Sale of Belarus operations cuts Raiffeisen Bank International's profit by half

Raiffeisen Bank International (RBI) posted a consolidated profit of 1.16 billion euros at the end of 2024, 50% lower than the 2.39 billion euros recorded the previous year, according to the announcement made yesterday by the Austrian banking group.

The bank said that in the last quarter of last year it had losses of 926 million euros as a result of the sale of Priorbank in Belarus. The operation had a negative impact of 824 million euros on the group's results.

RBI CEO Johann Strobl said in a statement: "Despite some special elements, RBI achieved a satisfactory result. By selling Priorbank in Belarus, we were able to reduce the political risk for RBI. The reduction of business in Russia has made significant progress."

Excluding operations in Russia and Belarus, RBI posted a consolidated profit of 975 million euros last year, up 1% from 2023. Calculated this way, net interest income reached 4.16 billion euros, and commission income rose 5% to 1.85 billion euros.

Including operations in Russia and Belarus, RBI's net interest income rose from 5.6 billion euros to 5.8 billion euros, and net commission income fell from 2.9 billion euros to 2.6 billion euros.

RBI is proposing to pay a dividend of 1.10 euros per share for 2024, compared with 1.25 euros for 2023. "Due to our good capitalization, we would like to propose a dividend of 1.10 euros per share to shareholders for 2024," Strobl said.

For the 2025 financial year, the bank is targeting lending growth of between 6% and 7% and a stable Tier 1 capital ratio. RBI also expects net interest income of around euro4.15 billion and net fee and commission income of around euro1.95 billion.

Raiffeisen Bank International covers 12 markets in the region, has almost 45,000 employees and 18.6 million customers. RBI continued to significantly reduce its business in Russia in 2024, and the volume of loans in the country fell by 30%, reaching just euro4.2 billion at the end of the year. Customer deposits fell by 35%. Foreign currency payment activity in Russia was even more restricted, according to RBI.

Recall that, in November last year, some sources quoted by Reuters stated that the European Central Bank (ECB) is pressuring Raiffeisen Bank International Group and the Italian bank UniCredit SpA to hold capital as a buffer against potential risks generated by their businesses in Russia. According to them, the ECB is seeking to keep under control the dangers faced by the two banks that still operate in a country where they no longer have effective control over their own activities.

The Frankfurt-based institution could adjust the individual capital requirements of creditors, which supervisors set annually to reflect risks that are not covered by broader requirements at the banking industry level. Reuters was unable to determine the size of the potential capital adjustments for the banks, according to Agerpres.

In addition, the ECB is asking Raiffeisen for a capital buffer to reflect its exposure to risky loans in the commercial real estate segment, the sources said at the time.

Spokespeople for the ECB and UniCredit did not want to make statements on what Reuters wrote. A Raiffeisen spokesman said, however, that the bank's capital requirements will increase from the beginning of 2025.