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BAWAG P.S.K. REPORTS 2014 RECORD NET PROFIT OF EUR 333 MILLION, +45%
o Net profit EUR 333 million, +45% versus prior year
o Return on equity 14.9%, +3.3pts
o Core revenues EUR 890 million, +16%
o Operating expenses down 27% to EUR 499 million
o Cost-income ratio improved to 53.1%, down 12.7pts
o Net interest margin improved by 46bps to 1.95%
o CET1 ratio (fully loaded) at 12.1%, up 2.7pts
o Outperformed all 2014 goals published in 2013 annual report
VIENNA, Austria - March 5, 2015 - BAWAG P.S.K. today reported record net profit
of EUR 333 million for 2014, up 45% compared to the year before. The increase
was primarily driven by improvements in the Retail Banking and Small Business
segment. Return on equity was 14.9%, up 3.3pts from last year. Net interest
margin improved 46bps to 1.95% with business net interest margin up 27bps to
2.33%. Operating expenses were down 27% and the cost-income ratio down 12.7pts
to 53.1%. Risk costs decreased by 24% with no material impairments. These strong
results demonstrate the successful transformation of BAWAG P.S.K. over the last
"The continued focus on our core businesses and prior year de-risking activities
drove outstanding financial results. De-spite a low-interest rate and a
slow-growth European macro environment, we generated record-breaking results and
exceeded of all our stated 2014 goals. Our Return on equity of 14.9% makes us
the most profitable major Austrian bank and one of the top players across
Europe", said Chief Executive Officer Byron Haynes. "We are proud of our
achieve-ments, which stems from BAWAG P.S.K's strong core franchise. We expect
another strong year in 2015, projecting a net profit of over EUR 400 million
with all key metrics improving."
"We will continue to execute on a variety of operational and strategic
initiatives during the course of 2015 that will further drive operational
excellence, greater efficiency and lead to continued profitable growth. Given
our current market positioning and focus, BAWAG P.S.K.'s best years are still
ahead," said Chief Financial Officer Anas Abuzaakouk.
Strong Capital Ratios on a fully loaded basis
From a capital standpoint, the management of BAWAG P.S.K. runs the Bank on a
fully loaded basis (i.e. not relying on any transitional capital under the CRR).
In 2014, the Bank redeemed EUR 810 million of non-sustainable capital comprised
of the remaining EUR 350 million of participation capital, minorities of
approximately EUR 400 million and a remaining EUR 60 million of non-sustainable
Tier 1 as well as other Tier 2 instruments. In addition, our share-holders
continued to show support with a capital contribution of EUR 125 million as part
of our final redemption of participation capital.
BAWAG P.S.K. reported a fully loaded CET1 ratio of 12.1% (2013: 9.4%) and a
total capital ratio of 15.8% (2013: 13.9%) as of 31 December 2014, positioning
the Bank among the top-tier banks when compared to both Austrian and European
peers. In addition, BAWAG P.S.K. was highly successful in passing the ECB's
stress test with capital ratios 50% higher than the minimum targets. The Asset
Quality Review (AQR) demonstrated results that were best-in-class amongst the
participating Austrian banks and confirmed the Bank's prudent and low risk
profile and the conservative nature of its international lending activities.
Key Business Highlights 2014
BAWAG P.S.K. successfully executed on its business plans in 2014 and made
substantial progress across all key financial, business and operational
initiatives positioning the Bank well to support its retail and corporate
customers over the long term.
Core revenues of EUR 890 million increased by 16% due to strength in net
interest income. Despite a continued low-interest rate environment net interest
income rose by 19% in 2014 due to a strong focus on key lending prod-ucts, a
disciplined approach to pricing and liability optimization measures. The
significant improvements in both net interest margin and business net interest
margin, by 46bps and by 27bps respectively, were a testament to the Bank's
successful re-pricing efforts and focus on profitable business.
Operating expenses fell by 27% to EUR 499 million in 2014, reducing the
cost-income ratio by 12.7pts to 53.1% and demonstrating the Bank's ability to
address structural cost imbalances over the past few years and continue to drive
Total risk costs substantially decreased by 24% to EUR 74 million in 2014,
resulting from the improved credit quality of the core businesses and positive
effects from the prior year de-risking activities.
Net profit increased by 45% to EUR 333 million largely driven by improvements in
the Retail Banking and Small Business segment's net profit, which was up over
Loans and receivables from customers increased by EUR 799 million or 4%, to EUR
22 billion as of year-end 2014, primarily driven by growth in core retail and
international business assets. BAWAG P.S.K. continued to proactively reduce its
loan exposure to CEE countries, down 70% to EUR 212 million or 0.6% of total
Retail Banking and Small Business was the key driver for the Bank's strong
results. Core revenues improved by 14% driven by higher net interest income of
16% and increased net commission income of 9%. Continued operating efficiency
improvements led to a decrease of 15% in operating expenses. The segment
contributed EUR 157 million or 47%, of the Bank's net profit in 2014, more than
doubling versus the prior year. The Bank's market share in consumer loans
increased to 9%, up 1pt since year-end 2013. Funding costs continued to decrease
as the Bank continued to manage the outflow, re-pricing and cross-selling of
customer volumes from fixed-term deposits. Consumer loan volume grew 13% to EUR
1.6 billion in a contracting Austrian market.
The direct banking subsidiary easybank continued its strong performance in 2014,
growing deposits by 7%, opening 47,000 (+10%) new customer accounts and reaching
507,000 client accounts at the end of the year.
Corporate Lending and Investments continued to improve its overall results in
2014 with a focus on disciplined pricing and profitable growth. Deleveraging of
non-core assets, repricing and reallocation of capital to more prof-itable and
capital-efficient assets resulted in an increase of net interest income of 6%.
Operating expenses decreased by 12% and risks costs significantly decreased by
36%. The segment contributed EUR 143 million of net profit, up 23% from the
prior year. Despite muted loan demand, Austrian Corporate new lending volumes
were up 11%. The International Business reported net investment growth of EUR
1.8 billion, ending the year at EUR 6.0 billion assets. The international new
business volume primarily reflected an increase in investment grade loans in
more defensive industries, diversification across international commercial real
estate lending, and portfolio financing transactions. Proactive risk management
and improving credit quality of the portfolio resulted in an NPL ratio of 1.2%,
down 1.7pts from the prior year. There were no losses in the international
business at year-end 2014, reiterating our conservative lending approach in this
Treasury Services and Markets reported net interest income up 6%, a decrease in
operating expenses of 39% and net profit of EUR 56 million, up 6% from prior
year. The investment strategy continues to focus on investment grade securities
of financial institutions in core Europe and the United States as well as in
select sovereign bonds. The total investment portfolio amounted to EUR 5.7
billion with an average duration of 3.7 years comprising 100% of investment
grade securities of which 85% were rated in the single "A" category or higher.
Exposure to CEE securities represented less than 5% of the portfolio limited to
select bonds (95% rated single "A" or better). The portfolio had no direct
exposure to Russia, Ukraine, Hungary or South-Eastern Europe as of 31 December
About BAWAG P.S.K.
BAWAG P.S.K. is one of Austria's largest banking institutions with 1.6 million
customers and a well-recognized national brand. The Bank focuses on three
business segments: Retail Banking and Small Business which includes lending,
savings, payment, card, investment and insurance services for private and small
business customers. Austrian corporate lending activities and other fee-driven
financial services as well as international activities are managed within the
Corporate Lending and Investments segment. The majority of the Bank's lending
activities are within Austria. The international business is focused on
corporate and commercial real estate financing primarily in Western Europe.
Treasury Services and Markets includes all activities associated with providing
trading and investment services for the Group's treasury activities and the
management of the Bank's portfolio of financial securities.
BAWAG P.S.K. focuses on a capital efficient, low risk and low leverage business
model while being the most efficient, centrally managed bank across Austria.
Delivering competitive, transparent and simple products and services to our
customers is the core of our strategy.
BAWAG P.S.K.'s Investor Relations website http://www.bawagpsk.com/BAWAGPSK/IR/EN
contains further infor-mation about the Bank, including financial and other
information for investors.
For charts please refer to the attached PDF press release
Further inquiry note:
T: 43 1 534 53 - 31210
F: 43 1 534 53 - 33015
end of announcement euro adhoc
company: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
phone: +43 (0) 59905
stockmarkets: stock market: Luxembourg Stock Exchange, Euronext Amsterdam,
Frankfurt, Wien, SIX Swiss Exchange