VIENNA, Sept 10 (Reuters) - Raiffeisen International <RIBH.VI>, the third-largest bank in central and eastern Europe, said it expects bank asset growth in the region to halve to 18 percent this year, but stuck to its own targets on Wednesday.
The slowdown was mainly due to the global financial crisis which has raised refinancing costs for banks and reduced appetite for risk globally, Raiffeisen Chief Executive Herbert Stepic said, adding that he did not expect a lasting effect from Russia's war with Georgia last month.
'The CEE banking market's growth dynamic has cooled down notably,' Stepic told reporters in Vienna. 'It is still on a high level but the risk of an overheating has reduced.'
'We now expect bank asset growth of 18 percent by the end of 2008,' he said, compared with 36 percent growth last year.
He added that he was sticking to the target for his own bank of around 1 billion euros ($1.42 billion) in net profit this year, and asset growth of at least 20 percent.
The fallout from Russia's war with Georgia will be confined to stock markets and capital inflows into Russia, Stepic said, but not weigh significantly on Russia's economic situation or his bank's business overall.
'Russia won't lose it economically, and hence our business won't,' he said. 'The reactions (to the Georgia crisis) will largely be confined to stock markets.
'I assume that more western investors will think twice about investing in Russia,' he added. 'We had net capital inflows of $80 billion last year and I assume this will ... drop to $40 billion to $45 billion.'
However, he added that the greater political risk in Russia was making his business there more difficult. Raiffeisen is the biggest foreign-owned bank in Russia.
'If I said we expect business as usual, this would give the wrong impression,' he said. 'Concerning our results forecast, I see no change. But it is a more difficult market, and I see a deterioration of refinancing costs.'
Still, margins and credit demand remained strong, he said.
Stepic said he expected Russia's banking sector to consolidate considerably over the next years, with the number of banks falling to around 600 from over 1,000 as small regional lenders are swallowed by bigger players.
But he said he was not interested in participating in this consolidation, as Raiffeisen is already present in all regions and it was easier for him to start new branches than to buy smaller banks.
(Reporting by Boris Groendahl; Editing by Erica Billingham) ($1=.7064 Euro) Keywords: RAIFFEISEN/ tf.TFN-Europe_newsdesk@thomson.com vs COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The slowdown was mainly due to the global financial crisis which has raised refinancing costs for banks and reduced appetite for risk globally, Raiffeisen Chief Executive Herbert Stepic said, adding that he did not expect a lasting effect from Russia's war with Georgia last month.
'The CEE banking market's growth dynamic has cooled down notably,' Stepic told reporters in Vienna. 'It is still on a high level but the risk of an overheating has reduced.'
'We now expect bank asset growth of 18 percent by the end of 2008,' he said, compared with 36 percent growth last year.
He added that he was sticking to the target for his own bank of around 1 billion euros ($1.42 billion) in net profit this year, and asset growth of at least 20 percent.
The fallout from Russia's war with Georgia will be confined to stock markets and capital inflows into Russia, Stepic said, but not weigh significantly on Russia's economic situation or his bank's business overall.
'Russia won't lose it economically, and hence our business won't,' he said. 'The reactions (to the Georgia crisis) will largely be confined to stock markets.
'I assume that more western investors will think twice about investing in Russia,' he added. 'We had net capital inflows of $80 billion last year and I assume this will ... drop to $40 billion to $45 billion.'
However, he added that the greater political risk in Russia was making his business there more difficult. Raiffeisen is the biggest foreign-owned bank in Russia.
'If I said we expect business as usual, this would give the wrong impression,' he said. 'Concerning our results forecast, I see no change. But it is a more difficult market, and I see a deterioration of refinancing costs.'
Still, margins and credit demand remained strong, he said.
Stepic said he expected Russia's banking sector to consolidate considerably over the next years, with the number of banks falling to around 600 from over 1,000 as small regional lenders are swallowed by bigger players.
But he said he was not interested in participating in this consolidation, as Raiffeisen is already present in all regions and it was easier for him to start new branches than to buy smaller banks.
(Reporting by Boris Groendahl; Editing by Erica Billingham) ($1=.7064 Euro) Keywords: RAIFFEISEN/ tf.TFN-Europe_newsdesk@thomson.com vs COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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