Raiffeisen Bank International (TS) Q3 2025: Loan Book Grows 3%, Driving Core ROE to 13.5% Ex-Russia
Raiffeisen Bank International’s Q3 2025 results show a disciplined pivot away from Russian exposure, with core business delivering robust loan and deposit growth across Central and Southeast Europe. The bank’s 13.5% return on equity, excluding Russia and Poland, underscores strong profitability and validates management’s forward guidance. Focus now shifts to sustaining above-market retail momentum and managing geopolitical and litigation headwinds into 2026.
Summary
- Core Profitability Strengthens: Ex-Russia and Poland, RBI’s core return on equity reached 13.5% as loan growth outpaced market averages.
- Retail and Deposit Momentum: Retail lending and deposit inflows remain elevated, supporting liquidity and net interest income resilience.
- Litigation and Geopolitics Remain Material: Ongoing FX mortgage litigation in Poland and macro uncertainty continue to shape risk and capital allocation priorities.
Performance Analysis
Raiffeisen Bank International’s Q3 2025 results highlight a clear decoupling of core regional growth from legacy Russian exposures. Loan growth of 3% year-to-date was driven by strong retail momentum in Czechia and Slovakia, while deposit inflows outpaced lending, further strengthening liquidity. The group’s consolidated profit of €1.03 billion (first nine months, ex-Russia) supports a solid 10% return on equity, while the core business (excluding Russia and Poland) delivered a 13.5% ROE, matching management’s medium-term ambition.
Net interest income (NII) and fee income (NFCI) performed in line with guidance, with NII stability underpinned by volume growth and less rate cut impact across key markets. Fee income was buoyed by FX volumes, asset management inflows, and seasonal credit card activity. Cost pressures remain visible, with operating expenses up 7% YoY, nudging the cost-income ratio target to 53%. Trading income faced headwinds from credit spread movements. Provisioning remains benign, with risk costs at a low 14 basis points for the year-to-date, enabling a reduction in full-year risk cost guidance to 30 basis points.
- Retail Lending Outperformance: Retail loan growth in Czechia and Slovakia exceeded market trends, aided by improved mortgage margins and revived consumer lending.
- Deposit Accumulation Surges: Deposits grew at more than double the pace of loans, reflecting customer wage gains and high liquidity in core markets.
- Risk Costs Stay Low: Defaults and insolvencies remain minimal, with overlays for Ukraine prudently increased but overall provisioning still conservative.
Capital ratios remain robust, with CET1 projected at 15.2% by year-end, despite RWA growth from lending and some rating migrations. The rundown of Russian exposures continues, with the corporate loan book in Russia down nearly 85% since the war began. Overall, RBI’s core franchise is demonstrating resilience and operational leverage, but faces a demanding macro and regulatory environment ahead.
Executive Commentary
"When we think about the future of RBI and exclude both Russia and Poland, we have achieved a 13.5 ROE in the first nine months. We can confirm our ambition to earn around 13% on this basis in 2025 and beyond."
Johann Strobel, Chief Executive Officer
"Asset quality continues to improve, and our MPE ratio has reached a new low for us at 1.7%, with a state three coverage ratio stable around 50%... After nine months this year, our provisioning ratio for the year stands at 14 basis points."
Hannes, Chief Risk Officer
Strategic Positioning
1. Russian Exposure Runoff and Legal Strategy
RBI’s Russian exit remains a central strategic lever, with the loan book in ruble terms down 60% and deposits down 40% since the start of the war. The bank is ahead of regulatory milestones for the Russian rundown, but the process is increasingly dictated by factors outside management’s control, including customer behavior and regulatory frameworks. Litigation against Raspberry and claims for compensation in Austria are ongoing, with management reiterating confidence but cautioning on timing and complexity.
2. Retail Banking as a Growth Engine
Retail lending is now RBI’s primary growth vector, particularly in Czechia and Slovakia, where both mortgage and consumer loan demand have rebounded. Management attributes outperformance to disciplined margin management and a cautious return to the mortgage market after a period of retrenchment. Deposit inflows are being driven by wage growth and high customer liquidity, but competitive pressures and potential central bank actions could alter the deposit pricing landscape in coming quarters.
3. Corporate Lending and Pipeline Visibility
Corporate loan growth is expected to accelerate in Q4, with a “strong pipeline” in the group corporates and markets (GCNM) segment. While retail has led YTD, management is counting on larger corporate “tickets” to achieve the upper end of loan growth guidance. Execution risk remains, as competition for quality corporate lending intensifies and some repayments have tempered recent growth.
4. Risk Management and Provisioning Discipline
Risk costs remain at historic lows, with overlays for Ukraine increased in response to the broadening conflict zone, but no further build anticipated in Q4. Litigation provisions in Poland for FX mortgages are now expected to decline in 2026, as euro-denominated cases rise but overall exposure moderates. Asset quality indicators, including the NPE ratio at 1.7%, reinforce the bank’s conservative risk posture.
5. Capital and Dividend Flexibility
CET1 capital remains strong at 15.7%, with management targeting 15.2% at year-end after accounting for loan growth and rating migrations. Dividend accruals of €1.60 per share are in place, with payout discussions pending with regulators. The bank’s MREL ratios are above target in all countries, and funding for 2025 is complete, with early issuance for 2026 already considered.
Key Considerations
RBI’s Q3 2025 results reflect a bank in transition, balancing strong core performance with the complexities of geopolitical risk, regulatory scrutiny, and legacy litigation. Management’s ability to sustain above-market growth while navigating these headwinds will define the group’s medium-term trajectory.
Key Considerations:
- Retail Banking Momentum: Sustained outperformance in retail lending and deposit gathering is critical for margin and fee growth.
- Corporate Pipeline Execution: Delivery on the Q4 corporate loan pipeline will determine if full-year loan growth targets are met.
- Litigation Provisioning in Poland: FX mortgage litigation remains a swing factor for risk costs and capital allocation into 2026.
- Russian Exposure Resolution: The pace and terms of the Russian rundown, including legal claims and asset recovery, remain unpredictable and material to capital planning.
- Cost Discipline vs. Inflation: Operating expense growth and cost-income ratio pressure must be managed amid wage and inflation dynamics in core markets.
Risks
Geopolitical and regulatory risks remain elevated, particularly around Russian asset resolution, litigation in Poland, and potential new bank taxes in core markets like Czechia. Competitive pressure in both lending and deposits could compress margins, while macro volatility and further escalation in Ukraine may necessitate higher risk provisioning. The bank’s forward guidance assumes stable asset quality and continued retail outperformance, both of which face external headwinds.
Forward Outlook
For Q4 2025, RBI guided to:
- Loan growth to reach 6% to 7% for the full year, with corporate lending expected to accelerate.
- Net interest income (NII) around €4.15 billion, with fee income stable and cost-income ratio at 53%.
For full-year 2025, management maintained guidance:
- Group ROE (ex-Russia) at 10%; core ROE (ex-Russia and Poland) targeting 13%.
- Risk cost guidance lowered to 30 basis points for the year.
Management highlighted several factors that could affect results:
- Execution of the corporate loan pipeline and retention of retail lending momentum.
- Potential shifts in regulatory, geopolitical, or macroeconomic conditions, especially in Russia, Ukraine, and Poland.
Takeaways
RBI’s Q3 2025 performance demonstrates robust core profitability and operational discipline, but the group’s future will be shaped by its ability to manage legal, geopolitical, and competitive risks while sustaining growth in its core markets.
- Retail and Deposit Engines Drive Core Growth: The pivot to retail banking and deposit gathering is delivering above-market results and supporting resilience in NII and fee income.
- Legacy Headwinds Remain Material: Russian exposure, Polish litigation, and macro uncertainty continue to absorb management focus and capital flexibility.
- 2026 Will Test Execution and Risk Management: Investors should monitor corporate lending delivery, litigation trends, and any regulatory changes in core markets to gauge sustainability of current profitability.
Conclusion
Raiffeisen Bank International is executing on its strategy to build a resilient, regionally focused franchise, with retail and deposit momentum offsetting legacy Russian and Polish headwinds. The bank’s ability to maintain growth and defend margins in a volatile environment will be decisive for shareholder value in the coming year.
Industry Read-Through
RBI’s results underscore a broader shift among Central and Eastern European banks toward retail-driven growth and disciplined risk management, as legacy exposures and litigation risks weigh on capital allocation. Deposit competition and regulatory scrutiny are intensifying, with implications for margin sustainability across the sector. Litigation provisioning in Poland and asset recovery efforts in Russia are sector-wide issues, signaling continued earnings volatility and capital planning challenges for regional peers. Investors should watch for similar dynamics at other banks with cross-border or legacy exposures.