Raiffeisen-Strong underlying beat, boosted by one-offs

• RBI reported net profit of EUR 442 mln, an extraordinary EUR 277 mln above consensus, returning another record quarter. Strong operating results were supported by EURRUB hedge and FX business one-offs, while contributions’ seasonality and EE provisions weighed on bottom-line profits. Guidance cut slightly with FY22 still looking optimistic (maybe a little too much even), medium-term targets suspended on low visibility.
• Key positives: (1) another record NII quarter with CZ, HU up 30%, 13% q-o-q respectively, rate hikes to support for another 1-2 quarters; (2) group NIM up some 13 bps adjusted for TLTRO, even with slightly weaker-then-expected BS effect, LTD ratio down 215 bps, in time before depo repricing; (3) NFC beats again, FX business up 131% q-o-q on RU activity (RU NFC up EUR 114 mln q-o-q from EUR 136 mln); (4) decent loan growth in CE/SEE at around 4.2% q-o-q; (5) FX hedge halved at just the right time, booking EUR 230 mln for Q1, another EUR 680 mln left; (6) high risk costing almost entirely of model adjustments with Stage 3 provisioning only up EUR 35 mln for the quarter (Stage 3 stock flat q-o-q), offset by EUR 52 mln release from overlay.
• Key negatives: (1) CET1 down 88 bps q-o-q on RU (corresponding RWA up 66% q-o-q) and UA risk (up 33%), expected regulatory adjustments; (2) OPEX slightly worse vs consensus; (3) negative FX-effect on loanbook in RU (down EUR 1 bln q-o-q); (4) guidance cut on risk cost (FY 100 bps, up from 40 bps), ROE (down to 8-10% from 11%), medium-term guidance suspended on low visibility.