Raiffeisen CEO Sees Russian Retail Lending Driving Credit Growth

Raiffeisen Bank International AG, owner of the third-biggest foreign lender in Russia, expects loan growth in eastern Europe to be driven by Russian retail credit, Chief Executive Officer Herbert Stepic said.

Raiffeisen, which trails UniCredit SpA and Societe Generale SA in Russia, expects only subdued credit demand in the Balkans and “moderate to average” requests for loans in the region including Poland, Hungary and the Czech and Slovak republics, Stepic said in an interview today while attending a Euromoney conference in Vienna.

“We’ve had in the past three years much higher lending rates in central and eastern European markets,” Stepic said. “It will continue in a slightly reduced fashion, but it will continue to grow much faster than” in western Europe, he added.

Raiffeisen and its peers, owners of three-quarters of the banking assets in post-communist Europe, bet that the region will have higher growth rates than developed Europe and that banks will expand even faster as consumers and companies use more banking services. That trend will be intact for years to come, Stepic said.

“The growth differential is due to the transformation process from a centralized economy to a free economy,” Stepic said. “Whether you pick Serbia or Russia, it will be the case. This will continue to drive growth for the next 10 to 15 years, the next generation and that makes us very confident.”

The region’s recovery and a pickup of loan growth will depend on the development of the euro area, Stepic said. “We’ll see two slow quarters in 2013 followed by a modest upswing beginning this year and then a better consolidation in 2014,” he said. “If Europe is performing better, central and eastern Europe will perform better.”

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