Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit...

13
FINANCIAL INSTITUTIONS CREDIT OPINION 20 March 2019 Update RATINGS Raiffeisen Schweiz Domicile Switzerland Long Term CRR A3 Type LT Counterparty Risk Rating - Fgn Curr Outlook Not Assigned Long Term Debt A3 Type Senior Unsecured - Dom Curr Outlook Negative Long Term Deposit Aa3 Type LT Bank Deposits - Fgn Curr Outlook Negative Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Contacts Andrea Wehmeier +49.69.70730.782 VP-Senior Analyst [email protected] Alexander Hendricks, CFA +49.69.70730.779 Associate Managing Director [email protected] » Contacts continued on last page CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 Raiffeisen Schweiz Update to credit analysis Summary We assign Aa3(negative)/P-1 deposit ratings and A3(negative) senior unsecured debt ratings to Raiffeisen Schweiz Genossenschaft (Raiffeisen Schweiz). Furthermore, we assign an a3 Baseline Credit Assessment (BCA) and Adjusted BCA and A3/P-2 Counterparty Risk Ratings (CRRs) to Raiffeisen Schweiz. The ratings reflect (1) Raiffeisen Schweiz's a3 BCA and Adjusted BCA; (2) the result of our Advanced Loss Given Failure (LGF) analysis, 1 resulting in two notches of rating uplift for the bank's deposits from the Adjusted BCA and a positioning one notch below the Adjusted BCA of its senior unsecured debt; and (3) the moderate likelihood of government support for the bank, resulting in one notch of uplift. Raiffeisen Schweiz's a3 BCA is positioned at the higher end of the scorecard range. This reflects our evaluation of the credit impact of the bank's significant corporate governance shortfalls with potentially crystallising higher asset risks at Raiffeisen Schweiz. The BCA further reflects its (1) adequate and improving capitalisation, (2) moderate and manageable asset risks, and (3) sound funding profile. Challenges include (1) above-average loan growth of and relative exposure to mortgage lending, leading to increased susceptibility to potential shocks; and (2) constrained profitability. When assessing Raiffeisen Schweiz's credit profile we consider the consolidated Raiffeisen Group numbers because of its importance to the group, in combination with the group's strong cohesion with a statutory mutualist support framework. Exhibit 1 Rating Scorecard - Key financial ratios 0.5% 16.1% 0.4% 14.5% 17.6% 0% 5% 10% 15% 20% 25% 30% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Asset Risk: Problem Loans/ Gross Loans Capital: Tangible Common Equity/Risk-Weighted Assets Profitability: Net Income/ Tangible Assets Funding Structure: Market Funds/ Tangible Banking Assets Liquid Resources: Liquid Banking Assets/Tangible Banking Assets Solvency Factors (LHS) Liquidity Factors (RHS) Raiffeisen-Gruppe (BCA: a3) Median a3-rated banks Solvency Factors Liquidity Factors Source: Moody's Financial Metrics

Transcript of Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit...

Page 1: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

FINANCIAL INSTITUTIONS

CREDIT OPINION20 March 2019

Update

RATINGS

Raiffeisen SchweizDomicile Switzerland

Long Term CRR A3

Type LT Counterparty RiskRating - Fgn Curr

Outlook Not Assigned

Long Term Debt A3

Type Senior Unsecured -Dom Curr

Outlook Negative

Long Term Deposit Aa3

Type LT Bank Deposits - FgnCurr

Outlook Negative

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]

» Contacts continued on last page

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Raiffeisen SchweizUpdate to credit analysis

SummaryWe assign Aa3(negative)/P-1 deposit ratings and A3(negative) senior unsecured debt ratingsto Raiffeisen Schweiz Genossenschaft (Raiffeisen Schweiz). Furthermore, we assign an a3Baseline Credit Assessment (BCA) and Adjusted BCA and A3/P-2 Counterparty Risk Ratings(CRRs) to Raiffeisen Schweiz.

The ratings reflect (1) Raiffeisen Schweiz's a3 BCA and Adjusted BCA; (2) the result of ourAdvanced Loss Given Failure (LGF) analysis,1 resulting in two notches of rating uplift for thebank's deposits from the Adjusted BCA and a positioning one notch below the Adjusted BCAof its senior unsecured debt; and (3) the moderate likelihood of government support for thebank, resulting in one notch of uplift.

Raiffeisen Schweiz's a3 BCA is positioned at the higher end of the scorecard range. Thisreflects our evaluation of the credit impact of the bank's significant corporate governanceshortfalls with potentially crystallising higher asset risks at Raiffeisen Schweiz. The BCAfurther reflects its (1) adequate and improving capitalisation, (2) moderate and manageableasset risks, and (3) sound funding profile. Challenges include (1) above-average loan growthof and relative exposure to mortgage lending, leading to increased susceptibility to potentialshocks; and (2) constrained profitability. When assessing Raiffeisen Schweiz's credit profilewe consider the consolidated Raiffeisen Group numbers because of its importance to thegroup, in combination with the group's strong cohesion with a statutory mutualist supportframework.

Exhibit 1

Rating Scorecard - Key financial ratios

0.5%16.1% 0.4% 14.5% 17.6%

0%

5%

10%

15%

20%

25%

30%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Asset Risk:Problem Loans/

Gross Loans

Capital:Tangible Common

Equity/Risk-WeightedAssets

Profitability:Net Income/

Tangible Assets

Funding Structure:Market Funds/

Tangible BankingAssets

Liquid Resources:Liquid Banking

Assets/TangibleBanking Assets

Solvency Factors (LHS) Liquidity Factors (RHS)

Raiffeisen-Gruppe (BCA: a3) Median a3-rated banks

So

lve

ncy F

acto

rs

Liq

uid

ity F

acto

rs

Source: Moody's Financial Metrics

Page 2: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Credit strengths

» Low dependence on market funding and adequate liquid resources

» Solid asset-quality metrics

» Improving capitalisation, providing a better buffer against downside risks

Credit challenges

» Corporate governance challenges, as identified by the Swiss Financial Market Supervisory Authority (FINMA)

» Risks from high exposures to the Swiss real estate market and above-average mortgage loan growth

» The low interest rate environment, which constrains the bank's profit and limits its ability to generate further capital, in light ofever-tighter regulatory requirements

OutlookRaiffeisen Schweiz's rating outlook is negative. The negative outlook reflects our assessment of the remaining tail risks and also ourview about the bank's lending standards and general risk-management shortfalls at the Raiffeisen Schweiz level, given the significanceof the regulator's findings.

Factors that could lead to an upgrade

» An upgrade of Raiffeisen Schweiz's ratings is currently unlikely, as reflected in the negative outlook. However, the bank's ratingscould be upgraded if its corporate governance practices or stronger credit fundamentals, or both, justify an upgrade of its BCA. Theratings could also be upgraded because of a higher rating uplift resulting from our LGF analysis, provided that government supportassumptions remain unchanged.

» Upward pressure on the bank's a3 BCA could develop following a significant strengthening of its corporate governance, includingthe full implementation of FINMA measures and higher comfort with regard to potential tail risks. Furthermore, a combinationof a slowdown in the group's mortgage loan book growth below the market average over the coming years in line with cautiousrisk management, a sustainable improvement in the bank's risk-adjusted levels of recurring profitability and efficiency, significantlyhigher capital at the consolidated group level and increased liquid asset volumes could result in upward pressure.

» Our Advanced LGF analysis could result in higher notches of rating uplift if Raiffeisen Schweiz issues significant volumes of seniorunsecured or subordinated debt instruments, which increase the respective instrument tranches, resulting in a reduced expectedloss.

Factors that could lead to a downgrade

» A downgrade of Raiffeisen Schweiz's ratings could be triggered following a downgrade of the bank's BCA or a decline in the group'scohesion, of which the latter, however, is considered highly unlikely. The bank's deposit ratings could be strained further if its depositvolume declines substantially, resulting in a fewer notches of rating uplift.

» Challenges for the bank's BCA could arise from a significant deterioration in its asset quality, especially if linked to risk-managementshortfalls; a higher risk appetite, in particular if accompanied by a reduction in the bank's capital ratios; a sustained weakening of thegroup's liquid resources; or a substantial increase in the bank's or the group's market funding ratio.

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 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 3: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Key indicators

Exhibit 2

Raiffeisen Schweiz (Consolidated Financials) [1]12-172 12-162 12-152 12-142 12-132 CAGR/Avg.3

Total Assets (CHF billion) 54 52 47 37 33 13.14

Total Assets (EUR billion) 46 48 43 31 27 14.44

Total Assets (USD billion) 55 51 47 38 37 10.64

Tangible Common Equity (CHF billion) 2.8 2.7 2.8 1.3 1.3 20.24

Tangible Common Equity (EUR billion) 2.4 2.5 2.5 1.1 1.1 21.54

Tangible Common Equity (USD billion) 2.8 2.6 2.8 1.3 1.5 17.44

Problem Loans / Gross Loans (%) 0.2 0.6 0.4 0.4 0.4 0.45

Tangible Common Equity / Risk Weighted Assets (%) - - - 12.8 14.1 13.56

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 0.9 2.7 1.7 2.6 2.8 2.15

Net Interest Margin (%) 0.3 0.3 0.3 0.3 0.4 0.35

PPI / Average RWA (%) - - - -0.4 -0.1 -0.36

Net Income / Tangible Assets (%) 0.1 -0.1 0.1 0.0 0.1 0.05

Cost / Income Ratio (%) 98.8 112.5 104.3 107.9 101.8 105.15

Market Funds / Tangible Banking Assets (%) 68.9 68.8 66.7 67.0 65.4 67.45

Liquid Banking Assets / Tangible Banking Assets (%) 69.5 69.8 65.7 62.9 62.9 66.15

Gross Loans / Due to Customers (%) 111.0 105.8 106.4 115.1 118.6 111.45

[1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully-loaded or transitional phase-in; LOCAL GAAP. [3] May include rounding differences due toscale of reported amounts. [4] Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [5] Simple average of periods presented for the latestaccounting regime. [6] Simple average of Basel III periods presented.Source: Moody's Financial Metrics

Exhibit 3

Raiffeisen-Gruppe (Consolidated Financials) [1]6-182 12-172 12-162 12-152 12-142 CAGR/Avg.3

Total Assets (CHF billion) 229 228 219 206 188 5.84

Total Assets (EUR billion) 198 195 204 189 157 6.94

Total Assets (USD billion) 231 234 215 206 190 5.84

Tangible Common Equity (CHF billion) 16 16 15 13 12 8.84

Tangible Common Equity (EUR billion) 14 14 14 12 9.8 10.04

Tangible Common Equity (USD billion) 16 16 14 13 12 8.94

Problem Loans / Gross Loans (%) - 0.4 0.5 0.5 0.6 0.55

Tangible Common Equity / Risk Weighted Assets (%) 16.1 16.5 15.9 15.3 14.1 15.66

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) - 5.0 6.1 6.4 7.6 6.35

Net Interest Margin (%) 1.0 1.0 1.1 1.1 1.2 1.15

PPI / Average RWA (%) 1.0 1.1 0.9 1.0 1.0 1.06

Net Income / Tangible Assets (%) 0.4 0.4 0.3 0.4 0.4 0.45

Cost / Income Ratio (%) 69.9 68.0 73.4 70.1 69.9 70.35

Market Funds / Tangible Banking Assets (%) 14.3 14.5 14.3 13.6 11.4 13.65

Liquid Banking Assets / Tangible Banking Assets (%) 16.3 17.6 17.4 15.2 12.0 15.75

Gross Loans / Due to Customers (%) 111.3 109.6 108.9 109.7 110.4 110.05

[1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully-loaded or transitional phase-in; LOCAL GAAP. [3] May include rounding differences due toscale of reported amounts. [4] Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [5] Simple average of periods presented for the latestaccounting regime. [6] Simple average of Basel III periods presented.Source: Moody's Financial Metrics

3 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 4: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

ProfileRaiffeisen Schweiz is a Switzerland-based cooperative corporation. The bank is wholly owned by 246 local Raiffeisen cooperative banks,which in turn were owned by 1.9 million cooperative members as of year-end 2018. Along with certain other specialised companies,these entities constitute the Raiffeisen Group, the third-largest banking group in Switzerland in terms of on-balance-sheet assets(CHF225.3 billion) as of end of year-end 2018. The group serves around 3.8 million customers through a nationwide network of 880branches as of year-end 2018. The bank has about 11,000 employees. As of 31 December 2017, Raiffeisen Schweiz reported total assetsof CHF53.6 billion (€45.8 billion).

Macro ProfileRaiffeisen Schweiz is predominantly active in Switzerland, which aligns its Macro Profile with that of its home country. The very highdegree of economic, institutional and government financial strength, and the very low susceptibility to event risk thus benefit thebank's BCA. Because of (1) the relatively high and rising private-sector debt, which is well covered by private-sector assets; (2) fundingconditions benefiting from a strong domestic deposit base; and (3) liquid covered bonds and interbank markets, Raiffeisen Schweiz'sMacro Profile stands at Very Strong-. A change in the Swiss Macro Profile to Strong+ could exert pressure on the bank's ratings,provided all other factors remain unchanged.

Recent developmentsOn 22 January 2019, Raiffeisen Schweiz announced the results of an independent expert's opinion on the corporate governance andmanagement practices of the bank during 2005-15, which revealed a number of corporate government shortfalls with regard to theinvestments and takeovers of the bank. The findings led to an investment revaluation, which impair Raiffeisen Group's 2018 annualprofit by around CHF270 million.

Detailed credit considerationsGenerally solid capitalisation levels but under regulatory pressureWe assign a aa3 Capital score to Raiffeisen Schweiz, one notch below the initial historical score. The adjustment reflects our centralscenario for a possible downturn in Swiss real estate markets but also the still-limited, but improving, distance to regulatory capitalrequirements.

The Raiffeisen Group would be able to cover expected losses from earnings and loan-loss reserves from a housing downturn withouta significant impact on its capital ratios. Our Tangible Common Equity (TCE) ratio stood at 16.5% as of half-year 2018. The RaiffeisenGroup reported a Common Equity Tier (CET) 1 capital of CHF16.4 billion, which translated into an improved CET1 ratio of 16.5% anda total capital ratio of 17.8% as of year-end 2018 (2017: 15.9% and 17.4%, respectively) (see exhibit 3). Earnings retention, but alsothe placement of capital with its increasing number of members did outweigh the increase in risk weighted assets of 3%, providing anincreasing cushion for investors.

Exhibit 4

Raiffeisen Schweiz exceeds its capital requirementsExhibit 5

Raiffeisen Schweiz's capital requirements

15.9%16.5%

15.2%15.9%

16.5%16.9%17.4% 17.8%

6.7% 7.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2016 2017 2018

TCE ratio CET1 ratio Total capital TCE leverage

TCE = Tangible Common Equity (Moody's calculation); CET1 = Common Equity Tier 1Source: Company reports, Moody's Investors Service

10.4%

12.6%

15.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Q3 2018

CET 1 Tier 1 Total capital

Source: Company reports

4 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 5: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

The bank already meets the fully loaded 2019 total capital requirements as a domestic systemically important financial institution/category 2 bank, with a total capital ratio requirement of 15.6% (see exhibit 4), including 1.2 percentage points resulting from thecountercyclical capital buffer for domestic residential mortgage exposures. However, the buffer of 220 basis points (bps) versus theregulatory requirements is improving, but still relatively limited.

Further, according to the new gone-concern capital requirements introduced as of January 2019, Raiffeisen has to hold total capitalof 17.9% of its risk-weighted assets because of its status as a domestic systemically important bank. While the gone-concernrequirements will phase in beginning 2026, we expect the bank to grow its capital buffers not only through retained earnings but alsovia the placement of new capital with its members over time, thereby supporting its high Capital score. The group already replaced alow-trigger Additional Tier 1 (AT1) instrument with a high-trigger AT1 in May 2018.

Raiffeisen is regulated at the group level, with Raiffeisen Schweiz ensuring compliance with regulatory requirements for capitalisation,liquidity and risk management. Further, the entity coordinates central guidance and risk management principles for the whole group,having discretionary authority to ask the primary member banks to comply with those.

While assessing Raiffeisen Schweiz's credit profile and because of its importance to the Raiffeisen Group, in combination with thegroup's strong cohesion with a statutory mutualist support framework, we consider the consolidated group numbers for RaiffeisenSchweiz. Member banks are contractually obliged to support each other as long as they have sufficient equity; according to the 2017annual report, resources available add up to CHF17.8 billion2.

Risks from high and rapidly rising exposures to the Swiss real estate market persistWe assign an a3 Asset Risk score to the group, five notches below the initial historical score of aa1. Our assessment incorporatesour view of the potential risk from corporate governance issues that may crystallise in the future and the meaningful concentrationrisks toward mortgage lending. Further, we take into account normalised nonperforming loan ratios throughout the current benigneconomic cycle in Switzerland and the inherent risk from market share gains, although growth has eased and the portfolio is betterseasoned than in the past.

Raiffeisen Group's mortgage loan book grew at a compound annual growth rate of 4.8% between 2012 and year-end 2018 toCHF179.6 billion, boosting the group's national market share to 17.6% from 16.2%. In 2017 and 2018, the growth rate of the bank'smortgage portfolio declined to below 5% but remained above the market average. As of year-end 2018, the mortgage portfolio stoodat CHF179.6 billion, up 4.0% from year-end 2017.

Exhibit 6

Raiffeisen Group's mortgage book growth has outpaced the Swiss banks' average

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

0%

1%

2%

3%

4%

5%

6%

2013 2014 2015 2016 2017 2018

Swiss banks' mortgage loan growth - LHS Raiffeisen mortgage loan growth - LHS Raiffeisen market share - RHS

Source: Swiss National Bank, Moody's Financial Metrics

Raiffeisen Group's problem loan ratio was very low at 0.4% as of year-end 2017 (CHF0.8 billion; see exhibit 6), a value that is likely toincrease through the economic cycle. While our central scenario does not assume a sharp decline in residential real estate prices, therisk of a price decline and a subsequent negative rating migration (which would have a significant negative impact on the group's assetquality and, potentially, its capitalisation) are nevertheless possible, despite the group's very granular loan book.

5 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 6: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Exhibit 7

Raiffeisen Group's already very low problem loan stock is declining further

0%

5%

10%

15%

20%

25%

30%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

2014 2015 2016 2017

Problem Loans / Gross Loans Coverage ratio (RHS)

Note: Problem loan ratio as per Moody's definition.Source: Company reports, Moody's Investors Service

Groupwide profitability metrics under persistent strain because of the low interest rate environment and competition formarket shareThe assigned ba2 Profitability score of the Raiffeisen Group, which is in line with the initial score, reflects the group's currentprofitability level. Pressures from the low interest rate environment, as visible in the falling interest margin, have been balanced byportfolio growth, which is a stabilising factor.

Exhibit 8

Raiffeisen Group's growth strategy stabilized its interest income, though costs are rising

2,093 2,131 2,134 2,196 2,2482,268

2,228

368 396 429 463 467 494 451

-1,895 -1,914 -1,934 -2,080 -2,266 -2,213 -2,379

-3,000.0

-2,000.0

-1,000.0

0.0

1,000.0

2,000.0

3,000.0

4,000.0

2012 2013 2014 2015 2016 2017 2018

CH

F T

ho

usa

nd

s

Net interest Income Net fees and commissions income Trading & other income Admin. Expenses

Risk provisions Extraordinary income and expense Pre-tax profit

Note: The financials for 2018 are the reported numbers, without Moody's adjustmentsSource: Company reports, Moody's Financial Metrics

Raiffeisen Group reported a net profit of CHF497 million in 2018, down 45.4% from a year earlier. The overall result reflects a numberof one-offs, predominantly linked to write-downs related to participations in the area of CHF270 million, after significant corporategovernment shortfalls were revealed in 2018. The operational business was more resilient, as reflected in a slightly improved netinterest income of CHF2.3 billion in 2018, up 1.8% from a year earlier. The bank's net commission income was CHF451 million (down8.8% from a year earlier), while its trading income was CHF210 million (down 8.7% from a year earlier), primarily driven by the sale ofNotenstein La Roche. The cost base was almost unchanged at CHF2.0 billion, with risk costs (aside from the participations) remainedlow at CHF124 million.

The group's reported interest margins have declined in recent years (102 bps in 2017 and 2018, down from 107 bps in 2016 and 112 bpsin 2015), illustrating the bank's growth strategy, in combination with the general market environment. The bank's margins have beenconstrained by the low-yield environment.

6 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 7: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

In the coming years, we expect the Raiffeisen Group to face the challenge of persistently strong competition in the Swiss bankingsystem, as well as continued low interest rates, both of which will strain its net interest income over time. The ongoing competition formarket share may strain the group's margins further, while rising loan-loss charges could constrain its profitability prospects.

Continued solid funding profileWe assign an a1 Funding Structure score to Raiffeisen Schweiz, in line with the initial score. The predominantly stable sources offunding and the resulting low dependence on confidence-sensitive market funding sources are the basis for our assessment, which weexpect to remain stable over the next 12-18 months.

The Raiffeisen Group's funding profile benefits from its substantial volume of stable deposits (CHF165.7 billion as of year-end 2018,constituting around 77% of the group's liabilities), to which Raiffeisen Schweiz and the local Raiffeisen banks have strong nationwideaccess.

Exhibit 9

Low dependence on market fundsComposition of market funding sources

0%

2%

4%

6%

8%

10%

12%

14%

16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 H1 2018

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

*Market Funding Ratio = Market Funds / Tangible Banking AssetsSource: Company reports, Moody's Investors Service

Raiffeisen Schweiz's market funding consisted of €21 billion in covered bonds as of year-end 2017 (up from CHF20.0 billion as of year-end 2016), limiting potential interest rate risks for the bank, given its better-matched asset-liability profile and around CHF3.5 billion ofsenior unsecured liabilities.

Adequate liquid resourcesThe assigned Liquid Resources score of baa2, in line with the initial score, reflects Raiffeisen Group's solid liquidity profile.

The group's liquid assets of around CHF37 billion as of June 2018 (consisting of CHF20 billion in cash, CHF7 billion in due from banksand CHF11 billion in repo-eligible securities or trading assets), mitigate its exposure to fluctuations in market sentiment.

7 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 8: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Exhibit 10

Raiffeisen Schweiz has a stable amount of liquid resourcesComposition of liquid assets

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 H1 2018

Other assets Loans Securities/Investments Interbank Cash Liquid Banking Assets Ratio* (RHS)

*Liquid Banking Assets Ratio = Liquid Assets / Tangible Banking AssetsSource: Company reports, Moody's Investors Service

These exposures arise from the bank's (1) slightly elevated loan-to-deposit ratio of 111% as of half-year 2018; and (2) stable liquiditybuffer, given that gross loans represented 81% of the group's balance sheet as of June 2018.

Qualitative adjustment of the BCA reflects our evaluation of the credit impact of significant corporate governanceshortfallsWe adjust Raiffeisen Schweiz's Financial Profile down by one notch. This adjustment reflects our evaluation of the credit implicationsof significant corporate governance shortfalls by Raiffeisen Schweiz, Raiffeisen Group Switzerland's central institution, as identified byFINMA in spring 2018. We have taken into account broader medium- to longer-term implications such as crystallising higher asset risksfrom previous underwritings at Raiffeisen Schweiz, given the significant corporate governance shortcomings.

As a result of its investigation, FINMA identified various control issues and problems, including significant shortfalls in the group'soverall corporate governance practices related to the management of shareholdings and related persons. Raiffeisen Schweiz failed toeffectively oversee and control its own management, and mitigate potential conflicts of interest arising from management's and thesupervisory board's involvement in day-to-day decision-making. This led to breaches of several supervisory laws and best practices,mainly during 2012-15. Further shortfalls included inadequate risk management around lending standards related to individuals closelyassociated with the bank or involving significant shareholdings and participation, or both, which in one case led to a miscalculation ofregulatory capital.

In our assessment of the various supervisory findings, we acknowledge that weaknesses around corporate governance are at leastpartially balanced by the bank's and the group's solid fundamentals, as reflected in their generally sound asset quality, adequatecapital levels and good liquidity. Furthermore, the bank has taken action to address the shortfalls; measures include a complete newsupervisory board and significant changes within the senior management team — to also comply with FINMA targets — which weexpect to be implemented within the outlook period, and an overhaul of internal guidances, best practices and controls.

Support and structural considerationsLoss Given Failure (LGF) analysisRaiffeisen Schweiz is subject to Swiss banking regulations, which we consider an operational resolution regime. We, therefore, apply ourAdvanced LGF analysis, considering the risks faced by the different debt and deposit classes across the liability structure at failure. Weassume residual tangible common equity of 3%, post-failure losses of 8% of tangible banking assets, a 25% runoff in junior wholesaledeposits and a 5% runoff in preferred deposits, and assign a 100% probability to deposits being preferred to senior unsecured debt (asreflected in the de facto case in the waterfall below), thereby reflecting depositor preference by law in Switzerland. We base our LGFanalysis on the consolidated group's liabilities at failure because of our assumption that the resolution would, upon exhaustion of allstatutory and joint support, be based on a full resolution of the entire group, including Raiffeisen Schweiz.

8 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 9: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Raiffeisen Schweiz's Aa3 long-term deposit ratings, therefore, reflect the very low loss given failure for the group's junior deposits,leading to a two-notch uplift from the bank's a3 Adjusted BCA. Conversely, the bank's A3 senior unsecured ratings take into accounttheir high loss given failure, leading to a one-notch reduction from the bank's a3 BCA. Our LGF analysis further indicates a high lossgiven failure for subordinated debt classes, leading us to position the ratings one notch below the bank's Adjusted BCA. In the absenceof the government support uplift assigned to this particular debt class, Raiffeisen Schweiz's subordinated bonds are rated Baa1.

High-trigger AT1 securitiesThe Baa3(hyb) rating assigned to the high-trigger undated deeply subordinated AT1 notes issued by Raiffeisen Schweiz reflects ourapproach to the rating of these securities, which we rate to the lower of a model-based outcome and a non-viability security rating.This method captures the credit risk associated with the distance to trigger breach and the credit risk of these securities' non-viabilitycomponent, which also captures the risk of coupon suspension on a non-cumulative basis.

Government support considerationsRaiffeisen Schweiz's long-term senior debt and deposit ratings benefit from one additional notch of government support uplift,taking into account (1) the Raiffeisen Group's status as a domestic systemically important financial institution; (2) the bank's largenationwide network, which serves around 3.8 million customers; (3) the bank's position as the second-largest clearer of payments,behind PostFinance; and (4) the group's domestic market shares of 17.6% in mortgages and 13.0% in savings as of year-end 2018.

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.

Raiffeisen Schweiz's CRRs are positioned at A3/P-2The CRRs are positioned in line with the bank's a3 Adjusted BCA, reflecting the high loss given failure from the low volume ofinstruments that are subordinated to CRR liabilities.

Counterparty Risk (CR) AssessmentsThe CR Assessment is an opinion of how counterparty obligations are likely to be treated if a bank fails, and are distinct from debtand deposit ratings in that they (1) consider only the risk of default rather than both the likelihood of default and the expectedfinancial loss, and (2) apply to counterparty obligations and contractual commitments rather than debt or deposit instruments. The CRAssessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing),derivatives (for example, swaps), letters of credit, guarantees and liquidity facilities.

Raiffeisen Schweiz's CR Assessment is positioned at A2(cr)/P-1(cr)The bank's CR Assessment is positioned one notch above the bank's a3 Adjusted BCA. This positioning reflects the depositor preferencein Switzerland, the resulting rank ordering of CR exposures below deposits and the moderate volume of instruments ranking below CRexposures, such as senior debt and equity, which is insufficient to reduce the expected loss to a level that would warrant uplift from theAdjusted BCA. The CR Assessment, however, benefits from one notch of government support uplift.

Methodology and scorecardThe principal methodology we use in rating Raiffeisen Schweiz was Banks, published in August 2018.

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.

9 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 10: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Rating methodology and scorecard factors

Exhibit 11

Raiffeisen-GruppeMacro FactorsWeighted Macro Profile Very

Strong -100%

Factor HistoricRatio

InitialScore

ExpectedTrend

Assigned Score Key driver #1 Key driver #2

SolvencyAsset RiskProblem Loans / Gross Loans 0.5% aa1 ← → a3 Loan growth Quality of assets

CapitalTCE / RWA 16.1% aa2 ← → aa3 Risk-weighted

capitalisationStress capital resilience

ProfitabilityNet Income / Tangible Assets 0.4% ba2 ← → ba2 Earnings quality Expected trend

Combined Solvency Score a1 a3LiquidityFunding StructureMarket Funds / Tangible Banking Assets 14.5% a1 ← → a1 Extent of market

funding relianceExpected trend

Liquid ResourcesLiquid Banking Assets / Tangible Banking Assets 17.6% baa2 ← → baa2 Stock of liquid assets Expected trend

Combined Liquidity Score a3 a3Financial Profile a3

Business Diversification 0Opacity and Complexity 0Corporate Behavior -1

Total Qualitative Adjustments -1Sovereign or Affiliate constraint: AaaScorecard Calculated BCA range a3-baa2Assigned BCA a3Affiliate Support notching --Adjusted BCA a3

Balance Sheet in-scope(CHF million)

% in-scope at-failure(CHF million)

% at-failure

Other liabilities 51,878 22.6% 68,837 30.0%Deposits 166,260 72.6% 149,302 65.2%

Preferred deposits 123,032 53.7% 116,881 51.0%Junior Deposits 43,228 18.9% 32,421 14.2%

Senior unsecured bank debt 3,541 1.5% 3,541 1.5%Dated subordinated bank debt 535 0.2% 535 0.2%Equity 6,873 3.0% 6,873 3.0%Total Tangible Banking Assets 229,087 100% 229,087 100%

10 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 11: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

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 4.8% 4.8% 4.8% 4.8% -1 -1 -1 -1 0 baa1Counterparty Risk Assessment 4.8% 4.8% 4.8% 4.8% 0 0 0 0 0 a3 (cr)Deposits 18.9% 4.8% 18.9% 4.8% 2 2 2 2 0 a1Senior unsecured bank debt 4.8% 3.2% 4.8% 3.2% -1 -1 -1 -1 0 baa1Dated subordinated bank debt 3.2% 3.0% 3.2% 3.0% -1 -1 -1 -1 0 baa1Non-cumulative bank preference shares 3.0% 3.0% 3.0% 3.0% -1 -1 -1 -1 -2 baa3 (hyb)

Instrument class Loss GivenFailure notching

AdditionalNotching

Preliminary RatingAssessment

GovernmentSupport notching

Local CurrencyRating

ForeignCurrency

RatingCounterparty Risk Rating -1 0 baa1 1 A3 A3Counterparty Risk Assessment 0 0 a3 (cr) 1 A2 (cr) --Deposits 2 0 a1 1 Aa3 Aa3Senior unsecured bank debt -1 0 baa1 1 A3 --Dated subordinated bank debt -1 0 baa1 0 Baa1 --Non-cumulative bank preference shares -1 -2 baa3 (hyb) 0 Baa3 (hyb) --[1] Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information.Source: Moody's Financial Metrics

Ratings

Exhibit 12Category Moody's RatingRAIFFEISEN SCHWEIZ

Outlook NegativeCounterparty Risk Rating A3/P-2Bank Deposits Aa3/P-1Baseline Credit Assessment a3Adjusted Baseline Credit Assessment a3Counterparty Risk Assessment A2(cr)/P-1(cr)Senior Unsecured -Dom Curr A3Subordinate -Dom Curr Baa1Pref. Stock Non-cumulative -Dom Curr Baa3 (hyb)

Source: Moody's Investors Service

Endnotes1 taking into account the severity of loss faced by different liability classes in resolution

2 Source: Annual report, including solidarity fund, reserves at Raiffeisen Schweiz and excess capital at the level of member banks.

11 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 12: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDITRISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THERELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITYMAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEEMOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’SRATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDITRATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAYALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDITRATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONSARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONSCOMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONSWITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDERCONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FORRETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACTYOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW,AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTEDOR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANYPERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSESAND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDITRATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating,agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintainpolicies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO andrated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually atwww.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as tothe creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it feesranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

REPORT NUMBER 1157931

12 20 March 2019 Raiffeisen Schweiz: Update to credit analysis

Page 13: Credit Opinion as of March 20th, 2019 - Raiffeisen · This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Contacts

Maryna HarbalAssociate Analyst

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

13 20 March 2019 Raiffeisen Schweiz: Update to credit analysis