On Thursday, Deutsche Bank (ETR:DBKGn) updated its assessment of Raiffeisen Bank International AG (RBI:AV) (OTC: RAIFY), raising the price target to €18.00 from the previous €17.00 while maintaining a Hold rating on the stock.
The revision follows Raiffeisen Bank's announcement of its second-quarter results for 2024, which showed a stronger-than-expected performance in its core operations. The bank's after-tax profits exceeded expectations by 13%, primarily driven by top-line growth and reduced risk costs.
The bank's management has also updated its guidance for 2024, indicating improvements in net interest income and risk costs. Additionally, Raiffeisen Bank has disclosed plans to expedite the process of reducing its involvement in Russia.
Despite these efforts, a complete withdrawal from the Russian market appears less likely. The bank's current strategy suggests it may retain a 40% stake in its Russian business.
Deutsche Bank's analyst noted that while the second-quarter results were solid, there are ongoing uncertainties regarding the future of Raiffeisen Bank's operations in Russia.
These uncertainties contribute to the cautious outlook for the bank, as the definition of its "core" business remains in question with a full exit from Russia seeming improbable. The Hold rating has been reiterated in light of these considerations.
InvestingPro Insights
As we delve into Raiffeisen Bank International AG's financial health and market performance, InvestingPro data provides a clearer picture. The bank is currently trading at a low Price to Book multiple of 0.3, suggesting that its market value is potentially undervalued relative to its book value. This aligns with the InvestingPro Tip highlighting the bank's low earnings multiple, which indicates that the stock might be trading at a discount compared to its earnings.
Investors seeking income will note that Raiffeisen Bank pays a significant dividend, with a yield of 4.2% as of the last dividend ex-date on April 9, 2024. The bank's commitment to returning value to shareholders remains evident despite the challenges it faces.
From a performance standpoint, the bank's after-tax profits have been robust, aligning with the prediction of profitability for the current year. This is supported by a solid operating income margin of over 53% in the last twelve months as of Q2 2024. Additionally, Raiffeisen Bank has shown resilience with a one-year price total return of 36.01%, reflecting investor confidence over the longer term.
For those interested in a deeper analysis, there are numerous additional InvestingPro Tips available, offering insights that could further inform investment decisions. To explore these tips and more detailed metrics, visit the InvestingPro platform for Raiffeisen Bank International AG.
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