* Q4 consolidated profit of 146 mln euros beats estimates
* Qualifies 2014 outlook given upheaval in Ukraine
* Cuts dividend to 1.02 euros/share from 1.17
* Puts Ukraine exposure at 5.13 bln euros (Adds comments from news conference)
By Michael Shields
VIENNA, March 27 Raiffeisen Bank International (RBI) said it was committed to its Russian business and played down potential problems in Ukraine that have cast a shadow over central and eastern Europe's number two lender.
But it was so concerned about the crisis in Ukraine - which is locked in a confrontation with Russia over Moscow's annexation of Crimea - that it said previous targets for lending and risk provisioning now depended on how those events play out.
"I don't want to sugarcoat the situation. Of course there are risks for (Ukrainian unit) Aval and RBI, which is why we qualified the outlook for 2014," Chief Executive Karl Sevelda told the group's annual results news conference.
Raiffeisen's business in Russia, which includes investment banking, capital markets and retail, accounted for most of its profits last year, bringing in a pre-tax return on equity of nearly 32 percent.
"If Raiffeisen remains committed to these countries, it will be affected by higher credit and funding risk and negative foreign currency translation," Berenberg Bank analyst Eleni Papoula wrote in a research note.
Every 10 percent drop in the Russian rouble would undermine estimates for 2015 pre-tax profit by around 4 percent, while risk from the Ukrainian hryvnia was much lower, she added.
Currency devaluations in the two countries are already having an impact. By the time its annual accounts were finished on March 11, currency swings had cut RBI's common equity tier 1 ratio by around 25 basis points, its annual report showed.
Its pro-forma CET1 ratio under Basel III rules stood at 10.1 percent of risk-weighted assets including proceeds of a share sale in January that raised 2.78 billion euros ($3.83 billion).
It had aimed to use some of the money to repay 2.5 billion euros in non-voting capital that it raised to help weather the financial crisis, but has not yet got a green light from regulators given the Ukraine turmoil.
UPBEAT ON RUSSIA
The bank said it swung to a fourth-quarter group net profit of 146 million euros, beating market estimates as net interest income and risk provisions came in better than expected.
Analysts polled by Reuters had on average expected profit of 74 million, while consensus estimates compiled by Raiffeisen itself saw profit of 102 million.
RBI stock gained more than 2 percent in early trade, but was down 1.1 percent at 22.84 euros by 1145 GMT while a European bank sector index was down 0.2 percent.
RBI shares trade at around 10 times 12-month forward earnings per share, a discount to Austrian peer Erste Group on nearly 15 times, according to StarMine, which weights analyst estimates by previous forecasting accuracy.
Analysts cite Raiffeisen's heavy exposure to the crisis-hit region. Erste sold its Ukraine business last year.
But RBI kept Russia atop its focus list of the six most attractive countries in the CEE region, citing an underbanked market, solid corporate banking and a growing retail segment.
Russia - where it is the 10th-largest lender with 2.6 million customers and a 10 billion euro loan book - accounted for 615 million euros of the 835 million profit the group made before tax in 2013.
"The growth prospects in Russia have clouded, but we are convinced that it will remain an attractive banking market when the crisis has passed," Sevelda said.
RBI had a grip on risks at its Ukraine business, he said, and Raiffeisen was still deciding whether to sell it. It put any deal on hold after letting a handful of suitors see its books.
The crisis was providing some upside as some big corporate customers moved staff accounts to Raiffeisen, he said.
RBI put its total Ukraine exposure at 5.13 billion euros at the end of February. Its government bond holdings amounted to 399 million euros as of March 13, while it described its liquidity position there as "currently stable".
Raiffeisen made a profit of 101 million euros last year in Ukraine, where it is the number five bank. Crimea contributes less than 2 percent of its profit in Ukraine, it said.
The group reaffirmed a goal to boost lending slightly in 2014 and said net provisioning should hold steady, although that guidance now depended on the impact of developments in Ukraine. It said results may also be affected by an ECB-led review of banks' balance sheets.
It proposed cutting its dividend to 1.02 euros per share from 1.17, a smaller drop than expected. ($1 = 0.7254 euros) (Reporting by Michael Shields; editing by Tom Pfeiffer)