Raiffeisen Bank stock rating upgraded to Buy at UBS on strong core operations

Investing.com - UBS has upgraded Raiffeisen Bank International AG (VIE:RBI) (OTC:RAIFY) from Neutral to Buy, while significantly raising its price target to EUR31.00 from EUR20.60. The bank, currently valued at $10.53 billion, trades at an attractive Price/Book ratio of 0.41, with InvestingPro analysis suggesting the stock is slightly undervalued at its current price of $7.21.

The upgrade comes after Raiffeisen delivered consistently strong core operating results over the past 12 months, excluding its Russian operations. The bank’s performance is reflected in its impressive 69.29% return over the past year, with revenue growing at 5.21%. UBS noted that net interest income performed better than expected, fee generation improved, and trading and other income reached higher levels.

In the second quarter of 2025, loan growth accelerated across most markets, particularly in retail, with UBS projecting 6-7% growth by year-end. Loan loss provisions remained low at 20 basis points in the first half of the year, with the bank maintaining substantial overlays that could be used or released. InvestingPro subscribers can access 7 additional key insights about Raiffeisen’s financial health and growth prospects.

UBS highlighted that Raiffeisen took significant steps to accelerate CHF litigation provisioning in Poland. The firm expects substantially improved Core Return on Tangible Equity (ROTE) in the second half compared to the first half of the year.

UBS forecasts Raiffeisen will achieve a Core ROTE of 10% in fiscal year 2025, rising to 11.4% in 2026 and 11.9% in 2027, with these projections approximately 20% above consensus estimates, primarily due to higher anticipated fees, trading and other income, as well as somewhat higher net interest income. The bank currently trades at a P/E ratio of 13.98, suggesting reasonable valuation levels relative to its growth prospects.

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