EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft / Consolidated Interim Report Q1 2015 (with document)

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6-month report

BAWAG P.S.K. reports record net profit of EUR 226 million for H1 2015

o Net profit EUR 226 million, +29% versus prior year
o Annualized return on equity of 18.1%, +1.9pts
o Core revenues EUR 465 million, +9%
o Operating expenses down 8% to EUR 225 million
o Cost-income ratio improved to 45.8%, down 5.3pts
o Net interest margin improved by 33bps to 2.12%
o CET1 ratio (fully loaded) at 14.2%, up 2.1pts versus year-end 2014
o BAWAG P.S.K. well on track to outperform 2015 targets

VIENNA, Austria - August 11, 2015 - BAWAG P.S.K. today reported a net
profit of EUR 226 million for the first half 2015, up 29% versus
prior year. The increase was driven by higher net interest income,
reduced operating expenses and lower risk costs. Annualized return on
equity was 18.1%, up 1.9pts. Net interest margin improved 33bps to
2.12% with business net interest margin up 17bps to 2.37%. Operating
expenses were down 7.6% and cost-income ratio also down 5.3pts to
45.8%. Risk costs decreased by 39% with no impairments in the first
half 2015.

"These first half results reiterate the strength of BAWAG P.S.K. We
continue to focus on growing our core franchises, maintaining
disciplined pricing and credit quality and running an efficient
balance sheet," Chief Executive Officer Byron Haynes said. "We are
confident the strong performance will continue for the remainder of
the year and BAWAG P.S.K. will outperform its 2015 targets."

"On the back of our record first half results, we will continue to
execute on a variety of operational and strategic initiatives during
the second half 2015 that will further drive efficiency, operational
excellence and lead to continued profitable growth well into the
future," said Chief Financial Officer Anas Abuzaakouk.

Strong capital ratios on a fully loaded basis

The management team continues to run the Bank on a fully loaded basis
from a capital standpoint. After having already eliminated most of
the non-sustainable capital instruments in 2014, the final clean-up
was completed by redeeming the last non-sustainable Tier 1 capital of
EUR 83 million in June 2015.

The Bank's fully loaded CET1 ratio further improved to 14.2% (Dec
2014: 12.1%) and the total capital ratio to 17.3% (Dec 2014: 15.8%)
as of 30 June 2015.

BAWAG P.S.K. upgraded by Moody's

In early July, Moody's Investors Service raised the Bank's long-term
deposit, senior unsecured and issuer ratings by one notch to Baa1.
The outlook was changed to "positive". The Bank's stand-alone rating
(baseline credit assessment) was upgraded to baa3 (investment grade
for the first time) and its senior subordinate rating to Ba1.
According to Moody's, the rating upgrades reflect "the stronger and
higher-quality capital adequacy ratios and the Bank's underlying
recovery in profitability that have allowed the Bank to reduce
on-balance sheet risks, as well as its significantly strengthened
loss-absorption capacity." The rating agency indicated further upside
potential over a 12-18 month outlook horizon.

Key business highlights H1 2015

BAWAG P.S.K. continued to successfully execute on its business plans
in the first half 2015, recording once again strong results.

Core revenues of EUR 465 million increased by 9% due to strength in
net interest income. Despite the continued low-interest rate
environment, net interest income increased by 14% in H1 2015 versus
the same period in 2014, driven primarily by lower funding costs and
higher demand for core lending products. Net interest margin improved
by 33bps to 2.12%, reflecting the Bank's dedicated focus on asset and
liability re-pricing.

Operating expenses decreased by 7.6% to EUR 225 million, driven by
sustainable long-term measures in personnel and other administrative
expenses. The cost-income ratio improved by 5.3 points to 45.8%.

Total risk costs decreased by 39% to EUR 23 million in H1, resulting
from the improved overall credit quality of the core businesses. The
Bank maintained a conservative risk profile with disciplined
risk-adjusted underwriting standards and a focus on stable and
economically sound geographies. The risk cost ratio improved to 18bps
(down 10bps) and the NPL ratio to 2.3% (down 1.1pts). There were no
impairments in H1 2015.

Net profit increased by EUR 51 million, or 29%, to EUR 226 million in
H1 2015. The increase was driven by improvements in Corporate Lending
and Investments with net profit up 72%. Net profit in Retail Banking
and Small Business was up 15%, driven by greater operating
efficiency. Overall, the net profit of the Bank was influenced by
higher net interest income, reduced operating expenses and lower risk
costs, reflecting the continued high quality of earnings.

Loans and receivables to customers increased by EUR 139 million, or
1%, to EUR 22 billion at the end of June 2015, primarily driven by
growth in the Retail Banking and Small Business segment. The total
new origination volume in the H1 2015 was over EUR 2 billion,
reflecting positive growth in both our Retail and International
businesses. At the same time, BAWAG P.S.K. has further managed down
non-core legacy loan assets from CEE countries. The remaining loan
exposure to CEE countries is below 0.6% of balance sheet total.

Segment reporting

Retail Banking and Small Business showed strong results in H1 2015 by
continuing to grow its consumer loan franchise in absolute terms
while also capturing market share. Overall, the segment achieved a
EUR 99 million net profit, a 15% increase compared to H1 2014 driven
by reduced operating expenses and risk costs. The continued
efficiency improvements resulted in an 11% decrease in operating
expenses versus prior year. The segment's cost-income ratio further
improved to 58%, representing a 5pts decrease from the previous year.
Despite a slow growth market, BAWAG P.S.K. was able to increase its
consumer lending market share to 9.7% at the end of June, up 70bps
since year-end 2014 and 100bps since June 2014. Total new business
loan origination during the first half 2015 was EUR 550 million,
driven primarily by consumer loans (up +7.1%), with total Retail
Banking and Small Business net asset growth of 2%. We continued
disciplined underwriting and pricing standards, which were reflected
in our stable margins and low risk costs. Overall funding costs also
continued to decrease as we optimized product mix, volume and
pricing. At the end of H1 2015 we reported a blended interest rate on
our retail deposits of 0.39%, down 11bps since the beginning of the
year.

The direct banking subsidiary easybank's client base grew to 533,000
accounts in H1 2015, up 5% since year-end 2014. Deposits grew by 7%
to EUR 3.1 billion. For the fifth year in a row, easybank was awarded
the Recommender Award of "Finanz-Marketing Verband Österreich" for
Austrian direct, special and private banks in 2015, reaching the
highest score in its peer group.

Corporate Lending and Investments was able to increase its net profit
from EUR 57 million to EUR 98 million, up 72% versus H1 2014. Core
revenues were up 24% driven by a 31% higher net interest income due
to continued deleveraging of non-core assets and reallocation of
capital into more profitable and capital-efficient assets. Core
business assets continued to see strength with EUR 600 million net
assets growth versus H1 2014. The Austrian corporate business
continued to be restrained with new business volume unchanged
compared to H1 2014. This was mainly due to flat domestic output,
lower corporate investment and continued concerns rising from CEE,
Ukraine and Russia as well as other macro risks across Europe. The
international business continued to see strength with new investment
volume of EUR 1.4 billion in the first six months. The focus remained
on stronger Western European countries (Germany, UK and France) and
the United States. Low risk costs and an NPL ratio of 0.65% reflect
positive impacts from de-risking actions and pro-active risk
management of the overall Corporate Lending and Investments
portfolio.

Treasury Services and Markets reported core revenues up 9% and
operating expenses down 15% due to increased operating efficiency.
Selective new investments and strategic sales supported a decrease of
risk-weighted assets by 22% in H1 2015. The investment strategy
continues to focus on investment grade securities predominantly
representing unsecured and secured bonds of financial institutions in
core Europe and the United States as well as select sovereign bond
exposures and high-quality CLOs (100% AAA-rated) in order to maintain
solid diversification. The total investment portfolio amounted to EUR
5.2 billion with an average duration of 3.9 years, comprising of 99%
of investment grade-rated securities, 83% rated single "A" or higher.
Exposure to CEE in this segment represented less than 5% of the
portfolio and was limited to select bonds (90% rate single "A"
equivalent category or better). The portfolio had no exposure to HETA
and no direct exposure to Russia, Hungary or South-Eastern Europe as
of 30 June 2015.

About BAWAG P.S.K.

BAWAG P.S.K. is one of Austria's largest banking institutions with
1.6 million customers and a well-recognized national brand. The Bank
focuses on three business segments: Retail Banking and Small Business
offers simple, fair and transparent products and services which
include lending, savings, payment, card, investment and insurance
services for private and small business customers. Based on a
long-term and traditional cooperation with Österreichische Post AG
(Austrian Post) these products and services are available through our
branches all over Austria which are complemented by our digital sales
channels. Austrian corporate businesses as well as international
activities are managed within the Corporate Lending and Investments
segment. The majority of the Bank's lending activities are within
Austria. The international business is focused on corporate,
commercial real estate and portfolio financing transactions primarily
in Western Europe and the United States of America. Treasury Services
and Markets includes all activities associated with providing trading
and investment services for the Group's treasury activities and the
management of the Bank's portfolio of financial securities. BAWAG
P.S.K. focuses on a capital efficient, low risk and low leverage
business model while targeting to be one of the most efficient,
centrally managed banks across Europe. Delivering simple, transparent
and best-in-class products and services to our customers is the core
of our strategy.

BAWAG P.S.K.'s Investor Relations website
https://www.bawagpsk.com/BAWAGPSK/IR/EN contains further information
about the Bank, including financial and other information for
investors.

For charts please refer to attached PDF.

BAWAG P.S.K. contacts:
Financial Community:
Benjamin del Fabro (Investor Relations)
Tel: +43 (0) 5 99 05-22456
E-mail: investor.relations@bawagpsk.com

Media:
Georgia Schütz-Spörl (Press Office)
Tel: +43 (0) 5 99 05-31210
E-mail: presse@bawagpsk.com

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Further inquiry note:
Pressestelle
T: 43 (0)59905 - 31210
F: 43 (0)59905 - 22007
e-mail: presse@bawagpsk.com

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company: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
Georg-Coch-Platz 2
A-1018 Wien
phone: +43 (0) 59905
mail: bawagpsk@bawagpsk.com
WWW: www.bawagpsk.com
sector: Banking
ISIN: -
indexes:
stockmarkets: stock market: Luxembourg Stock Exchange, Euronext Amsterdam,
Frankfurt, Wien, SIX Swiss Exchange
language: English