Austrian RBI sees big profit gains in Russia and Belarus

By Alexandra Schwarz-Goerlich and Tom Sims

VIENNA (Reuters) – The Russian and Belarusian operations of Raiffeisen Bank International (RBI) recorded the biggest profit increases among its subsidiaries in the first half, figures showed on Tuesday, even as the Austrian bank considers a possible exit from the region.

The profitability of Russian operations complicates the picture for the Vienna-based bank as it plots its future following Moscow’s invasion of Ukraine.

RBI, one of Europe’s banks with the most exposure to Russia, is exploring strategic options for the company, including a possible withdrawal from Russia.

“Due to the complex situation and the constantly changing framework conditions, the process will still take some time,” said Managing Director Johann Strobl.

Strobl told reporters he could not provide a time frame for any decision and declined to elaborate on statements from May, when he said the bank had been approached with unsolicited indications of interest in its operations in Russia.

On Monday evening, the bank announced that second-quarter profit had more than tripled after posting a gain on the sale of its Bulgarian subsidiary.

Shares of the bank rose 6.5% on Tuesday morning in Vienna. They are down 50% since the start of the year, stronger than a 12% drop in a broad index of European banks.

Barclays analysts called the bank’s results a “massive earnings beatdown” and said its guidance “implies significant increases in earnings.”

JPMorgan noted that “earnings benefited from a very strong contribution from Russia.”

Profits rose 201% in Russia in the first six months of the year to 630 million euros ($645 million). RBI attributed the rise to factors including higher interest rates and a stronger rouble.

Austrian and Russian RBI:

RBI reduced its lending volume in Russia, but profits in the country still accounted for about a third of the group’s total in the first half.

The lender has operated in Russia since the collapse of the Soviet Union 30 years ago and its operations there – which is Russia’s 10th largest bank by assets – also contributed nearly a third of net profit of the group of 1.5 billion euros last year.

In Belarus, profits rose by more than 1,700% in the first half, but from a low level.

(Reporting by Alexandra Schwarz-Goerlich in Vienna and Tom Sims in Frankfurt; Additional reporting by Tristan Chabba; Editing by Miranda Murray and David Holmes)

Copyright 2022 Thomson Reuters.

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