UniCredit Bank Austria AG: Bank Austria posts profit of EUR 833 million for the first half of 2009
UniCredit Bank Austria AG / Half Year Results
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Results for the first six months of 2009:
Bank Austria posts profit of EUR 833 million for the first half of 2009
* Operating profit rises to record level of over EUR 2 billion driven by
strong operating performance in customer business, up by about 51 per cent
on H1 2008
o Operating income up by almost 18 per cent to EUR 3.8 billion
o Net trading income reaches EUR 272 million, after a net trading loss
for H1 2008
o Operating expenses down by close to 6 per cent due to cost
reductions in CEE and synergies within UniCredit Group
* Provisioning charge triples to EUR 1 billion reflecting the economic
environment
* Consolidated profit of EUR 833 million, down by 21 per cent from first
half of previous year
Erich Hampel, Bank Austria's Chief Executive Officer: 'Our operations have
again proved to be highly resilient despite the global economic downturn.
The sustained focus on classic customer business pays off. And with
investment banking generating profits again after the losses recorded in
the past year, our operating profit rose to a record level of over EUR 2
billion. Nevertheless, the persistently weak economic trend has impacted
our results in the form of a significantly higher provisioning charge. The
good operating performance has enabled us to absorb this impact and achieve
a profit of EUR 833 million in the first half of 2009.'
Items in the income statement
Net interest income in the first half of 2009 was EUR 2,557 million, up by
10.8 per cent on the first six months of the previous year (H1 2008: EUR
2,309 million), and remained the major revenue component. Most of the
increase in net interest income resulted from interest-earning business of
the Markets & Investment Banking Division.
Net fees and commissions amounted to EUR 899 million, down by 13.3 per cent
on the previous year (H1 2008: EUR 1,037 million). The decline was due to
persistently low demand for securities investments.
In the second quarter of 2009, net trading, hedging and fair value income
continued to develop favourably as in the first quarter, reaching a total
of EUR 272 million in the first six months. The comparative figure for the
first half of 2008 was a net loss of EUR 198 million.
Overall, operating income improved significantly to a level of EUR 3,824
million, an increase of 17.9 per cent over the same period of the previous
year (H1 2008: EUR 3,244 million).
Operating expenses declined by 5.6 per cent to EUR 1,795 million compared
with the first half of the previous year (H1 2008: EUR 1,902 million). The
decline was due to lower-cost processes and cross-regional synergies, and
to staff reductions mainly as part of the integration of the new banking
subsidiaries in Ukraine and Kazakhstan.
The improvement in operating profit was thus supported by both revenues and
costs. Bank Austria's operating profit for the first half of 2009 was EUR
2,029 million, up by 51.3 per cent on the same period of the previous year
(H1 2008: EUR 1,341 million).
As in the fourth quarter of the previous year, the persistently weak
economic environment had an impact on the income statement items between
operating profit and profit before tax. The provisioning charge increased
as the risk position in commercial banking business deteriorated further.
Net writedowns of loans and provisions for guarantees and commitments more
than tripled compared with the same period of the previous year, to a level
of minus EUR 1,009 million (H1 2008: minus EUR 329 million).
As the provisioning charge increased and net income from investment was
lower, Bank Austria's profit before tax declined by 19 per cent to EUR
1,048 million (H1 2008: EUR 1,293 million).
Consolidated profit (after minority interests) for the first six months of
2009 was EUR 833 million (H1 2008: EUR 1,053 million).
The following key financial data have been calculated on the basis of the
above-mentioned results:
* Return on equity before tax was 14.8 per cent (H1 2008: 17.1 per cent).
* Return on equity after tax was 12.1 per cent (H1 2008: 14.6 per cent).
* The cost/income ratio improved to 46.9 per cent (H1 2008: 58.6 per cent).
* The risk/earnings ratio (provisioning charge as a percentage of net
interest income) rose significantly, to 39.5 per cent (H1 2008: 14.2 per
cent).
* The Tier 1 capital ratio based on credit risk increased to 8.58 per cent
(7,70 per cent as at year end 2008) under Basel II.
* The Tier 1 capital ratio based on all risks improved to 7.53 per cent
(6,82 per cent as at year end 2008.) under Basel II.
Results of the Divisions
Until the first half of 2009, Bank Austria reports its results in five
Divisions: Retail, Private Banking, Corporates, Markets & Investment
Banking and Central Eastern Europe (CEE). The bank also shows results for
its Corporate Center.
In the first six months of 2009, the Retail Division achieved a profit
before tax of EUR 44 million, which was only slightly lower than in the
same period of the previous year (H1 2008: EUR 48 million). Return on
equity before tax was 10.5 per cent (H1 2008: 12.1 per cent), the
cost/income ratio improved to 71 per cent (H1 2008: 74.4 per cent).
The Private Banking Division was affected by low activity in securities
business in the first half of 2009. The Division generated a profit before
tax of EUR 17 million (H1 2008: EUR 25 million). Return on equity before
tax reached 22 per cent (H1 2008: 29.8 per cent), the cost/income ratio was
68.7 per cent (H1 2008: 67.4 per cent).
Given the continued weakness of the economic environment, the provisioning
charge in the Corporates Division rose significantly in the first half of
2009 and thus impacted profits. Profit before tax amounted to EUR 144
million (H1 2008: EUR 280 million). Return on equity before tax was 14.3
per cent (H1 2008: 23.9 per cent). The cost/income ratio was 33.1 per cent
(H1 2008: 30.4 per cent).
The favourable development seen in the Markets & Investment Banking
Division in the first three months of 2009 continued in the second quarter,
with profit before tax reaching EUR 391 million, while the figure for the
same period of the previous year was negative (H1 2008: a loss before tax
of EUR 36 million). Return on equity before tax rose to 13.9 per cent (H1
2008: minus 1.7 per cent), the cost/income ratio also improved to 18.4 per
cent.
Bank Austria's CEE Division again achieved a strong increase in its
operating profit, which rose by 33 per cent to EUR 1,447 million in the
first six months of 2009. As the provisioning charge more than tripled
compared with the same period of the previous year, profit before tax was
EUR 721 million, down by 22 per cent on the first half of the previous year
(H1 2008: EUR 929 million). Return on equity before tax was 14.8 per cent
(H1 2008: 21.3 per cent), while the cost/income ratio improved
significantly to 39.7 per cent (H1 2008: 49.1 per cent).
Bank Austria is the hub for UniCredit Group's banking network in Central
and Eastern Europe. As sub-holding for CEE operations, Bank Austria manages
the largest banking network in this region of almost 400 million
inhabitants. More than 53,000 employees in over 4,000 branches are
committed to maintaining customer satisfaction at a high level by striving
for sustainability in customer relationships and thus in the bank's
business.
The commitment of Bank Austria to CEE has always been that of a long term
investor, trusting in the potential of the countries and clearly benefiting
from the structural strength of the region. CEE is not a homogeneous area
and in the last couple of months it has become clear that some countries
are struggling more with the effects of the crisis than others. The well
diversified banking model of the Group has proved to be trustworthy in
these difficult times.
'We are aware of the risks in CEE and effectively responding to it with a
strong focus on credit risk management, pro-active and close monitoring of
liquidity positions in all countries and further cost reductions, which are
reflected in a further improved cost/income ratio. Although we successfully
improved our operating profit once again, the significantly increased loan
loss provisions reduced the profit before tax compared with previous year.
Nonetheless, this good result shows that we are well positioned and able to
handle the current market situation', says Federico Ghizzoni, Deputy CEO of
Bank Austria.
Balance sheet
Bank Austria's total assets at 30 June 2009 were EUR 207.7 billion, down by
6.5 per cent from the level at the end of the previous year (31 December
2008: EUR 222.2 billion).
Like the consolidated balance sheet at 31 December 2008, the interim
consolidated balance sheet at 30 June 2009 includes disposal groups
classified as held for sale (valued at the lower of carrying amount and
fair value less costs to sell), which are shown in accordance with IFRS 5
in the items Non-current assets and disposal groups classified as held for
sale and Liabilities included in disposal groups classified as held for
sale. These items include the investment bank UniCredit CAIB AG and Card
Complete Service Bank AG.
On the assets side, loans and receivables with customers were EUR 127.1
billion as at 30 June 2009, 3.7 per cent lower than at the end of the
previous year (31 December 2008: EUR 132 billion); the decline was mainly
due to short-term transactions and devaluation of CEE currencies. Loans and
receivables with banks decreased by EUR 1.4 billion or 7.1 per cent to EUR
18.6 billion (31 December 2008: EUR 20 billion). The decline of EUR 5.9
billion or 17.2 per cent in the item Non-current assets and disposal groups
classified as held for sale to EUR 28.2 billion (31 December 2008: EUR 34.1
billion) mainly reflects the reduced interbank business of CAIB.
On the liabilities side, interbank business declined by EUR 4.5 billion and
liabilities included in disposal groups classified as held for sale were
down by EUR 8.6 billion, accounting for most of the EUR 14.5 billion
contraction of the balance sheet total. Deposits from customers rose by EUR
1.0 billion to EUR 96.2 billion (31 December 2008: EUR 95.2 billion) and
debt securities in issue were EUR 31.2 billion, down by EUR 1.4 billion (31
December 2008: EUR 32.6 billion).
Primary funds - the sum total of the above two items - reached EUR 127.2
billion or 61.2 per cent of the balance sheet total. This means that
primary funds covered 100 per cent of loans and receivables with customers.
The loan/deposit ratio improved to 132 per cent (year-end 2008 figure:
138.7 per cent).
Equity was EUR 14.1 billion, almost unchanged compared with the level at
the end of 2008 (31 December 2008: EUR 14.2 billion).
Capital ratios as at 30 June 2009 improved significantly compared with
year-end 2008. The Tier 1 capital ratio based on credit risk pursuant to
Basel II rose to 8.58 per cent. The Tier 1 capital ratio based on all risks
increased to 7.53 per cent. The Core Tier 1 capital ratio (Tier 1 capital
ratio without hybrid capital based on all risks) was 7.2 per cent.
Staff numbers in the Bank Austria Group including the employees at
UniCredit Group subsidiaries in Austria totalled 64,372 (FTEs) as at 30
June 2009, a decrease compared with the previous year (30 June 2008: 67,462
employees). Of this total, 10,881 (FTEs) were employed in Austria and
53,491 (FTEs) in CEE countries.
change
in Euro mn 1-6/09 1-6/08 in %
Net interest 2,506 2,183 15
Dividend income 30 41 -28
Other income from
equity investments 22 85 -74
Net interest income 2,557 2,309 11
Net fees and commissions 899 1,037 -13
Net trading, hedging and
fair value income/loss 272 -198 n.m.
Net other expenses/income 96 96 0
Net non-interest income 1,267 935 36
OPERATING INCOME 3,824 3,244 18
Payroll costs -965 -1,102 -12
Other administrative
expenses -665 -644 3
Recovery of expenses 1 2 n.m.
Amortisation, depreciation
and impairment losses on
tangible and intangible
assets -165 -158 4
OPERATING EXPENSES -1,795 -1,902 -6
OPERATING PROFIT 2,029 1,341 51
Goodwill impairment 0 0 n.m.
Provisions for risks
and charges -23 -12 100
Restructuring costs -3 2 n.m.
Net writedowns of loans and
provisions for guarantees
and commitments -1,009 -329 >100
Net income
from investments 55 291 -81
PROFIT BEFORE TAX 1,048 1,293 -19
Income tax -187 -184 2
NET PROFIT 860 1,109 -22
Minority interests -27 -56 -52
CONSOLIDATED PROFIT 833 1,053 -21
1-6/09 1-6/08
ROE after taxes 12.1% 14.6%
Cost/income ratio 46.9% 58.6%
Risk/earnings ratio 39.5% 14.2%
in Euro bn change
30/06/09 31/12/08 in %
Total assets 207.7 222.2 -6.5
Equity 14.1 14.2 -0.7
Tier 1 ratio 7.53% 6.82% 71 bp
Il Primo cip...se scende meglio..
. Bank Austria ha fatto un risultatone
. E' andata bene HVB:yeah:. La somma delle due fà quasi l'utile semestrale di UC
. 
? Capitalia e il vecchio Credito Italiano??