Investing.com -- S&P Global Ratings has revised its outlook for Austria-based Raiffeisen Bank International (RBI) to stable from negative, affirming its ’A-/A-2’ long-term and short-term issuer credit ratings. This change follows RBI’s strategic scaling back of operations in Russia and exit from Belarus in November 2024, which has reduced nonfinancial risks and the likelihood of significant impacts from reputational risk.

RBI’s risk organization has been assessed as positive by S&P Global Ratings due to its robust compliance framework, effective IT monitoring, and sufficient resources to support the bank’s compliance with sanctions, anti-money-laundering, and counter-terrorism financing (AML/CTF) regulations. The wider Raiffeisen Banking Group (RBG) also maintained strong financial performance and capitalization in 2024, despite a dip in asset quality.

The stable outlook reflects the expectation that RBI will either reduce or divest its stake in its Russian subsidiary AO Raiffeisenbank within the next 12 to 24 months. Nonfinancial risks have lessened since the previous negative outlook revision in April 2022, following Russia’s invasion of Ukraine. RBI’s and RBG’s financial projections for 2025 and 2026 exclude Russian operations, considering the full write-down of local equity of about €4.5 billion and regulatory risk-weighted assets of about €17.3 billion as of December 2024.

RBI’s exit from Belarus in November 2024 and its focus on de-risking in Russia have been significant. The bank has reduced its customer loans and deposits at AO Raiffeisenbank by nearly 70% since the second quarter of 2022. Furthermore, it has ceased local deposit-taking and limited financial services for most clients, except for whitelisted clients who are typically multinational companies.

RBI has increased its compliance efforts to meet stringent sanctions and AML/CTF requirements amid geopolitical uncertainty. The bank has expanded its compliance staff in recent years and invested in IT infrastructure to strengthen risk controls. These efforts started before the Russia-Ukraine war in 2022, demonstrating RBI’s commitment to proper risk controls and proactive risk management across the group.

RBG’s strong financial performance and capitalization contribute to the group’s creditworthiness, despite a decline in asset quality throughout 2024 and one-offs related to RBI’s operations in Belarus and Russia. RBG is projected to report net profits of about €3.8 billion for 2024, down from €4.5 billion in 2023. This anticipated 16% decline in profits is mainly due to one-time impacts from RBI’s divestiture of Priorbank JSC in Belarus (€830 million) and an €840 million legal provision related to a recent Russian court ruling.

The stable outlook reflects the expectation that RBG will maintain a resilient balance sheet and robust earnings performance despite economic and geopolitical risks over the next 12-24 months. A negative rating could result if the group’s operating environment deteriorates beyond base-case expectations, leading to setbacks to RBG’s profitability, asset quality, or capitalization. Conversely, a positive rating action could be taken if RBG improves its asset quality and demonstrates consistent and improving earnings performance while maintaining strong capitalization.

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