Raiffeisen Bank International AG share price down, forecasts first annual loss, may take an additional write-down

Raiffeisen Bank International AG, the second-biggest bank operating in Eastern Europe, fell the most in three years after projecting its first annual loss due to surging bad-debt provisions.

According to a statement by the banks Chief Executive Officer Mr. Karl Sevelda, Raiffeisens loss may widen to between €50 million ($64 million) and €500 million. He explained that the range couldnt be narrowed due to a number of uncertainties, including developments in Ukraine and Hungary.

Raiffeisen revealed that the expected net provisions against losses for the current year would be in the range from €1.50 billion ($1.93 billion) to €1.70 billion, compared to previous estimates which ranged between €1.30 billion and €1.40 billion.

The bank could also take an additional write-down on the value of its Ukraine operations, amounting to €60 million, while its business in Hungary will incur losses that may exceed projections by as much as €200 million.

The conflict in Ukraine threatens to impair Raiffeisens operations in Russia – the lenders biggest profit generator, on which the bank relies to offset bad loans which continue to erode its profit in other markets.

“As a consequence of the latest developments, a negative result for 2014 is to be expected,” Raiffeisen said. “We feel sufficiently capitalized. We don’t see the need for a capital increase. Of course we are in close contact with our regulator.”

Although the lender expects to pass the ECBs stress test and asset quality review, whose results are due in October, analysts see the bank as one of the likely to be found short of capital.

Raiffeisen Bank International AG fell by 10.19% to trade at €17.75 per share at 13:08 GMT in Vienna, marking a one year change of -22.77%. The lender is valued at €5.79 billion. According to the Financial Times, the 24 analysts offering 12-month price targets for Raiffeisen Bank International AG have a median target of €26.30, with a high estimate of €33.00 and a low estimate of €22.00. The median estimate represents a 33.06% increase from the previous close of €19.77.