May 24, 2012 / 6:21 AM / 6 years ago

UPDATE 3-Raiffeisen Q1 beats forecast, boosts liquidity

* Consolidated profit doubles to 541 mln euros

* Loss provisions down 26.5 pct to 153 mln euros

* Maintains 2012 outlook, boosts liquidity on Greece worries

* Group core tier 1 ratio near 9.3 pct by EBA definition

* Shares up 1.8 percent (Adds comments from news conference, analyst call)

By Michael Shields

VIENNA, May 24 (Reuters) - Austrian lender Raiffeisen Bank International has boosted its liquidity buffer to 25 billion euros ($31.5 billion)to ensure it has plenty of cash on hand amid markets made jittery by Greece’s financial crisis, RBI officials said.

“What all banks have to fear is the uncertainty of retail savers. This leads them to knock on the door and say I want to see my money,” Chief Executive Herbert Stepic told reporters after the bank’s first-quarter profit easily beat expectations.

RBI has no Greek sovereign debt exposure but competes against Greek banks in nearby Balkan countries, where it has been taking business from them for a year, Stepic said.

“We have been taking over a good number of first-class customers,” Stepic told analysts in a conference call.

But this was not the case for retail customers in the region, he said, suggesting an exodus would come only if Greece actually quit the euro, an event to which he gave a 50-50 chance.

“If that will not happen, then I don’t see a huge run on Greek banks (abroad) from retail customers,” he said.

RBI’s first-quarter consolidated profit doubled to 541 million euros, smashing the average estimate of 457 million euros after minorities in a Reuters poll and topping even the highest estimate in the survey.

The market had been expecting provisioning costs to rise, but they dropped a quarter to 153 million euros, helping to offset a 3 percent decline in operating profit.

The bank called quarterly provisioning “low” and advised analysts not to extrapolate the figure over the full year, saying provisions in Hungary in particular would remain high.

Two exceptional items contributed to quarterly results. It earned 159 million euros before tax “from further sales of the group headquarters’ securities portfolio”, while hybrid debt buybacks generated 113 million before tax.


The Raiffeisen group is on track to hit the European Banking Authority’s target for major banks to have core tier 1 capital ratios of at least 9 percent of risk-weighted assets by the middle of this year, it said.

“Taking into consideration measures already completed, or close to their conclusion, the RZB group currently reaches a core tier 1 ratio according to the EBA’s definition of 9.3 percent and is therefore in line with the plan,” it said

The 9.3 percent figure included consolidation of Polbank - the Polish unit it is buying from Greece’s EFG Eurobank to drive growth in that market - and a capital swap at unlisted parent Raiffeisen Zentralbank.

RBI shares were up 1.8 percent at 23.61 euros by 1400 GMT, off a high at 24.10 but ahead of the 1.4 percent gain in the Stoxx European banking sector index.

RBI - which is fighting Austrian peer Erste Group Bank to be emerging Europe’s second-biggest bank after market leader UniCredit - left unchanged its outlook for stable business volume in 2012.

It reiterated that a capital increase remained a possible option depending on market conditions.

Raiffeisen officials have played down prospects for a rights issue until market sentiment improves, but investor concern about a potential capital increase has weighed on RBI shares.

RBI trades at around 5.6 times 12-month forward earnings, a discount to Erste on 6.2 times, according to Thomson Reuters StarMine, which ranks analyst estimates by previous accuracy.

RBI’s results cap a solid first-quarter showing for big Austrian banks, whose role as the biggest lenders in central and eastern Europe put them in focus for Austria’s debt ratings.

Erste’s profit rose 7.8 percent to 346.5 million euros, helped by a 250 million gain buying back hybrid debt.

UniCredit’s Bank Austria unit boosted profit 17 percent to 399 million euros, helped by lower bad loan provisions and repurchasing hybrid debt. ($1 = 0.7947 euro) (Editing by David Cowell)

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