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EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische
Consolidated Interim Report H1 2016 (with
-------------------------------------------------------------------------------- Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- 6-month report BAWAG P.S.K. REPORTS STRONG H1 2016 NET PROFIT OF EUR 284 MILLION o Net profit of EUR 284 million, +25% versus prior year o Return on equity of 19.3%, +1.2pts o Return on tangible equity of 21.8%, +2.9pts o Core revenues of EUR 473 million, +2% o Net interest margin stable at 2.1% o Operating expenses down 3% o Cost-income ratio improved to 42.6%, -2.3pts o Fully loaded CET1 ratio of 15.1%, +2.2pts versus year-end 2015 VIENNA, Austria - August 10, 2016 - BAWAG P.S.K. today reports a strong net profit of EUR 284 million for the first half 2016, up 25% versus the prior year. The increase was driven by higher core revenues, lower operating expenses and reduced risk costs. The return on equity was 19.3% and the return on tangible equity 21.8%, up 1.2pts and 2.9pts, respectively. The net interest margin remained stable at 2.1%. Operating expenses were down 3% and the cost-income ratio down 2.3pts to 42.6%. Risk costs decreased by 36% to EUR 15.9 million. "BAWAG P.S.K. delivered a strong first half 2016, reporting a net profit of EUR 284 million. With a return on tangible equity of 22%, a cost-income ratio below 43% and a fully loaded CET1 ratio over 15%, BAWAG P.S.K. ranks among the most profitable, efficient and best capitalized banks across Europe. The continued strong results reiterate that BAWAG P.S.K. is well positioned to win in this competitive and evolving European banking landscape. We will continue to maintain our Austria and developed market-focused low-risk strategy while providing our customers with simple, transparent and best-in-class products and services. All our 2016 financial targets are expected to be outperformed from today's perspective," said Chief Executive Officer Byron Haynes. "Over the past four years, we have simplified 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 during the second half 2016 that will continue to drive efficiency, operational excellence and profitable growth," said Chief Financial Officer Anas Abuzaakouk. Strong capital ratios and favorable stress test results The fully loaded CET1 ratio further improved by 2.2pts to 15.1% (Dec 2015: 12.9%) and the fully loaded total capital ratio by 2.3pts to 18.1% (Dec 2015: 15.8%). These ratios already take into account the deduction of a EUR 325 million dividend for 2015 which has not yet been fully distributed. At the same time, we maintained an RWA density of 45%, a conservative ratio relative to our European peers. BAWAG P.S.K. was part of the recent ECB Banking Supervision SREP stress test exercise and delivered favorable results. The Bank's CET1 ratio in the adverse scenario stands at 9.7% and is not only well above the ECB's minimum expectation but also above the 2016 SREP requirement of 9.0% for BAWAG P.S.K. In addition, the impact on the CET1 ratio in the adverse scenario is only 330bps. Acquisition of start:bausparkasse and IMMO-Bank In June 2016, BAWAG P.S.K. announced to acquire start:bausparkasse (formerly ABV), a large Austrian savings & loan association, as well as IMMO-Bank from Volksbanken Group. Both banks combine the expertise and longstanding tradition of housing and real estate financing. This transaction will grow BAWAG P.S.K.'s domestic retail footprint, extend its expertise in building society savings & loans, and result in a significant increase in the financing volume with real estate companies and social housing associations. The transaction is expected to close in the fourth quarter 2016 and is still subject to customary closing conditions and regulatory approvals. BAWAG P.S.K. upgraded by Moody's In April 2016, Moody's further upgraded BAWAG P.S.K.'s long-term deposit, senior unsecured and issuer ratings by one notch to A3 and the outlook was maintained as "positive." The current rating upgrades make BAWAG P.S.K. the highest rated bank in Austria by Moody's as well as one of the few "A" rated banks across Europe. BAWAG P.S.K. awarded "Austria's Best Bank 2016" by Euromoney BAWAG P.S.K. was awarded "Austria's Best Bank 2016" by Euromoney, one of the world's leading special interest magazines for banking, finance and capital market issues, in July 2016. This award underlines BAWAG P.S.K.'s successful strategic transformation in recent years and is the second important international recognition for the Bank after The Banker's "Bank of the Year 2015" award for Austria in December 2015. Key business highlights H1 2016 BAWAG P.S.K. successfully executed on its business plans in the first half 2016, delivering another period of strong results. Core revenues increased by 2% to EUR 473 million, driven by strength in net interest income. Despite the continued low-interest rate environment, net interest income increased by 2% versus the first half 2015, driven by core product growth, pricing initiatives and lower funding costs. Net interest margin remained stable at 2.1%, reflecting the Bank's dedicated focus on risk-adjusted pricing and balance sheet efficiency. Operating expenses decreased by 3% to EUR 215 million, driven by sustainable long-term measures in personnel and non-personnel expenses. The cost-income ratio further decreased by 2.3pts to 42.6%. Risk costs decreased by 36% to EUR 16 million in the first half 2016, resulting from the improved credit quality of the individual business segments and positive effects from the prior years' de-risking activities. The Bank continues to maintain a conservative risk profile with disciplined underwriting and a focus on developed markets in Austria, Western Europe and the United States. This is best reflected in a low risk cost ratio of 12bps and a stable NPL ratio of 2.3%. Profit before tax was EUR 244 million in the first half 2016, up 5% versus prior year. Net profit increased by 25% to EUR 284 million, driven by higher operating income, lower operating expenses and risk costs as well as tax income resulting from the recognition of deferred tax assets on tax loss carryforwards. These positive developments offset the doubling of regulatory charges. Loans and receivables with customers decreased by 4% to EUR 23.7 billion compared to year-end 2015. The total new origination volume in the first half 2016 was EUR 2.0 billion. 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 investments in the Bank's Austrian retail franchise continue to pay off. The market share in consumer loans, one of the Bank's core retail products, grew to 11.0%, up 80bps from year-end 2015, representing net asset growth of 8.4%. Deposits from customers increased by 2% to EUR 22.1 billion compared to year-end 2015, mainly resulting from higher deposit account balances. Funding costs continued to decrease as the product mix, volume and pricing were optimized. At the end of the first half 2016, the blended overall retail deposit rate stood at 0.27% versus 0.39% in year-on-year comparison. Segment reporting As of June 2016, the business segmentation and the related reporting have been changed to provide greater insight and transparency and to better reflect our strategic focus and the progress of the business units going forward. The former Retail Banking and Small Business segment was split into two segments, BAWAG P.S.K. Retail and easygroup. Similarly, the former Corporate Lending and Investments segment was split into DACH Corporates & Public Sector and International Business. The BAWAG P.S.K. Retail segment, consisting of the Bank's retail and small business lending to domestic customers, social housing activities as well as real estate leasing, achieved a net profit of EUR 80 million in the first half 2016, down 3.4% compared to the same period last year, while also delivering a return on equity of 18.8% and a cost-income ratio of 55.3%. Stable core revenues and lower operating expenses offset the increased regulatory charges stemming from the deposit guarantee scheme, which represented full-year expenses even though they were booked in the first half. Accounting for regulatory charges on a pro-rata basis throughout the year would have resulted in a net profit of EUR 86.3 million, or an 8.4% increase compared to the same period last year, with a return on equity of 20.3%. New loan originations were EUR 560 million, while moderately increasing margins and maintaining the disciplined underwriting standards. Overall risk metrics reflect the high credit quality of the retail business, with a risk cost ratio of 0.38% and an NPL ratio of 2.2%. The easygroup segment, comprising Austria's leading direct bank easybank, our auto and mobile leasing platforms as well as our international residential mortgage portfolio, showed strong results by more than doubling net profit to EUR 45 million compared to the first half 2015, with a return on equity of 27.3% and a cost-income ratio of 24.2%. The underlying performance reflects the acquisition of the Volksbank Leasing business as well as the purchase of a high-quality performing residential mortgage portfolio during the fourth quarter 2015. During the first half 2016, the segment recorded new business originations of EUR 240 million, thereof EUR 187 million in consumer auto leasing (up 15% from the first half 2015). In July, we entered into a partnership with "Autogott", Austria's leading online car sales channel, which will increase easybank's brand awareness and further grow the segment's current customer base of approximately 380,000 clients in Austria. Overall, easygroup is well positioned to further build out its asset origination capabilities in auto leasing and consumer loans both domestically and internationally. The DACH Corporates & Public Sector segment includes corporate and public lending activities and other fee driven financial services for mainly Austrian customers and select client relationships in Germany and Switzerland. The segment contributed EUR 36 million to the Bank's net profit in the first half 2016, a decrease of 19% compared to the same period last year, but still delivered a return on equity of 13.5%. Core revenues were down 16%, driven by early redemptions, margin pressures and low new business volume. This was offset by the improvement in operating expenses (down 8%) and positive risks costs. In the first half 2016, the business segment recorded EUR 170 million of new lending in addition to regular renewals. The overall quality of the portfolio remained stable with an NPL ratio of 1.0%, being a reflection of prior years' de-risking activities. The International Business segment comprises international corporate, real estate and portfolio lending outside the DACH region primarily in Western Europe and the United States. In the first half 2016, the Bank continued to focus on loan origination opportunities in select developed Western countries, generating new business volume of EUR 1.0 billion. The segment contributed EUR 56 million to the Bank's net profit in the first half 2016, up 1.6% from the same period last year, and delivered a return on equity of 19.5% despite higher than anticipated early redemptions. Operating income was down 2.7%, offset by positive risk costs. Similar to the DACH business, the international business is characterized by high credit quality assets, with no nonperforming loans. Treasury Services & Markets manages the Bank's investment portfolio of financial securities in the amount of EUR 5.1 billion as well as the liquidity reserve of EUR 1.2 billion at the end of June 2016. The investment strategy continues to focus on investment grade securities primarily representing secured and unsecured bonds of financial institutions in Western Europe and the United States as well as select sovereign bond exposures in order to maintain a solid diversification. The investment portfolio's average maturity was 3.9 years, comprising 98% investment grade-rated securities, of which 78% were rated in the single "A" category or higher. The segment contributed EUR 20.9 million to the Bank's net profit in the first half 2016, down 1.4% versus the first half 2015, and delivered a return on equity of 11.9%. Overall core revenues were flat, with lower gains and losses from financial instruments offset by lower operating expenses. About BAWAG P.S.K. With more than 1.7 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 and receivables 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 and insurance services. Our Austrian business is complemented by international activities focused on retail, corporate, commercial real estate and portfolio lending in Western economies. 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: email@example.com This text can also be downloaded from our website: https://www.bawagpsk.com For charts please refer to the attached PDF-press release. Attachments with Announcement: ---------------------------------------------- http://resources.euroadhoc.com/us/28URKhsj Further inquiry note: Pressestelle T: 43 (0)59905 - 31210 F: 43 (0)59905 - 22007 e-mail: firstname.lastname@example.org end of announcement euro adhoc -------------------------------------------------------------------------------- Attachments with Announcement: ---------------------------------------------- http://resources.euroadhoc.com/us/28URKhsj 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: email@example.com WWW: www.bawagpsk.com sector: Banking ISIN: - indexes: stockmarkets: stock market: Luxembourg Stock Exchange, Euronext Amsterdam, Frankfurt, Wien, SIX Swiss Exchange language: English