November 8, 2018 / 6:36 AM / 9 days ago

UPDATE 2-Austrian bank BAWAG likely to exceed all 2018 targets

* Will update on 2019, medium-term goals early next year

* Confirms planned dividend payout of 50 pct of net pft

* Targets further acquisitions in Germany (Adds CFO, outlook, shares)

By Kirsti Knolle

VIENNA, Nov 8 (Reuters) - Austrian bank BAWAG Group is well on track to exceed its full-year targets after a 20 percent jump in its third-quarter profit and is hunting for further acquisitions in Germany, it said on Thursday.

The shares of the former trade union bank, which is focusing on retail partnerships, acquisitions and cost management, gained as much as 6.7 percent.

The bank said it will likely raise its medium-term goals early next year.

BAWAG, backed by U.S. private equity group Cerberus Capital Management, has already exceeded some of its 2018 targets, which include a cost-income ratio under 46 percent and a pre-tax profit of at least 543 million euros.

“We are confident in exceeding all of our 2018 targets,” said Chief Executive Officer Anas Abuzaakouk in a statement.

Pre-tax profit was at 429 million euros ($490 million) in the first nine months, and the cost-income ratio was at 43.3 percent per end-September.

“We will not revise the (2018) goals one month before year-end, but will adjust our 2019 goals accordingly with the release of our full-year figures and probably also (the targets) for 2020 and 2021,” finance chief Enver Sirucic told Reuters. BAWAG will publish its 2018 earnings on February 19, he said.

Under its current 2018-2020 plan, BAWAG aims to grow its pre-tax profit to more than 600 million euros by end-2020 and to lower its cost-income ratio to under 40 percent.

The return on investment, which was at 20.2 percent in the third quarter, is targeted to be in a range of 15 to 20 percent under the current plan.

Sirucic confirmed BAWAG’s plan to pay out 50 percent of its net profit as a dividend. The rest of the profit is supposed to be used for acquisitions, he said, adding that if no fitting target can be found, the excess capital will be used for stock buybacks.

BAWAG has been hoarding capital with a view to making further acquisitions in Germany, which it sees as a low risk region with experienced customers, after purchases including regional lender Suedwestbank last year. Third-quarter operating profit came in at 298.3 million euros. Analysts had expected earnings before interest and tax (EBIT) of 158 million euros on average, according to Refinitiv data. ($1 = 0.8747 euros) (Reporting by Kirsti Knolle, Editing by Sherry Jacob-Phillips and Elaine Hardcastle)

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