Raiffeisen Bank International (RBI) increased its net profit in Russia by 8.2% year-on-year to €326mn in 1Q24, with the share of Russian business in the profit of the whole group being as high as 45%, Kommersant daily reports citing the group’s financial statements.
RBI’s return on equity (ROE) in Russia in 1Q24 was 29.1%, which is higher than that of Russia’s two largest state-controlled banks Sberbank and VTB (24.2% and 22.1% respectively). The bank’s profit grew despite a 21.9% decline in assets in Russia, to €21.1bn, and a 28.2% decline in the loan portfolio to €5.8bn.
RBI is under heavy regulatory pressure to come up with an exit plan from Russia, but the bank would take a massive hit, as Russia made up 38% of its net profits in 2023. RBI has been unable to access the profits it has made there because of Russian central bank restrictions.
But most recent reports suggested that in reality RBI is delaying plans to leave Russia, hoping that the full-scale military invasion of Ukraine will end before the bank will have to cave in to sanctions pressure and scrap its presence in the country.
According to Interfax, citing a statement from RBI CEO Johann Strobl, the bank does not intend to start the implementation of the new plan to wind down business in Russia in 3Q24. RBI promised a clearer understanding during the presentation of the second quarter financials.
According to preliminary plans, by 2026 the loan portfolio in the Russian Federation should reduce by 65% compared to the third quarter of 2023, when it was estimated at €6.3bn.
The analysts surveyed by Kommersant confirm that RBI remains the only major bank in Russia conducting transactions in unfriendly currencies from Russia to abroad and vice versa.
The latest financial report also confirmed that in April RBI received a request from the European Central Bank to accelerate the scaling back of its business in Russia. In Russia, RBI maintains a bank, insurance, management and leasing companies, as well as a special depository and IT company.
