Raiffeisen Bank's shares surge after strong Q3, guidance upgrade

Raiffeisen Bank International AG's stock rose nearly 10% on Nov. 3 as the Austrian lender updated its outlook and targets following strong third-quarter and nine-month results.

The group's consolidated profit in the third quarter rose to €443 million from €230 million a year ago and €396 million in the second quarter. Its consolidated profit in the nine months to Sept. 30 also jumped to €1.06 billion from €599 million a year before.

The 76% year-over-year rise in the nine-month profit was driven by lower risk costs and a strong recovery in lending volumes, interest rates and fee business, CEO Johann Strobl told analysts during a presentation.

Raiffeisen Bank International, or RBI, now expects its consolidated return on equity to further improve in 2022, with a medium-term target of 11%. In the first three quarters of the year, the bank's return on equity has been growing and hit 14.3% in the three months to Sept. 30. The figure for the nine months was 11.1%.

Strobl said nine-month net interest income was almost even compared with 2020 despite the first-quarter figure being significantly lower year over year. The bank is also "encouraged by another record quarter" in terms of fee and commission income, which amounted to €538 million, buoyed by "excellent business trends and with no significant one-offs included," he added.

The bank expects to record a net loan growth of roughly 11% this year, excluding Equa bank a.s., in the Czech Republic. Loan growth accelerated in the third quarter, with volumes nearly 5% higher. The growth was 7% when taking Equa bank into account, Strobl said.

At the end of September, loans to banks and customers were at €16.68 billion and €100.66 billion, respectively.

Swiss franc mortgages

The legal battles in Poland over Swiss franc-denominated loans continue to hang over RBI. The Polish Supreme Court was due to rule on how to resolve the matter in September but instead sought help from the Court of Justice of the European Union to address procedural issues.

RBI took an additional €40 million of litigation provisions over the matter in the third quarter, taking the total provisions to €231 million. Its gross exposure amounted to about €2 billion, comprising 28,732 loans.

The number of cases is still increasing, Strobl said. At the end of September, the bank had 6,341 pending cases, and it expects to record about 310 new cases per month for the rest of the year.

Asked about the possibility of striking voluntary settlements, Strobl said the "framework is not ready" for such a resolution.

"We do not like that there are expectations that the full negative impact from the Swiss franc development is fully attributed to the banks. I think this should be somehow split between all those who have benefited in the past," Strobl added.

RBI's shares were up 9.5% at €28.26 in late afternoon trading.