Austria’s Raiffeisen Bank International, which in March had to suspend dividends as it braced for a hit from its Russian subsidiary, said its net profit more than tripled to 1.27 billion euros (the equivalent of $1.3 billion) in the second quarter.
Raiffeisen shares jumped after the bank posted quarterly results!
As it turns out, Russia can still be a money maker for Western banks.
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Raiffeisen Bank records profits in Russia,as shares jumped after the bank posted quarterly results!
Key Indicator; the surprisingly strong appreciation of the Russian ruble, which appreciated 60% against the euro and 50% against the dollar in the quarter, according to @FactSet pic.twitter.com/NZIal2FSFO
— The_Journalbiz (@the_journalbiz) August 10, 2022
The main reason: the surprisingly strong appreciation of the Russian ruble, which appreciated 60% against the euro and 50% against the dollar in the quarter, according to FactSet.
Shares of the bank were up close to 5%.
Everything rose at Raiffeisen Russia, even though the bank has been cutting down on customers and lending.
- Deposits in the subsidiary rose €16 billion to €29 billion.
Besides the ruble appreciation, the bank said it saw deposit inflows in the quarter. Fee and commission income also shot up as foreign-exchange transactions increased.
Overall, the bank posted a staggering €534 million profit from the unit, up from €113 million a year ago.
“Contrary to expectations, Russia has been a massive profit driver for Raiffeisen,” said Jérôme Legras, head of research at Axiom Alternative Investments.
SEMI-ANNUAL REPORT 2022
- Consolidated profit of EUR 1,712 million, including gain on the sale of Raiffeisenbank (Bulgaria)
- Net interest income up 23% quarter-on-quarter, due to higher rates in CE and SEE as well as EUR/RUB appreciation
- Net fee and commission income up 29% quarter-on-quarter, in particular on the back of continued strong customer activity and FX business in Russia
- Provisioning ratio increased significantly to 0.86% year-to-date, largely driven by the buildup of overlays and macro downgrades
- Loans grew 7% year-to-date, supported by focus CE and SEE markets
- Consolidated profit of EUR 1,712 million year-to-date, including net gain of EUR 453 million on the sale of the Bulgarian unit
Raiffeisen problem remains the fact that Russia has blocked most businesses from converting rubles to other currencies and has forced big exporters, namely oil and gas companies, to convert their dollar and euro revenues into rubles.
That means Raiffeisen still has a problem,
For one, its profit is stuck in Russia, as it can’t move money outside. The bank said it is looking into strategic options for the unit, although Mr. Legras questioned whether the strong results would influence its decision.