raiffeisen bank international ag · associate managing director [email protected]...

FINANCIAL INSTITUTIONS

CREDIT OPINION29 June 2020

Update

RATINGS

Raiffeisen Bank International AGDomicile Vienna, Austria

Long Term CRR A3

Type LT Counterparty RiskRating - Fgn Curr

Outlook Not Assigned

Long Term Debt A3

Type Senior Unsecured - FgnCurr

Outlook Stable

Long Term Deposit A3

Type LT Bank Deposits - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Andrea Wehmeier +49.69.70730.782VP-Senior [email protected]

Alexander Hendricks,CFA

+49.69.70730.779

Associate Managing [email protected]

Raiffeisen Bank International AGUpdate to credit analysis

SummaryWe assign A3 (stable)/P-2 senior unsecured debt and deposit ratings to Raiffeisen BankInternational AG (RBI). We also assign a Baseline Credit Assessment (BCA) and an AdjustedBCA of baa3 to the bank, along with A3/P-2 Counterparty Risk Ratings (CRRs).

The ratings reflect RBI's baa3 BCA; its membership in the federal institutional protectionscheme of Austria's Raiffeisen Banking Group (RBG), which results in a close alignment ofthe member banks' Adjusted BCAs; and three notches of uplift from the application of ourAdvanced Loss Given Failure (LGF) analysis to its liabilities. We do not incorporate a ratinguplift from government support for RBI because of the wider scope of the BRRD applicationin Austria and evidenced willingness of its government to apply burden sharing to creditors.

RBI's baa3 BCA reflects its past positive asset-quality trajectory, although concentration risksfrom higher-risk exposures pose downside risks. Solid capitalisation levels, in combinationwith satisfying profitability, provide a buffer for such downside scenarios. The bank's BCA alsobenefits from balanced and sound liquidity, reflecting a normal to moderate level of marketfunding and adequate liquid resources. Our view on RBI's BCA could change if the creditshock caused by the coronavirus outbreak leads to a sustained erosion of the bank's solvency.

Exhibit 1

Rating Scorecard - Key financial ratios

3.9% 13.5% 0.6% 23.4% 32.5%

0%

5%

10%

15%

20%

25%

30%

35%

0%

3%

6%

9%

12%

15%

Asset Risk:Problem Loans/

Gross Loans

Capital:Tangible Common

Equity/Risk-WeightedAssets

Profitability: NetIncome/ Tangible

Assets

Funding Structure:Market Funds/

Tangible Banking Assets

Liquid Resources: LiquidBanking Assets/Tangible

Banking Assets

Solvency Factors (LHS) Liquidity Factors (RHS)

Raiffeisen Bank International AG (BCA: baa3) Median baa3-rated banks

The bank's asset risk and profitability ratios reflect the average for 2017-19.Source: Moody's Financial Metrics

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https://www.moodys.com/credit-ratings/Raiffeisen-Bank-International-AG-credit-rating-808549486?atagqt=001&viewtabid=0

https://www.moodys.com/credit-ratings/Raiffeisen-Bank-International-AG-credit-rating-808549486?atagqt=001&viewtabid=0

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Credit strengths

» Adequate capitalisation, which provides strong investor protection

» Overall contained market funding reliance and role as the central bank of RBG

» Adequate liquid resources

Credit challenges

» Exposure to risks stemming from the potential economic and political volatility in some parts of the bank's operating regions

» Rising loan loss provisions will pressure profitability

» Limited earning power on a through-the-cycle basis

OutlookThe stable outlook reflects our expectation that RBI will be able to maintain and preserve its current creditworthiness and that RBG'sfinancial performance will remain largely unchanged. We consider any further improvement to be unlikely over the outlook horizon.

Factors that could lead to an upgrade

» RBI's ratings could be upgraded following a more favourable assessment of the financial strength of the Austrian Raiffeisen sector asa whole, which could result in a rating uplift for RBI.

» Upward pressure on RBI's BCA could be triggered by a combination of (1) a further significant improvement in the bank's assetquality; (2) a further significant strengthening of the bank's capitalisation beyond its announced medium-term targets; and (3) asignificant improvement in the bank's profitability beyond our current expectations, without an increase in its risk profile.

Factors that could lead to a downgrade

» RBI's ratings could be downgraded following a weakening of RBG's creditworthiness; or a significant decrease in RBI's bail-in-abledebt buffer, leading to fewer notches of rating uplift under our Advanced LGF analysis.

» Downward pressure on RBI's BCA could be triggered by a higher recourse to confidence-sensitive market funding; a significantdecline in its liquid resources; a setback in the bank's efforts to contain asset risks, for instance, following a deterioration in Russia's(Baa3 stable) operating environment; an extended period of declining earnings and internal capital generation; or a decline in thebank's capitalisation and regulatory capital buffers.

» However, a downgrade of the bank's BCA would likely be offset by affiliate support uplift.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 29 June 2020 Raiffeisen Bank International AG: Update to credit analysis

https://www.moodys.com/credit-ratings/Russia-Government-of-credit-rating-600018921


Key indicators

Exhibit 2

Raiffeisen Bank International AG (Consolidated Financials) [1]

03-202 12-192 12-182 12-172 12-162 CAGR/Avg.3

Total Assets (EUR Billion) 153.2 150.8 139.2 133.1 109.1 11.04

Total Assets (USD Billion) 168.1 169.2 159.1 159.9 115.1 12.44

Tangible Common Equity (EUR Billion) 10.6 11.1 9.9 9.3 8.0 8.94

Tangible Common Equity (USD Billion) 11.6 12.4 11.3 11.1 8.4 10.34

Problem Loans / Gross Loans (%) 3.0 3.1 3.8 5.7 9.2 5.05

Tangible Common Equity / Risk Weighted Assets (%) 13.5 14.2 13.6 12.9 13.3 13.56

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 21.9 21.9 25.8 37.3 50.2 31.45

Net Interest Margin (%) 2.4 2.4 2.5 2.5 2.6 2.55

PPI / Average RWA (%) 2.6 2.7 2.8 2.9 2.6 2.76

Net Income / Tangible Assets (%) 0.6 0.9 1.1 0.9 0.5 0.85

Cost / Income Ratio (%) 63.5 61.7 61.4 62.4 66.9 63.25

Market Funds / Tangible Banking Assets (%) 25.7 23.4 25.0 23.2 21.6 23.85

Liquid Banking Assets / Tangible Banking Assets (%) 32.9 32.5 34.0 32.1 26.3 31.65

Gross Loans / Due to Customers (%) 97.4 97.2 95.9 95.7 98.6 96.95

[1]All figures and ratios are adjusted using Moody's standard adjustments. [2]Basel III - fully loaded or transitional phase-in; IFRS. [3]May include rounding differences because of the scaleof reported amounts. [4]Compound annual growth rate (%) based on the periods for the latest accounting regime. [5]Simple average of periods for the latest accounting regime. [6]Simpleaverage of Basel III periods.Sources: Moody's Investors Service and company filings

ProfileRaiffeisen Bank International AG (RBI) is the central institution of the Austrian cooperative banking group, Raiffeisen Banking Group(RBG). RBI serves around 16.8 million customers through 2,000 branches in Austria and Central and Eastern Europe (CEE). As of March2020, the bank reported a consolidated asset base of €155.6 billion.

RBI is a universal bank that offers a broad range of retail, corporate and investment banking products and services, including corporatefinance, structured finance, export finance, factoring, leasing, securities investment (bonds, shares, funds and certificates), hedging andcash management services. It mainly operates in Central Europe, Southeastern Europe, Eastern Europe and Austria, where it has itsheadquarters (for more details, please refer to the bank's Issuer Profile).

The bank's Strong- Macro Profile reflects its diverse activities in Austria (22.8% of the bank's exposures as of March 2020) and CEE,with Austria's Strong+ Macro Profile adding some stability to the more volatile business mix in CEE. Because of RBI's exposures tojurisdictions with lower Macro Profiles in CEE through its foreign subsidiaries, the overall Macro Profile for the bank is two notchesbelow that of Austria.

Recent developmentsThe global economy continues to slide as the coronavirus outbreak worsens. The full extent of the economic downturn will be unclearfor some time. However, G-20 economies will contract by 5.8% in 2020 and the euro area by 6.5%, followed by a gradual recoveryin 2021. In Europe, the outbreak adds to late-cycle risks for European banks. The recession in 2020 will weigh on the banks' assetquality and profitability. In the current coronavirus-induced recession and its aftermath, capital levels will be a key differentiator ofcredit profiles among banks. Generally, banks are facing a sharp deterioration in asset quality and reductions in profitability fromalready low levels, while central banks are providing extraordinary levels of liquidity and governments have strong incentives to supportbanking systems to foster an eventual recovery. Thus, when comparing a bank to its peers, the level of capital with which it entered thisrecession and its ability to retain capital throughout the next several years take on particular importance.

In March 2020, the European Central Bank (ECB) announced a series of measures to help the European Union (EU) economies weatherthe widening effects of the coronavirus pandemic, temporarily increasing banks’ liquidity provisions, as well as lowering regulatorycapital and liquidity requirements. As part of these temporary measures, the ECB increased its targeted long-term refinancing


https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1150901



operations (TLTRO III) under more favourable terms, as well as its financial asset purchase programme, while refraining from furtherlowering the ultralow interest rates.

The temporary suspension of buffer requirements for regulatory capital and the liquidity coverage ratio (LCR) provides banks greaterflexibility and additional leeway to absorb the economic impacts, such as asset-quality declines. Overall, the package aims to helpbanks continue to finance corporates and small and medium-sized enterprises suffering from the effects of the coronavirus outbreak.We believe that the ECB’s measures will provide limited relief for banks and their borrowers, and that significant fiscal policy measuresby the EU and its member states will be required to avert higher default rates in banks’ lending books.

Austria announced a large stimulus package that complements the ECB's supportive policy actions. The Austrian government launchedemergency corporate lending guarantee programmes and expanded short-time work subsidies. The measures add to automaticstabilisers that support household incomes when unemployment increases. We believe these policy measures will soften the negativeeconomic effects of the coronavirus outbreak, but might not fully mitigate the credit-negative operational effects of the outbreak.

Detailed credit considerationsImproved asset quality metrics will be challenged by the coronavirus impactWe assign a ba1 Asset Risk score, two notches below the initial score of baa2. We believe RBI continues to face challenges as a result ofits moderate asset quality on a through-the-cycle basis. The assigned score also reflects the bank's concentration in cyclical industriessuch as commercial real estate relative to its capital, especially in more volatile economies, while coverage ratios remain comfortable.We expect RBI's problem loan ratio to start deteriorating from its low levels because of the economic downturn.

The assigned score further reflects the bank's improved problem loan ratio of 3.0% as of March 2020, down from 3.2% as of year-end2019 and 3.8% as of year-end 2018. The improvement reflects a growing loan book — while GDP growth in most countries remainedsolid, the momentum slowed down slightly, with nonperforming loans declining to €2.9 billion as of March 2020 compared with €3.4billion as of year-end 2018. Our asset risk assessment for RBI also takes into account its high coverage ratio1 of 84% as of March 2020(2019: 79%, 2018: 78%). The higher coverage ratio reflects RBI's expectation for the need of increasing loan loss provisions for 2020.Though the bank did not yet fully booked the forecasted 75bps costs of risk for 2020, the provisioning did rise to 66bps already.

Exhibit 3

RBI has significantly reduced its problem loan stockThe coverage ratio was also maintained at solid levels

11.9%

9.2%

5.7%

3.8%3.2% 3.0%

71.3%75.6%

67.0%

77.6% 78.7%83.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

2%

4%

6%

8%

10%

12%

14%

2015 2016 2017 2018 2019 Q1 2020

Problem Loans / Gross Loans (left axis) Coverage ratio (right axis)

Sources: Company reports and Moody's Investors Service

The improvement in RBI's asset quality until year-end 2019 was driven by the bank's successful de-risking of its balance sheet andselective disposal of problem loans, as well as the still ongoing economic recovery in CEE. However, despite RBI's improved assetdiversification following its merger with Raiffeisen Zentrabank in 2017, the bank continues to exhibit sizeable exposures in EasternEurope, including the Commonwealth of Independent States and associated countries.

As of March 2020, RBI's corporate loans accounted for 45% of its €190.5 billion total credit exposure, financial institutions and public-sector exposure accounted for 33%, and its retail segment accounted for 22% (largely mortgage lending). Key corporate exposures are




wholesale trade (€13.0 bn or 7% of its portfolio), followed by manufacturing (€11.5 billion, 6% of the portfolio) and real estate (€9.1billion, 5% portfolio share). At 55%, RBI's exposures to Eastern European countries continued to dominate its portfolio (Central Europe:26%, Southeastern Europe: 17%, Eastern Europe: 12% [including 10% for Russia and 2% for Ukraine]), while its exposure in Austria wasstable at 23%.

Exhibit 4

Credit exposure breakdown by countryAs of March 2020

Exhibit 5

Credit exposure breakdown by typeAs of March 2020

Central Europe26%

Southeatern Europe17%

Eastern Europe12%

Group Corporates & Markets45%

Corporate Center & Reconciliation0%


Corporate customers45%

Banks12%

Sovereigns21%

Retail customers22%


The economic downswing combined with higher capital requirements challenge RBI's adequate capital buffersWe assign a baa2 Capital score, which is two notches below the a3 initial score. The assigned score captures potential vulnerabilitiesin a stressed economic scenario, given its exposure to more volatile economies, as well as RBI's adequate-only buffer versus regulatoryminima. The score further reflects RBI's tangible common equity (TCE) ratio of 13.5%.

RBI's Common Equity Tier 1 (CET1) capital ratio was 13.0% compared with an 10.6% Supervisory Review and Evaluation Process (SREP)requirement for CET1 as of Q1 2020, up from 9.8% as of year-end 2018. We consider the current buffers compared with regulatoryminima adequate because of the bank's exposures to both economically and politically more volatile markets. During the first quarterof 2020, RBI's CET1 ratio decreased to 13.0% from 13.9% as of year-end 2019 (2018: 13.4%), partly because of unfavourable currencymovements directly recognised in the bank's equity , but also driven by loan growth and the drawdown of committed lines in Q1.

Exhibit 6

RBI's capitalisation is adequateExhibit 7

RBI's SREP CET1 capital requirements in detail

13.6%

14.2%13.5%13.4%

13.9%

13.0%

7.1% 7.3%6.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2018 2019 Q1 2020

TCE ratio CET1 ratio (fully loaded) TCE leverage ratio


9.83%

11.58%11.59%

0%

2%

4%

6%

8%

10%

12%

14%

2018 2019 Q1 2020

Pillar 1 Pillar 2 requirement

Capital conservation buffer Countercyclical buffer

System risk buffer


As of March 2020, the regional Raiffeisen-Landesbanken continued to be RBI's majority owners and, together, held a 58.8% stake inRBI. According to a syndicate agreement between RBI and the regional Raiffeisen banks, the latter have a fixed majority ownership



until 2020. The agreement allows for a reduction in the banks' combined stake in RBI to 40% after the expiry of the three-year lockupperiod.

RBI's earnings to be challenged by higher risk costs and the continued strain from the low interest rate environmentThe ba1 Profitability score assigned to RBI is in line with the bank's initial score, reflecting a normalisation of returns after anexceptionally strong performance from 2017 to 2019 and the increasing pressures on profitability caused by the coronavirus impact.We still expect returns of 0.5%-0.6% of net income/tangible banking assets on a through-the-cycle basis. Central bank measures inresponse to the further spread of the coronavirus outbreak could, however, exacerbate the profitability pressure that many Europeanbanks are facing, particularly when combined with higher loan-loss provisions.

For 2020, higher loan-loss provisions, in combination with an increasing strain on interest margins in in CEE and Russia plus persistentpolitical and economic uncertainty, should lead to a more muted profit development, especially after taking into account potentialcurrency effects and increasing costs of risk.

Exhibit 8

RBI's profitability is normalising after strong performance in 2017-18

1.0

0.0 0.7 0.9

1.6 1.9 1.7 1.3

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2013 2014 2015 2016 2017 2018 2019 2020*

EU

R b

illio

n

Net interest Income Net fees and commissions income Trading & other income

Admin. Expenses Risk provisions Extraordinary income and expense

Pre-tax profit

*Q1 2020 annualised.Sources: Company reports and Moody's Investors Service

During Q1 2020, RBI reported a net profit after tax of €207 million, down from €259 million in Q1 2019. While net interest incomeincreased to €881 million as of March 2020 (Q1 2019: €825 million) and the trading result increased to €37 million (Q1 2019: -€52million), the result was substantially burdened by increased risk provisions of €153 million in Q1 2020, compared with €9 million in Q12019. Furthermore, the Russian segment continued to drive the bank's profitability and contributed 64% of the consolidated pretaxprofit in Q1 2020 (Q1 2019: 47%), while Southern Europe's and Central Europe's contributions slightly declined to 22% (Q1 2019: 29%)and 24% (Q1 2019: 36%), respectively.

In 2019, RBI reported a net profit after tax of €1.365 million (2018: €1.398 million). While net interest income remained almost stableat €3.4 billion, higher risk provisions of €234 million instead of €166 million in the year earlier and a lower trading result strained theperformance. RBI's profitability is now more closely aligned with our expectation of 0.5%-0.6% net income/tangible banking assets ona through-the-cycle basis.

The negative effect of a lower release of provisions was most pronounced for the group's corporate and market segment (including itsAustrian activities), which was down 28% year over year in 2019, and for Central Europe, which was down 24%. For the same period,the Russian segment contributed 36% to the bank's consolidated pretax profit (2018: 33%, 2017: 35%, 2016: 43%, 2015: 62%) andremained a key driver of the group's overall performance, with a more stable pretax profit contribution from Southeastern Europe of27% and a lower contribution from Central Europe of 23%.



Sizeable deposits ensure moderate reliance on wholesale fundingRBI's Funding Structure score is baa2, one notch above the initial score of baa3, reflecting the bank's reliance on wholesale funding butalso qualitative considerations because of RBI being the Austrian Raiffeisen sector's central institution. We view the ample sources ofsector funding, including member banks' minimum reserves, as a more stable source of funding, even in times of stress because of theRaiffeisen sector's high cohesion.

We believe RBI's ability to access the capital markets is an integral part of its business model. The bank's reliance on wholesale fundingis demonstrated by its market funding of 25.7% of its tangible banking assets (2019: 23.4%), which were sourced from short-, medium-and long-term funding sources as of March 2020. A good portion of the bank's funding needs are placed within Austrian investors andvia private placements.

Exhibit 9

Deposits remain RBI's main funding source

24.7%

21.6%23.2%

25.0%23.4%

25.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 Q1 2020

Equity Other liabilities Trading liabilities Issued securities Interbank Deposits Market Funds Ratio* (right axis)


RBI continues to benefit from a deposit-rich balance sheet, with customer deposits accounting for around 62% of its total assets as ofMarch 2020 (2019: 63%). RBI's gross loans of €92.2 billion were largely matched by its €97.1 billion of customer deposits for the sameperiod.

Furthermore, the bank's funding profile was complemented by €7.0 billion of senior unsecured bonds, €1.3 billion of covered bonds,€2.6 billion of subordinated debt and €1.2 billion of low-trigger Additional Tier 1 (AT1) hybrid capital instruments outstanding as ofyear-end 2019.

As of March 2020, RBI's network banks were able to source funding from local markets, as indicated by the loan-to-deposit ratios of66% for Ukraine, 87% for the Czech Republic and 77% for Russia. The significant reduction in intragroup funding reflects the regulatoryrequirements that recommend limiting new lending in CEE markets to 110% of local deposits plus funding in local capital markets(Austrian finish), as well as the impact of RBI's restructuring efforts and lower loan growth in those markets.

Liquidity reserves are solid, providing an adequate bufferRBI's assigned baa2 Liquid Resources score is two notches below the initial score of a3, reflecting the bank's liquid assets, whichrepresented 32.9% of its tangible assets as of March 2020 (2019: 32.5%), adequate compared with its confidence-sensitive fundingreliance. The assigned score incorporates our consideration of the bank's significant sector liabilities (RBI is holding liquidity on behalf ofthe Austrian Raiffeisen sector) and limited asset encumbrance.



Exhibit 10

RBI's liquidity reserves provide an adequate buffer for potential funding risks

27.4% 26.3%

32.1%34.0%

32.5% 32.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 Q1 2020

Other assets Loans Securities/Investments Interbank Cash Liquid Banking Asset Ratio (right axis)


RBI's liquid resources consisted of €21.5 billion in cash (2019: €18.9 billion) and €13.9 billion in interbank reserves (2019: €14.8 billion)as of March 2020. Furthermore, we also take into account RBI's €15.0 billion (2019: €14.8 billion) liquid and high-quality securities,along with its access to the covered bond market, although recourse is limited for now.

Environmental, social and governance (ESG) considerationsThe global banking sector has been classified as “Low” risk in our Environmental risk heat map2 and as “Moderate” risk in our Social riskheat map.3 RBI's exposure to environmental and social risks is in line with our general assessment for the global banking industry.

RBI’s investment portfolio is well diversified by industry, and although geographically concentrated in Austria and CEE countries, it isnot considered to be particularly exposed to any relevant environmental risk in the regions in which the bank operates.

In terms of social risks, RBI has occasionally experienced consumer-friendly court rulings on some of its products (for instance,foreign-currency loans in CEE — particularly in Poland — or the Romanian court ruling on building society loans). The Czech NationalBank's revised interpretation of the 2016 Czech Consumer Credit Act could also, if maintained, allow borrowers to terminate lendingcontracts early without having to bear foregone interest, lowering the bank's net interest income if many customers make use oftheir new optionality, while in the Slovak Republic, a significant increase in the bank levy is under discussion. RBI has been proactivelyapproaching customers, regulators and other stakeholders, and taken immediate provisions to mitigate any negative effect suchinstances could have had on the bank's future profitability. We are not aware of any additional social risk drivers potentially affectingthe credit profile of RBI, mainly because of the high diversification of its business model across countries and its swift reaction tosudden policy or law changes.

Governance4 is highly relevant for RBI, as it is to all banks, but more specifically because of the complexity of its multi-countryoperations. However, we do not have any particular governance concern for RBI, and we do not apply any corporate behaviouradjustment to the bank. Nonetheless, corporate governance remains a key credit consideration, given new emerging risks, andcontinues to be a subject of our ongoing monitoring.

Support and structural considerationsAffiliate supportWe consider the likelihood of support from RBG and the Austrian Raiffeisen sector to be very high because of RBI's importance to thesector. This support materially reduces the probability of default because the cooperative group's cross-sector support mechanism aimsto stabilise its members by avoiding a bail-in or any form of loss participation by creditors.

We assess the Austrian Raiffeisen sector's financial capacity to provide support to its members based on the cooperative group'scombined financial strength. Although their combined financial strength has improved, we still consider RBG's capitalisation moderatecompared with its overall credit profile, which is strongly correlated with its higher-risk CEE exposures housed at RBI. Member bankswith BCAs of baa3 or higher therefore do not benefit, in terms of rating uplift, from our very high support assumption, given thesector's limited support capacity. Accordingly, RBG's cross-sector support currently results in no rating uplift for RBI.






The assignment of a very high probability of support from the Austrian Raiffeisen sector for RBI reflects the bank's formal inclusion, asa direct member, into RBG’s federal Institutional Protection Scheme; and the strong links between RBI and the other Raiffeisen banksbecause of RBI’s central treasury function for the Austrian Raiffeisen sector. RBI has been a formal member since March 20175.

Loss Given Failure (LGF) analysisRBI is subject to the EU BRRD, which we consider an operational resolution regime. We apply our Advanced LGF analysis to RBI'sliabilities, considering the risks faced by the different debt and deposit classes across the bank's liability structure at failure. We assumeresidual TCE of 3%, post-failure losses of 8% of tangible banking assets, a 25% runoff in junior wholesale deposits and a 5% runoff inpreferred deposits. These assumptions are in line with our standard assumptions.

For deposits and senior unsecured debt, our LGF analysis indicates an extremely low loss given failure, leading us to position theirPreliminary Rating (PR) Assessments at a3, three notches above the baa3 Adjusted BCA.

For subordinated debt, our LGF analysis indicates a moderate loss given failure, leading us to position its PR Assessment in line with thebaa3 Adjusted BCA.

Hybrid capital instrumentsNon-cumulative preferred securities issued by RZB Finance (Jersey) III Limited are rated Ba3(hyb), three notches below RBI's baa3Adjusted BCA, reflecting their deeply subordinated claims in a liquidation scenario and the non-cumulative coupon-skip mechanismtied to the breach of a balance-sheet loss trigger. These debt instruments are backed and assumed by RBI.

Additional Tier 1 (AT1) instrumentsWe assign a Ba3(hyb) rating to RBI's low-trigger AT1 securities (the notes), which is three notches below the bank's baa3 Adjusted BCA.

The rating reflects our assessment of the notes' undated deeply subordinated claim in liquidation, as well as their non-cumulativecoupon deferral features. The notes are senior only to RBI's ordinary shares and other capital instruments that qualify as CET1 capital. Inaddition, the notes' principal is subject to a write-down on a contractual basis if RBI's consolidated or standalone CET1 ratio falls below5.125%, the issuer receives public support or the Austrian Financial Market Authority determines that the conditions for a write-downof the instrument are fulfilled and orders such a write-down as a measure to prevent the solvency.

Government supportIn contrast to banks in other EU countries, and reflective of the governmental measures implemented in Austria since 2014, we assign alow level of support for the senior debt and deposit ratings of Austrian banks. As a consequence, we do not include any beneficial ratingimpact for government support in RBI's unsecured debt and deposit ratings, despite the bank's strong national market shares and itssystemic relevance to the country's banking system.

Counterparty Risk Ratings (CRRs)CRRs are opinions of the ability of entities to honour the uncollateralised portion of non-debt counterparty financial liabilities (CRRliabilities) and also reflect the expected financial losses in the event such liabilities are not honoured. CRRs are distinct from ratingsassigned to senior unsecured debt instruments and from issuer ratings because they reflect that, in a resolution, CRR liabilities mightbenefit from preferential treatment compared with senior unsecured debt. Examples of CRR liabilities include the uncollateralisedportion of payables arising from derivatives transactions and the uncollateralised portion of liabilities under sale and repurchaseagreements.

RBI's CRRs are positioned at A3/P-2The CRRs are positioned three notches above the bank's baa3 Adjusted BCA, reflecting the extremely low loss given failure from thehigh volume of instruments that are subordinated to CRR liabilities.

Counterparty Risk (CR) AssessmentCR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt anddeposit ratings in that they consider only the risk of default rather than both the likelihood of default and the expected financial loss,and apply to counterparty obligations and contractual commitments rather than debt or deposit instruments. The CR Assessment is



an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (forexample, swaps), letters of credit, guarantees and liquidity facilities.

RBI's CR Assessment is positioned at A3(cr)/P-2(cr)For RBI, our LGF analysis indicates an extremely low loss given failure for the CR Assessment, leading us to position it three notchesabove the baa3 Adjusted BCA.

Methodology and scorecardThe principal methodology we used in rating RBI was the Banks Methodology, published in November 2019.

About Moody's Bank ScorecardOur scorecard is designed to capture, express and explain in summary form our Rating Committee's judgement. When read inconjunction with our research, a fulsome presentation of our judgement is expressed. As a result, the output of our scorecardmay materially differ from that suggested by raw data alone (though it has been calibrated to avoid the frequent need for strongdivergence). The scorecard output and the individual scores are discussed in rating committees and may be adjusted up or down toreflect conditions specific to each rated entity.




Rating methodology and scorecard factors

Exhibit 11

Raiffeisen Bank International AG

Macro FactorsWeighted Macro Profile Strong - 100%

Factor HistoricRatio

InitialScore

ExpectedTrend

Assigned Score Key driver #1 Key driver #2

SolvencyAsset RiskProblem Loans / Gross Loans 3.9% baa2 ←→ ba1 Quality of assets Sector concentration

CapitalTangible Common Equity / Risk Weighted Assets(Basel III - transitional phase-in)

13.5% a3 ←→ baa2 Risk-weightedcapitalisation

Stress capital resilience

ProfitabilityNet Income / Tangible Assets 0.6% ba1 ←→ ba1 Return on assets Expected trend

Combined Solvency Score baa2 baa3LiquidityFunding StructureMarket Funds / Tangible Banking Assets 23.4% baa3 ↑ baa2 Extent of market

funding relianceMarket funding quality

Liquid ResourcesLiquid Banking Assets / Tangible Banking Assets 32.5% a3 ↓ baa2 Stock of liquid assets Expected trend

Combined Liquidity Score baa2 baa2Financial Profile baa3Qualitative Adjustments Adjustment

Business Diversification 0Opacity and Complexity 0Corporate Behavior 0

Total Qualitative Adjustments 0Sovereign or Affiliate constraint Aa1BCA Scorecard-indicated Outcome - Range baa2 - ba1Assigned BCA baa3Affiliate Support notching -Adjusted BCA baa3

Balance Sheet in-scope(EUR Million)

% in-scope at-failure(EUR Million)

% at-failure

Other liabilities 37,330 53.8% 39,284 56.6%Deposits 19,156 27.6% 17,202 24.8%

Preferred deposits 14,175 20.4% 13,466 19.4%Junior deposits 4,980 7.2% 3,735 5.4%Senior unsecured bank debt 7,040 10.1% 7,040 10.1%Dated subordinated bank debt 2,629 3.8% 2,629 3.8%Preference shares (bank) 1,150 1.7% 1,150 1.7%Equity 2,082 3.0% 2,082 3.0%Total Tangible Banking Assets 69,386 100.0% 69,386 100.0%



De Jure waterfall De Facto waterfall NotchingDebt ClassInstrumentvolume +

subordination

Sub-ordination

Instrumentvolume +

subordination

Sub-ordination

De Jure De FactoLGF

NotchingGuidance

vs.Adjusted

BCA

AssignedLGF

notching

AdditionalNotching

PreliminaryRating

Assessment

Counterparty Risk Rating 24.0% 24.0% 24.0% 24.0% 3 3 3 3 0 a3Counterparty Risk Assessment 24.0% 24.0% 24.0% 24.0% 3 3 3 3 0 a3 (cr)Deposits 24.0% 8.4% 24.0% 18.6% 3 3 3 3 0 a3Senior unsecured bank debt 24.0% 8.4% 18.6% 8.4% 3 3 3 3 0 a3Dated subordinated bank debt 8.4% 4.7% 8.4% 4.7% 0 0 0 0 0 baa3Non-cumulative bank preference shares 4.7% 3.0% 4.7% 3.0% -1 -1 -1 -1 -2 ba3

Instrument Class Loss GivenFailure notching

Additionalnotching

Preliminary RatingAssessment

GovernmentSupport notching

Local CurrencyRating

ForeignCurrency

RatingCounterparty Risk Rating 3 0 a3 0 A3 A3Counterparty Risk Assessment 3 0 a3 (cr) 0 A3(cr)Deposits 3 0 a3 0 A3 A3Senior unsecured bank debt 3 0 a3 0 A3 A3Dated subordinated bank debt 0 0 baa3 0 Baa3 Baa3Non-cumulative bank preference shares -1 -2 ba3 0 Ba3 (hyb)[1]Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information.Source: Moody’s Investors Service



Ratings

Exhibit 12

Category Moody's RatingRAIFFEISEN BANK INTERNATIONAL AG

Outlook StableCounterparty Risk Rating A3/P-2Bank Deposits A3/P-2Baseline Credit Assessment baa3Adjusted Baseline Credit Assessment baa3Counterparty Risk Assessment A3(cr)/P-2(cr)Senior Unsecured A3Subordinate Baa3Pref. Stock Non-cumulative -Dom Curr Ba3 (hyb)

Source: Moody's Investors Service

Endnotes1 (measured by loan-loss reserves as a percentage of problem loans)

2 Environmental risks can be defined as environmental hazards encompassing the impact of air pollution, soil/water pollution, water shortages, and naturaland man-made hazards (physical risks). Additionally, regulatory or policy risks, like the impact of carbon regulations or other regulatory restrictions,including the related transition risks like policy, legal, technology and market shifts, which could impair the evaluation of assets, are important factors.Certain banks could face a higher risk from concentrated lending to individual sectors or operations exposed to the aforementioned risks.

3 Social risk considerations represent a broad spectrum, including customer relations, human capital, demographic and societal trends, health and safety,and responsible production. The most relevant social risks for banks arise from the way they interact with their customers. Social risks are particularly highin the area of data security and customer privacy, which are partly mitigated by sizeable technology investments and banks’ long track record of handlingsensitive client data. Fines and reputational damage because of product mis-selling or other types of misconduct are a further social risk. Societal trendsare also relevant in a number of areas, such as shifting customer preferences towards digital banking services increasing information technology costs,ageing population concerns in several countries affecting demand for financial services or socially driven policy agendas that may translate into regulationsthat affect banks' revenue bases.

4 Corporate governance is a well-established key driver for banks and related risks are typically included in our evaluation of banks' financial profile. Further,factors like specific corporate behaviour, key-person risk, insider and related-party risk, strategy and management risk factors and dividend policy maybe captured in individual adjustments to the BCA, if deemed applicable. Corporate governance weaknesses can lead to a deterioration in a company’scredit quality, while governance strengths can benefit its credit profile. When credit quality deteriorates because of poor governance, such as breakdownin controls resulting in financial misconduct, it can take a long time to recover. Governance risks are also largely internal rather than externally driven.

5 For more information, see our Issuer In-Depth, “RBI's improved credit profile is positive for Austria's Raiffeisen sector,” published on 3 November 2017.


https://www.moodys.com/research/Raiffeisen-Bank-International-AG-RBIs-improved-credit-profile-is-positive-Issuer-In-Depth--PBC_1096355


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