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UPDATE 1-Bank Austria eyes billion-euro profit in 2013
March 28, 2012 / 11:51 AM / in 6 years

UPDATE 1-Bank Austria eyes billion-euro profit in 2013

* 2011 net profit falls 71 pct to 209 mln euros

* Net operating profit up 13 pct to 1.73 bln

* Net writedowns and provisions down 27 pct to 1.35 bln (Recasts with comments from news conference, background)

By Michael Shields

VIENNA, March 28 (Reuters) - UniCredit unit Bank Austria forecast modest loan growth this year and dangled prospects of boosting earnings back to 1 billion euros ($1.3 billion) in 2013 as one-off hits wane.

Net profit at emerging Europe’s top lender fell 71 percent in 2011 as impairments in Kazakhstan and Ukraine and writedowns on Greek debt eclipsed higher underlying operating profit.

Exposure to fast-growing markets such as Turkey and Russia should keep powering underlying growth, officials said, putting it within reach of the 1.1 billion euros in made in 2009.

Chief Executive Willibald Cernko demurred when asked at a news conference on Wednesday whether a 1 billion euro profit was realistic this year. Pressed again, he said: “Next year.”

“We absolutely are going in with a certain basic optimism, but you have to say soberly that growth prospects are limited. The only thing you can really book are cost targets at the moment,” he explained.

Chief Financial Officer Francesco Giordano noted that the bank’s loan book and deposits grew last year, even in the fourth quarter as Europe’s debt crisis raged.

“You can also say there is some slowdown in CEE in Q1 but we expect to continue to grow quite moderately,” he added, referring to the central and eastern Europe region.

Big Austrian banks are the largest lenders in CEE. They also include Erste Group Bank and Raiffeisen Bank International RBI).

Erste, emerging Europe’s second-biggest lender, has also forecast improved operating results this year as provisions for bad debts fall and its Hungarian headache eases.

RBI details final 2011 results on Thursday.

GOODWILL HURTING

Bank Austria released results a day after its Italian parent eked out a fourth-quarter profit as it sought to turn the corner after a massive clean-up of its balance sheet.

Bank Austria’s net profit after minorities plunged to 209 million euros even though net operating profit rose 13 percent to 1.73 billion. Net loan writedowns and provisions fell by more than a quarter to 1.35 billion.

But it booked goodwill impairment charges of 737 million euros, mainly on banking subsidiaries in Kazakhstan and Ukraine, and wrote down Greek government debt by 396 million.

Bank levies in Austria and some other countries in central and eastern Europe cost it 148 million.

Turkey and Russia combined accounted for 58 percent of its 1.3 billion euros in 2011 pretax profit, with Croatia chipping in another 13 percent.

Even in Hungary - whose bank tax and scheme to let borrowers repay foreign-currency mortgages at below-market rates have hit the sector - it made 64 million euros before tax last year. It lost money only in Kazakhstan and the Baltics.

Its core Tier 1 capital ratio rose to 10.55 percent of risk-weighted assets from just over 10 percent a year earlier.

After the 2011 writedowns - including a 47 million hit for CJSC Securities Russia that reduced to zero the goodwill for this unit - Bank Austria values its equity investments at a conservative 1.2 times book value on average, it said.

Giordano said Bank Austria was watching the market to gauge whether to issue senior unsecured debt now that two rounds of cheap three-year ECB funding had improved sentiment markedly. ($1 = 0.7506 euros) (Additional reporting by Angelika Gruber; Editing by Jodie Ginsberg)

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