Tuesday, 23 September 2014 11:30
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VIENNA: Hits from Ukraine and Hungary will likely push Austrian lender Raiffeisen Bank International to its first-ever annual loss in 2014, it said late on Monday.
Emerging Europe's second-biggest lender revised its outlook to see 2014 risk provisions of 1.5 billion to 1.7 billion euros ($2.18 billion), up from its previous forecast of 1.3-1.4 billion, "primarily due to higher expected risk costs in Ukraine in light of ongoing political tensions in the region".
This would trigger a review of how to value remaining intangibles at its Ukrainian unit Raiffeisen Bank Aval, which could result in an additional write-down of up to 60 million euros, it said in a statement.
In Hungary, legislation forcing banks to compensate customers for what the government called mispriced loans meant
RBI expected total costs of up to 240 million euros, of which it had booked 67 million in the second quarter with the rest to come in the second half, it said.
"As a consequence of the latest developments, a negative result for 2014 is to be expected," it said without being more specific.
"Aside from these extraordinary charges, underlying operating performance remains stable.
For 2015 RBI expects a consolidated profit in the mid-triple-digit millions," it added.
RBI also lowered its mid-term target for return on equity before tax to around 14 percent from the 15 percent it had seen before, and its goal for consolidated return on equity to around 11 percent from 12 percent before.
A spokeswoman said it was too early to say what effect the changed outlook would have on its dividend but RBI planned to pay the dividend due on non-voting capital it has repaid the state and private investors this year.
Austrian peer Erste Group is also headed for a record loss in 2014 as its cleans up all its balance sheet problems in central and eastern Europe.
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