Speaker #4: Can I ask just a follow-up? I guess, sorry, I was on NEEM. I was just referring to GC&M rather. I wasn't I know you would not be calling out the full number.
Speaker #4: I was just trying to gauge the GC&M business, I think. Just that was the for the margin, but.
Speaker #5: So on GC&M, NII at 202 million in Q2, which is up 24 million quarter on quarter. So here, NEEM improved quarter on quarter from 1.11 to 1.25.
Speaker #5: It is continuous effort from our side to be disciplined on the profitable business, yeah? So this is something which you've heard in the strategy one of the pillars on increasing profitability and addressing GC&M business.
Speaker #5: So we would continuously see a better improvement. On the NEEM, on the GC&M. And the last question 2027, where you're asking about our ROE, yeah?
Speaker #5: Development. And first of all, I hope you join us on the capital markets date on 10th of February, where we will walk you through all of our ambitions, including the profitability ambitions.
Speaker #5: What we can say today is that one of the key pillars from our side would be a key cost discipline, very much, and a very disciplined also capital allocation.
Speaker #5: Which will be driving our improved ROE in the coming years, yeah? So that would be our key pillars. And we generally remain very positive for our region and the potential for sustained growth in our region.
Speaker #4: Sure. Thank you. Can I just sneak in a very small question, just a small follow-up on the NII on the Hungarian NII? Just any negative one-offs to be seen in Q4 or like there isn't anything which is like it's just flat Q on Q despite loan growth and volume growth.
Speaker #4: It's just the effects impact or like are there any one-offs or anything that we should be aware for Q4, a small on the Hungarian side?
Speaker #5: I think that there is a cat on the interest rates, yeah? So it's prolonged. This is something which we've seen. On NII, more than that, I don't see a significant impact going forward.
Speaker #5: When it comes to the profitability of our Hungarian business, what needs to be mentioned is that the banking tax was prolonged going forward in 2027.
Speaker #5: So at the current level, so here, we would not see any improvement in 2027. And also, the corporate income tax for the larger entities have been increased from 9% or from 9% to 15%, yes?
Speaker #5: That's correct. So this would be also some impact on the total effective tax rate in Hungary.
Speaker #4: Thank you.
Speaker #2: Thank you. As a reminder, if you would like to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
Speaker #2: And to withdraw your question, you can press star 1 and 1 again. We have a question from Ricardo Rivera from Mediobanka. Please go ahead.
Speaker #6: Thanks. Thanks for this quick follow-up. When it comes when it comes to guarantee BBVA and the 90 million profit accretion that you mentioned, have you been in the position to say how much of that is synergies with the current operations you already have in Romania and how much is the underlying business that you are that you are consolidated, please?
Speaker #5: Generally, in all our acquisitions, we are taking a rather conservative approach in most of the cases. We are predominantly counting with a cost synergies, which we consider in our hands.
Speaker #5: And rather less on the revenue synergies. But what we are counting also and with a lower funding cost. So that's what is the second component to the revenue accretion.
Speaker #6: Okay. Okay. Fine. But is out of the 90 is, I don't know, one-third is synergies, one-fifth? I mean, if you want to share with us this number, if you don't, I understand.
Speaker #5: I frankly speaking, it is relatively sensitive information, but I will tell you that majority of it comes from the OPEX.
Speaker #6: No problem. Thanks.
Speaker #2: Thank you. And as a reminder, if there were any further questions, please press star 1 and 1 on your telephone and wait for your name to be announced.
Speaker #2: And if you need to cancel your question, you can press star 1 and 1 again. Next question is from Matty Nemes from UBS. Please go ahead.
Speaker #7: Thank you for taking my follow-up question. This is on NII. And specifically, I wanted to ask about the bond portfolio. In NII, you flagged continued expansion of the bond portfolio.
Speaker #7: And I was just wondering if it would update us on the key attributes of that bond portfolio, i.e., size, duration, and yield, and then what would you expect for NII contribution come 2027?
Speaker #7: Thank you.
Speaker #5: Thank you for the question. The size of the security books approximately 49 billion euros. Out of which 41 billion. Government bonds. This is what we this book we primarily use as a natural hedge to stabilize our NII.
Speaker #5: Average maturity is approximately 5.2 years, modified duration about 4.5 years. Some of the of these bonds are asset swapped and, of course, yields depends on currency and the countries.
Speaker #5: And it would be misleading if we provide you an average yield, but if you refer to our NII sensitivity, it fully reflects the bond portfolio.
Speaker #7: Understood. Thank you, Kamal.
Speaker #2: Thank you. We have another question from the phone lines. Please stand by. Question from Thomas Unger from Erste Group. Please go ahead.
Speaker #7: Yes. Hello. Sorry. Good afternoon. Thank you for taking my question. I only have one, actually, and this is on the Vesperia claim. And I would like to understand the legal ownership and accounting treatment of the 3.15 billion claim.
Speaker #7: Was the economic entitlement to the recovery already transferred from the Russian subsidiary to the Austrian parent? So the proceeds can be recognized with RBI excluding Russia?
Speaker #7: Thank you.
Speaker #5: First of all, the claim has been brought by RBI as well as our Russian subsidiary. So we consider this claim to be recognized in RBI upon defreezing of the shares.
Speaker #5: So here, basically, with alignment with our auditor, we decided that freezing of the assets by FMA would provide us with a level of the certainty.
Speaker #5: In order to recognize these assets on our balance sheet, yeah? So and if you would ask us from today's perspective, we will recognize it in other income upon, as I said, upon unfreezing of the shares.
Speaker #5: So and we are working on a different scenarios. And yeah, we will we will not this, I can confirm, we will not send this money to Russia.
Speaker #7: No, but it will be recognized as in the view excluding Russia. Is that correct?
Speaker #5: No. It will be recognized, yes, in the view excluding Russia in our core group.
Speaker #7: Okay. Thank you.
Speaker #2: Thank you.
Speaker #5: We have a.
Speaker #2: Oh, we have one more question on the phone lines. If you would like to take that. Thank you. This is Ricardo Rivera, Mediobanka. Please go ahead.
Speaker #6: Yes. Thanks. Thanks. Thank you for taking my second follow-up. In one of the slides I've right at the beginning of the presentation, you mentioned your research colleagues' department seeing 9 to 10 percent loan growth 26, 27.
Speaker #6: Is their projections, is something that you take into account when it comes to your budgeting and planning? Or not?
Speaker #5: Generally, see banking reports contains the number of countries, for example, including Poland, which also shows the quite a significant growth. So that impacts the overall number that you see here.
Speaker #5: But in our budgeting and planning, we normally don't look at the regional growth. We'll look at more detailed planning on country-by-country basis. And we'll rely on the indications which you will see actually in the banking report itself on per-country basis.
Speaker #5: This is our source of budgeting and planning and assumptions on the market growth. Overall guidance for 2027, we have it's too early for us to comment where we go, but we've seen that our region enjoyed quite a substantial growth and remains to be a very attractive pocket of growth.
Speaker #5: And we have proven our ability to grow with the market in all of our markets in most of our markets, yeah? So and here, in some areas and in some products, we grow substantially above, yeah?
Speaker #5: So and we will continue to do that as part of our strategy.
Speaker #6: All right. Perfect. Thank you very much, Kamil.
Speaker #2: Thank you. I would now hand over to the speakers to take a question from the webcast.
Speaker #5: We have only one question in the chat. It was partially answered when we were answering the question from Erste Bank, but I will read up and maybe some of the additional points will need to be mentioned.
Speaker #5: So what are specific uncertainties? Still prevent RBI from recognizing the asset gain now that the Austrian court ruling final and legal binding. That refers to the Vesperia accounting treatment on the capital impact.
Speaker #5: It comes with a second and a third part. So from IFRS perspective, do you can see the formal FAMA approval is absolutely necessary before recognizing the assets?
Speaker #5: Or could the final. Court ruling already meet IS 37 requirement that inflow of economic benefit is virtually certain? And the final question is, what would be the potential impact of the recognizing these assets again on RBI 2026 net profit equity and in particular the CT1 ratio excluding Russia?
Speaker #5: To put it in another way, in any such positive effect, already if any such positive effect already reflected in the current capital guidance. So to answer this question, the first two in the alignment, as I mentioned with our auditor, we have decided that the unfreezing of the assets by FMA will provide us with a level of certainty, yeah?
Speaker #5: So only upon the freezing of the assets, we will recognize it on our balance sheet. And also on our balance and through effect through P&L, actually.
Speaker #5: On the third question, where you're referring to impact from a freezing, so based on the two-day share price, then a net effect through P&L would be around 2.6 billion now.
Speaker #5: This is not included in our guidance, nor in our CT1 outlook. And we cannot comment on any timing here of the FMA decision. Thank you for the questions.
Speaker #2: Thank you. And there were no further questions, so I will now hand back to the speakers for any closing remarks.
Speaker #6: So thank you all for your participation in today's call. We are very much looking forward, as I said at the beginning, to our capital markets day in February.
Speaker #6: Hopefully, we may welcome many of you personally in Vienna. And we keep you posted on all the developments, especially on the M&A transactions and also Raspberria as we said in our presentations.
Speaker #6: Before the capital markets day, of course, we will present our Q4 results one week before on the February 3rd of February, next year. So thank you and goodbye.
Speaker #7: Goodbye.
