VIENNA (Reuters) - Austria's Raiffeisen Bank International (VI:RBIV) (RBI) on Friday played down the potential impact of Western sanctions on its crucial business in Russia, where it is the 10th-largest lender with a 9.6 billion euro (7.68 billion pound) loan book.
RBI's shares have been hit by market jitters over its exposure to Russia amid sanctions imposed by the West to punish Moscow over what Western leaders call Moscow's support for separatist rebels in eastern Ukraine. Moscow denies this.
RBI's operations in Russia - where it has nearly 2.7 million customers - made 139 million euros before tax in the first quarter, down from 198 million a year earlier but up from 108 million in the fourth quarter.
Last month, the European Union and the United States announced sanctions against Russia which target its energy, banking and defence sectors.
"We don't expect the new U.S. or EU sanctions to have any significant direct effect on RBI's business," Chief Risk Officer Johann Strobl said in comments released by emerging Europe's second-biggest lender.
He also expressed confidence that the Raiffeisen group would hold up well in the European Central Bank-led Asset Quality Review (AQR) health checks of euro zone major banks, including its unlisted parent, Raiffeisen Zentralbank [RZB.UL].
"The AQR process and stress tests are still ongoing. As of yet, there has been no response from the ECB (European Central Bank). Nevertheless, we believe that we will pass both the AQR and stress test," he said.
RBI stock, which this week hit its lowest levels since early 2012, was down 1.8 percent at 18.00 euros by 1515 GMT, while the Stoxx European banking sector <.SX7P> was barely changed.
Raiffeisen, which has forecast a net provisioning requirement of 1.3-1.4 billion euros this year, has been trying for weeks to allay market worries about Russia.
"We are confident that Russia will remain an attractive banking market over the medium and long term," Chief Executive Karl Sevelda had said in May after the Austrian lender's first-quarter profits easily beat market expectations.
Bank Austria, the central and eastern Europe arm of Italian bank UniCredit (MI:CRDI), this week said it expected to keep making solid profits in Russia despite Western sanctions.
(Reporting by Michael Shields; Editing by Jason Neely and Shadia Nasralla)