Corporate & Investment Banking 2010/11:
All signs pointing to growth
- Corporate banking is an important pillar of business for Bank Austria, generating EUR 899 million or one fourth of the total operating result
- With a market share of as much as 89 per cent, Bank Austria remains the leading commercial bank in Austria
- Commercial real estate financing, municipal sector business and trade financing developed particularly well in 2010
- Ample equity and a solid level of primary capital provide an ideal base for expansion in 2011
The year 2010 was without a doubt a period of recovery for Austria's businesses. After contracting by 3.9 per cent in 2009, Austrian GDP is projected to have grown by 2 per cent in 2010. Nearly 90 per cent of this upswing can be attributed to the export economy. Gross investment still fell slightly over the year, however. This trend was also reflected in Bank Austria's corporate banking business during 2010, where the lending volume remained stable in annual comparison at roughly EUR 46 billion. Commercial real estate financing, municipal sector business and trade financing developed particularly well in 2010.
"We are in our third year since the bankruptcy of Lehman Brothers, which marked the start of the largest global financial market and economic crisis since 1929. Despite the fact that the causes of this crisis were primarily to be found in the USA, its effects were felt in virtually all of the world's economies," said Helmut Bernkopf, Bank Austria's director of Corporate & Investment Banking. He continued: "Since then, we have made great strides in Europe and Austria towards reaching a state of ‘new normalcy'. No entrepreneur or manager today can simply hope for the next economic upswing. Our economic and financial system is not the same as it was before 2008."
Corporate financing stable compared with 2009
Bank Austria's corporate banking business again made an important contribution to its overall result for the year. The Corporate & Investment Banking (CIB) division accounted for EUR 1,334 million or 19 per cent of the bank's operating income and EUR 899 million or 24 per cent of its operating result. Earnings were stable compared with 2009, while the cost-income ratio of only 32.6 per cent is the lowest of any division at Bank Austria.
"We restructured the Corporate & Investment Banking division last year and transferred companies with annual sales of up to EUR 50 million to the new division for private customers and small and medium sized enterprises," said Bernkopf. He added: "This makes me all the more happy that the volume of our corporate financing business remained the same as in 2009. We now have closer ties with our customers, Austria's leading companies." At around EUR 46 billion, receivables in corporate banking make up nearly 70 per cent of all receivables from customers in Austria. Bank Austria's credit risk costs fell by 19 per cent to EUR 1,839 million in 2010, and even by nearly 50 per cent to EUR 169 million in the Corporate & Investment Banking division.
The sale of CAIB to HypoVereinsbank was finalised as planned on 1 June 2010. Before this transaction was completed, customer investment banking, Bank Austria's funding activities and the local capital market business were all reintegrated into Bank Austria. Customer investment banking and the expertise for large-volume financing were combined in the new Financing & Advisory service unit.
Highlights in 2010
Commercial real estate financing, municipal sector business and trade financing were particularly profitable in 2010. The Real Estate unit more than doubled its volume of extended loans from EUR 1.1 billion to EUR 2.3 billion. With financing agreements worth a total of EUR 600 million, the share of this loan volume in CEE even increased by more than 300 per cent. The most important projects in the Real Estate unit included the construction of DC Tower in Danube City in Vienna, which represented an investment volume of EUR 300 million, and Serdika Center in Sofia, of which Bank Austria financed EUR 70 million.
Public sector business also developed very well in 2010. As the market leader in public sector financial services, Bank Austria provided municipal governments capital for infrastructure and community services investments at highly competitive terms under its "GemeindeMilliarde" programme.
In its trade financing business, Bank Austria profited handsomely from the robust demand for OeKB-guaranteed export loans and further expanded its market leadership. Half of all OeKB-guaranteed export loans are currently processed through Bank Austria. "The wide range of import markets that we finance is one of our unmatched strengths, and makes us the preferred partner for many companies. Our unique network enables us to support them in their expansion onto growth markets from Central and Eastern Europe to Asia and Africa," said Helmut Bernkopf, Bank Austria's director of Corporate & Investment Banking. As a result of the global financial crisis, structured factoring has also become much more important than it was in the past, and the Structured Trade & Commodity Finance unit doubled its business volume to EUR 1 billion.
Loans totalling EUR 1.5 billion were granted by Bank Austria in 2010 under its AufschwungKredit "upswing loan" programme. In this way, Bank Austria helped around 150 medium-sized enterprises to come out of the crisis and improve their competitive positions. In addition to attractive fees and a low interest rate, the "upswing loan" also comes with comprehensive advice in matters of liquidity and government funding options. The public loan guarantees under the Corporate Liquidity Strengthening Act (ULSG) also enjoyed brisk demand. Bank Austria arranged nearly EUR 314 million or nearly 24 per cent of the total guarantees, and handled a loan volume of EUR 518 million or 23 per cent of the total financing. This made it the most active broker among all of Austria's banks.
After a phase of consolidation, 2011 is expected to bring sustainable growth in corporate banking for Bank Austria. In this, the goals of the Corporate & Investment Banking division include further expanding its position as the preferred partner for corporate capital market measures. "We want to act as more than a simple capital source, we also want to offer expert advice and know-how for the benefit of our customers. We will also continue to focus on cross-border business, where we are already the market leader in individual segments thanks to our position as a European bank group with an unparalleled network," concluded Bernkopf.
Enquiries: Bank Austria Press Office Austria
Julia Wegenstein, tel. +43 (0) 50505 - 52854
back to the summary