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14.11.2006

Results for the first nine months of 2006:
Bank Austria Creditanstalt on track to achieve record results in 2006

  • Net income after taxes and minority interests up by 86 per cent to EUR 1.5 billion
  • Adjusted for one-off effects, profits rose by 37 per cent
  • CEE business is driving BA-CA's growth

Bank Austria Creditanstalt (BA-CA) significantly improved its results in the first nine months of 2006 compared with the same period of the previous year. Net income after taxes and minority interests rose by 86 per cent to EUR 1.5 billion (first nine months of 2005:
EUR 824 million); contributions to the increase also came from one-off effects such as the capital gain on the sale of Splitska banka. Adjusted for one-off effects, net income after taxes and minority interests rose by 37 per cent to EUR 912 million (adjusted figure 2005: EUR 665 million). The adjusted return on equity (ROE) after taxes improved to 17.5 per cent (2005: 13.2 per cent). The cost/income ratio declined to 57.5 per cent (2005: 61.1 per cent).

BA-CA's operating performance further improved significantly in 2006: gross operating profit achieved by the Central Eastern Europe (CEE) business segment increased by 27.9 per cent to EUR 679 million (2005: EUR 531 million). Gross operating profit from Austrian customer business rose by 17.3 per cent to EUR 652 million (2005: EUR 556 million).

Results for the third quarter of 2006 show the following picture: adjusted for one-off effects such as capital gains or a change in risk standards, BA-CA's net income after taxes and minority interests for the third quarter of 2006 amounted to EUR 281 million. The adjusted figure for the third quarter of 2005 was EUR 212 million.

Erich Hampel, Chairman of BA-CA's Managing Board: "We are on track to exceed the record results achieved in the previous year – even without one-off effects. Especially business in CEE is developing very favourably. Integration in UniCredit Group is making BA-CA significantly stronger."
 
Items in the income statement
Net interest income generated by BA-CA in the first nine months of 2006 was EUR 2,052 million, up by 6.6 per cent on the same period of the previous year (2005: EUR 1,925 million). The net charge for losses on loans and advances increased by 24.2 per cent to EUR 392 million (2005: EUR 316 million). The increase was mainly due to the application of stricter risk standards in BA-CA's Retail Division. Net interest income after losses on loans and advances rose by 3.1 per cent to EUR 1,660 million (2005: EUR 1,609 million). 

Net fee and commission income and the net trading result developed very favourably: net fee and commission income reached EUR 1,283 million, an increase of 22.5 per cent over the previous year (2005: EUR 1,047 million). The net trading result rose by 51.3 per cent to EUR 282 million (2005: EUR 186 million). General administrative expenses increased by 8.7 per cent to EUR 2,083 million (2005: EUR 1,917 million) as a result of exchange rate effects, growth in CEE and changes in the group of consolidated companies.

Operating profit was EUR 1,147 million, an increase of 26.8 per cent over the previous year's figure of EUR 905 million. Net income from investments amounted to EUR 719 million (2005: EUR 269 million); this includes the capital gain of EUR 684 million on the sale of Splitska banka, a Croatian bank which was sold to comply with merger control requirements.

Net income before taxes reached EUR 1,854 million, an increase of 66.9 per cent over the previous year (2005: EUR 1,111 million). Net income after taxes and minority interests was EUR 1,533 million, up by 86 per cent on the previous year (2005: EUR 824 million).

These results have the following effects on key financial data:

  • The return on equity (ROE) after taxes rose to 28 per cent (2005: 16.4 per cent). Adjusted for one-off effects, the ROE after taxes was 17.5 per cent.
  • The cost/income ratio improved from 61.1 per cent to 57.5 per cent.
  • Earnings per share increased from EUR 5.61 to EUR 10.43. Adjusted for one-off effects, earnings per share were EUR 6.20.
  • The Tier 1 capital ratio was 7.7 per cent – after 8.3 per cent at year-end 2005.

Business segment results 1)
In the third quarter of 2006, BA-CA adjusted its business segments to the UniCredit Group structure. BA-CA divides its results into five business segments: Central Eastern Europe (CEE), Retail Division, Private Banking & Asset Management, Corporate Division and Markets & Investment Banking. The bank also shows results for its Corporate Center.

These are the main changes: within Austrian customer business, the newly created Private Banking & Asset Management segment covers business with high net worth individuals served by Schoellerbank and BANKPRIVAT. Business with large corporates and institutional real estate customers is now included in the Corporate business segment. Corporate customers which generate a turnover of more than EUR three million or make strong use of international services and corporate finance products are also included in the Corporate business segment. Small business customers with a turnover of less than EUR three million are covered by the Retail business segment.

In addition to Austria, the region of Central and Eastern Europe (CEE) is the core market of BA-CA. Within UniCredit Group, Bank Austria Creditanstalt is responsible for activities in these markets. UniCredit Group operates by far the largest banking network in the CEE region. Some 64,500 employees in 17 countries serve 24 million customers in 3,000 branches.

Net profit after taxes in the CEE business segment was EUR 1,137 million. Adjusted for the capital gain on the sale of Splitska banka, net profit was EUR 460 million (2005 adjusted: EUR 346 million). The ROE after tax was 41.1 per cent (2005: 19.1 per cent). The cost/income ratio declined from 52.7 per cent to 51.6 per cent.

Bank Austria Creditanstalt further enhanced its operating performance in Austrian customer business. Operating profit rose by 17.3 per cent to EUR 652 million (2005: EUR 556 million).

The improvement is also reflected in the Retail business segment: operating profit increased by 39.8 per cent, from EUR 108 million to EUR 151 million. However, the bottom line shows a net loss after tax of EUR 71 million (2005: a net loss of EUR 76 million). The cost/income ratio was 84.2 per cent (2005: 88.5 per cent).

This result is due to three factors: the application of higher credit risk standards mentioned earlier; the difficulties currently experienced in the area of small business customers, which are now included in the Retail Division; and the transfer of business with high net worth individuals to the new Private Banking & Asset Management Division. For 2007, BA-CA expects to achieve a significant improvement in results in the Retail business segment.

The new Private Banking & Asset Management business segment, which also includes the results of BA-CA's private banking units Schoellerbank and BANKPRIVAT, achieved a net profit after tax of EUR 39 million, a figure that is 5 per cent higher than in the previous year (2005: EUR 37 million). The return on equity after tax reached 32.8 per cent (2005: 33.4 per cent). The cost/income ratio was 58.1 per cent (2005: 63.5 per cent).

Net profit after tax generated by the Corporate business segment was EUR 315 million, down by five per cent on the previous year (2005 adjusted: EUR 258 million). The return on equity after tax was 17.1 per cent (2005: 19.3 per cent). The cost/income ratio was 41.9 per cent (2005: 43.2 per cent).

The Markets & Investment Banking business segment generated a net profit after tax of EUR 170 million, which was 14 per cent higher than in the previous year (2005: EUR 149 million). The return on equity after tax was 73.5 per cent (2005: 55.4 per cent). The cost/income ratio was 36.4 per cent (2005: 28.9 per cent).

BA-CA's Corporate Center recorded a net profit after tax of EUR 49 million (2005: a net loss of EUR 8 million).
 
Balance sheet

As at 30 September 2006, Bank Austria Creditanstalt's total assets amounted to EUR 157 billion (31 December 2005: EUR 159 billion). The decrease of 1.5 per cent compared with the year-end 2005 figure was mainly due to the sale of Splitska banka. In 2007, the group of consolidated companies of BA-CA will continue to change significantly as BA-CA will take over UniCredit's CEE units in Bulgaria, Croatia, the Czech Republic,  Romania, Slovakia and Turkey as well as HypoVereinsbank's units in Russia and in the three Baltic countries. The closing of the sale of shares in the Polish Bank BPH to UniCredit took place on 3 November 2006. In the balance sheet at 30 September 2006, Bank BPH is included in the items "Non-current assets classified as held for sale" and "Liabilities directly associated with non-current assets classified as held for sale". The declines in the various items of the balance sheet resulted from this form of presentation.

On the assets side of the balance sheet, trading assets declined by 7.7 per cent to EUR 16.3 billion (2005: EUR 17.7 billion). Loans and advances to, and placements with, banks amounted to EUR 24.2 billion, down by 8.2 per cent from the year-end 2005 figure (2005: EUR 26.4 billion). Loans and advances to customers declined by 7.1 per cent to EUR 80.3 billion (2005: EUR 86.4 billion). Investments totalled EUR 16.4 billion, a decrease of 9.9 per cent (2005: EUR 18.2 billion).

On the liabilities side, amounts owed to banks fell by 11.3 per cent to EUR 39.3 billion (2005: EUR 44.3 billion). Amounts owed to customers were EUR 54.3 billion, 12.2 per cent lower than at the end of the previous year (2005: EUR 61.9 billion). Liabilities evidenced by certificates declined by 3.2 per cent to EUR 22 billion (2005: EUR 22.7 billion). Shareholders' equity (including minority interests) increased by 14.6 per cent to EUR 8.6 billion (2005: EUR 7.5 billion). Thus BA-CA has by far the strongest capital base of any bank in Austria.

As at 30 September 2006, staff numbers in the BA-CA Group totalled 31,722, an increase of 436 over the previous year (30 September 2005: 31,286 employees).

1)  New income statement format for segment reporting. Figures are not directly comparable with published figures for the previous year. To facilitate a comparison, the comparative figures for 2005 used in the text and in the tables have been adjusted to the new format.

Enquiries: 
Bank Austria Creditanstalt Press Office
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 of Bank Austria Creditanstalt for the first nine months of 2006

  

1 Jan.-
30 Sept. 2006
in EUR m

1 Jan.-
30 Sept. 2005
in EUR m

Change
in EUR m

Change
in %

Net interest income

2,052

1,925

127

6.6

Losses on loans and advances

-392

-316

-77

24.2

Net interest income after losses
on loans and advances

1,660

1,609

51

3.1

Net fee and commission income

1,283

1,047

236

22.5

Net trading result

282

186

96

51,3

General administrative expenses

-2,083

-1,917

-167

8.7

Balance of other operating
income and expenses

5

-22

27

 

Operating profit

1,147

905

242

26.8

Net income from investments

719

269

450

> 100

Goodwill impairment

-8

0

-8

> -100

Allocation to provisions for restructuring costs

0

-60

60

 

Balance of other income and expenses

-4

-3

-1

23.0

Net income before taxes

1,854

1,111

744

66.9

Taxes on income

-215

-208

-7

3.6

Net income

1,639

903

736

81.5

Minority interests

-107

-79

-28

35.1

Net income after taxes and minority interests

1,533

824

708

86.0


Income statement of Bank Austria Creditanstalt by quarter

  

Q3 2006
in EUR m

Q2 2006
in EUR m

Q1 2006
in EUR m

Q4 2005
in EUR m

Q3 2005
in EUR m

Net interest income

719

690

643

686

643

Losses on loans and advances

-198

-84

-110

-179

-108

Net interest income after losses on loans and advances

522

606

533

507

536

Net fee and commission income

412

455

416

410

381

Net trading result

43

87

152

51

68

General administrative expenses

-692

-699

-693

-705

-646

Balance of other operating income and expenses

8

0

-3

-27

-7

Operating profit

293

449

405

237

332

Net income from investments

14

688

17

13

229

Goodwill impairment

0

-8

0

-4

0

Allocation to provisions for restructuring costs

0

0

0

-48

-60

Balance of other income and expenses

-2

-1

-1

-8

-1

Net income before taxes

305

1,128

421

190

500

Taxes on income

-51

-84

-80

-18

-92

Net income

254

1,044

341

172

409

Minority interests

-37

-36

-34

-32

-38

Net income after taxes and minority interests

217

1,008

308

140

371

 Business segments

Balance sheet of Bank Austria Creditanstalt at 30 September 2006

Assets
 

30 Sept. 2006
in EUR m

31 Dec. 2005
in EUR m

Change
in EUR m

Change
in %

Cash and balances with central banks

3,484

3,855

-371

-9.6

Trading assets

16,299

17,665

-1,366

-7.7

Loans and advances to, and placements with, banks

24,225

26,384

-2,160

-8.2

Loans and advances to customers

80,267

86,404

-6,137

-7.1

- Loan loss provisions

-2,741

-3,232

491

-15.2

Investments

16,370

18,172

-1,802

-9.9

Property and equipment

816

1.097

-281

-25.6

Intangible assets

1,034

1,358

-324

-23.8

Other assets

2,819

3,956

-1,137

-28.7

Non-current assets classified
as held for sale

13,972

3,221

10,751

333.8

Total assets

156,544

158,879

-2,336

-1.5

Liabilities and shareholders' equity

30 Sept. 2006
in EUR m

31 Dec. 2005
in EUR m

Change
in EUR m

Change
in %

Amounts owed to banks

39,279

44,279

-5,000

-11.3

Amounts owed to customers

54,315

61,863

-7,548

-12.2

Liabilities evidenced by certificates

21,977

22,703

-726

-3.2

Trading liabilities

6,242

6,807

-565

-8.3

Provisions

4,729

4,753

-24

-0.5

Other liabilities

2,704

3,671

-966

-26.3

Subordinated capital

5,175

5,400

-224

-4.2

Liabilities directly associated with non-current assets classified as held for sale

13,504

1,884

11,620

616.9

Shareholders' equity

8,619

7,521

1,098

14.6

   of which: minority interests

684

650

34

5.2

Total liabilities and
shareholders' equity

156,544

158,879

-2,336

-1.5