Raiffeisen Bank International (RBI), the second-largest cross-border bank in Central and Eastern Europe by assets, made a better than expected consolidated net profit of €3.627bn in 2022, up 164%, with more than half the profit coming from its Russian operations.
In the fourth quarter net profit soared from €317mn a year ago to €826mn.
Excluding Russia and Belarus, as well as a gain on the sale of its Bulgarian unit, 2022 consolidated profit was €982mn, up 35% year on year.
The Austrian lender, which has become more and more reliant on its Russian business over the years, is rethinking its presence in the country, where it is the 10th largest bank by assets. Currently it cannot withdraw any profits from its Russian business, where profits have boomed, partly from the strength of the ruble.
However, it has come under criticism because it seems to be in no hurry to leave – its workforce in Russia actually rose last year – and appears to be waiting until President Vladimir Putin’s war against Ukraine comes to an end so it can return to business as usual.
Excluding Russia and Belarus, net interest income was €3.399mn, up 37% y/y due to higher interest rates and volumes. Net interest margin rose to 2.59% from 2.01% on higher interest rates. However, RBI guided that NII this year would be lower at between €3.2bn and €3.4bn, excluding Russia and Belarus.
Net fee and commission income excluding Russia and Belarus was €1.739mn, up 16% y/y. It predicts €1.6bn this year.
Risk costs were €949mn, of which €490mn was booked in Russia and Belarus. The bank has increased its overall provisioning ratio from 0.30% in 2021 to 0.73%, while the non-performing exposure ratio was flat at 1.6%
The bank’s transitional CET ratio was 16.0% compared with 13.1% a year ago. It predicts 15% this year.
The consolidated return on equity soared from 10.9% to 26.8%. It expects this to return to around 10% this year.
RBI shares collapsed by 60% from February 10 just before the invasion to March 7. Currently the shares trade around €15.90, down 37% y/y.
RBI recommended a dividend of €0.80 per share.