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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 Annual Report 2015 (with document)

  Corporate news transmitted by euro adhoc. The issuer/originator is solely
  responsible for the content of this announcement.

annual report

BAWAG P.S.K. reports 2015 record net profit of EUR 418 million, +26%

o   Net profit EUR 418 million, +26% versus prior year
o   Return on equity of 16.2%, +1.3pts
o   Core revenues EUR 908 million, +4%
o   Net interest margin up 15bps to 2.06%
o   Core operating expenses down 10%, total operating expenses down 4%
o   Cost-income ratio improved to 46.7%, down 4.9pts
o   Fully loaded CET1 ratio of 13.1% (post-dividend), up 1.0pt versus year-end
o   Proposed dividend of EUR 325 million

VIENNA, Austria - March 3, 2016 - BAWAG P.S.K. today reported a record net
profit of EUR 418 million for 2015, up 26% versus prior year. The increase was
driven by higher net interest income, reduced operating expenses and lower risk
costs. Return on equity was 16.2%, up 1.3pts. Net interest margin improved 15bps
to 2.06%. Core operating expenses were down 10%, total operating expenses down
4% and the cost-income ratio down 4.9pts to 46.7%. Risk costs decreased by 44%
to EUR 46 million.

"Despite low interest rates, a slow-growth European macro environment and
increasing regulatory requirements, BAWAG P.S.K. generated record earnings again
in 2015. Reporting a net profit of EUR 418 million makes BAWAG P.S.K. one of the
most profitable Austrian, but more importantly, European banks. The global
banking industry is currently undergoing a significant transformation on many
fronts. Nevertheless, we see significant opportunities during this period as we
are in a very good position to play a larger role in addressing these challenges
and capitalizing on unique opportunities. We are proud of our accomplishments in
2015, positioning BAWAG P.S.K. among the best-performing banks in Europe", said
Chief Executive Officer Byron Haynes.

"The past four years were focused on simplifying our business model by focusing
on core products, cost efficiency, low leverage and a conservative risk profile.
We will continue to execute on a variety of operational and strategic
initiatives in 2016 that will continue to drive efficiency, operational
excellence and profitable growth", said Chief Financial 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 further improved to 13.1% (Dec
2014: 12.1%) and the fully loaded total capital ratio to 16.0% (Dec 2014: 15.8%)
as of December 31, 2015. On a transitional basis, these ratios were 13.8% (Dec
2014: 12.9 %) and 16.7% (Dec 2014: 16.1%), respectively. The SREP requirement of
the regulated parent company for December 2015 and 2016 is 8.75%. As BAWAG
P.S.K. is considered as a systemically important financial institution (SIFI), a
systemic risk buffer of currently 25bps has to be applied on top of the SREP
ratio in 2016. 

Based on the strong 2015 results, the Managing Board decided to propose a motion
for a dividend distribution of EUR 325 million to the general assembly, which is
fully reflected in the year-end 2015 capital ratios.

Highlights in 2015

o   BAWAG P.S.K. entered into a long-term partnership with the world-class asset
manager Amundi, the new owner of former BAWAG P.S.K. INVEST, providing our
customers with access to a broad range of fund products.

o   Moody's raised the Bank's long-term deposit, senior unsecured and issuer
ratings by one notch to Baa1 and changed the outlook to "positive". In addition,
the stand-alone rating was upgraded to baa3 (investment grade for the first
time) and a further upside potential was indicated. 

o   BAWAG P.S.K. executed two acquisitions in line with its growth strategy: The
Bank purchased the auto leasing business of the former Volksbanken, creating the
#3 auto lessor in Austria. In addition, the Bank acquired an attractive
residential loan portfolio in Western Europe to expand its retail franchise
beyond the Austrian borders.

o   BAWAG P.S.K. was awarded "Bank of the Year 2015 in Austria" by "The Banker",
an international industry magazine for banks published by the "Financial Times",
for the first time, underlining the Bank's successful strategic transformation
in recent years.

Key business highlights 2015

BAWAG P.S.K. successfully executed on its business plans in 2015 delivering
strong, record-breaking results and exceeding all its stated goals.

Core revenues increased by 4% to EUR 908 million, driven by strength in net
interest income. Despite the continued low-interest rate environment, net
interest income increased by 7% versus 2014, driven by a strong focus on key
lending products and a disciplined pricing approach. Net interest margin
improved by 15bps to 2.06%, reflecting the Bank's dedicated focus on asset and
liability repricing efforts.

Core operating expenses decreased by 10%, driven by sustainable long-term
measures in personnel and non-personnel expenses. We provisioned EUR 20 million
during the fourth quarter 2015 to address further cost-out opportunities. Total
operating expenses decreased by 4% to EUR 459 million and the cost-income ratio
improved by 4.9pts to 46.7%.

Total risk costs decreased by 44% to EUR 46 million in 2015, resulting from the
improved credit quality of the core businesses and positive effects from the
prior years' de-risking activities. The Bank maintained a conservative risk
profile with disciplined risk-adjusted underwriting standards and a focus on
stable and economically sound geographies. The risk cost ratio (risk costs as a
percentage of loans and receivables) was 0.17% and the NPL ratio improved to
2.1% (down 70bps versus 2014).

Net profit increased by EUR 85 million, or 26%, to EUR 418 million in 2015. The
increase was driven by improvements in both Corporate Lending and Investments
(net profit up 33%) and Retail Banking and Small Business (net profit up 23%).

Loans and receivables with customers increased by EUR 2.9 billion, or 14%, to
EUR 24.7 billion as of December 31, 2015, primarily driven by growth in consumer
loans and international business as well as acquisitions of the former
Volksbanken Austrian leasing business and a residential loan portfolio in
Western Europe . The total new origination volume in 2015 was EUR 4.9 billion,
reflecting positive growth in both our retail and international businesses. The
overall customer loan book continued to be composed of two-thirds exposure to
Austria and one-third to Western Europe and the United States.

Segment reporting 

The Retail Banking and Small Business segment showed strong results by
continuing to grow its domestic consumer loan franchise in absolute terms while
also capturing market share. Overall, the segment achieved a EUR 193 million net
profit, a 23% increase compared to the previous year, driven by reduced
operating expenses and lower risk costs. The continued efficiency improvements
resulted in a 12% decrease in operating expenses versus prior year. 

New business loan originations in 2015 were EUR 1 billion. BAWAG P.S.K. was able
to increase its domestic consumer lending market share to 10.2%, up 1.2pts since
December 2014. Retail assets stood at EUR 12.8 billion, up 34% compared to
previous year. This growth reflects the continued increase in our consumer and
housing loans as well as strategic acquisitions of the Volksbanken Austrian
leasing business and a portfolio of performing residential loans in Western
Europe . The Bank maintained its disciplined underwriting and pricing standards,
which were reflected in a low risk cost ratio of 0.30% and an NPL ratio of 1.93%
(down 129bps compared to year-end 2014).

On the funding side, retail deposits grew 1% to EUR 18.9 billion, driven by
growth in current accounts and savings cards. Funding costs continued to
decrease as product mix, volume and pricing was optimized. At the end 2015, the
blended interest rate on retail deposits stood at 0.32%, down 18bps since
December 2014.

easybank, our 100% direct banking subsidiary, grew its client base to 556,000
accounts, up 10% compared to December 2014. Deposits increased by 12% to EUR 3.2
billion. With the integration of the BAWAG P.S.K. auto leasing and the former
Volksbanken Austrian leasing business, easybank is well positioned to boost its
asset origination capabilities going forward. easybank also entered into a new
strategic partnership with "Unsere Wasserkraft","easy green energy", which
provides easybank with yet another opportunity to expand its market presence,
brand awareness and best-in-class service offering to new segments and

Corporate Lending and Investments contributed EUR 190 million to the Bank's net
profit in 2015, a 33% increase compared to the previous year, driven by core
revenue growth (up 10%) and lower risk costs. Risk costs of EUR 6 million (EUR
35 million in 2014) and an NPL ratio of 0.67% (down 48bps compared to year-end
2014) reflect positive impacts from de-risking actions and the overall high
credit quality of the portfolio. 

Despite muted overall demand, flat domestic output and low corporate
investments, the Austrian corporate business generated new business volumes of
EUR 370 million in addition to regular renewals in 2015.

The international business continued to see strength with loan originations of
EUR 3.5 billion in 2015. The focus remained on stronger Western European
countries (Germany, UK and France) and the United States.

Treasury Services and Markets reported core revenues up 8% and operating
expenses down 12% due to increased operating efficiency. The total investment
portfolio stood at EUR 4.5 billion as of year-end 2015. The strategic sale of
the CLO investments in the third quarter supported a decrease of risk-weighted
assets by 25% in 2015. The investment strategy continues to focus on investment
grade securities predominantly representing secured and unsecured bonds of
financial institutions in core Europe and the United States as well as select
sovereign bond exposures in order to maintain a solid diversification. The
portfolio's average maturity was 3.8 years, comprising 98% investment
grade-rated securities, of which 75% were rated single "A" category or higher.

Exposure to CEE in this segment represented less than 3% of the portfolio and
was limited to select bonds (84% rated single "A" equivalent category or
better). The Bank had no exposure to HETA and no direct exposure to China,
Russia, Hungary or South-Eastern Europe as of December 31, 2015.

Charts: please refer to the attached PDF of the press release

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 include lending, savings, payment, card,
investment, insurance and leasing services for private and small business
customers. These products and services are available through our branches all
over Austria which are complemented by our digital sales channels and 100% owned
direct bank easybank. 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
primarily in Western Europe and the United States. Treasury Services and Markets
includes all activities associated with providing hedging 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 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.

BAWAG P.S.K. contacts:
Financial Community:
Benjamin del Fabro (Head of Investor Relations)
Tel: +43 (0) 5 99 05-22456 

This text can also be downloaded from our website:
Attachments with Announcement:

Further inquiry note:
T: 43 (0)59905 - 31210
F: 43 (0)59905 - 22007

end of announcement                               euro adhoc 

Attachments with Announcement:

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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