Tear Sheet: Raiffeisen Bank International AG

Although credit losses have remained relatively low, we anticipate that new litigation provisions related to RBI's foreign currency (euro and Swiss franc) mortgage portfolio in Poland will exert pressure on its bottom line over the next 12 to 24 months. The coverage ratio for this portfolio is high at about 94% as of third-quarter 2024, thanks to RBI's forward-looking creation of litigation provisions. This limits risks from this part of the loan portfolio, in our view. Midyear 2024 figures for the broader Raiffeisen Banking Group (RBG), also show a highly profitable, strongly capitalized group with solid liquidity buffers and a resilient funding base, although the NPA ratio has deteriorated moderately. The divestment of RBI's Russian business is encountering new challenges

...What's new: Raiffeisen Bank International AG (RBI) demonstrated robust profitability and cost efficiency in the first nine months of 2024, despite facing moderate challenges to its asset quality. Based on S&P Global Ratings definitions, the bank had a return on average common equity (ROAE) of 15.8% as of Sept. 30, 2024, alongside a sound cost-to-income ratio of 43.1%. However, the non-performing asset (NPA) ratio rose to 3.6% in third-quarter 2024, primarily due to adverse developments affecting clients in Austria's commercial real estate (CRE) sector and the impact of tighter financial conditions, which have led to increased debt servicing costs for clients across RBI's operating regions. Although credit losses have remained relatively low, we anticipate that new litigation provisions related to RBI's foreign currency (euro and Swiss franc) mortgage portfolio in Poland will exert pressure on its bottom line over the next 12 to 24 months. The coverage ratio for this portfolio is high at...

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