FRANKFURT â€" Raiffeisen Bank International, an Austrian bank with large holdings in Ukraine and Russia, said on Thursday that net profit rose about 9 percent in the fourth quarter after a tax refund offset an increase in the number of problem loans.
The Vienna-based bank’s profit rose to 146 million euros, or about $201 million, in the last three months of 2013 from €134 million a year earlier, the bank said.
Risk provisions â€" money set aside to cover loans that may not be repaid â€" rose by €19 million to €350 million during the period, which was before Russian troops annexed the Crimean peninsula, setting off an international crisis.
“Our good operating result proves once again that our business model is sound, also in challenging times,†Karl Sevelda, the bank’s chief executive, said in a statement. It made no direct mention of the acute tension between Russia and the United States and its European allies.
The rise in net profit was entirely the result of the tax benefit. Raiffeisen booked a €4 million refund compared with a tax payment of €80 million a year earlier. The bank said it benefited from a transfer from its main shareholder, RZB, an Austrian cooperative bank, as well as lower tax bills in Russia and the Czech Republic because of lower profits there.
Pretax profit in the fourth quarter-without the tax benefit â€" fell 40 percent to €138 million.
Raiffeisen employs about 8,500 people in Russia and 13,000 in Ukraine, making it one of the largest foreign banks operating in the region and among the most vulnerable to the possibility that reciprocal sanctions, from Russia in response to the United States and the European Union, could hurt businesses operating in Russia.
Well before the crisis, Raiffeisen and other large Austrian banks had suffered from wobbly economic performance in eastern Europe, where they built up large networks after the end of the Cold War in the 1990s. The banks, which also include Erste Group and Bank Austria, a unit of Italian bank UniCredit, were overly generous in issuing loans and overly optimistic in their assumptions about how former Soviet-bloc countries could develop modern economies, analysts say.
During 2013, Raiffeisen raised the amount of money it set aside for problem loans in Russia by €48 million, the company said. For the bank as a whole, the percentage of loans classified as non-performing, meaning the bank does not expect to get all its money back, rose to 10.7 percent in 2013 from 9.8 percent in 2012. The rate of problem loans is about double the worldwide average for banks.
