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DGAP-News: UniCredit Bank Austria AG: Bank Austria posts net profit of EUR 566 million for the first half of 2013



DGAP-News: UniCredit Bank Austria AG: Bank Austria posts net profit of EUR 566 
million for the first half of 2013

DGAP-News: UniCredit Bank Austria AG / Key word(s): Half Year Results
UniCredit Bank Austria AG: Bank Austria posts net profit of EUR 566
million for the first half of 2013

07.08.2013 / 11:03

---------------------------------------------------------------------

Corporate News

Date of entry: 7 August 2013

Results for the first half of 2013:
Bank Austria posts net profit of EUR 566 million for the first half of 2013

  - Volume of customer business up on the previous year

      - Lending volume was EUR 136 billion, up by 2.5 per cent
        year-on-year, with growth driven by Central and Eastern Europe
        while demand in Austria stagnated

      - Customer deposits increased in Austria and CEE, by a combined 3.8
        per cent to EUR 108 billion

  - Charge for bank levies (Austria and CEE) and financial transaction tax
    in Hungary totalling EUR 102 million

  - Operating profit up by 5.5 per cent to EUR 1.6 billion, reflecting
    sound customer business and flat cost trends

  - Net write-downs of loans rose to EUR 688 million, but the cost of risk
    remained at a moderate level of 102 basis points

  - Special effects to be noted in a comparison with the previous year: 

      - The buyback of hybrid instruments in the previous year resulted in
        a one-off gain of EUR 124 million; such a gain was not included
        this year

      - A provision of EUR 65 million following a judgment by the Swiss
        Federal Supreme Court impacted results for the current year with
        increased provisions for risks and charges

  - Net profit of EUR 566 million down by EUR 76 million or 11.8 per cent
    from the previous year reflecting special effects

  - Large volume of direct funding: customer loans covered by customer
    deposits and debt securities in issue to the extent of 100 per cent

  - Core Tier 1 capital ratio further improved to an excellent 11.1 per
    cent

Bank Austria's CEO Willibald Cernko: 'In an environment that remained
volatile, and against the background of persistently weak economic trends,
we again achieved sound results with a net profit of EUR 566 million,
thanks to our broadly-based operations. However, bank levies and the
Hungarian financial transaction tax, totalling EUR 102 million, have become
a heavy burden on us. While net write-downs of loans in Austria increased
from an extremely low level, the cost of risk remained very low. The higher
provisioning charge in CEE was due to economic developments as recovery is
not progressing as rapidly as we hoped, and it also resulted from our
conservative risk management as we improved the coverage ratio in several
countries. Our Core Tier 1 capital ratio of 11.1 per cent, a direct funding
ratio of over 100 per cent of our lending volume, and a leverage ratio of
12.7 all show that we are a healthy and sound bank. This is an important
message at a time when there are discussions about wills of banks and a
bail-in of creditors.'

Items in the income statement (Footnote 1) 

Net interest in the first half of 2013 was EUR 2,202 million, remaining the
most important revenue component in an environment characterised by low
interest rates. The figure was slightly higher, by 1.4 per cent, than in
the same period of the previous year (H1 2012: EUR 2,173 million).

Net fees and commissions developed favourably - contrary to the general
trend - for the first time since the onset of the financial crisis, rising
by 13.8 per cent to EUR 868 million (H1 2012: EUR 763 million).

Net trading, hedging and fair value income was significantly higher than in
the same period of the previous year; in this context one should note that
the figure for the first half of 2012 included a gain of EUR 124 million on
the buyback of hybrid instruments. Net trading, hedging and fair value
income for the first six months of 2013 was EUR 371 million, up by 10.5 per
cent on the same period of the previous year (H1 2012: EUR 336 million).

Overall, operating income amounted to EUR 3,555 million, an increase of 5
per cent over the first half of the previous year (H1 2012: EUR 3,387
million).

Operating costs rose by 5 per cent to EUR 2,005 million (H1 2012: EUR 1,919
million). This reflects two developments: costs associated with operating
activities increased only moderately, due to strict cost discipline and
business expansion in growth markets. On the other hand, bank levies had a
strong adverse impact on costs: the charge for bank levies totalled EUR
85.5 million, representing 4.3 per cent of operating costs in the first
half of 2013. In addition to this, the charge for the newly introduced
financial transactions tax in Hungary was EUR 16.5 million.

The total charge for bank levies and for the financial transactions tax in
Hungary payable by the Bank Austria Group was EUR 102 million, of which EUR
48.4 million relates to Austria and EUR 53.5 million to CEE. Within CEE,
the bank levy and the financial transaction tax in Hungary amounted to EUR
28 million and EUR 16.5 million, respectively; bank levies in other CEE
countries were EUR 7.1 million in Slovakia, EUR 0.8 million in Slovenia and
EUR 1.1 million in Romania.

Operating profit rose by 5.5 per cent to EUR 1,550 million (H1 2012: EUR
1,469 million); this sound operating performance was achieved despite the
charges for bank levies.

Net write-downs of loans and provisions for guarantees and commitments in
the first half of 2013 were EUR 688 million, up by 41.5 per cent, the first
increase seen in a long time (H1 2012: EUR 486 million). The provisioning
charge in Austrian customer business rose by 31 per cent to EUR 114 million
(H1 2012: EUR 88 million), returning to a normal yet still low level. In
CEE, net write-downs of loans and provisions for guarantees and commitments
increased by 43.7 per cent to EUR 574 million (H1 2012: EUR 399 million),
the main reason being that the coverage ratio especially in Ukraine was
further increased in response to current economic trends.

Net operating profit - i.e. operating profit less net write-downs of loans
and provisions for guarantees and commitments - declined by 12.3 per cent
to EUR 862 million (H1 2012: EUR 983 million) in the first six months of
2013, as a result of the higher provisioning charge.

Among the non-operating items, provisions for risks and charges were EUR
120 million, significantly higher than in the previous year (H1 2012: EUR
67 million). The increase was mainly due to the judgment of the Swiss
Federal Supreme Court in the legal dispute with Bundesanstalt für
vereinigungsbedingte Sonderaufgaben; the judgment is final and binding, and
the related charge was EUR 65 million. This means that all charges relating
to the Swiss lawsuit against Bank Austria have been included in the
financial statements and that there is no risk of any further costs arising
from this case.

Profit before tax for the first half of 2013 was EUR 740 million, down by
14.2 per cent from the previous year (H1 2012: EUR 862 million). Profit for
the period was EUR 586 million, down by EUR 86 million or 12.8 per cent
from the previous year (H1 2012: EUR 671 million). After deduction of
non-controlling interests and the goodwill impairment charge, net profit
attributable to the owners of the parent company was EUR 566 million, down
by EUR 76 million or 11.8 per cent  (H1 2012: EUR 641 million).

The following key financial data have been calculated on the basis of the
above-mentioned results:
  - Return on equity before tax was 8.6 per cent.

  - Return on equity after tax was 6.8 per cent.

  - The cost/income ratio improved slightly, to 54.0 per cent (H1 2012:
    54.9 per cent).

  - The risk/earnings ratio (provisioning charge as a percentage of net
    interest income) rose to 30.4 per cent (H1 2012: 21.6 per cent).

  - The total capital ratio (based on all risks) increased to 13.1 per
    cent.

  - The Tier 1 capital ratio (based on all risks) was 11.3 per cent.

  - The Core Tier 1 capital ratio (based on all risks) improved to 11.1 per
    cent.

Francesco Giordano, Chief Financial Officer of Bank Austria: 'Bank Austria
has a sound balance sheet structure. We have further improved our Core Tier
1 capital ratio to an excellent 11.1 per cent and the leverage ratio
(Footnote 2) - a key indicator which is currently the subject of
international discussion - is a conservative 12.7, reflecting our strong
equity capital position and our conservative business model. At the same
time, thanks to an increase in deposits, we have also further improved our
liquidity position. The loan / direct funding ratio is 99.7 per cent. This
means that all of our customer loans are covered by customer deposits and
debt securities in issue.
As a result of the successful completion of the sale of ATF Bank, our
former Kazakh banking subsidiary, our total capital ratio improved by a low
double-digit figure reflecting a reduction of RWAs. Results for the first
half of 2013 do not yet include the proceeds from the sale of Yapi Kredi
Sigorta and Yapi Kredi Emeklilik, two Yapi Kredi subsidiaries, because the
closing of the deal took place on 12 July 2013, after the end of the
reporting period.'

Results of the Divisions 
Bank Austria reports its results in four Divisions: Retail & Corporates,
Corporate & Investment Banking (CIB), Private Banking and Central Eastern
Europe (CEE). The bank also shows results for the Corporate Center.

In the first six months of 2013, the Retail & Corporates Division generated
a profit before tax of EUR 78.6 million (H1 2012: EUR 152 million). The
decline was due to the fact that interest rates were low and credit demand
remained subdued; moreover, costs rose as a result of additional
investments in IT. Both developments are reflected in the cost/income ratio
of 74.6 per cent (H1 2012: 67.2 per cent). While net write-downs of loans
and provisions for guarantees and commitments also increased in a
year-on-year comparison, the cost of risk remained at a very low level of
44 basis points.

Profit before tax generated by the Private Banking Division in the first
half of 2013 was EUR 21.9 million, up by a substantial 45.6 per cent (H1
2012: EUR 15.0 million). The favourable development was driven by
significantly higher net fees and commissions compared with the same period
of the previous year, an improvement which reflects investors' renewed
interest in securities, and strict cost management.. The cost/income ratio
improved to 70.9 per cent (H1 2012: 76.5 per cent).

The Corporate & Investment Banking (CIB) Division achieved a profit before
tax of EUR 121.3 million in the first six months of 2013, a figure which
was 7.4 per cent lower than for the same period of the previous year (H1
2012: EUR 131 million). This development was mainly due to a decline in net
interest from the Markets subsegment, which reflects the low level of
interest rates and was not offset by a strong trading performance and
strict cost discipline. The cost/income ratio declined to 37.3 per cent (H1
2012: 37.9 per cent). Customer business of the Corporate & Investment
Banking Division showed a positive development, with an increase of 17 per
cent over the level recorded in the same period of the previous year,
despite the challenging environment.

The net operating profit generated by the CEE Division in the first half of
2013 amounted to EUR 816 million, up by 5.6 per cent from the comparative
figure for the first half of the previous year (H1 2012: EUR 773 million).
At constant exchange rates, net operating profit increased by 6.8 per cent.
This growth is mainly driven by stronger revenues from a sound customer
business and a well-contained development of cost across the region,
despite the accumulative burden from special taxes in some countries. At
the same time profit before tax was EUR 786 million, 3.5 per cent above the
first half of 2012 equalling 4.6 per cent at constant exchange rates.
Despite the Division's continued business expansion, its cost/income ratio
improved to an outstanding level of 43.9 per cent (H1 2012: 47.6 per cent).

Within UniCredit, Bank Austria is the sub-holding company for operations in
the region of Central and Eastern Europe. Its banking network comprises
around 2,500 branches and roughly 47,400 employees in 14 countries. The
Group continues to see itself as a long-term investor in the CEE region and
aims to expand its leading market position through sustained organic growth
in the coming years.

Despite constraints, Central and Eastern Europe is making progress in
working its way through a variety of growth challenges. Especially industry
has shown signs of improvement recently. Nevertheless, the years leading up
to 2008 were unique in terms of growth and its patterns will not be
repeated. Instead CEE is adjusting to the slower growth of its trading
partners and it is determining a 'new norm'. UniCredit economists expect
regional GDP to gain some 2.4 per cent this year and 2.7 percent in 2014,
which is significantly above Western European rates. The primary risks to
the recovery path are more negative external financing conditions, which
means that there is a need for building buffers.

'In the coming years, economic growth in CEE should outperform the core
Western European countries, provided the right conditions are in place.
This revived growth is likely to be driven by investment rather than
consumption', says Gianni Franco Papa, Bank Austria's Deputy CEO and Head
of CEE Division, 'Right now profitability and efficiency are the dictate of
the moment. We need to steadily test our customer service model, whether or
not it still meets customer expectations. Concerning risk management we
want to be prudent without missing business opportunities.'
  

Financial position 

Bank Austria's total assets as at 30 June 2013 were EUR 201.8 billion, down
by EUR 5.8 billion from the end of the previous year (31 December 2012: EUR
207.6 billion); the year-end 2012 figure still included the banking
subsidiary in Kazakhstan (EUR 3.5 billion), which has been sold in the
meantime.

On the assets side, loans and receivables with customers rose by 2.7 per
cent or EUR 3.6 billion to EUR 136.0 billion as at 30 June 2013 (31
December 2012: EUR 132.4 billion), while loans and receivables with banks
declined by 16.4 per cent to EUR 23.5 billion (31 December 2012: EUR 28.1
billion).

On the liabilities side, deposits from customers declined slightly, by 2.2
per cent, to EUR 108.1 billion (31 December 2012: EUR 110.6 billion). Debt
securities in issue rose slightly, by 1.3 per cent, to EUR 28.4 billion (31
December 2012: EUR 28.1 billion). Primary funds - i.e. the sum total of
deposits from customers and debt securities in issue, representing direct
funding from commercial banking sources - totalled EUR 136.5 billion or
67.7 per cent of total liabilities and equity. This means that customer
loans were fully covered by primary funds.

The leverage ratio (total assets less intangible assets / equity less
intangible assets) improved from 13.0 at the end of the previous year to
12.7 as at the end of June 2013.

As at 30 June 2013, IFRS equity was EUR 18.0 billion, marginally down from
the end of the previous year (31 December 2012: EUR 18.2 billion) as a
result of exchange rate movements and other valuation effects.

Capital ratios continued to improve compared with the year-end 2012 levels.
As at 30 June 2013, the total capital ratio based on all risks was 13.1 per
cent (31 December 2012: 12.5 per cent).
The Tier 1 capital ratio based on all risks rose to 11.3 per cent (31
December 2012: 10.8 per cent) and the Core Tier 1 capital ratio (excluding
hybrid capital) based on all risks was 11.1 per cent (31 December 2012:
10.6 per cent).

Staff numbers in the Bank Austria Group including the employees of
UniCredit's subsidiaries (Footnote 3) in Austria totalled 57,495 (full-time
equivalents - FTEs) as at 30 June 2013 (30 June 2012: 58,102 FTEs). Of this
total, 10.107 FTEs were employed in Austria and 47,388 FTEs in CEE
countries.

Footnote 1: To ensure comparability, the comparative figures for 2012 are
shown on an adjusted basis: results from ATF Bank are now presented in the
item 'Total profit or loss after tax from discontinued operations' and
segment reporting has been adjusted to the new structure.

Footnote 2: Leverage ratio = total assets less intangible assets / equity
less intangible assets

Footnote 3: Mainly UniCredit Business Integrated Solutions Austria GmbH
(UBIS Austria), Pioneer Investments Austria and UniCredit Leasing.



                             Quarterly         Half-          Change
                                               years          over
                             developme         (year-         previou
                             nt 2013           on-year)       s year
in Euro mn                   Q1 2013    + Q2   = H1     H1    +/- EUR  +/-
%
                                        2013   2013     2012
Net interest                     1,103  1,099    2,202  2,173     +29   +1%
Dividend income and other
income
from equity investments             35     28       63    82      -18  -23%
Net fees and commissions           418    450      868   763     +105  +14%
Net trading, hedging and
fair value income                  144    227      371   336      +35  +10%
Net other expenses/income           38     14       52    35      +17  +47%
Operating Income                 1,737  1,818    3,555  3,387    +168   +5%
Payroll costs                     -495   -504     -999  -977      -22   +2%
Other administrative
expenses                          -445   -426     -871  -810      -61   +8%
Recovery of expenses                 0      1        1     1       +1 >100%
Amortisation, depreciation
and impairment
losses on intangible and
tangible assets                    -67    -69     -136  -132       -4   +3%
                                                           -
Operating costs                 -1,007   -998   -2,005  1,919     -87   +5%
Operating profit                   730    820    1,550  1,469     +81   +6%
Net write-downs of loans
and provisions
for guarantees and
commitments                       -298   -390     -688  -486     -202  +41%
NET OPERATING PROFIT               432    430      862   983     -120  -12%
Provisions for risks and
charges                            -74    -46     -120   -67      -54  +80%
Integration/restructuring
costs                               -2     -4       -6    -3       -3  +76%
Net income from investments         -1      5        4   -50      +54  n.a.
PROFIT BEFORE TAX                  355    384      740   862     -123  -14%
Income tax for the period          -65   -104     -168  -178      +10   -5%
Total profit or loss after
tax from discontinued
operations                           8      6       14   -13      +27  n.a.
Profit for the period              299    287      586   671      -86  -13%
Non-controlling interests          -11     -4      -15   -18       +4  -20%
NET PROFIT ATTRIBUTABLE TO
THE
OWNERS OF BANK AUSTRIA
BEFORE PPA                         288    283      571   653      -82  -13%
Purchase Price Allocation
effect                               0      0        0    -5       +5 -100%
Goodwill impairment                 -3     -3       -5    -7       +2  -27%
NET PROFIT ATTRIBUTABLE TO
THE
OWNERS OF BANK AUSTRIA             285    281      566   641      -76  -12%




n.m. = not meaningful

Notes:
  - Bank Austria's income statement as presented in this table is a
    reclassified format corresponding to the format used for segment
    reporting.

  - Recast: The comparative figures for 2012 have been recast to reflect
    the consolidation perimeter and business structure in 2013.

 3) Purchase Price Allocation (PPA) effects Russia.



in Euro bn                       30.06.2013                     31.12.2012
Total Assets                          201.8                          207.6
Equity                                 18.0                           18.2




Issuer:
UniCredit Bank Austria AG
Schottengasse 6-8, 1010 Vienna, Austria
e-mail: investor.relations@unicreditgroup.at
Internet: http://IR-en.bankaustria.at

Largest bonds by volume issued:

ISIN   Stock exchanges:
XS0343689377  Luxemburg
XS0372532514  Luxemburg
XS0379307258  Luxemburg
AT000B048988  Vienna
AT000B049010  Vienna

Further stock exchanges where bonds are admitted to listing:
Frankfurt, Stuttgart, Paris, Zurich, Munich




Contact:
Günther Stromenger
Corporate Relations - Bank Austria
phone: +43 (0) 50505 - 57232
e-mail: guenther.stromenger@unicreditgroup.at


End of Corporate News

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07.08.2013 Dissemination of a Corporate News, transmitted by DGAP - a
company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:    English                                                  
Company:     UniCredit Bank Austria AG                                
             Schottengasse 6 - 8                                      
             1010 Wien                                                
             Austria                                                  
Phone:       0043 (0) 50505 - 57232                                   
Fax:         0043 (0) 50505 - 8957232                                 
E-mail:      investor.relations@unicreditgroup.at                     
Internet:    www.bankaustria.at                                       
ISIN:        AT0000995006                                             
WKN:         99500                                                    
Listed:      Foreign Exchange(s) Luxemburg, Wien (Amtlicher Handel /  
             Official Market)                                         
 
 
End of News    DGAP News-Service  
---------------------------------------------------------------------  
224438 07.08.2013                                                      
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