UPDATE 1-Raiffeisen Bank Int’l tops profit forecast on fewer bad loans


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* Q1 net profit at 399 mln eur vs forecast of 244 mln

* NPL ratio declines to 5.4 percent

* Fully loaded CET1 ratio at 12.8 percent

* RBI shares gain as much as 5.9 percent (Adds detail, Russia, shares)

VIENNA, May 15 (Reuters) – Austrian lender Raiffeisen Bank International (RBI) reported an 81 percent jump in first-quarter net profit as it reduced its exposure to non-performing loans, lifting its shares to the top of the European sector index.

The bank, which operates across eastern Europe, said on Tuesday it made consolidated net profit for the three months through March of 399 million euros ($476 million), topping the 244 million expected by analysts in a Reuters poll.

The lender said it sold a “significant volume of loans with a net profit” and released provisions after restructuring and repayments of overdue loans.

The backlog of bad loans declined further. The non-performing loan (NPL) ratio stood at 5.4 percent of total loans at the end of March versus 5.7 percent at the end of last year.

RBI posted a fully loaded common equity tier 1 (CET 1) ratio, a measure of capital strength, of 12.8 percent and said it still aimed for the ratio to be around 13 percent in the medium term.

The sale of its core Polish assets, which was agreed last month, is expected to increase its fully loaded CET 1 ratio by 90 basis points on closing, RBI said.

Operating income in RBI’s eastern European unit, of which Russia generates 71 percent, was up 3.8 percent at 366 million euros. Russia is an important market for RBI and political risks are the biggest threat to the bank’s business there.

RBI’s shares briefly dropped 15 percent last month after the United States announced a ratcheting up of sanctions on Russia. They recouped part of their losses after the bank said that only 0.1 percent of its total assets were linked to companies directly affected by the sanctions.

The Russian unit saw a first-quarter increase in net interest income due to lower interest rates on customer deposits but a decrease in net fee and commission income due to higher expenses in payment transfers, RBI said.

It said the sale of non-performing corporate loans reduced risk costs in Russia by 21 million euros in the first quarter. The bank had 9 percent of its total assets in Russia in 2017.

RBI shares gained as much as 5.9 percent to 30.49 euros in early trade, while the European sector index traded 0.3 percent higher.

$1 = 0.8391 euros
Reporting by Kirsti Knolle; Editing by Himani Sarkar and Mark


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