UniCredit Bank Austria AG: Bank Austria: net consolidated profit of EUR 761 million for the first nine months

UniCredit Bank Austria AG  / Key word(s): Quarter Results

10.11.2010 08:02
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Corporate News

Bank Austria's results for the first nine months of 2010

Date of entry: 10 November 2010

Results for the first nine months of 2010: 

Bank Austria: net consolidated profit of EUR 761 million for the first nine
months

  - Profit before tax of EUR 450 million in Q3 2010 was the best quarterly
    performance since the beginning of 2009

  - Net fees and commissions for the first nine months significantly higher
    than in the previous year; net interest income lower than the
    exceptionally high figure in the previous year, reflecting low level of
    interest rates, but with a steadily increasing quarterly trend

  - Provisioning charge continued to decline in Austria and Central and
    Eastern Europe (CEE), at EUR 1.3 billion it was down by 19 per cent
    from the previous year

  - Net consolidated profit of EUR 761 million reflects an increasing
    quarterly trend, but was still lower than in the previous year as a
    result of goodwill impairment and weaker net interest income

  - Equity at EUR 17.9 billion, up by almost one quarter from year-end 2009

  - Tier 1 capital ratio (based on all risks) rose to 9.95 per cent

Bank Austria's CEO Willibald Cernko: 'In our customer business we achieved
a strong operating performance in the first nine months. Profit before tax
generated in the third quarter of 2010 was higher than in any quarterly
period in the past one and a half years. But we have not yet returned to
pre-crisis levels. In the countries where we are responsible for banking
operations, the speed of recovery varies considerably: Turkey and Russia -
the countries which make the largest contribution to CEE profits - are
achieving the strongest growth. We are pleased to note that the
provisioning charge has continued to decline in both Austria and Central
and Eastern Europe. With our strong equity capital base we are well placed
to meet the new capital adequacy requirements (Basel III). We see no need
for action in this respect.

I continue to take a critical view of the multiple burden arising from
Basel III, the new deposit guarantee scheme and levies on banks in Austria
and Hungary - not so much in the context of Bank Austria because it is a
strong and sound bank. But there is a risk of overburdening the entire
banking system to the disadvantage of the economy.'

Items in the income statement 

Net interest income continued to increase over the preceding quarters,
rising to EUR 3,513 million for the first nine months of 2010. The 6 per
cent decline from the figure for the comparable period of the previous year
was mainly due to weaker net interest income from international financial
market trading activities and in Treasury (1-9 2009: EUR 3,743 million).

Net fees and commissions in the first nine months were EUR 1,480 million,
up by 11 per cent on the comparable period of the previous year. Securities
business increased in the course of the first nine months but did not yet
match pre-crisis levels.

Net trading, hedging and fair value income for the first nine months of
2010 was EUR 277 million, a significant increase of 17 per cent over the
figure for the same period of the previous year (1-9 2009: EUR 237
million).

Operating income in the third quarter of 2010 was 7 per cent higher than in
Q3 2009; the figure for the first nine months was EUR 5,406 million, only 2
per cent lower than in the previous year (1-9 2009: EUR 5,506 million).

Operating expenses rose moderately, by 3 per cent to EUR 2,782 million,
compared with the same period of the previous year (1-9 2009: EUR 2,693
million). The slight increase of 2.6 percentage points in the cost/income
ratio to 51.5 per cent primarily reflects lower net interest income.

In the third quarter of 2010, operating profit exceeded the previous year's
figure by 10 per cent. Operating profit for the first nine months was EUR
2,623 million, down by 7 per cent from the same period of the previous year
(1-9 2009: EUR 2,813 million).

Net writedowns of loans and provisions for guarantees and commitments were
significantly reduced, by 19 per cent to EUR 1,314 million, compared with
the first nine months of the previous year (1-9 2009: EUR 1,612 million).
Reductions were made in Austria-based business, where the provisioning
charge declined by 23 per cent to EUR 302 million for the first nine
months, and in Central and Eastern Europe, where the provisioning charge
was reduced by 17 per cent to EUR 1,010 million. Kazakhstan and Ukraine,
both with declining loan loss provisions over the past quarters, accounted
for about 47 per cent of net writedowns of loans and provisions for
guarantees and commitments in CEE, whereas the provisioning charge in two
large countries - Turkey and Russia - was significantly reduced.

Among the other non-operating items between operating profit and profit
before tax, the impairment loss of EUR 162 million on goodwill relating to
the banking subsidiary in Kazakhstan, which was recognised in the second
quarter, had a significant impact on results for the first nine months of
2010. Net income from investments was EUR 61 million, down from EUR 79
million in the previous year, as Bank Austria's contractual participation
in current profits of the Polish UniCredit banking subsidiary expired at
the end of 2009; in the previous year, the latter item amounted to EUR 74
million.

Profit before tax for the third quarter of 2010 reached EUR 450 million,
the best quarterly performance since the first quarter of 2009. However, on
account of the above-mentioned special effects, profit before tax for the
first nine months of 2010 was lower than in the comparable period of the
previous year. Profit before tax for the first nine months was EUR 1,094
million, down by 11 per cent from the previous year (1-9 2009: EUR 1,224
million).

After deduction of minorities, net consolidated profit (attributable to the
owners of Bank Austria) for the first nine months of 2010 amounted to EUR
761 million (1-9 2009: EUR 972 million).

The following key financial data have been calculated on the basis of the
above-mentioned results:

  - Return on equity before tax was 8.7 per cent (1-9 2009: 11.5 per cent).

  - Return on equity after tax excluding minority interests was 6.2 per
    cent (1-9 2009: 9.6 per cent).

  - The cost/income ratio rose slightly, to 51.5 per cent (1-9 2009: 48.9
    per cent).

  - The risk/earnings ratio (provisioning charge as a percentage of net
    interest income) declined significantly, to 37.4 per cent (1-9 2009:
    43.1 per cent).

  - The Tier 1 capital ratio (based on all risks) improved to 9.95 per cent
    (year-end 2009: 8.68 per cent).

  - The Core Tier 1 capital ratio (Tier 1 capital without hybrid capital)
    rose to 9.63 per cent (year-end 2009: 8.33 per cent).

Results of the Divisions 

Bank Austria reports its results in four Divisions: Family & SME Banking,
Private Banking, Corporate & Investment Banking (CIB) and CEE Banking
(Central Eastern Europe). The bank also shows results for its Corporate
Center.

In the first nine months of 2010, the Family & SME Banking Division
generated a profit before tax of EUR 42 million, an increase of 26 per cent
over the same period of the previous year (1-9 2009: EUR 33 million). The
improvement resulted from higher activity levels in securities business,
strict cost management and a decline in the provisioning charge. The
cost/income ratio rose slightly, to 74.8 per cent (1-9 2009: 73.3 per
cent).

The Private Banking Division's profit before tax for the first nine months
of 2010 reached EUR 27 million (1-9 2009: EUR 34 million). The decline
resulted from lower net interest income. The cost/income ratio was 72.9 per
cent (1-9 2009: 67.6 per cent).

The favourable performance trend recorded in the Corporate & Investment
Banking (CIB) Division in the two preceding quarters continued in the third
quarter of 2010. Profit before tax for the first nine months of the current
year was EUR 552 million (1-9 2009: EUR 674 million), making a substantial
contribution to the Group's overall results. Operating income was lower
than in the same period of the previous year, reflecting the exceptionally
strong performance of UniCredit CAIB AG in the first quarter of 2009. But
operating expenses remained more or less unchanged and the provisioning
charge was significantly reduced compared with the first nine months of the
previous year. The cost/income ratio of the CIB Division was at a low level
of 32.7 per cent (1-9 2009: 26.8 per cent).

The CEE Division's profit before tax for the first nine months was EUR 863
million, up by 4.4 per cent on the same period of the previous year (1-9
2009: EUR 827 million), thus again making a substantial contribution to the
Group's overall results. The increase in profit before tax was due to the
decline in the provisioning charge. The cost/income ratio rose slightly, to
45.6 per cent, thus remaining below the average for the bank as a whole
(1-9 2009: 41.2 per cent).

This performance was supported by an improved interest margin in the period
from July to September, which led to a steady increase in net interest
income and offset the temporary downturn in the first half of 2010, when
credit spreads for CEE were at high levels. At the same time, the
provisioning charge improved, although there are wide regional variations.
Net writedowns of loans and provisions for guarantees and commitments in
the third quarter of 2010 were EUR 319 million, significantly lower than in
the preceding quarter. In Turkey, successful debt collection efforts
enabled the local bank to release loan loss provisions made in previous
periods. An easing of the situation was also seen in Russia.

Bank Austria is UniCredit's sub-holding company for operations in Central
and Eastern Europe. With a banking network comprising about 52,000
employees and more than 2,700 branches, it holds a leading position in this
region.

Balance sheet 

Bank Austria's total assets as at 30 September 2010 were EUR 191.5 billion,
down by EUR 2.9 billion or 1.5 per cent as a result of the sale of
UniCredit CAIB (31 December 2009: EUR 194.5 billion). Overall, the quality
of the balance sheet improved. Loans and receivables with customers
continued to grow, deposits remained stable, and equity rose strongly on
account of the capital increase in March 2010. The leverage ratio (total
assets / equity) thus improved from 13.5 to 10.7.

On the assets side, loans and receivables with customers rose by 3.3 per
cent to EUR 127.7 billion as at 30 September 2010 (31 December 2009: EUR
123.6 billion), representing 67 per cent of total assets (year-end 2009: 64
per cent). Loans and receivables with banks declined by EUR 2.4 billion or
10.1 per cent to EUR 20.7 billion (31 December 2009: EUR 23.1 billion).

On the liabilities side, deposits from customers increased slightly to EUR
97.7 billion (31 December 2009: EUR 97 billion), while debt securities in
issue were down by EUR 0.9 billion to EUR 27.9 billion (31 December 2009:
EUR 28.8 billion). Primary funds - i.e. the sum total of deposits from
customers and debt securities in issue - amounted to EUR 125.6 billion;
they accounted for 65.6 per cent of the balance sheet total, an increase of
1 percentage point. This means that loans and receivables with customers
were almost fully covered by primary funds.

The loan/deposit ratio is currently 130.7 per cent (31 December 2009: 127.4
per cent).

Equity was EUR 17.9 billion, up by a substantial EUR 3.5 billion or 24.1
per cent on the year-end 2009 level (31 December 2009: EUR 14.4 billion).

Capital ratios as at 30 September 2010 improved significantly compared with
year-end 2009 as UniCredit strengthened Bank Austria's equity capital base
with a capital increase of EUR 2 billion in March 2010. The Tier 1 capital
ratio based on credit risk under Basel II rose to 11.04 per cent (31
December 2009: 9.76 per cent). The Tier 1 capital ratio based on all risks
rose to 9.95 per cent (31 December 2009: 8.68 per cent). The Core Tier 1
capital ratio (Tier 1 capital ratio without hybrid capital) based on all
risks was 9.63 per cent (31 December 2009: 8.33 per cent).

Staff numbers in the Bank Austria Group including the employees of
UniCredit subsidiaries (Footnote 1) in Austria totalled 62,376 (full-time
equivalents) as at 30 September 2010 (30 September 2009: 63,527). Of this
total, 10,739 FTEs were employed in Austria and 51,637 FTEs in CEE
countries.

Footnote 1)

Administration Services (now UniCredit Business Partner), BTS (Banking
Transaction Services), Pioneer Investments Austria, WAVE (now UGIS),
UniCredit Leasing and UniCredit CAIB were transferred on an intra-group
basis.

 


in Euro mn                         Q3 2010   Q3 2009   1-9 2010  1-9 2009
Net interest                         1,183     1,137     3,401     3,642
Dividend income                          4         6        16        36
Other income from equity
investments                             26        43        95        65
Net interest income                  1,212     1,186     3,513     3,743
Net fees and commissions               492       436     1,480     1,335
Net trading, hedging and fair
value
income/loss                             43       -34       277       237
Net other expenses/income               57        95       136       191
Net non-interest income                592       496     1,893     1,763
OPERATING INCOME                     1,804     1,683     5,406     5,506
Payroll costs                         -493      -464    -1,441    -1,430
Other administrative expenses         -371      -355    -1,106    -1,020
Recovery of expenses                     1         0         1         1
Amortisation, depreciation and
impairment losses on tangible
and intangible assets                  -79       -79      -237      -244
OPERATING EXPENSES                    -942      -898    -2,782    -2,693
OPERATING PROFIT                       863       785     2,623     2,813
Goodwill impairment                     -3        -1      -170        -1
Provisions for risks and charges       -13       -27      -103       -50
Restructuring costs                     -1        -1        -3        -5
Net writedowns of loans and
provisions for guarantees
and commitments                       -418      -603    -1,314    -1,612
Net income from investments             22        23        61        79
PROFIT BEFORE TAX                      450       176     1,094     1,224
Income tax                            -131       -17      -296      -204
NET PROFIT                             319       159       798     1,020
Net profit attributable to
the parent company                     302       139       761       972
Minorities                              17        20        38        47





in Euro bn                             30.09.2010              31.12.2009
Total assets                                191.5                   194.5
Equity                                       17.9                    14.4




Enquiries: 

Günther Stromenger
Corporate Relations - Bank Austria
phone: +43 (0) 50505 - 87230
e-mail: guenther.stromenger@unicreditgroup.at

Issuer:

UniCredit Bank Austria AG
Schottengasse 6-8, 1010 Vienna, Austria
e-mail: investor.relations@unicreditgroup.at
Internet: http://ir.bankaustria.at

Largest bonds by volume issued:

ISIN:            Stock exchanges:
XS0372532514     Luxemburg
XS0343689377     Luxemburg

Further stock exchanges where bonds are admitted to listing:
Vienna, Frankfurt, Stuttgart, Paris, Zurich, Munich




Contact:
Günther Stromenger
Corporate Relations - Bank Austria
phone: +43 (0) 50505 - 87230
e-mail: guenther.stromenger@unicreditgroup.at






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Language:     English
Company:      UniCredit Bank Austria AG
              Schottengasse 6-8
              1010 Wien
              Österreich
Phone:        0043 (0) 50505 - 87230
Fax:          0043 (0) 50505 - 8987230
E-mail:       investor.relations@unicreditgroup.at
Internet:     www.bankaustria.at
ISIN:         AT0000995006
WKN:          99500
Listed:       Foreign Exchange(s) Wien (Amtlicher Handel / Official
              Market), Luxembourg
 
End of Announcement                             DGAP News-Service
 
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