Who supports the interest rate cut by the RBI?
RBI makes less profit
Raiffeisen Bank International (RBI) has to save due to the corona crisis and is planning to close 300 branches in Eastern Europe.
Vienna. The effects of the corona crisis left a deep mark on Raiffeisen Bank International (RBI) in the third quarter. In addition to a cyclical decline in credit demand and currency devaluations in some core countries, more had to be set aside for possible loan defaults. The bottom line was that profits fell from 303 to 230 million euros. The institute is doing better than analysts expected.
"The interest rate cuts and the sharp decline in economic activity in the lockdown phases are having a negative impact on our earnings," said RBI CEO Johann Strobl. Strict cost discipline and the consistent implementation of the digitization strategy would therefore have top priority. In order to reduce costs, 300 of the 1958 branches in Central and Eastern Europe are also to be closed by the end of 2022.
Commercial bank bankruptcy costs
Austria's second largest bank had to set aside 185 million euros for non-performing loans after 68 million euros in the same quarter of the previous year. RBI is one of the largest lenders in Eastern Europe. Operationally, the Austrians held up better in the third quarter. The operating result rose slightly by four million euros to 584 million euros and was thus above expectations. The important source of income, net interest income, fell to EUR 770 million after EUR 866 million.
The bank recorded the largest decline in its most important single market, Russia. There the ruble devalued against the euro. Analysts had expected smaller losses. On average, they expected net interest income of 815 million euros. Net commission income fell to 433 million euros after 468 million euros.
For the year as a whole, Strobl expects lower credit growth. He sees the return on equity in the mid-single-digit range for the year as a whole. In the medium term, a value of around eleven percent is targeted. The Board of Directors is sticking to the goal of a cost-income ratio of around 55 percent.
In Austria, the RBI expects the compensation of savers due to the Commerzialbank bankruptcy and the former Meinl Bank (AAB) from the deposit protection fund and thus reduced fund resources annually by around four million euros higher contribution payments in order to ensure the requirements of the statutory deposit protection. (Reuters / APA / Red.)
("Die Presse", print edition, November 13th, 2020)
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