Raiffeisen Net Profit Rises 85% to €43.9m in 2023

Banque Raiffeisen has presented its annual results for 2023, a year in which the cooperative bank posted a net profit of €43.9 million - up 85% compared to 2022.

As of 31 December 2023, the bank posted an operating result of €25.5 million, an increase of €1.8 million (+7.5%) over one year. The bank said this "good" performance was driven by all business lines. This was in the context of "an environment marked by uncertainty", which made 2023 a "particularly difficult year", both for the financial sector and for private, professional and institutional customers.

On the asset side of the balance sheet, customer loans showed a slight annual decline of €39 million (-0.5%) to €7,694 million.

In 2023, Banque Raiffeisen continued to assist its private customers, local businesses and SMEs, as well as financing a number of large-scale municipal or parapublic projects; the latter segment grew by 37.3%.

The bank added that the inflationary environment and disruption to the national real estate market have had significant repercussions for private customers looking to embark on a property project. This has had an impact on the number of mortgage loan applications processed. The bank’s core business, financing home ownership, experienced a historic fall of 2.4%.

On the liabilities side of the balance sheet, funds entrusted by non-bank customers amounted to €9,597 million, an increase of €170 million (+1.8%), by virtue of growth in household savings totalling €209 million. Due to the "unfavourable" economic climate, deposits from professional customers fell by €39 million (-1.1%).

The bank added that its "prudent" risk management policy, together with the "resilience" of its business model and rising interest rates, enabled Banque Raiffeisen to post a "solid" result. In 2023, the bank recorded a 56% increase in net interest income. This increase was mainly due to higher interest rates earned on the bank’s liquid assets and the replacement of its equity capital.

Net commissions were 2.6% lower than in 2022, mainly as a result of lower commissions from financing activities, partially offset by higher commissions from the bank's securities placement and payment activities.

In view of these factors, net banking income rose by 44.8% over the year.

Operating costs increased by 6.5%, mainly due to higher staff costs following a 3.5% increase in the workforce and successive wage indexations during 2023. As of 31 December 2023, Banque Raiffeisen counted 683 employees.

The bank added that the cost of risk had a "significant" impact on its financial results for 2023. A prudent risk management approach regarding the bank's loan portfolio led to a significant net allocation to value adjustments on loans and advances of €53.5 million, as well as an allocation of €10 million to the fund for general banking risks. These amounts enable the bank to cover all identified credit risks and to build up a reserve to cover any other contingencies, especially related to sectors exposed to the downturn in the economy.

Taking all these factors into account, and after deducting tax charges, the bank posted a net profit of €43.9 million, an increase of €20.2 million (+85.2%) on the previous year. The result for the year includes a large exceptional component linked to the restructuring of the bank’s shareholdings, notably the sale of a subsidiary, leading to a non-recurring profit of €18.4 million.

The operating result and income allowed the bank to strengthen its equity capital. This ongoing strengthening of equity is expected to enable the bank to continue to expand its financing activities and develop its business model.

At the end of 2023, the cooperative bank had 49,348 members, an increase of 7.6%. They received OPERA benefits of a total value of €1,384,855, an increase of 9.2% on the previous year.

In 2023, Banque Raiffeisen also maintained a high level of investment, both in staff training and in its "phygital" approach, which favours the development of both traditional and digital distribution and communication channels - as illustrated by the opening of a new branch in Differdange (March 2023), the refurbishing of the Niederanven branch (June 2023) and the ongoing development of the online banking R-Net, the R-Vision digital advisor tool and the Online Branch.

Banque Raiffeisen added that it is committed to meeting the current expectations of customers and investors seeking more responsible growth, as well as the expectations of future generations. Its ambition is to be "a driving force for change" in the transition to a more sustainable economy, particularly through its ESG products and services. These include its range of Visa credit cards which, for every 200 transactions made, lead to the planting of a tree, its range of ESG-compliant investments and its financing of projects designed to support an environmentally friendly energy transition.

The bank also noted that it promotes the professional development of its employees, attaching "great importance" to the well-being and commitment of its staff members, as well as to promoting diversity, inclusion and equity within the company.

2023 was also the first year of Quality Time (offering employees more free time), which is now used by most staff members with "no negative impact" on either the internal organisation or on the quality of customer service. Following the introduction of this measure, the bank noted a "considerable" increase in the number of job applications it received. Other initiatives were deployed to enhance Banque Raiffeisen's employer branding, including the opening of several "satellite offices", the adherence to the Luxembourg Women in Finance charter and the development of a "Diversity, Equity, Inclusion" policy.

The bank noted that the reported figures are still subject to approval by the Ordinary General Meeting.