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RBI down 60.2% for 2013, to scale back in Hungary

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Raiffeisen Bank International (RBI) released its figures for the first half of 2013 and as expected, the numbers were down considerably year-on-year; the 60.2% drop was slightly more than analysts had forecast. RBI CEO Karl Sevelda had cited “catastrophic results in Hungary” – said to account for €700 million in losses in the past year – as a primary reason for the poor results.

In response to the poor results, RBI must now adopt “painful” cost cuts that include forced layoffs, per new CEO Karl Sevelda in a Reuters report, as he reins in the emerging European empire that he assumed control over in June.

Presenting his first results as boss after Herbert Stepic quit in a row over his personal finances, Sevelda took a much more conservative line than the forceful, ambitious Stepic, who built the bank into Central and Eastern Europe’s second-biggest lender. Compared with our peers, there is room for improvement on costs, he told reporters.

Sevelda said RBI was scaling back in Hungary, Slovenia and perhaps Croatia, while focusing on Russia, Poland, Austria, Romania, Slovakia and the Czech Republic. Second-quarter group profit fell by a quarter to €120 million ($160 million). The company also took a one-off hit of €20 million for an upfront booking of a Hungarian bank levy.

Despite the numbers, however, shares in RBI rose on optimistic prospects for 2013, as net interest income – its main profit driver – increased 42 basis points to 3.06% in the first half of the year.

– David Landry contributed to this story 

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