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04.11.2004

Bank Austria Creditanstalt's results for the first nine months of 2004: Profits boosted by strong performance of CEE operations

  • BA-CA improves net income before taxes by 38 per cent to EUR 632 million
  • Net income after taxes increases by 39 per cent to EUR 434 million
  • Q3 the best quarter of the year
  • BA-CA raises the target for net income before taxes for 2004 as a whole from EUR 750 million to EUR 800 million
  • CEE operations make by far the largest contribution to overall profits of BA-CA
  • Expansion in CEE continues: BA-CA acquires Hebros Bank in Bulgaria

In the first nine months of 2004, Bank Austria Creditanstalt (BA-CA) significantly improved its results compared with the same period of the previous year. Net income after taxes and minority interests rose by 39 per cent to EUR 434 million (Q1 to Q3 of 2003: EUR 312 million). Business with private customers in Austria and especially business in Central and Eastern Europe (CEE) contributed to the improved results. The CEE business segment more than doubled its results compared with the same period of the previous year; CEE accounted for 40 per cent of the bank's overall profits and thus made by far the largest contribution to BA-CA's results.   

BA-CA's CEO Erich Hampel: "The result is an important step forward. We particularly benefit from our strong commitment in Central and Eastern Europe. Despite this result we should, however, not forget that there is still some work ahead of us in Austria. Our measures are beginning to show an impact, but we still have a long way to go to reach our goal."

The third quarter was the best quarter so far for BA-CA in the current financial year: net income after taxes and minority interests reached EUR 151 million, exceeding the profit figures for the preceding quarters of 2004 (first quarter: EUR 133 million, second quarter: EUR 150 million). BA-CA responds to the good result for the quarter by raising its target for net income before taxes for fiscal 2004 from EUR 750 million to EUR 800 million.

BA-CA in CEE: expansion continues
On Wednesday evening BA-CA signed the agreement on the purchase of the Bulgarian Hebros Bank. Says BA-CA's CEO Hampel: "We are pushing ahead with our expansion in the CEE region and this gives us strong growth leverage. We just finalized our latest acquisition: by buying Hebros Bank in Bulgaria, we clearly strengthen our position in the Bulgarian market.“

With total assets of EUR 291 million, 92 offices and 210,000 customers, Hebros Bank is number 10 in the Bulgarian banking market. Together with HVB Bank Biochim, BA-CA operates in Bulgaria as the fourth-largest local bank. With the acquisition, BA-CA strengthens its presence in Bulgaria and achieves its target of a 10 per cent market share.

BA-CA operates in 11 countries of Central and Eastern Europe. With a network of approximately 960 offices, the bank serves 4.4 million customers. Moreover, through HVB Group, customers of Bank Austria Creditanstalt have access to markets in Russia, the Ukraine, the Baltic countries and all international financial centers.

Items in the income statement
In the first nine months of 2004, BA-CA's net interest income rose to EUR 1,789 million, an increase of 11.1 per cent over the same period of the previous year (2003: EUR 1,610 million). The net charge for losses on loans and advances was further reduced to EUR 323 million, a decrease by 9.3 per cent over the figure for the same period of the previous year (2003: EUR 356 million). Net interest income after the net charge for losses on loans and advances rose by 16.9 per cent to EUR 1,466 million (2003: EUR 1,254 million). 

Net fee and commission income also made good progress, rising by 11.1 per cent to EUR 932 million (2003: EUR 839 million). The net trading result was EUR 138 million, down by 36.7 per cent from the exceptionally high figure for the first nine months of the previous year (2003: EUR 217 million). General administrative expenses remained practically unchanged, declining by 0.2 per cent to EUR 1,835 million (2003: EUR 1,838 million).

The operating profit thus reached EUR 685 million. BA-CA thus achieved an increase of 42.3 per cent over the previous year's figure of EUR 482 million. Net income from investments amounted to EUR 1 million (2003: EUR 26 million). Amortization of goodwill was EUR 54 million (2003: EUR 48 million).

BA-CA thus generated a net income before taxes in the amount of EUR 632 million, which is up by 38.4 per cent on the previous year's level (2003: EUR 457 million). Minority interests rose to EUR 47 million (2003: EUR 43 million). Net income after taxes and minority interests was EUR 434 million, an increase of 39 per cent over the previous year (2003: EUR 312 million). Adjusted for amortization of goodwill, net income after taxes and minority interests rose by 35.3 per cent to EUR 487 million (2003: EUR 360 million).

These results had the following effects on key financial data:

  • The return on equity before taxes (ROE) rose to 13.8 per cent (2003: 12.5 per cent) although shareholders' equity increased significantly from EUR 5.8 billion to EUR 6.4 billion.
  • The return on equity after taxes rose to 9.5 per cent (2003: 8.5 per cent).
  • The cash ROE – i.e. the return on equity adjusted for amortization of goodwill – was
    12.7 per cent (2003: 12.2 per cent).
  • The cost/income ratio improved from 68.7 per cent to 64.5 per cent.
  • Earnings per share increased from EUR 3.35 to EUR 3.93.
  • The risk/earnings ratio (net charge for losses on loans and advances as a percentage of net interest income) improved considerably, from 22.1 per cent to 18.1 per cent.
  • The Tier 1 capital ratio is 7.5 per cent, after 7.7 per cent as at 30 September 2003.

Business segment results
BA-CA divides its results into five business segments: Central and Eastern Europe, Private Customers Austria, Corporate Customers Austria, International Markets, and Corporate Center.

Besides Austria, the region of Central and Eastern Europe (CEE) is BA-CA's core market. The bank intends to pursue its expansion in CEE and to further expand the leading banking network in this growth region. The acquisition of Hebros Bank is a further step in this direction.

Business in the CEE region developed excellently in the first nine months of 2004:
Bank Austria Creditanstalt's banking subsidiaries significantly improved their net income before taxes to EUR 342.1 million (2003: EUR 229.7 million), an increase of 49 per cent. Bank BPH, BA-CA's Polish banking subsidiary, showed a particularly strong performance, with net income before taxes rising by 68 per cent to EUR 160 million. Strong growth was also achieved by the subsidiaries in Hungary, with net income before taxes up by 58 per cent to EUR 59.7 million, and in Romania, where net income before taxes increased by 96.7 per cent to EUR 16.8 million. HVB Bank Biochim, the banking subsidiary in Bulgaria, improved its net income before taxes by 62.5 per cent to EUR 14.3 million.

After amortization of goodwill and after consolidation effects, net income before taxes in the CEE business segment amounted to EUR 254 million, compared with EUR 123 million in the previous year. This is an increase of 106.5 per cent. The ROE before taxes was 20.7 per cent (2003: 19.2 per cent). The cost/income ratio declined considerably, from 70.9 per cent in the previous year to 58.6 per cent.

The Private Customers Austria segment achieved a net income before taxes of EUR 130 million for the first nine months of 2004, which is an increase of 53 per cent over the previous year (2003: EUR 85 million). The return on equity before taxes amounted to 19.3 per cent (2003: 15.5 per cent). The cost/income ratio improved slightly, from 80.6 per cent to 79 per cent.

In the Corporate Customers Austria segment, net income before taxes amounted to EUR 174 million, down by 7.5 per cent from the previous year's figure (2003: EUR 188 million). The return on equity before taxes was 10.1 per cent (2003: 12.4 per cent), the cost/income ratio is 51.8 per cent (2003: 54.3 per cent).

The International Markets segment generated net income before taxes of EUR 91 million, an increase of 42 per cent over the previous year (2003: EUR 64 million). The return on equity before taxes reached 58.8 per cent (2003: 40.8 per cent). The cost/income ratio was 54.3 per cent (2003: 66.1 per cent).

The Corporate Center segment of BA-CA recorded a net loss before taxes of EUR 16 million (2003: a net loss of EUR 3 million).

Inclusion of results in the business segments of HVB Group
BA-CA's net income before taxes is included in HVB Group's business segment results in the following way: first, amortization of goodwill and calculated refinancing costs as well as other consolidation effects are deducted from the amount of EUR 632 million. The remaining amount of EUR 499 million is apportioned to HVB Group's business segments: EUR 445 million to the Austria and CEE segment, EUR 77 million to Corporates & Markets, and minus EUR 23 million to Other Items.

Balance sheet
As at 30 September 2004, BA-CA's balance-sheet total amounted to EUR 139.9 billion, an increase of 2.1 per cent over the year-end 2003 figure (31 December 2003: EUR 137 billion).  

On the assets side of the balance sheet, loans and advances to, and placements with, banks were reduced by 7.2 per cent to EUR 23.3 billion compared with the level at the end of the previous year (2003: EUR 25.1 billion). Trading assets declined by 7.5 per cent to EUR 14.9 billion. Loans and advances to customers rose by 4.2 per cent to EUR 79.2 billion (2003: EUR 76.0 billion). Investments increased by 7 per cent to EUR 17 billion (2003: EUR 15.9 billion).

On the liabilities side, amounts owed to banks declined slightly, by 1.8 per cent to EUR 38.4 billion (2003: EUR 39.1 billion). Amounts owed to customers rose by 4.1 per cent to EUR 56 billion (2003: EUR 53.8 billion). Liabilities evidenced by certificates increased by 11.5 per cent to EUR 19.4 billion (2003: EUR 17.4 billion). Shareholders' equity rose by 9.6 per cent to EUR 6.4 billion (2003: EUR 5.8 billion).

Enquiries: 
Bank Austria Creditanstalt Press Relations
Martin Hehemann, tel.: +43 (0)5 05 05 57007; e-mail: martin.hehemann@ba-ca.com 
Peter N. Thier, tel.: +43 (0)5 05 05 52371; e-mail: peter.thier@ba-ca.com 

Income statement for the first nine months of 2004

 

 

 

 

 

 

 

 

1 Jan. –
30 Sept. 2004

1 Jan. –
30 Sept. 2003

Change
in EUR m

Change

in %

 

in EUR m

in EUR m

 

 

Net interest income

1,789

1,610

179

11.1

Losses on loans and advances

-323

-356

33

-9.3

Net interest income after losses on loans and advances


1,466


1,254


212


16.9

Net fee and commission income

932

839

93

11.1

Net trading result

138

217

-80

-36.7

General administrative expenses

-1,835

-1,838

3

-0.2

Balance of other operating income and expenses


-16


9


-25


>100

Operating profit

685

482

203

42.3

Net income from investments

1

26

-25

-97.1

Amortization of goodwill

-54

-48

-5

11.4

Balance of other income and expenses


0


-2


2


>100

Net income before taxes

632

457

175

38.4

Taxes on income

-151

-102

-49

48.2

Minority interests

-47

-43

-4

10.0

Net income after taxes and minority interests


434


312


122


39.0

 

Income statement by quarter

 

 

 

 

 

 

 

 

 

 

Q3 2004

Q2 2004

Q1 2004

Q4 2003

Q3 2003

 

in EUR m

in EUR m

in EUR m

in EUR m

in EUR m

Net interest income

608

640

541

566

551

Losses on loans and advances

-107

-107

-109

-111

-127

Net interest income after
losses on loans and advances


501


534


432


455


424

Net fee and commission income

317

319

297

296

296

Net trading result

52

29

57

3

31

General administrative expenses

-620

-612

-604

-641

-598

Balance of other operating income and expenses


-3


-12


0


8


14

Operating profit

246

257

181

121

166

Net income from investments

-10

-22

33

95

6

Amortization of goodwill

-18

-18

-18

-19

-16

Balance of other income and expenses


2


-1


0


-6


-1

Net income before taxes

220

216

196

191

156

Taxes on income

-53

-51

-47

-53

-36

Minority interests

-16

-15

-16

-8

-10

Net income after taxes and minority interests


151


150


133


130


110

 

Business segments Jan.-Sept. 2004 / Jan.-Sept. 2003 

 Chart

Balance sheet at 30 September 2004

 

 

 

 

 

 

 

Assets

30 Sept. 2004

31 Dec. 2003

Change

Change

 

in EUR m

in EUR m

in EUR m

in %

Cash and balances with
central banks


3,020


2,286


735


32.1

Trading assets

14,935

16,140

-1,205

-7.5

Loans and advances to, and placements with, banks


23,321


25,130


-1,809


-7.2

Loans and advances to customers

79,221

75,997

3,224

4.2

 - Loan loss provisions

-3,463

-3,490

27

-0.8

Investments

17,027

15,910

1,116

7.0

Property and equipment

1,135

1,120

15

1.4

Intangible assets

1,247

1,288

-40

-3.1

Other assets

3,504

2,674

830

31.0

Total assets

139,947

137,053

2,893

2.1

 

 

 

 

 

Liabilities and
shareholders' equity

30 Sept. 2004 in EUR m

31 Dec. 2003

in EUR m

Change

in EUR m

Change

in %

Amounts owed to banks

38,443

39,133

-690

-1.8

Amounts owed to customers

56,018

53,824

2,195

4.1

Liabilities evidenced by certificates

19,395

17,399

1,996

11.5

Trading liabilities

7,453

8,560

-1,107

-12.9

Provisions

3,579

3,422

157

4.6

Other liabilities

2,943

3,118

-176

-5.6

Subordinated capital

5,341

5,419

-78

-1.4

Minority interests

402

362

40

11.1

Shareholders' equity

6,371

5,815

556

9.6

Total liabilities and

shareholders' equity


139,947


137,053


2,893


2.1