* Q1 profit 161 mln eur vs 157 mln yr ago, 124 mln poll avg
* Ups provisioning forecast to 1.3-1.4 bln euros
* Aims to repay all or most of state aid within 3-4 weeks
* Shares rise more than 5 percent in early trade
(Adds details on Ukraine, Russia; CEO and analyst quotes)
By Michael Shields
VIENNA, May 22 Raiffeisen Bank International
reported first-quarter profit that beat market
expectations, saying its Russian business was "relatively
normal" and it could soon pay back nearly 2 billion euros ($2.73
billion) in state aid.
Shares in the Austrian lender jumped more than 5 percent in
early trade on Thursday, as rising net interest income provided
a positive surprise, while risk provisions rose less than
expected despite a hit from Ukraine.
Its risk provisions for Ukraine - locked in a power struggle
with Russia - were 92 million in the first quarter, up from 27
million in the fourth, as the hryvnia currency weakened and
borrowers struggled to repay mortgages.
RBI, central and eastern Europe's second-biggest lender,
said it now expected lending to hold steady this year - it had
previously forecast a slight rise - and saw risk provisions
rising to 1.3-1.4 billion euros from 1.15 billion in 2013.
"Results may be impacted by the ECB Asset Quality Review
process and further deterioration of the situation in Ukraine
and Russia," it said, referring to upcoming balance sheet health
checks by the European Central Bank.
RBI said that, within three to four weeks, it would repay
all or part of the 1.75 billion euros in state aid it got during
the financial crisis, which will not count as core capital after
2017. It raised a total of 2.5 billion euros including private
"This is an encouraging signal given the pending AQR and,
while management commentary at today's analyst call will be
scrutinised ... we expect today's results to be supportive,"
Nomura analysts wrote in a note.
RBI stock was trading up 5.6 percent at 23.38 euros by 0755
GMT, the top gainer in a flat European bank sector index
RBI said net profit rose 2.5 percent to 161 million euros,
well above the average forecast of 124 million in a Reuters poll
of 10 analysts.
The Russian business brings in most of RBI's profits and the
bank had already said the political turmoil in Ukraine would
prompt it to revisit its 2014 forecast for steady risk
STATE AID REPAYMENT LOOMS
RBI, which raised fresh capital this year to shore up its
balance sheet, said it expected approval from supervisors soon
to repay non-voting capital it raised in 2009 to help weather
the financial crisis. The FMA watchdog had held up approval,
citing RBI's exposure to turbulent eastern markets.
RBI kept Russia atop its list of the six most attractive
countries in the CEE region on Thursday, citing an underbanked
market, solid corporate banking and a growing retail segment.
Russia - where it is the 10th-largest lender with nearly 2.7
million customers and a 9.6 billion euro loan book - made 139
million euros before tax in the quarter, down from 198 million a
year earlier but up from 108 million in the fourth quarter.
"Business in Russia was relatively normal, although the
economic development was weaker than in the previous year, and
we therefore had to apply stricter standards in extending
loans", Chief Executive Karl Sevelda said, adding he thought
that significantly tougher EU sanctions on Moscow were unlikely.
RBI put its Ukraine credit exposure at 3.8 billion euros net
of provisions. Its government bond holdings worth 386 million
were almost entirely in local currency, while it described its
liquidity position there as stable.
Raiffeisen lost 30 million euros before tax in Ukraine,
where it is the number five bank. It has closed its 32 branches
in Russian-annexed Crimea - which contributed less than 2
percent of its 2013 profit in Ukraine - and sold them to an
unnamed bank it said was legally allowed to operate there.
It moved its Crimea corporate loan book to its Russia unit.
In eastern Ukraine, a hotbed of insurrection against the
interim government in Kiev, RBI had 84 branches and 1,000 staff
in the separatist regions of Donetsk and Lugansk, it said,
putting its credit exposure there at around 590 million euros,
of which 100 million was already covered by provisions.
($1 = 0.7318 Euros)
(Reporting by Michael Shields; editing by Georgina Prodhan and