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Raiffeisen Bank International saw the biggest drop in its single largest market, Russia.
(Photo: Reuters)
Vienna The effects of the crown crisis left a deep impression on the Wiener Geldhaus Raiffeisen Bank International (RBI) in the third quarter. In addition to a cyclical drop in credit demand and currency devaluations in some core countries, more had to be set aside for potential loan defaults, as the bank operating in Eastern Europe and Russia announced on Thursday. The end result was that profits fell to 230 million euros from 303 million euros. The institute is better than expected. Analysts on average expected a net profit of 215 million euros. RBI sticks to perspective.
“The interest rate cuts and the sharp drop in economic activity in the lockdown phases have a negative impact on our earnings,” said bank manager Johann Strobl. Therefore, strict cost discipline and consistent implementation of the digitization strategy would have the highest priority.
Austria’s second largest bank had to set aside € 185 million for bad loans after € 68 million in the same quarter last year. RBI is one of the largest lenders in Eastern Europe. From the current perspective, the so-called new training rate will rise to 75 basis points, depending on the duration and extent of the economic recession, the institute said.
Operationally, the Austrians held up better in the third quarter. Operating income increased slightly by four million euros to 584 million euros and therefore exceeded expectations. The important source of income, the net interest margin, fell to 770 million euros after 866 million euros. The bank saw the biggest drop in its largest single market, Russia, where the ruble had depreciated against the euro. Analysts had expected smaller losses. On average, they expected an interest margin of 815 million euros. Net fee income was reduced to € 433 million after € 468 million.
For the full year, the bank’s boss, Strobl, expects lower credit growth. He sees return on equity in the mid-single digit range for the year as a whole. In the medium term, it is aimed at a value of around eleven percent. The Board of Directors sticks to the medium-term goal of a cost-to-income ratio of about 55 percent. The basic capital ratio (CET 1) should remain at around 13 percent.
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