17.05.2000

Bank Austria Group significantly improves results for 1st quarter 2000 compared to 1999's record year

  • Net income before taxes rises by 18.2 % to EUR 173 million as against one-quarter of the previous year's figure
  • Results are clearly above budget although they do not yet include amounts realised from capital gains from equity interests
  • Operating activities are making excellent progress
  • Interest earned up by 4 % to EUR 431 million
  • Cost/income ratio declines from 71.7% to 67.3 % (target for 2000: below 70 %)
  • ROE rises from 11.9 % to 12.6 % (target for 2000: over 12 %)

In the first quarter of 2000, the Bank Austria Group achieved a further improvement to the record 1999 results. Net income before taxes was 18.2 % higher than one-quarter of the total figure for the previous year. The results show clear structural improvements and the principal earnings components improved strongly: interest earned rose by 4 % compared with one-quarter of the 1999 figure and net fee and commission income was up by 7.1 %. The contribution from domestic retail business to the Group's net income rose to almost 30 %. The Central and Eastern European network accounted for almost 19 % of Group profits. This continues to confirm Bank Austria's strategy of expansion in this region.

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Change in %

Interest earned (excluding income from securities and equity interests)


431


414


+ 4.0

Net interest income

501

509

-1.5

Net fee and commission income

208

194

+7.1

Net trading result

95

47

+ 103.7

General administrative expenses

541

537

+ 0.6

Net income before taxes

173

147

+ 18.2

Consolidated net income

142

128

+10.9

       

Earnings per share in accordance with IAS

1.24

1.11

 

ROE

12.6 %

11.9 %

 

Cost/income ratio in accordance with IAS

67.3 %

71.7 %

 
       

EUR million

31 March 2000

31 Dec. 1999

 

Total assets

147,201

139,999

+5.1

Shareholders' equity

4,549

4,441

+2.4

Income statement: net income before taxes up by 18.2 %

At the end of 1999, the Bank Austria Group changed to International Accounting Standards (IAS) as the basis of their accounting, presenting its 1999 consolidated financial statements for the first time in accordance with IAS. In line with international practice, Bank Austria is not reporting IAS-based quarterly figures retrospectively for the year 1999 and therefore the results for the first three months of 2000 are compared with one-quarter of the figures for 1999 as a whole.

In the first quarter of 2000, the Bank Austria Group's net income before taxes rose by
18.2 %, from EUR 147 million to EUR 173 million compared with one-quarter of the 1999 figure. Consolidated net income for the first three months was EUR 142 million. This is an improvement of 10.9 % or EUR 14 million. Gerhard Randa, Bank Austria's Chief Executive Officer says: "Bank Austria's performance in the first quarter was very strong and the key performance indicators are clearly better than our targets for the year as a whole."

A comparison of results with those for the first quarter of 1999 would show an even stronger increase. For seasonal reasons, first-quarter results tend to be lower than one-quarter of the figure for the year as a whole. This is due to the fact that in the first quarter, dividend income contained in the item "income from securities and equity interests" was not a significant amount. Most of such income is recorded in the second and third quarters. The item "result of other operating activities" does not yet include any capital gains from the sales of equity interests. In this area, the Bank Austria Group has contributed at least EUR 72 million to overall profits in each of the past few years.

Key performance indicators improve significantly

The Bank Austria Group performed excellently in the first quarter of 2000 which is reflected in a significant improvement in key performance indicators. For the first three months the Group already has already exceeded the targets set for the year as a whole. The cost/income ratio declined from 71.7 % to 67.3 % and return on equity rose from 11.9 % to 12.6 %. Consolidated net income increased by 11 %.

This means that, although 870,543 Bank Austria participation certificates were exchanged for Bank Austria ordinary shares in the first quarter of 2000, earnings per share rose by 11.3 %, from EUR 1.11 to EUR 1.24, compared with one-quarter of the figure for the previous year.

Structural improvement: interest earned up by 4 %

A very positive feature of the good result of EUR 142 million is that it was all derived from operating activities. The two divisions serving domestic retail and commercial customers boosted their share of Group net income before taxes from 12 % to almost 30 %. With regard to Central and Eastern Europe, the network in the region accounted for just under 19 % of the Group's net income before taxes.

Interest earned (net interest income excluding income from securities and equity interests) for the first three months rose from EUR 414 million to EUR 431 million, an increase of 4 % over one-quarter of the previous year's total figure. This growth reflects the focused measures taken by the Bank Austria Group to enhance earnings and stabilise the net interest margin. The decline of about 25 % in income from securities and equity interests compared with one-quarter of the total figure for the previous year is due to seasonal factors and to the technicalities of accounting. A large part of total dividend income is recorded in the second quarter. Overall, therefore, net interest income for the first three months declined by 1.5 %, from EUR 509 million to EUR 501 million, compared with one-quarter of the previous year's figure.

Credit risk costs rose slightly, by 7.3 %, from EUR 100 million to EUR 107 million. Income expected in the course of the year from the release of provisions and from recoveries of loans and advances previously written off has not yet been recognised in accordance with IAS 34.

Strong increase in net fee and commission income

Net fee and commission income increased by 7.5 %. A very favourable trend was seen especially in the securities business. The volume of fund assets under management rose by 5.6 % from EUR 17.8 billion to EUR 18.8 billion, which makes the Bank Austria Group the clear market leader in the mutual funds business. Fees and commissions from payment transactions and lending operations will rise in the next quarters, also reflecting accounting technicalities.

The net trading result more than doubled to EUR 95 million. However, on account of high volatility in this area, results from trading activities are not expected to remain at this high level throughout the year. The strong increase in the first quarter was mainly supported by equity-related business. In the foreign currency business, the successful reorganisation of the foreign exchange business, which included the introduction of a global options book, contributed to the significant improvement in results.

General administrative expenses rose marginally, by 0.6 %, from EUR 537 million to EUR 541 million. However, as the year progresses, staff costs will increasingly reflect the continued reduction in staff numbers after the integration of the joint IT systems has been completed. Other administrative expenses declined by 4.6 % in the first quarter.

Balance sheet: total assets up by 5.1 %

In the first three months, the Bank Austria Group's total assets grew by 5.1 %, from EUR 140 billion at the end of 1999 to EUR 147.2 billion at the end of the first quarter of 2000.

On the assets side, loans and advances to customers increased by 4.3 % or EUR 3.2 billion to EUR 77.8 billion. Financial fixed assets increased by 10.1 % or EUR 2 billion to EUR 21.9 billion. Trading assets rose moderately, by 2.6 % or EUR 260 million to a total of EUR 10.2 billion.

On the liabilities side, this expansion of business was funded primarily by way of interbank business and liabilities evidenced by certificates. Amounts owed to banks increased by 7.3 % or EUR 3.9 billion to EUR 57.3 billion. Liabilities evidenced by certificates increased by 5 % or EUR 1.3 billion to EUR 27.2 billion. In this connection, it should be noted that the rise in the US dollar's exchange rate led to an increase of over EUR 1.5 billion in total assets.

In the reporting period, consolidated shareholders' equity increased by 2.4 % to EUR 4,549 million.

Domestic retail customers

Key figures:

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Share of Group total

Net interest income

198

164

39.6 %

Net fee and commission income

110

94

52.7 %

Net income before taxes

33

3

19.0 %

Equity

454

455

10.1 %

   

1999

 

ROE before taxes

29.1 %

2.2 %

 

Cost/income ratio

81.7 %

91.4 %

 

The business segment comprising domestic retail customers showed a significantly better performance in the first quarter of 2000. The improvement in results was supported by a rising interest margin and a strong increase in fee and commission income. Net income before taxes for the first quarter of 2000 was EUR 33 million, with EUR 3 million representing one-quarter of the total figure for the previous year. In the lending business, volume in the first three months of 2000 rose by 2.9 % from EUR 8.6 billion to EUR 9.1 billion. In the area of investments, the shift towards securities investments continued, while savings deposits declined by 1 %, the volume of investments in mutual funds rose by 5.6 % from EUR 17.8 billion to EUR 18.8 billion. This fully underlines Bank Austria Group's market leadership position in the mutual funds sector in Austria.

Favourable trends in this particularly cost-intensive business segment helped to reduce the cost/income ratio from 91.4 % to 81.7 %. The positive effect has also been reflected in the return on equity. The sharp increase from 2.2 % to 29.1 % may also be explained by the fact that relatively little equity needs to be allocated to this business segment because of its relatively low risk. The business segment accounts for only 10 % of the Group's equity. Therefore changes in net income have a very strong effect on the return on equity.

Domestic commercial customers

Key figures:

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Share of Group total

Net interest income

127

127

25.4 %

Net fee and commission income

57

57

27.2 %

Net income before taxes

16

18

9.2 %

Equity

1,487

1,418

33.1 %

   

1999

 

ROE before taxes

4.3 %

5.0 %

 

Cost/income ratio

66.7 %

66.4 %

 

Results in the business segment of domestic commercial customers were slightly lower than one-quarter of the previous year's total figure. Net income before taxes reached EUR 16 million (1999: EUR 18 million). Net interest income and net fee and commission income remained unchanged compared with the previous year. The cost/income ratio is 66.7 %, matching the previous year's level, and thus slightly lower than the figure for the Group as a whole.

International business

Key figures:

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Share of Group total

Net interest income

130

133

26.0 %

Net fee and commission income

45

40

21.6 %

Net income before taxes

94

62

54.0 %

Equity

1,272

1,257

28.3 %

   

1999

 

ROE before taxes

29.4 %

19.8 %

 

Cost/income ratio

55.0 %

54.8 %

 

The excellent trend in the international business continued in the first quarter. This business segment's net income was EUR 94 million, up by 52 % from one-quarter of the figure for the previous year as a whole, with the international business therefore accounting for 54 % of the Bank Austria Group's net income before taxes.

In the first three months, the commercial banking subsidiaries in the core market of Central and Eastern Europe achieved net income of EUR 33 million. These units contributed almost 19 % to the Bank Austria Group's overall profits. Favourable trends were seen particularly in Slovakia, Hungary and Poland.

Business in the international financial centres – London, Hong Kong and Singapore – and at Banco BBA in Brazil also made very good progress. The new management in the USA are concentrating on strict risk management and on making more intensive use of the cross-selling potential in the USA.

CA IB Investmentbank also had a good first three months. CA IB took full advantage of the booming stock markets – especially in the new economy sector – and further expanded its strong position in corporate finance activities in Central and Eastern Europe.

 

 

Financial Markets

Key figures:

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Share of Group total

Net interest income

50

54

9.9 %

Net fee and commission income

3

3

1.4 %

Net income before taxes

57

28

32.7 %

Equity

849

751

18.9 %

   

1999

 

ROE before taxes

26.7 %

15.0 %

 

Cost/income ratio

44.5 %

58.0 %

 

With net income before taxes of EUR 57 million, results from the Financial Markets business segment rose by 100 % compared with one quarter of the previous year's total figure. This highly satisfactory result was supported in the main by domestic equity trading and Group Treasury activities. Both the return on equity and the cost/income ratio showed very favourable trends in this business segment.

Equity interests

Key figures:

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Share of Group total

Net interest income

-7

21

-1.4 %

Net fee and commission income

-3

1

-1.6 %

Net income before taxes

-11

57

-6.1 %

Equity

431

431

9.6 %

   

1999

 

ROE before taxes

-9.8 %

52.8 %

 

Results in the Equity Interests business segment are not comparable with one-quarter of the previous year's figure because there was no significant dividend income from subsidiaries in the first quarter and the results did not yet include contributions from sales of equity interests.

Please direct any questions to: Bank Austria Public Relations

Martin Hehemann, tel. ++43 1 711 91 ext. 57007;

E-Mail: martin.hehemann@bankaustria.com

Consolidated balance sheet at 31 March 2000

Assets in EUR m

31 March 2000

31 Dec.
1999

Change
in EUR m

Change
in %

Cash and balances with central banks

1,182

848

334

39.4

Loans and advances to, and placements with, banks


29,990


29,397


593


2.0

Loans and advances to customers

77,881

74,648

3,234

4.3

-total loan loss provisions

-2,393

-2,348

-45

1.9

Trading assets

10,242

9,982

260

2.6

Other current financial assets

3,892

3,301

591

17.9

Financial fixed assets

21,939

19,932

2,007

10.1

Intangible assets

701

710

-10

-1.4

Property and equipment

1,128

1,088

40

3.7

Other assets

2,639

2,442

197

8.1

Total assets

147,201

139,999

7,202

5.1

         

Liabilities and shareholders' equity
in EUR m

       

Amounts owed to banks

57,322

53,433

3,889

7.3

Amounts owed to customers

43,527

41,885

1,642

3.9

Liabilities evidenced by certificates

27,211

25,926

1,285

5.0

Provisions

3,120

3,172

-53

-1.7

Other liabilities

7,384

7,278

106

1.5

Subordinated capital

3,696

3,478

218

6.3

Minority interests

392

385

7

1.8

Shareholders´ equity

4,549

4,441

108

2.4

Total liabilities and shareholders´ equity

147,201

139,999

7,202

5.1

Consolidated income statement for the first quarter of 2000

in EUR m

1 Jan. – 31 March 2000

¼ of 1999

Change
in EUR m

Change
in %

Interest and similar income

Interest and similar expenses

1,820

1,319

1,534

1,025

286

294

18.6

28.6

Net interest income

501

509

-8

-1.5

Losses on loans and advances

107

100

7

7.3

Fee and commission income

Fee and commission expenses

266

58

246

52

20

6

8.2

12.2

Net fee and commission income

208

194

14

7.1

Net trading result

95

47

48

103.7

General administrative expenses

541

537

3

0.6

Result of other operating activities

17

34

-17

-49.8

Extraordinary result

0

0

0

---

Net income before taxes

173

147

26

18.2

Taxes on income

-24

-10

-14

146.0

Net income

149

137

12

8.9

Minority interests

7

9

-2

-20.1

Consolidated net income

142

128

14

10.9

Consolidated shareholders' equity

 

 

EUR million

Subscribed capital

Capital reserves

Retained earnings

Total

As at 1 January 1999

847

1,989

1,346

4,182

Consolidated net income

Dividend payment

Currency translation

Other changes

 

 

 

 

0

512

-117

-139

3

512

-117

-139

3

As at 31 December 1999

847

1,989

1,605

4,441

EUR million

Subscribed capital

Capital reserves

Retained earnings

Total

As at 1 January 2000

847

1,989

1,605

4,441

Consolidated net income

Dividend payment

Currency translation

Capital increase

Conversion of
participation certificates

 

 

 

 

 


4

142

0

-39

0

142

0

-39

0


4

As at 31 March 2000

847

1,993

1,709

4,549

Net interest income

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Interest income from loans and advances to, and placements with, banks, Interest income from loans and advances to customers

1.334

1.095

Interest income from bonds and other fixed income securities

374

307

Interest income from leasing transactions

40

36

Share of net income of companies accounted for under the equity method

50

54

Other income similar to interest

21

41

Interest and similar income

1.820

1.534

Interest expenses for amounts owed to banks and customers

948

700

Interest expenses for liabilities evidenced by certificates

368

320

Other expenses similar to interest

3

5

INTEREST AND SIMILAR EXPENSES

1.319

1.025

NET INTEREST INCOME

501

509

Losses on loans and advances

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Direct write-offs of, and provisions for, loans and advances to banks and customers

Release of provisions for loans and advances to banks and customers

Recoveries of loans and advances previously written off


149

-34

-8

175

-55

-16

Net charge for losses on loans and advances on the balance sheet

107

104

Allocation to provision for contingent liabilities and commitments

Release of provision for contingent liabilities and commitments

2

-2

9

-13

Net charge for provisions for off-balance sheet credit transactions

0

-4

LOSSES ON LOANS AND ADVANCES

107

100

 

Net fee and commission income

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Payment transactions

67

68

Lending business

21

23

Securities business

69

51

Foreign exchange, foreign notes and coin, and precious metals transactions


34


32

Other services and advisory business

16

20

NET FEE AND COMMISSION INCOME

208

194

 

Net trading result

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Equity-related transactions

50

20

Currency-related transactions

33

20

Interest rate-related transactions

12

6

Other transactions

0

0

NET TRADING RESULT

95

47

 

 

 

 

 

General administrative expenses

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Staff costs

312

302

Other administrative expenses

191

200

Depreciation of fixed assets and amortisation of intangible assets

38

36

GENERAL ADMINISTRATIVE EXPENSES

541

537

Result of other operating activities

EUR million

1 Jan. – 31 March 2000

¼ of 1999

Other operating income

18

26

Other operating expenses

-28

-37

Amortisation of goodwill

-6

-7

Results from other current financial assets

36

10

Results from financial fixed assets

-3

43

RESULT OF OTHER OPERATING ACTIVITIES

17

34

Total loan loss provisions

EUR million

Loans and advances to, and placements with, banks

Loans and advances to customers

Total

 

31 March 2000

31 Dec. 1999

31 March 2000

31 Dec. 1999

31 March 2000

31 Dec. 1999

At beginning of reporting year

74

336

2,210

2,227


2,284

2,563

Exchange differences

1

8

11

28

12

36

Allocation

0

17

139

583

139

601

Release

-2

-80

-32

-140

-34

-220

Use

-16

-184

-58

-506

-74

-690

Transfer

0

-24

6

18

6

-5

At end of
reporting year

57

74

2,276

2,210


2,332

2,284