RBI signals disciplined M&A and capital allocation after Romania, Croatia deals

Raiffeisen Bank International AG will take an opportunistic approach to acquisitions with disciplined valuations and careful capital allocation following two major transactions in Romania and Croatia.

The Austrian lender in March announced a €591 million acquisition of Garanti Bank SA in Romania, a move set to make RBI the country's third-largest bank.

The following month, RBI made a €449.5 million offer for Addiko Bank AG at €23.05 per share, but Nova Ljubljanska Banka dd later responded with a higher bid of €29 per share. Addiko Bank is based in Austria but focuses its operations on the Balkan region.

RBI lowered its 2026 CET1 ratio guidance excluding Russia from above 15% to around 14.3% to account for the two deals. CFO Kamila Makhmudova during a May 5 earnings call said the ratio will temporarily dip below the 14.5% medium-term target, but the bank aims to restore it in the coming quarters.

"Capital allocation will be one of my highest priorities as CFO, and you can count on me to pay very close attention on how we deploy it," Makhmudova said, adding that the current M&A opportunities warrant the use of the accumulated capital. Makhmudova remains a "firm believer" in organic growth and deals "need to be opportunistic" and keep a "careful eye" on valuation.

When asked about redeploying capital that could be potentially released from Russia, Makhmudova said a capital release could come from the bank selling its Russian subsidiary or pursuing a €2.4 billion damages claim against Russian investment company Rasperia, though both the timing and amount remain uncertain and the claim process could take up to two years.

If released, RBI could use its capital from Russia for shareholder dividends, expanding its business in core markets, and acquisitions, Makhmudova said.

"Currently, we see quite high valuations in attractive markets so if we find any opportunities for successful and value-accretive redeployment of the capital in [M&A], we will pursue them as you've seen it now," she said.

Profit dip

RBI reported first-quarter consolidated profit of €470 million for its business including Russia, up 6% quarter over quarter, but down by 33% year over year and about 18% lower than the Visible Alpha consensus estimate of €576 million.

Net interest income reached €1.5 billion, expanding 1% quarter over quarter but contracting 3% year over year. Net fee and commission income amounted to €693 million, down by 1% quarter over quarter and up by 4% on an annual basis.

RBI's first-quarter consolidated profit excluding Russia reached €209 million, down 50% quarter over quarter and 20% year over year. The result was 16.1% lower than the consolidated profit consensus estimate of €249 million provided by the bank.

RBI said its results were affected by the upfront booking of higher bank levies. In the first quarter, RBI paid €150 million in special taxes and bank levies in Austria, Hungary, Poland and Romania, with the total expected to rise to €251 million for 2026, compared to €178 million paid in 2025.

RBI is also facing a 50% income tax rate in Ukraine this year and a bank levy in Slovakia, which it booked in its income tax line, Makhmudova said.

RBI's first-quarter return on equity excluding Russia was 5.2%. The bank did reaffirm its full-year ROE target of around 10.5%. Makhmudova said stronger net interest and fee income in the coming quarters, along with solid loan growth and stable margins, should help the bank achieve that goal.

RBI is also looking at a dividend payout ratio of 40% for 2026, translating to an estimated €1.80 per share.

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