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Investing.com -- Raiffeisen Bank International (VIE:RBIV) stock jumped 10% following a UBS upgrade to "Buy" from "Neutral" based on improving operating trends and higher return on tangible equity (RoTE) forecasts.
The Austrian bank has demonstrated strong core operating results over the past year, with better-than-expected net interest income, improved fee generation, and higher trading income. Loan growth, particularly in retail, has accelerated across most markets and appears on track to reach 6-7% by year-end, while loan loss provisions remained at low levels of 20 basis points in the first half of the year.
UBS raised its price target for Raiffeisen to €31 and increased earnings per share forecasts for the bank’s core business by 17% for fiscal year 2025 and 19% for 2026-2027. The upgrade is driven by expectations of higher volume growth, better net interest margin, improved net fee and commission income, higher trading income, and slightly lower risk costs.
"We think sell side consensus and likely buy side expectations do not reflect the significantly higher prospective ROTE adequately, with potential optionality from the planned counter-claim against Rasperia, which was awarded c.€2bn in damages last year," UBS analysts noted.
Despite rising 24% year-to-date, Raiffeisen has underperformed the banking sector by approximately 4 percentage points. UBS expects the bank’s RoTE to reach 10% in FY25, 11.4% in FY26, and 11.9% in FY27, with forecasts approximately 20% above consensus estimates.
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