RBI continues to work on options for deconsolidating Raiffeisenbank, reduce business in Russia

MOSCOW. May 5 (Interfax) - Austria's Raiffeisen Bank International (RBI) continues to progress potential transactions which would result in the sale or spin-off of Raiffeisenbank Russia and deconsolidation of Raiffeisenbank Russia from the Group, RBI said in a presentation.

"We are committing to further reducing business activity in Russia whilst we continue to progress such potential transactions," it said.

RBI continues to reduce the payment business and has terminated all Russian correspondent banks, excluding Raiffeisenbank Russia.

RBI CEO Johann Strobl said on a conference call that the group expected revenue from the Russian subsidiaries to fall this year as business was reduced.

"We continue to reduce business in Russia: after downsizing the loan portfolio and firming our risk-weighted asset management (RWA) approach last year, we have also taken additional steps to reduce the payments business. As a result, we expect a decline in Russian business revenue in 2023," he said.

Strobl recalled that the group had decided on the fate of its Russian business which it plans to either sell or spin off. "We are working flat out on both solutions. I can't say which one will ultimately be chosen. Both options require a number of approvals," he said.

RBI said in the presentation that its net cross border exposure to Russia as of April 24, 2023 had fallen to 195 million euros from an estimated 600 million euros on March 1.

RBI's Russian subsidiaries earned profit after tax of 301 million euros in Q1 2023, up from 96 million euros in the same period of 2022 and 43% of the group's entire profit. RBI's profit after tax rose 53% in Q1 2023 to 700 million euros and profit before tax 72% to 887 million euros, of which Russia generated 43% or 381 million euros.

The net interest income of RBI's Russian subsidiaries rose 1.7-fold to 377 million euros and net commission fees doubled to 496 million euros.

The Russian subsidies made provisions of 280 million euros in Q1 2023, up 63% from 172 million euros in Q4 2022 and up 34% from 209 million euros in Q1 2022.

The assets of the subsidiaries rose 0.6% during Q1 2023 to 27 billion euros.

Their loan portfolio decreased by10% during Q1 and 24% in the last 12 months to 8.1 billion euros.

The NPL ratio was practically unchanged at 1.6%.

Customer deposits grew 3% in Q1 and 28% in 12M to 20.8 billion euros.

RBI Group assets in Russia include Raiffeisenbank and leasing, insurance and management companies. The group has been assessing all options for its Russian bank, including a carefully managed exit, since February last year.