Raiffeisen: From Russia With Nothing. Spread Negative.

Raiffeisen Bank (RBIAV: A1/A-) results are marginally better. However, new guidance now excludes Russia and Belarus and implies to us the sale process is dead now. This looks set to reduce CET1 by nearly 300bp (as those businesses are zeroed in the balance sheet) and delete a good chunk (maybe 25%?) of the income statement. This has to be viewed as a spread negative, though RBIAV already trades as though several notches lower, in our view.

• Key credit stats: CET1 is c.20bp below consensus (17.2%, transitional basis) and loan losses are meaningfully better (at 22bp from 61bp in 4Q23, consensus had 50-55bp, we estimate). Non-performers are stable on Dec-23 (at 1.9%).
• Overall: revenues are 0.7% ahead of consensus, costs are 6% better and that loan loss beat means net income is c.26% above expectations.
• Outlook: group guidance has been “suspended in light of the ECB’s requirement to accelerate business reduction in Russia”. This isn’t a formal termination of the sale process, but it implies precisely that to us. New guidance (ex-Russia, Belarus) includes CET1 ratio of 14.6% and, compared to consensus for the old group, has revenues c.25% lower, costs 15% lower and loans losses of c.50bp. This implies a pre-tax profit around 15-25% lower than before.

Conf calls are, typically, 1300 with details at: https://www.rbinternational.com/en/investors.html