EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft / Consolidated Interim Report Q3 2015 (with document)

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9-month report

BAWAG P.S.K. CONTINUES TO DELIVER STRONG RESULTS: EUR 320 MILLION NET
PROFIT FOR FIRST THREE QUARTERS 2015, +22%

o Net profit EUR 320 million, +22% versus prior year
o Return on equity of 16.9%, +1.0pt
o Core revenues EUR 684 million, +6%
o Operating expenses down 8% to EUR 337 million
o Cost-income ratio improved to 46.7%, down 4.6pts
o Net interest margin up 28bps to 2.13%
o Fully loaded CET1 ratio of 14.9%, up 2.8pts versus year-end 2014
o Fully loaded total capital ratio of 17.9%, up 2.1pts versus year-end
2014

VIENNA, Austria - November 10, 2015 - BAWAG P.S.K. today reported a net profit
of EUR 320 million for the first three quarters 2015, up 22% versus prior year.
The increase was driven by higher net interest income, reduced operating
expenses and lower risk costs. Annualized return on equity was 16.9%, up 1pt.
Net interest margin improved 28bps to 2.13%. Operating expenses were down 8% and
cost-income ratio down 4.6pts to 46.7%. Risk costs decreased by 40% with no
impairments in the first three quarters 2015.

"Our strong results in the first three quarters reiterate that BAWAG
P.S.K. is well prepared to succeed in a competitive European banking
landscape. Because of our efforts over the past few years, we are in
a very good position enabling us to play offense both organically and
inorganically. We are proud of our accomplishments, positioning BAWAG
P.S.K. among the best-performing banks in Europe" said Chief
Executive Officer Byron Haynes.

"On the back of another strong quarterly performance we will continue
to execute on a variety of operational and strategic initiatives
during the fourth quarter and running into 2016. Our focus continues
to be on driving efficiency, operational excellence and 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. The Bank's fully loaded CET1 ratio further
improved to 14.9% (Dec 2014: 12.1%) and the total capital ratio to
17.9% (Dec 2014: 15.8%) as of 30 September 2015. On a transitional
basis, these ratios were 15.8% and 18.7%, respectively. At the same
time we maintained a RWA density of 48%, a conservative ratio
relative to other European peers.

Closed the acquisition of former Volksbanken Leasing

Having a strong capital base enabled BAWAG P.S.K. to make a strategic
acquisition of the former Volksbanken Leasing business, closing on
October 5, 2015. This transaction enables BAWAG P.S.K. to obtain a
stronger market position in the Austrian retail leasing business and
to provide floor plan financing capabilities creating a strategic
advantage for auto dealer relationships. Combined with easybank's
existing auto leasing entity, BAWAG P.S.K. will become the #3 auto
lessor in Austria with a market share of approximately 11%.

Key business highlights in the first three quarters 2015

We continued to deliver strong results in the first three quarters,
positioning us among the best-performing European banks.

Core revenues increased by 6% to EUR 684 million driven by strength
in net interest income. Despite the continued low-interest rate
environment, net interest income increased by 9% in the first three
quarters 2015 versus the same period in 2014, driven primarily by
lower funding costs and stable interest income. Net interest margin
improved by 28bps to 2.13%, reflecting the Bank's dedicated focus on
asset and liability pricing.

Operating expenses decreased by 8% to EUR 337 million, driven by
sustainable long-term measures in personnel and non-personnel
expenses. The cost-income ratio improved by 4.6 points to 46.7%.

Total risk costs decreased by 40% to EUR 31 million in the first
three quarters 2015, 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 was 16bps and the NPL ratio improved to 2.2% (down 1pt
versus previous year). There were no impairments in the first three
quarters 2015, reiterating the low risk nature of our business.

Net profit increased by EUR 57 million, or 22%, to EUR 320 million in
the first three quarters 2015. The increase was driven by
improvements in Corporate Lending and Investments, with net profit up
34%. Net profit in Retail Banking and Small Business was up 14%,
driven by greater operating efficiency. Overall, the net profit of
the Bank was driven by higher net interest income, reduced operating
expenses and lower risk costs, reflecting the continued high quality
of earnings.

Loans and receivables with customers increased by EUR 265 million, or
1%, to EUR 22 billion at the end of September 2015, primarily driven
by growth in the Retail Banking and Small Business segment. The total
new origination volume in the first three quarters of 2015 was EUR
3.4 billion, reflecting positive growth in both our retail and
international businesses. The overall customer loan book remained
heavily weighed to our domestic market with over 70% of customer
loans in Austria. At the same time, BAWAG P.S.K. continued to reduce
its non-core legacy loan assets from CEE countries. The remaining
loan exposure to CEE countries is now below 0.6% of total assets.

Segment reporting

Retail Banking and Small Business showed strong results in the first
three quarters 2015 by continuing to grow its consumer loan franchise
in absolute terms while also capturing market share. Overall, the
segment achieved a EUR 142 million net profit, a 14% increase
compared to the same period in 2014, driven by reduced operating
expenses and lower 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 59%, 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 10%, up 1pt since year-end 2014 and
0.3pts since June 2015. Total new business loan origination in the
first three quarters 2015 was EUR 840 million. Retail assets stood at
EUR 9.7 billion at the end of the third quarter 2015, up 1% compared
to December 2014. This growth reflects the continued increase in our
consumer and housing loans.

We maintained our 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 September 2015 we
reported a blended interest rate on our retail deposits of 0.35%,
down 15bps since the beginning of the year.

The direct banking subsidiary easybank's client base grew to 545,000
accounts in the first three quarters 2015, up 8% since year-end 2014.
Deposits grew by 13% to EUR 3.1 billion from September 2014. With the
recent integration of the BAWAG P.S.K. auto leasing business and now
the acquisition of the former Volksbanken Leasing business, easybank
is well positioned to boost its asset origination capabilities going
forward. easybank also entered into a new strategic partnership with
"Unsere Wasserkraft" ("easy green energy") which provides easybank
with yet another opportunity to expand its market presence, brand
awareness and best-in-class service offering to new segments and
customers.

Corporate Lending and Investments contributed EUR 143 million to the
Bank's net profit in the first three quarters 2015 compared to EUR
107 million in the same period last year. This 34% increase was
mainly driven by higher core revenues and lower risk costs. Core
revenues were up 16% driven by higher net interest income due to
continued deleveraging of non-core assets and reallocation of capital
into more profitable and capital-efficient assets. Low risk costs of
EUR 4 million (EUR 21 million in the first three quarters 2014) and
an NPL ratio of 0.7% (down 1.2 points from September 2014) reflect
positive impacts from our de-risking actions and the overall high
credit quality of the assets.

Despite muted overall demand, flat domestic output and lower
corporate investment the Austrian corporate business generated (in
addition to normal renewals) a new business volume of EUR 300 million
in the first three quarters 2015.

The international business continued to see strength with loan
originations of EUR 2.6 billion in the first three quarters. The
focus remained on stronger Western European countries (Germany, UK
and France) and the United States.

Treasury Services and Markets reported core revenues up 7% and
operating expenses down 9% due to increased operating efficiency.
Selective new investments and strategic sales supported a decrease of
risk-weighted assets by 18% in the first three quarters 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 in order to
maintain solid diversification. The portfolio of CLO investments was
disposed of in the third quarter 2015 based on evaluation of
alternative investments and overall portfolio management.

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. These products and
services are available through our branches all over Austria which
are complemented by our digital sales channels and 100% owned direct
bank easybank. 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 hedging
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 the attached PDF-press release.

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

Attachments with Announcement:
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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