Profit beat despite higher provisioning in RU, guidance upgrade

Profit beat despite higher provisioning in RU, guidance
upgrade
 Raiffeisen posted EUR 657 mln, above market estimate of EUR 528 mln by 24%
and in line with our profit figure forecast of EUR 650 mln. The profit beat vs. the
consensus basically came from higher revenues particularly fees. With regards
to trends, RBI is visibly trying to wind down business activity in Russia&Belarus
while the Core business (rest of the Group) was strong in the first quarter. Note
that the RUB depreciated against the EUR substantially in the quarter which
impacted earnings and the balance sheet. This translated to 20% lower profit qo-q but from a higher base and a lower profit contribution from RU&BY.
 Key positives: (1) Strong core performance with EUR 1 EPS (2) High operating
income beat on NII and fees. (3) Capital position stable with ex-RU,BY at 13.7%
CET1 . (4) Profit guidance raised at Core and Group as well on higher revenues.
 Key negatives: (1) Russia provisioning due to overlays were remarkable, making
up most of the risk provisioning. (2) Volumes dynamic i.e. loans are expected to
be weak for the remainder of 2023.
 Outlook&Opinion: RBI beat market estimates and the increased guidance is a
positive, with the new guidance, RBI trades at a very undemanding 0.38 P/BVx
and 3.8 P/Ex Ex-Russia, BY (!). Nevertheless investor’s focus remains on
possible Russia exit thus any comment on the issue could be a larger market
mover than the solid earnings themselves given that this will be the largest
rerating trigger (obviously dependent on price too) in our view.