Results for the first six months of 2007:
Bank Austria Creditanstalt as part of UniCredit Group on growth path
- Consolidated profit up by 76 per cent to EUR 1.2 billion
- Business with Austrian retail customers confirms turnaround
- CEE Division substantially strengthened and growing strongly
Bank Austria Creditanstalt (BA-CA) continued to increase its earnings power substantially in the first six months of 2007. Contributions to this strong performance came from all of the bank's Divisions. Austrian customer business improved significantly and the CEE Division, comprising the banks in Central and Eastern Europe, grew very strongly. The group of consolidated companies of BA-CA has significantly widened as a result of the bundling of all CEE banks (except Poland's Markets) in UniCredit Group's CEE Division, which is managed out of Vienna. To make the BA-CA results for the first half of 2007 comparable with the same period of the previous year, we have recalculated the figures for the first half of 2006 on a pro-forma basis reflecting the new structure of BA-CA.
In the first half of 2007, BA-CA's net profit after tax and minorities increased by 76.1 per cent to EUR 1,208 million (first six months of 2006: pro forma EUR 686 million). Return on equity after tax was 18.7 per cent. The cost/income ratio, at 48.9 per cent, declined to a level below the 50 per cent mark for the first time (first six months of 2006: pro forma 57.7 per cent).
BA-CA's CEO Erich Hampel: "I am very satisfied with the results. They show that Bank Austria Creditanstalt is benefiting strongly from cooperation within UniCredit Group. Our Group's business model combines a focus on customer segments, global product expertise and back-office competence centres with a strong local presence and customer business know-how. As part of a strong European banking group, BA-CA has a major competitive advantage which makes us stand out from our Austrian competitors."
Items in the income statement1
BA-CA's net interest income in the first six months of 2007 rose by 16.2 per cent to EUR 1,838 million (2006: EUR 1,582 million). Net fee and commission income also developed favourably, rising by 17.6 per cent to EUR 1,054 million compared with the same period of the previous year (2006: EUR 897 million). Net trading income was EUR 224 million, 28.7 per cent lower than the very high level of the previous year (2006: EUR 314 million).
Operating expenses were reduced by 3.7 per cent to EUR 1,584 million (2006: EUR 1,645 million). BA-CA's operating profit thus amounted to EUR 1,657 million, an increase of 37.5 per cent over 2006 (2006: EUR 1,205 million). Net writedowns of loans and provisions for guarantees and commitments totalled EUR 208 million, matching the previous year's level (2006: EUR 205 million) despite the further expansion of the CEE network.
Profit before tax was EUR 1,528 million, up by 53.2 per cent on the previous year (2006: EUR 997 million). Consolidated profit after tax and minority interests increased by 76.1 per cent to EUR 1,208 million in the first half of 2007 (2006: EUR 686 million).
The following key financial data have been calculated on the basis of these results:
- Return on equity before tax was 22.6 per cent.
- Return on equity after tax was 18.7 per cent.
- The cost/income ratio improved to 48.9 per cent (pro-forma figure for 2006: 57.7 per cent).
- The risk/earnings ratio improved from 13 per cent to 11.3 per cent.
- The Tier 1 capital ratio is 10.4 per cent, the total capital ratio is 13.5 per cent.
Results of the Divisions2
BA-CA reports its results in five Divisions: Retail, Private Banking & Asset Management, Corporates, Markets & Investment Banking, and Central Eastern Europe (CEE). The bank also shows results for its Corporate Center.
In the first half of 2007, the Retail Division achieved a profit before tax of EUR 72 million (2006: a loss before tax of EUR 7 million), thus continuing the favourable trend recorded in this segment. This confirms the turnaround achieved on the basis of a two-year programme with which the bank significantly expanded its customer relationship management activities and, for example, focused on guarantee products in its securities business. The new focus on small businesses also contributed to the improvement in results. Return on equity before tax reached 14 per cent, the cost/income ratio was 73.5 per cent (2006: 83.9 per cent).
The Private Banking & Asset Management Division generated a profit before tax of EUR 44 million in the first half of 2007, improving its performance by 27.3 per cent compared with the previous year (2006: EUR 34 million). Return on equity before tax was 43.6 per cent (2006: EUR 44.2 per cent), the cost/income ratio 52.5 per cent (2006: 58.6 per cent).
The Corporates Division increased its profit before tax by 9.1 per cent to EUR 323 million (2006: EUR 296 million). Return on equity before tax reached 27.7 per cent (2006: 24.6 per cent). The cost/income ratio was 37.0 per cent (2006: 40.5 per cent). The Corporates Division – like Markets & Investment Banking – is benefiting strongly from cooperation in UniCredit Group, especially but not only in cross-border business. In 2006, CA IB Corporate Finance Beratungs GmbH was part of the Corporates Division. In 2007, the company was transferred to the Markets & Investment Banking Division.
The profit before tax generated by the Markets & Investment Banking Division amounted to EUR 187 million, an increase of 21.1 per cent (2006: EUR 155 million). Return on equity before tax amounted to 87.5 per cent (2006: 100.1 per cent). The cost/income ratio was 37.5 per cent (2006: 33.7 per cent).
The CEE Division's profit before tax grew by 77.6 per cent to EUR 679 million (2006: EUR 383 million), one of the reasons being the change in perimeter. Return on equity before tax reached 20.1 per cent (2006: 19.4 per cent). The cost/income ratio was 50.2 per cent (2006: 51.7 per cent).
Bundling all CEE banks of UniCredit Group (except Poland's Markets) in the CEE Division has considerably expanded the perimeter of BA-CA's activities in the region. Before its integration in UniCredit Group, BA-CA was responsible for a network of banking subsidiaries in 10 countries (including Poland) with business volume totalling EUR 40 billion. Now the network comprises banking subsidiaries in 15 countries with total assets of about EUR 80 billion. This is by far the largest banking network in Central and Eastern Europe. Following the completion of acquisitions in Kazakhstan and Ukraine, BA-CA's perimeter will encompass 19 countries, with total assets amounting to EUR 90 billion.
Additionally, BA-CA has recently finalised the acquisitions of the entire institutional business of the Russian broker ATON and the remaining share capital of International Moscow Bank. The total purchase price for ATON is US$ 424 million (about EUR 307 million at the current exchange rate). Following this acquisition, UniCredit Group now ranks among the top 5 investment banks in Russia and holds important positions in equities and fixed-income business as well as corporate finance advisory services. In addition, BA-CA has finalised the acquisition of 9.97 per cent of the total share capital of International Moscow Bank (IMB) from the European Bank for Reconstruction and Development (EBRD) for a price of about US$ 229 million (about EUR 166 million at the current exchange rate). Following completion of this transaction, BA-CA now holds 100 per cent of IMB's share capital.
In addition to these two acquisitions in Russia and the recent purchases of shareholdings in banks in Kazakhstan and Ukraine, the CEE Division continues to pursue organic growth. The Division plans to open about 800 new branches in the region, with a strong focus on Romania, Russia and Turkey. BA-CA's CEO Erich Hampel, who is a member of the Management Committee of UniCredit Group with responsibility for the CEE Division: "The region offers enormous growth potential. We are determined to use these opportunities."
The Corporate Center of BA-CA recorded a profit before tax of EUR 222 million (2006: EUR 689 million).
BA-CA's total assets grew by 31.6 per cent to EUR 203.0 billion compared with year-end 2006 (31 December 2006: EUR 154.3 billion). On a pro-forma basis, the increase was 6.1 per cent (2006: EUR 191.4 billion).
On the assets side, financial assets held for trading increased by 3.6 per cent to EUR 17.3 billion (2006: EUR 16.7 billion). Loans and receivables with banks totalled EUR 46.6 billion, up by 43.4 per cent (2006: EUR 32.5 billion). Loans and receivables with customers increased by 30.6 per cent to EUR 104.6 billion (2006: EUR 80.1 billion).
On the liabilities side, deposits from banks rose by 25.4 per cent to EUR 60.6 billion (2006: EUR 48.3 billion). Deposits from customers increased by 54.1 per cent to EUR 84.7 billion (2006: EUR 55.0 billion). Debt certificates including bonds rose by 1.9 per cent to EUR 25.8 billion (2006: EUR 25.3 billion). Equity (including minority interests) increased by 41.1 per cent to EUR 14.3 billion (2006: EUR 10.1 billion).
As at 30 June 2007, BA-CA had 49,192 employees, 28,105 more than in the previous year (31 December 2006: 21,087 employees). In the same period, the number of branches increased by 1,214 to 2,284 (2006: 1,070). This increase was due to the transfer to BA-CA of banking subsidiaries of UniCredit and HVB in CEE.
photographs of the Press Conference
1 The income statement figures for the first six months of 2006 are pro-forma figures.
2 Based on data availability, the business segment data are actual figures.
3 Based on data availability, the balance sheet figures are actual figures.
Enquiries: Bank Austria Creditanstalt Media Relations
Ildiko Füredi-Kolarik, tel. +43 50505 56102