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EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische
Consolidated Interim Report Q1 2015
-------------------------------------------------------------------------------- Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- quarterly report BAWAG P.S.K. reports strong quarterly net profit of EUR 121 million, +51% from Q1 2014 o Net profit EUR 121 million, +51% versus prior year o Annualized return on equity of 19.6%, +4.6pts o Core revenues EUR 230 million, +13% o Operating expenses down 4% to EUR 118 million o Cost-income ratio improved to 45.3%, down 7.9pts o Net interest margin improved by 38bps to 2.07% o CET1 ratio (fully loaded) at 13.5%, up 1.4pts versus year-end 2014 o Reiterate confidence in meeting or exceeding 2015 targets VIENNA, Austria - May 12, 2015 - BAWAG P.S.K. today reported net profit of EUR 121 million for the first quarter 2015, up 51% versus prior year. The increase was driven by higher net interest income, reduced operating expenses and lower risk costs. Annualized return on equity was 19.6%, up 4.6pts. Net interest margin improved 38bps to 2.07% with business net interest margin up 20bps to 2.33%. Operating expenses were down by 4% and the cost-income ratio down 7.9pts to 45.3%. Risk costs decreased by 44% with no impairments in the first quarter 2015. These strong results demonstrate the continued success from the strategic actions the Bank undertook over the last years. "As we closed out the first quarter 2015 we continued to see strong momentum across all our business segments. Our continued strength and results reiterate the success of our transformation and the sustainability of our focused low risk business model", said Chief Executive Officer Byron Haynes. "Over the past five quarters, our core revenues have continuously grown and we expect this positive development to continue throughout 2015. We are confident in our targets and see no issue in meeting or exceeding those we have communicated earlier this year." "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", said Chief Financial Officer Anas Abuzaakouk. Strong capital ratios on a fully loaded Basis The management team continues to run the Bank on a fully loaded basis from a capital standpoint. After having already eliminated most of the non-sustainable capital instruments in 2014, the last non-sustainable Tier 1 capital of EUR 83 million has been called in April 2015 and will be redeemed in the second quarter 2015. The Bank's fully loaded CET1 ratio further improved to 13.5% (Dec 2014: 12.1%) and the total capital ratio to 17.1% (Dec 2014: 15.8%) as of 31 March 2015. Key business highlights Q1 2015 BAWAG P.S.K. continued to successfully execute on its strategy showing a very strong performance in the first three months of 2015, positioning BAWAG P.S.K. as one of the best performing banks in Austria and across all Europe. Core revenues of EUR 230 million increased by 13% due to strength in net interest income. Despite the continued low-interest rate environment, net interest income rose 20% in Q1 versus the same period in 2014. The increase came from our continued strong focus on liability optimization measures. The net interest margin improved by 38bps to 2.07%, while the business net interest margin increased 20bps to 2.33%, reflecting the continuous efforts in asset and liability re-pricing. Operating expenses decreased by EUR 5 million, or 4%, to EUR 118 million driven by a reduction in personnel and other administrative expenses. The cost-income ratio improved by 7.9pts to an all-time low of 45.3% compared to last year's reporting period. Risk costs decreased by 44% to EUR 11 million. This was mainly driven by positive effects from de-risking actions and improved overall credit quality of the core businesses. The portfolio continues to be strong with no impairments in Q1 2015, just as in Q1 2014. Net profit increased by EUR 41 million, or 51%, to EUR 121 million in Q1 2015. The increase was driven by improvements in Corporate Lending and Investments with its net profit up over 100% and in Retail Banking and Small Business up 16%. In addition we had higher net interest income, reduced operating expenses and lower risk costs. Loans and receivables with customers increased by EUR 280 million or 1% to EUR 22 billion at the end of March 2015, primarily driven by growing Retail and the International business segments. At the same time, the Bank has further reduced its exposure in non-core legacy loan assets from CEE countries: Overall, the remaining CEE-loan exposure is less than 0.6% of total assets. Segment reporting Retail Banking and Small Business showed strong results as we continued to focus our strategy on offering simple, fair and transparent products and services through our multi-channel franchise. Core revenues remained stable in Q1 2015 compared to the same period in 2014. The continued efficiency improvements resulted in a 10% decrease in operating expenses compared to previous year. The segment's cost-income ratio further improved to 58%, representing a 6pt decrease from the previous year. Overall, the segment achieved EUR 48 million net profits in the reporting period, a 16% increase compared to Q1 2014. Despite a slow growth market, BAWAG P.S.K. was able to increase its consumer lending market share to 9.4%, up 40bps since year-end 2014 and 90bps since first quarter 2014. Our new business lending volume during the quarter was above EUR 100 million with net asset growth of 4.9% against an overall market growth of 0.7%. We maintained disciplined underwriting and pricing standards, which was reflected in our stable margins. Overall funding costs also continued to decrease as we optimized product mix, volume and pricing. At the end of Q1 we had a blended rate of 0.42% versus 0.5% at year-end 2014 and 0.69% in Q1 last year. The direct banking subsidiary easybank continued to increase the number of customer accounts by +3% to a total of 522,000 accounts since year-end 2014. Deposits grew by 7% to EUR 2.9 billion versus Q1 2014. Corporate Lending and Investments was able to more than double its net profit from EUR 25 million to EUR 54 million year over year. Core revenues were up by 26% driven by higher net interest income of 37% due to continued deleveraging of non-core products and reallocation of capital into more profitable, capital-efficient assets. Core business assets continued to see strength with EUR 800 million net asset growth versus Q1 2014. The Austrian corporate business continued to be restrained with new business volume flat compared to Q1 2014. This was mainly due to flat domestic output, lower corporate investment and continued concerns rising from CEE, Ukraine and Russia. International business continued to see strength with new investment volume of more than EUR 800 million in the first three months. The focus remained on stronger Western European countries and the United States. The international new business volume primarily consists of investment grade loans with a general focus on more defensive industries and on traditional real estate financings with attractive loan-to-value (LTV), strong cash flow, shorter weighted expected maturities and solid covenant characteristics. Low risk costs and a NPL ratio of 1.0% reflect positive impacts from de-risking actions and pro-active risk management of the overall Corporate Lending and Investments portfolio. Treasury Services and Markets reported stable core revenues, operating income and net profit. Selective new investments and strategic sales decreased our risk-weighted assets by 23%. The investment strategy continues to focus on investment grade securities predominantly representing unsecured and secured bonds of financials in core Europe and the United States as well as select sovereign bond exposures and high-quality CLOs (100% AAA-rated at quarter end) in order to maintain solid diversification. The total investment portfolio amounted to EUR 5.4 billion with an average duration of 3.9 years comprising 100% of investment grade securities, 87% rated single "A" or higher. Exposure to CEE countries represented less than 5% of the portfolio limited to select bonds (95% rate single "A" or better). The portfolio has no direct exposures to Russia, Ukraine, other South-Eastern European countries or HETA Asset Resolution AG. 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 offers simple, fair and transparent products and services which includes lending, savings, payment, card, investment and insurance services for private and small business customers. Based on a long term and traditional cooperation with Österreichische Post AG (Austrian Post) these products and services are available through our branches all over Austria which are complemented by our digital sales channels. Austrian corporate businesses 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, commercial real estate and portfolio financing transactions primarily in Western Europe and the United States of America. 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 targeting to be one of the most efficient, centrally managed banks across Europe. Delivering simple, transparent and best-in-class products and services to our customers is the core of our strategy. BAWAG P.S.K.'s Investor Relations website https://www.bawagpsk.com/BAWAGPSK/IR/EN contains further information about the Bank, including financial and other information for investors. For Charts please refer to attached PDF. Further inquiry note: Financial Community: Benjamin del Fabro (Investor Relations) T: +43 (0) 5 99 05-22456 E-Mail: email@example.com Media: T: + 43(0) 5 99 05-31210 E-Mail: firstname.lastname@example.org T: 43 (0)59905 - 31210 e-mail: email@example.com end of announcement euro adhoc -------------------------------------------------------------------------------- company: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft Georg-Coch-Platz 2 A-1018 Wien phone: +43 (0) 59905 mail: firstname.lastname@example.org WWW: www.bawagpsk.com sector: Banking ISIN: - indexes: stockmarkets: stock market: Luxembourg Stock Exchange, Euronext Amsterdam, Frankfurt, Wien, SIX Swiss Exchange language: English