Banking
Raiffeisen cuts return on equity guidance due to Polish mortgage loans provisions
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(Reuters) -Austria’s Raiffeisen Bank International (RBI) has cut its
(Reuters) -Austria’s Raiffeisen Bank International (RBI) has cut its return on equity (ROE) guidance for this year, excluding its Russian and Belarusian businesses, the lender said on Tuesday.
It now expects a consolidated return on equity of around 7.5% in 2024, compared with the 10% forecast previously, as it booked 493 million euros ($533 million) of provisions for Swiss franc and euro mortgage loans in Poland.
RBI, the biggest Western bank still in Russia, previously suspended its guidance for the country and neighbouring Belarus as it tries to sell its businesses there under pressure from regulators.
In September, a Russian court froze RBI’s shares in local arm Raiffeisenbank, blocking it from leaving.
Net interest income including Russia and Belarus fell to 1.46 billion euros in July-September from 1.44 billion euros a year ago, reflecting muted business activity in the quarter, the bank said.
($1 = 0.9258 euros)
(Reporting by Andrey Sychev; Editing by Jon Boyle and Mark Potter)
Return on equity (ROE) is a financial metric that measures a company's profitability in relation to shareholders' equity. It indicates how effectively management is using a company’s assets to create profits.
Mortgage loans are loans specifically used to purchase real estate, where the property itself serves as collateral. Borrowers repay the loan amount plus interest over a specified period.
Provisions in banking refer to the funds set aside to cover potential losses from bad debts or non-performing loans. This is a precautionary measure to ensure financial stability.
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