The BAWAG PSK Group, Austria's third largest banking group, achieved an excellent group performance in a difficult economic environment, according to a statement issued by the bank last week.
As at December 31 this year, the group's balance sheet total (based on IAD) is expected to increase to €51.7 billion, exceeding last year's figure by €2.8 billion, or 5.8 per cent. Loans and advances to BAWAG customers increased by €2.1 billion (7.8 per cent), reaching €29.5 billion.
This favourable business development had a positive impact on BAWAG's earnings, and the operating result is expected to rise by €15 million (+6.3 per cent), to €259 million. This rise is due to BAWAG's success with new lending transactions, even while market forces have led to a significant lowering of the interest rates charged on loans. Net commission income reached €135 million.
BAWAG's administrative expenses have been cut to €583 million, and successful cost management strategies have reduced the cost/ income ratio to 69.3 per cent, a first-time drop below the 70 per cent mark since the acquisition of PSK in 2000.
The fair value valuations required by IAS will show a reduction in the market values of BAWAG's financial assets, due to the increase of long-term interest rates. Yet loan loss provisions will be slightly below the previous year, leading to a profit before tax of €134 million, a €7 million increase (+5.8 per cent) over last year's figure.
The fully-owned Malta operation, BAWAG Malta Bank Ltd, set up last September, has had a good start. With the conclusion of a structured finance transaction last month, BAWAG Malta Bank's share capital has been increased to Lm210 million.
After the first few months of operation, the volume of lending by the Malta bank to Maltese and international customers and other banks will reach close to Lm50 million. BAWAG Malta Bank Ltd is confident that this performance will be reflected in a positive result as early as the first year of business.
Otto Karasek, who heads BAWAG's Malta operation, said: "We started from scratch in September and have reached our targets in full. Our loan portfolio is in keeping with our business plan, and is more heavily weighted towards international loans than to domestic loans.
"We are talking to Maltese customers with a view to reaching agreement on significant loans. We are pleased to be in Malta. From the ratings point of view, Malta is in the top group of the new European Union accession countries."