AUSTRIA: BANK AUSTRIA TO UP PROFIT MARGINS

Article Abstract:

Bank Austria, which within the HypoVereinsbank group is responsible for Austria and Central and Eastern Europe, expects a double-digit increase in profitability in 2001. In year 2000 Bank Austria group saw a 17.9% increase in balance sheet total to EUR 165bn. Group profit for the year grew 15.6% to EUR 592mn. Cost-income ratio fell from 71.7% to 66.7%, while return on equity rose from 11.9% to 13.1%. Return on equity on Eastern markets rose to 21.2%. By 2005 profit ratio in this region is to be raised to 30%. Then 50% of Bank Austria group profits should come from Central and Eastern Europe. Currently the rate is about 20%. In Austria, profit ratio in private client business increased 2.2%<-points> to 35.7% and in corporate client business from 5% to 7.2%. In year 2000 Bank Austria increased reserves for bad debts by 66% to EUR 666mn, partly due to the more stringent lending rules of the German parent. In Austria, Bank Austria is to reduce the number of branches from 460 at present. The number will not, however, fall below 400. The bank is to boost mobile selling and marketing via internet and telephone.

Eastern Europe, Oesterreichische Nationalbank

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AUSTRIA: BAWAG'S PLANS FOR POST OFFICES

Article Abstract:

Bawag, the bank controlled by the Austrian trade union confederation OGB, is to increase the number of Bawag branches from 155 to 160 by converting PSK ones. In year 2000 Bawag took over Osterreichische Postsparkasse (P.S.K.), becoming Austria's third-largest bank. The distribution of Bawag/PSK products through 2,300 post offices (currently about 2,300 outlets) will be made more efficient. Postmen will be trained to sell standard products, and PSK is to boost its mobile sales team. The number of financial advice centres in post offices is to be increased from 118 to 200. Bawag is to have an employee specialising in bank services in 460 post offices. Due to the interest burden of the PSK acquisition that was worth Sch 17bn, Bawag expects lower profits in 2001. Return on equity is estimated at 16%, compared with 21% in 2000. In 2000 the balance sheet total of Bawag/PSK grew 3.2% to EUR 44.8bn. Operating profit surged 37.4% to EUR 346mn.

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