* Tier 1 capital ratio sinks to 8.1 pct from 10.5 pct
* Falls in E.Europe currencies, rising bad debt weigh
* Keeps dividend at 0.93 eur/share
* E.Europe lending to remain stable, no profit outlook
(Adds more details, background, analyst comment)
By Boris Groendahl
VIENNA, March 26 (Reuters) - Emerging Europe's No.2 bank,
Raiffeisen International <RIBH.VI>, pledged to keep on lending
to the region after declining currencies and rising bad debt ate
into its regulatory capital in the fourth quarter.
The Austrian lender's tier 1 capital ratio - a key gauge of
a bank's strength - slumped by 2.4 percentage points last year
to stand at 8.1 percent by the end of 2008, mainly weighed down
by the collapse of the Ukrainian hryvnia <UAH=>, Raiffeisen said
on Thursday in a statement.
While this rate is still comfortably above regulatory
minimums, analysts doubt it will provide the bank with a big
enough cushion against the deep recession sweeping across the
former communist part of Europe, notably the countries furthest
to the east to which Raiffeisen has high exposure.
"Solvency is quite impacted by weaker currencies, and this
is going to continue in 2009 as their drop continues versus the
euro," said Francois Boisson, analyst at Exane BNP Paribas.
Despite a looming need for capital the bank, which provided
no earnings outlook for 2009, said it would keep its dividend
unchanged at 0.93 euro per share as it confirmed preliminary
results published on Feb. 19.
They showed net profit dropped 44 percent to 120.5 million
euros ($162.7 million) in the fourth quarter, slightly ahead of
its own guidance. []
Raiffeisen's non-performing loans already rose by a fifth to
3.1 percent of total loans in the final quarter, and provisions
for bad debt almost tripled in what analysts expect to be just a
foretaste of what is on the menu for this year.
But Raiffeisen said it would keep lending stable at the
level of last year, reiterating its pledge not to pull out of
its core region and keep funding lines to subsidiaries and
credit lines to clients open.
"Raiffeisen International continues to be convinced of
(emerging Europe's) potential, and continues to regard the
region as its core market," it said in a statement.
Chief Executive Herbert Stepic told Reuters on Feb. 19 that
he did not expect Raiffeisen to make a loss this year, even in a
worst-case scenario of ballooning loan losses. []
CAPITAL INJECTION LIKELY
The World Bank and the International Monetary Fund have
repeatedly appealed to the western banks dominating emerging
Europe to stay put and continue to fund the region's economies,
for which they are now virtually the only remaining source of
capital.
The IMF is meeting on Thursday with parent banks of
Romania's top lenders -- including Raiffeisen, which owns the
country's No.3 bank, and peer Erste Group Bank <ERST.VI> -- to
bring them on board for the Fund's 20 billion euro rescue of the
southeastern European country. []
Apart from Romania, Raiffeisen is also highly exposed to
Ukraine, where it owns the second-biggest lender, and Russia,
where its bank is the biggest foreign-owned.
Raiffeisen is funded mainly by its parent, cooperative
banking group RZB, which has asked for a 1.75 billion euro
capital injection from Austria's banking stability package and
is expected to pass on part of that to its subsidiary.
At 0900 GMT, Raiffeisen shares were up 0.6 percent at 23.97
euros, having shed the bulk of initial sharp gains, as the DJ
Stoxx Banking index <.SX7P> fell 0.25 percent.
The shares have almost doubled since hitting a low of 12.80
euros on Feb. 17, the day that marked the nadir for panic
selling of emerging European assets triggered by fears the
former Communist bloc would collapse under its foreign debt.
They change hands at around 0.6 times book value -- slightly
more than rivals including Erste Group Bank <ERST.VI> at 0.5 and
UniCredit <CRDI.MI> at 0.3.
($1=.7408 Euro)
(Reporting by Boris Groendahl; editing by John Stonestreet)
