Raiffeisen Bank International reduces assets and income in Russia
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Russia still generates the majority of RBI’s profits, although they fell by more than a third in 2023. Experts attribute the dynamics to the high base of 2022, when there was a sharp increase in Raiffeisenbank’s income from the payment business due to cross-border transactions, the volume of which decreased last year. The group continues to talk about plans to exit business in the Russian Federation at the first opportunity, but the market does not yet see clear signs of preparation for this.
The annual net profit of RBI in Russia in 2023 amounted to more than 56% in the structure of the consolidated net profit of the Austrian group (€1.3 billion for the Raiffeisenbank group in the Russian Federation out of €2.4 billion in total). However, compared to the record year of 2022, the performance of the group’s Russian business decreased. Thus, net interest income decreased by almost 8%, to €1.4 billion. Net commission income fell by 43%, to €1.15 billion. Operating income decreased by 30%, to €2.7 billion.
In the fourth quarter of 2023, RBI’s Russian subsidiaries received €317 million in net profit, which is half the result of the same period in 2022.
The group expected a decline in revenues in the Russian Federation in 2023 due to a “reduction in business.” At the same time, the profits of a number of Russian banks also decreased, and Raiffeisenbank, despite the declared reduction, increased the number of clients by 2%, to 3.2 million people, and staff – by 4%.
However, the group reported a decrease in assets in the Russian Federation: in annual terms they decreased by 23%, including by 7.1% in the fourth quarter, to €20.7 billion. According to the RBI report, for a period approximately corresponding to the time from the beginning military actions in Ukraine and until the end of 2023, the portfolio of loans to clients from Russia fell by 56%, to €6 billion. At the same time, the process has clearly slowed down: the peak of the reduction occurred at the end of 2022 (by €4 billion), and in the fourth quarter of 2023 year, the decrease was already only €300 million.
Ivan Uklein, senior director for banking ratings at the Expert RA agency, notes that “the revaluation factor worked strongly primarily in 2022, and after the massive devaluation of the banking sector, the revaluation effect was already several times lower.”
According to Dmitry Kurbatsky, managing partner of the Dmitry Donskoy financial group, the main reasons for the decline in Raiffeisenbank’s profits are the sharp reduction in payment transactions, which created the basis for the record profits of 2022. “Due to the introduction of sanctions, a large flow of clients with payments in dollars and euros poured into Raiffeisenbank in 2022, which at that time opened this window for everyone and made money on it,” explains Mr. Kurbatsky. “In 2023, profits from the payment business decreased against the background of the entry of medium-sized banks into this segment and the emergence of so-called satellite banks for cross-border settlements among a number of large players.”
Raiffeisenbank itself last spring (see “Kommersant” dated March 4, 2023) stopped opening new accounts for legal entities and, against the backdrop of EU suspicions of helping to circumvent sanctions, significantly limited payment transactions, including due to high commissions (see “Kommersant” from August 31, 2023).
“However, I would not talk about curtailing business in Russia, since the bank’s profit, although it decreased compared to last year, when it was abnormally high – 141 billion rubles. according to RAS (see “Kommersant” dated March 17, 2023), still remains at a high level,” emphasizes Mr. Kurbatsky. The growth in the number of staff and clients also does not speak in favor of maintaining business in the Russian Federation.
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