Raiffeisen Bank International (RBI), the fourth largest cross-border bank in Central and Eastern Europe (CEE) by assets, made a consolidated profit of €2.39bn in preliminary full-year results for 2023, down 34%, it announced on January 31.

Fourth quarter profits fell 67% to €272mn. Profits were hit by €873mn provisions made for Swiss franc mortgages in Poland.

Excluding Russia, where RBI is the largest remaining Western operator, full-year profit was €997mn, down 11% and below analysts’ expectations.

Russia made up 38% of RBI's net profits in 2023, down from 49% in 2022. The bank is not able to access its Russian profits.

The Austrian bank has been scaling back its lending in Russia, which is down 56% over the past six quarters to €6bn, with risk-weighted assets down €2.3bn y/y to €14bn.

However, it has resisted huge pressure to withdraw completely, claiming that its presence is needed to facilitate payments for the remaining Western businesses there.

It has looked at spinning off the Russian operations into a separate company to be owned by RBI shareholders, but it is understood that one large shareholder was blocking this plan as they did not want to hold Russian RBI shares. There were also doubts over whether the shares in the Russian spin-off would be tradeable. Any plan would also require the co-operation of the Russian authorities, who have been obstructing the exit of Western businesses and demanding large discounts in valuations and special payments to give their approval.

The bank is now focused on a controversial swap deal with Russian oligarch Oleg Deripaska, in which his 28% stake in Austrian construction firm Strabag will in effect be exchanged for RBI Russian profits.

RBI has been accused of evading sanctions in this deal, which will allow it to take its Russian profits out, but will also allow Deripaska to monetise his frozen Strabag stake. According to the Financial Times, the oligarch will bank €1.5bn from the deal.

The lender said the transaction should close at the end of Q1, and it would add 125bps to its CET ratio.

RBI's capital strength ratio was 17.3% at the end of 2023, up 1.3pp, or 14.6% excluding Russia. The bank expects the consolidated figure to be 17.8% at the end of this year, excluding the Strabag deal.

Return on equity (ROE) was 14.8% in 2023, down a massive 12pp. Excluding Russia, ROE was 7.6%, down 1.1pp. RBI expects consolidated ROE to be 11% this year.

The bank forecast 2024 net interest income of around €4bn, excluding its Russian operations.

The board has proposed a dividend of €1.25 per share.