Raiffeisen International Bank AG, the biggest non-Russian lender in the former Soviet Union, said 2006 profit will be 10% higher than previously forecast because of better-than-expected lending in eastern Europe. Net income is expected to rise to €550 million ($691 million) instead of €500 million, CEO Herbert Stepic said on Friday. The forecast excludes one-time gains from unit sales in Ukraine and Kazakhstan. „The management is very conservative about the numbers which they present publicly,” Keefe Bruyette & Woods analyst Matthew Clark said from Kiev. „Raiffeisen's profit will exceed on Friday's forecast.” The Austrian lender has more than doubled its branches in eastern Europe over the past year, helped by acquisitions. The bank paid $1 billion for Bank Aval to become the No. 2 bank in Ukraine and $555 million for Russia's Impexbank to become that country's biggest non-domestic lender. „The central and eastern European market is a promising market, we will concentrate on it and we plan a further expansion,” Stepic said at a Kiev news conference. „We want to be one of the leading retail banks in Russia.” Raiffeisen's Russian unit and Impexbank will complete their merger next year, the Vienna-based lender said. Private loans issued by Impexbank have more than tripled since 2005 to €430 million as many Russians borrow for houses and cars for the first time. The bank plans to open at least 85 branches in the country in 2007, Stepic said.
Raiffeisen is present in almost all the countries of central and eastern Europe and in the former Soviet Union states, Stepic said. „We are not present only in two central Asian countries, Kazakhstan and Azerbaijan. We are looking for opportunities,” he said. Reorganizing the bank's Ukraine and Russian businesses „will burden earnings in the short term,” the Austrian lender also told analysts and investors in Kiev. Raiffeisen said it will expand its eastern European branch network by 450 offices next year and plans to boost branches to 3,167 by 2008 from 2,725 in June. „The retail sector is extremely important for us, we expect it will grow at a rapid pace,” Stepic said. „We will attract 15 million new customers in three or four years.” The bank's shares rose 50 cents, or 0.6%, to €88 in Vienna. They've gained 58% this year, giving Raiffeisen a €12.6 billion market value. (Bloomberg)