BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft

EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
Consolidated Interim Report H1 2107 - ATTACHMENT

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Mid Year Results

Austria, Vienna - August 3,2017 - BAWAG P.S.K. REPORTS STRONG H1 2017 PROFIT
BEFORE TAX OF EUR 251 MILLION

o Profit before tax of EUR 251 million, +3% versus prior year
o Return on tangible equity (@12% CET1) of 18.3%
o Core revenues of EUR 502 million, +5%
o Operating income of EUR 521 million, +3%
o Operating expenses up 1% due to acquisitions
o Cost-income ratio improved to 41.7%, -0.9pts
o Net interest margin stable at 2.23% versus Q1 2017
o Fully loaded CET1 ratio of 16.5%, +140bps versus year-end 2016

VIENNA, Austria - August 3, 2017 - BAWAG P.S.K. today reports a strong profit
before tax of EUR 251 million for the first half 2017, up 3% versus the prior
year driven by higher operating income. The return on tangible equity (@12%
CET1)1) came in at 18.3%. Higher operating expenses were driven by fully
absorbing the Bank's acquisitions that were completed during the fourth quarter
2016. Nevertheless, the cost-income ratio was down 0.9pts to 41.7%. The net
interest margin remained stable at 2.23% compared to the first quarter 2017. The
Bank has increased its fully loaded CET1 ratio by 140bps to 16.5% versus year-
end 2016.

"BAWAG P.S.K. delivered strong results in the first half 2017, while continuing
to execute on various operational and strategic initiatives. We maintained our
low-risk strategy focused on the DACH region, with Austria as our foundation,
while providing our customers with simple, transparent and best-in-class
products and services. In line with this strategy, we recently announced the
signing of the acquisition of Südwestbank, a medium-sized regional bank
headquartered in Stuttgart, Germany. This complements our Austrian business and
offers us a solid foundation for growth in the German market. Our strong half-
year results reiterate that BAWAG P.S.K. is well positioned to win in this
competitive and evolving European banking landscape," commented Chief Executive
Officer Anas Abuzaakouk.

Strong capital ratios

The management team continues to run the Bank on a fully loaded basis from a
capital standpoint. The fully loaded CET1 ratio improved by 140bps to 16.5% (Dec
2016: 15.1%) and the fully loaded total capital ratio by 130bps to 19.3% (Dec
2016: 18.0%), driven by organic earnings. Due to the recently announced
acquisitions this year, the Bank maintains a capital position significantly
above both regulatory requirements and the management's CET1 target ratio of
12%.

Acquisition of Südwestbank

In mid-July 2017, BAWAG P.S.K. successfully signed an agreement to acquire
Südwestbank, a regional bank with over EUR 7 billion assets and approximately
100,000 retail and corporate customers headquartered in Stuttgart, Germany. The
expertise and long-standing tradition of Südwestbank in Baden-Württemberg, an
economically strong region, make the bank an ideal partner to help BAWAG P.S.K.
expand its footprint and customer base in Germany. This transaction is part of
BAWAG P.S.K.'s larger DACH regional strategy and will provide the Bank access to
excellent customers in a highly attractive market. The transaction is expected
to close in the second half 2017.

BAWAG P.S.K. upgraded by Moody's

In April 2017, the long-term senior unsecured debt, issuer and deposit ratings
were all raised by one notch to A2, while the positive outlook on these ratings
was maintained. At the same time, the Bank's standalone rating as well as its
subordinate debt rating were also upgraded by one notch to baa1 and Baa2,
respectively. Taken together with our Fitch rating, this makes BAWAG P.S.K. one
of the few banks across Europe with two ratings in the single A category.

BAWAG P.S.K. awarded "Austria's Best Bank 2017" by Global Finance

In addition to the Moody's upgrades, Global Finance, one of the leading
magazines for finance and capital market issues, awarded BAWAG P.S.K. as
"Austria's Best Bank 2017" in March 2017. After having received The Banker's
"Bank of the Year 2016" award for Austria in December 2016, we are again proud
to be recognized for the successful development of the Bank.

Key business highlights in H1 2017

BAWAG P.S.K. successfully executed on its business plans in the first half 2017,
delivering another quarter of strong results.

Operating income increased by 3% to EUR 521 million. Despite a continued low-
interest rate environment, net interest income rose 5% to EUR 395 million in the
first half 2017, primarily driven by net asset growth and lower funding costs.
Net commission income increased by 3% to EUR 106 million. The net interest
margin remained stable at 2.23% compared to the first quarter 2017, reflecting
the Bank's dedicated focus on risk-adjusted pricing and optimizing the liability
structure.

Operating expenses increased by 1% to EUR 218 million in the first half 2017 and
were driven by fully absorbing the acquisitions that were completed during the
fourth quarter 2016. Despite higher operating expenses, the costincome ratio in
the first half 2017 further improved by 0.9pts to 41.7%. The operating expenses
are expected to decrease as integration efforts from these acquisitions are
realized through the course of the year.

Risk costs in the first half 2017 increased on an absolute basis driven by
precautionary provisions booked on exposures in the oil & gas sector. The Bank
continues to maintain a conservative risk profile characterized by disciplined
underwriting, low leverage and a business model focused on developed markets in
Austria and Western Europe. This is best reflected in a risk cost ratio of 17bps
and an NPL ratio of 1.9% as of June 2017.

Regulatory charges amounted to EUR 28 million as we had to front-load
approximately 90% of the total regulatory charges anticipated for the full year
during the first half 2017.

For comparison purposes, BAWAG P.S.K. focuses on profit before tax as net profit
in the first half 2016 was significantly impacted by a one-time tax benefit.
Profit before tax was EUR 251 million, up 3% compared to the first half 2016
driven by higher operating income.

Loans and receivables with customers increased by 18% to EUR 28.0 billion
compared to June 2016, reflecting the acquisition of start:bausparkasse and
IMMO-BANK in December 2016. The overall customer loan book continued to be
comprised of two-thirds exposure to Austria and one-third to Western Europe and
the United States. The total new origination volume in the first half 2017 was
more than EUR 2 billion.

The funding of BAWAG P.S.K. continues to be based on stable customer deposits of
EUR 25.4 billion, representing two-thirds of the overall funding base. The
increase of 15% compared to June 2016 mainly results from the acquisition of
start:bausparkasse and IMMO-BANK. The funding costs continued to decrease as the
product mix, volume and pricing were optimized. At the end of June 2017, the
blended overall retail deposit rate stood at 0.19%, down 9bps versus a year ago.

Segment reporting

The BAWAG P.S.K. Retail segment, consisting of the Bank's retail and small
business lending to domestic customers, social housing activities and real
estate leasing, also includes start:bausparkasse and parts of IMMO-BANK. The
segment achieved a profit before tax of EUR 117 million in the first half 2017,
up 45% compared to the same period last year, while delivering a pre-tax return
on equity (@12% CET1) of 28.4% and a cost-income ratio of 47.7%. Higher core
revenues resulted from the continued enhancements in our core products as well
as from the recent acquisitions of start:bausparkasse and IMMO-BANK. Overall
risk metrics reflect the high credit quality of the retail business, with a risk
cost ratio of 28bps (down 10bps versus the first half 2016) and an NPL ratio of
2.1% (down 30bps versus the first half 2016). The increase in regulatory charges
is due to already having to book the full-year accruals for the deposit
guarantee scheme.

The easygroup segment, comprising easybank, one of Austria's leading direct
banks, the auto and mobile leasing platforms as well as performing residential
mortgage portfolios in Western Europe, achieved a profit before tax of EUR 71
million in the first half 2017, up 59% compared to the first half 2016, with a
pre-tax return on equity (@12% CET1) of 43.2% and a cost-income ratio of 19.0%.
The underlying performance reflects the purchase of a high-quality performing
residential mortgage portfolio in Western Europe in December 2016. The segment
will benefit significantly from the announced acquisition of the PayLife card
issuing business, providing access to a solid customer base, an elite credit
card team and important distribution partnerships. The transaction is expected
to close in the second half of 2017. The approval from the Austrian Competition
Authority has already been obtained.

The DACH Corporates & Public Sector segment includes corporate and public
lending and other fee-driven financial services for mainly Austrian customers
and select client relationships in Germany and Switzerland. The segment
contributed EUR 38 million to the Bank's profit before tax, up 6% compared to
the first half 2016 and delivering a pre-tax return on equity (@12% CET1) of
17.4%. Core revenues decreased by 14% to EUR 52 million compared to the same
period last year, resulting from the competitive market environment with
continued pressure on margins. The overall quality of the portfolio further
improved compared to the first half 2016, with an NPL ratio of 0.9% (down
40bps). This is a reflection of the prior years' de-risking activities and the
overall high asset quality.

The International Business segment comprises international corporate, real
estate and portfolio lending outside the DACH region, primarily in Western
Europe and the United States. The segment contributed EUR 34 million to the
Bank's profit before tax in the first half 2017, down 38% compared to the same
period last year due to higher operating expenses and risk costs, while still
delivering a pre-tax return on equity (@12% CET1) of 14.9%. Despite higher-than-
anticipated early redemptions and general pressure on margins, core revenues
remained largely stable. Similar to the DACH corporate lending business, the
international business is characterized by high-quality assets and a low NPL
ratio of 0.9%.

Treasury Services & Markets manages the Bank's investment portfolio of financial
securities of EUR 6.0 billion and a liquidity reserve of EUR 1.8 billion. The
investment portfolio's average maturity was five years, comprising 97% of
investment grade securities, of which 86% were rated single A or higher. As of
30 June 2017, the portfolio had no direct exposure to China, Russia, Hungary or
South-Eastern Europe. Direct exposure to the UK is moderate and focuses on
internationally diversified issuers with solid credit quality. The segment
contributed EUR 27 million to the Bank's profit before tax in the first half
2017, up 28% compared to the same period in 2016, and delivered a pre-tax return
on equity (@12% CET1) of 16.7%. Operating income was up 20%, supported by higher
gains on financial instruments.

About BAWAG P.S.K.

With more than 2.2 million customers, BAWAG P.S.K. is one of Austria's largest,
most profitable and best capitalized banks operating under a well-recognized
national brand. We apply a low-risk, highly efficient, simple and transparent
business model focused on Austria and other developed markets - with two-thirds
of our customer loans within Austria. The remaining customer loans are
predominantly in Western Europe and the United States. We serve Austrian retail,
small business and corporate customers across the country, offering
comprehensive savings, payment, lending, leasing, investment, building society
and insurance products and services. Our Austrian business is complemented by
international activities focused on retail, corporate, commercial real estate
and portfolio lending in Western developed countries. This strategy provides us
with earnings diversification and growth opportunities, while maintaining a
conservative risk profile with disciplined underwriting.

We run the Bank in a safe and secure manner with a strong balance sheet, low
leverage and solid capitalization. Delivering simple, transparent and best-in-
class products and services that meet our customers' needs is our consistent
strategy across all business units.

BAWAG P.S.K.'s Investor Relations website https://www.bawagpsk.com/IR contains
further information about the Bank, including financial and other information
for investors.

BAWAG P.S.K. contact:
Financial Community:
Benjamin del Fabro (Head of Investor Relations & Communications)
Tel: +43 (0) 5 99 05-22456
E-mail: investor.relations@bawagpsk.com

This text can also be downloaded from our website: https://www.bawagpsk.com

Note: In this press release, any data is presented on the BAWAG Holding Group
level (referred to as BAWAG P.S.K. throughout the document).

For charts please refer to the attached PDF-press release.



Further inquiry note:
Pressestelle 
T: 43 (0)59905 - 31210
F: 43 (0)59905 - 22007
e-mail: presse@bawagpsk.com

end of announcement                         euro adhoc
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Attachments with Announcement:
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http://resources.euroadhoc.com/documents/3021/5/10034660/1/H1_2017_Press_release_final.pdf


issuer:       BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
              Georg-Coch-Platz  2
              A-1018 Wien
phone:        +43 (0) 59905
FAX:          
mail:      bawagpsk@bawagpsk.com
WWW:       www.bawagpsk.com
ISIN:         -
indexes:      
stockmarkets: Wien, Euronext Amsterdam, Frankfurt, Luxembourg Stock Exchange,
              SIX Swiss Exchange
language:     English
 



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