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Net income before taxes clearly exceeds the target announced in early 2004. Higher dividend proposed.
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Income statement: 36% increase in consolidated net income based on sustained improvement in operating revenues. Risks remain under control despite business expansion, costs unchanged.
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Segments: CEE drives growth in volume and profit. Successful initiative in Austrian customer business. Renewed strong performance of INM.
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Balance sheet: customer business supports balance sheet growth. Strong capital base provides basis for further expansion.
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Outlook: on the basis of planning figures for 2005, net income before taxes should exceed € 1 bn. Focus on growth in areas generating returns above the cost of capital. New medium-term ROE target: 15%.
Bank Austria Creditanstalt is presenting good results for 2004, fully confirming its business model as “Bank of the Regions” in an enlarged Europe. Consolidated net income rose by 36.1% to € 602 m. Net income before taxes increased by 29.0% to € 836 m. The ROE was 13.4% before taxes and 9.7% after taxes. These results significantly exceeded the target, publicly announced at the beginning of 2004, of € 750 m for net income before taxes for 2004. This means that the bank is on track towards meeting its ambitious medium-term targets.
Both the sustainability and the quality of earnings have further improved:
- Over the past one and a half years, results have steadily improved. The decisive factors in this development were the “sustainable” components of income from current business – i.e. net interest income and net fee and commission income. One-off effects were insignificant. Trading operations in financial markets also met the high expectations, with their overall performance matching the levels seen in previous years, despite fluctuations during the reporting year.
- Growth was driven by the banking subsidiaries in Central and Eastern Europe: operating profit in the CEE business segment reached € 420 m, more than double the figure for the previous year (+139%), and thereby contributed 46% to the bank’s total operating profit. In a very difficult environment, operating profit from Austrian customer business improved by more than 20% to € 448 m due to the market initiative in this area and greater efficiency; this business area thus still accounts for about half of the figure for the Group. This shows that the mature Austrian market and the high-growth CEE market are a very good combination.
- Bank Austria Creditanstalt has been expanding its business with due regard to risks and costs. Risk-weighted assets increased by 3.9% on an annual average, and by as much as 7.7% in the final quarter of 2004, compared with the previous year. Nevertheless, thanks to stringent risk management and a clearly defined lending policy pursued by Bank Austria Creditanstalt, and also due to the absence of major insolvencies, the net charge for losses on loans and advances in 2004 was reduced, both in absolute terms (by 10.7% or € 50 m) and in relative terms (with significant declines in the risk/earnings ratio and in the provisioning charge expressed as a percentage of risk-weighted assets). General administrative expenses were kept at the previous year’s level.
- Qualifications: Almost all of the profits came from current business operations. One-off income, including gains on sales of equity interests, was insignificant on balance in 2004. In the previous year, the income statement items Other operating income and expenses and Net result from investments included substantial gains on sales, primarily in connection with the rearrangement of equity holdings in insurance companies. Exchange rate effects from the translation of the financial statements of our CEE subsidiaries are of minor importance in assessing the bank’s performance in the year under review. In 2004, annual average exchange rates were used in translating income statement items. At the level of net income before taxes, the exchange rate effect was therefore low and was offset by hedging costs.
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