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 Q1 2015

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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

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 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
T: + 43(0) 5 99 05-31210
T: 43 (0)59905 - 31210

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
sector:      Banking
ISIN:        -
stockmarkets: stock market: Luxembourg Stock Exchange, Euronext Amsterdam,
             Frankfurt, Wien, SIX Swiss Exchange 
language:   English

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