RBI warns it may make another loss this year

By bne IntelliNews March 26, 2015

Robert Anderson in Prague -


Raiffeisen Bank International (RBI) warned on March 25 that following a tough 2014 it may record another loss this year.

Announcing its audited results, the Austrian bank confirmed it made a consolidated net loss of €493m in 2014. In large part that was because of a 49% increase in net provisions to €1.716bn, including €533m for its Ukrainian operation.

RBI, the second largest lender in Central and Eastern Europe, said it expects net provisioning for impairment losses to remain elevated in 2015, although below 2014’s level. The bank's stock fell 1.5% in Vienna to close at €12.10. Its shares have more than halved in value over the past nine months.

In February, RBI announced plans to sell its Polish and Slovenian operations, and to scale back in Russia and Ukraine in order to build up its capital buffers. It now says it will also announce a new business plan for its struggling Hungarian business when it releases first quarter results in May.

The bank also revealed it is in talks to sell a minority stake in its lossmaking Ukraine unit to the European Bank for Reconstruction and Development this year.

CEO Karl Sevelda told an analysts’ conference call on March 25 that the sale processes in Poland and Slovenia and of Czech-Slovak internet bank Zuno are progressing well. A final decision in Slovenia should be made in the next few weeks, he added.

Sevelda reiterated that RBI would fulfil its commitment to Polish regulator KNF to list its Polish unit Polbank in Warsaw by 2016. “We do not see an IPO requirement as an obstacle to this transaction,” he told analysts.

By the end of 2017, RBI aims to cut gross risk-weighted assets by €16bn, compared to the €68.7bn on its books at the end of last year. It also plans to cut its €3bn cost base by 20% by the end of 2017. The Austrian bank said the majority of costs involved in the restructuring (expected to amount to €550mn overall) will be booked in 2015.

Following the restructuring, RBI is targeting a return on equity before tax of 14% and a fully-loaded tier one capital ratio of 12%, up from 10% at the end of 2014.

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