EANS-News: BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft / Consolidated Interim Report - H1 2014 (with document)

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6-month report

BAWAG P.S.K. reports first half 2014 net profit of EUR 175 million,
+87%

o Net profit EUR 175.0 million, +87% from H1 2013 o Core revenues
of EUR 432.5 million, +21% o Cost-income ratio continues to trend
downward at 51.9%, down 11.4pts o Business net interest margin
improved by 32bps to 2.26% o Retail consumer lending market share up
70bps over past six months to 8.7% o CET1 ratio (fully loaded) at
11.2%, up 1.8pts since year-end 2013 o Full year targets on track

VIENNA, Austria - August 20, 2014 - BAWAG P.S.K. today reported a net
profit of EUR 175 million for the first half 2014, up 87% versus the
same period last year. Annualized return on equity was 16.2%, up 6.2
points. Net interest margin improved 53 basis points to 1.84% with
business net interest margins up 32 basis points. Operating expenses
were down 17% and risk costs down 41%. Overall performance in the
first half reflects the continuous repositioning efforts of the Bank.

"BAWAG P.S.K. continued to deliver strong results with a net profit
of EUR 175 million representing an increase of 87%. We had strong
performance across all business segments while facing a challenging
market environment", said Chief Executive Officer, Byron Haynes. "We
are starting to see the significant investments made over the past
few years paying off. We are proud of the accomplishments in the
first half 2014 and expect this strength to continue into the
future."

"We continue to execute on our long-term strategic repositioning. The
first half results are a reflection of significant prior year
investments and restructuring measures geared towards positioning
BAWAG P.S.K. to be one of the most efficient banks across Europe with
a capital efficient, low risk balance sheet", said Chief Financial
Officer, Anas Abuzaakouk. "We feel this business model will allow us
to continue to be successful in a competitive and constantly evolving
European banking environment."

Key Highlights in H1 2014 Despite a low-interest rate environment and
a slow-growth European macro-environment, BAWAG P.S.K. delivered
strong results while maintaining a focus on providing competitive and
innovative products to its customers. The Bank also further improved
its cost structure and continued to strengthen its capital base.

Operating income was EUR 483.2 million, up 2%. Core revenues of EUR
432.5 million increased 21% due to strength in net interest income.
Net interest income was up 25% driven by a focus on liability
optimization measures and reduced funding costs. Customer loan
development remained stable, creating positive earnings leverage. The
9% increase of net commission income reflects continued fee income
growth in the Bank's core retail and corporate franchises. In markets
where BAWAG P.S.K. saw slower loan demand and compressed margins, the
Bank maintained a disciplined pricing approach with net interest
margin up 53bps to 1.84%. Other revenue was down 57% driven by
non-recurring security sales in the first half 2013.

Operating expenses decreased by 17% in the first half 2014. Our focus
on efficiency and productivity continues to produce savings. The
cost-income ratio improved to 51.9%, down 11.4 points.

Credit performance continued to improve. Risk costs decreased by 41%
to EUR 37.5 million resulting from improvements in the overall credit
quality of the core businesses and positive effects from historical
de-risking actions. Risk cost ratio was 0.28% in the first half 2014,
a decrease of 16bps compared to first half 2013. Our focus continues
to be in safe haven economies like Austria and other developed
Western countries such as Germany and the United Kingdom. We
significantly reduced our CEE exposure over the years, today below
2%. The NPL ratio of 3.4% remained unchanged compared to year-end
2013 and was 1.1 points better versus 30 June 2013.

BAWAG P.S.K.'s capital base continues to be strong with a fully
loaded Common Equity Tier 1 capital ratio of 11.2% and a total
capital ratio of 15.1%. In addition to the redemption of the
remaining EUR 350 million of participation capital in March 2014, the
Bank redeemed the non-sustainable minorities of EUR 400 million in
the first half 2014 and the remaining EUR 60 million of
non-sustainable Tier 1 instruments on 31 July 2014.

The Bank's funding base remains its core customer deposits. BAWAG
P.S.K. focuses on reducing funding costs and maintains a conservative
liquidity management strategy with a loan-to-deposit ratio of 101%.
The liquidity reserve amounted to EUR 3.4 billion as of 30 June 2014.

Retail Banking and Small Business was a key driver of the Bank's
strong results. Core revenues increased by 16% driven by positive
developments in NII and NCI, up 19% and 9% respectively. Prior year
investments in our retail franchise continue to pay off. Current
accounts increased by 13% in the first half 2014, loans by 21% and
funds by 8% contributing to the strength in net commission income.
Retail consumer loan market share was up 70bps since year-end 2013 to
8.7%. Funding costs continue to decrease as we focus on reducing
non-core funding, re-pricing initiatives and shifting our deposit
mix. The direct banking subsidiary easybank continued its strong
performance in the first half 2014 opening 21,000 new customer
accounts.

Corporate Lending and Investments continued to strengthen its
operating leverage by reducing its operating expenses by 16%.
Austrian corporate new lending volumes increased 47% versus first
half 2013. Ongoing portfolio management activities reduced non-core
exposures by EUR 440 million since 30 June 2013 and lending margins
remained stable through our re-pricing activities. The segment NPL
ratio continued to decrease to 2.48%. The new business volume in our
core international corporate business reflected a mix of investment
grade securities purchases combined with select leveraged loan
investments. International commercial real estate investments
increased with continued portfolio diversification. Overall assets in
the core international business totaled EUR 4.1 billion as of 30 June
2014.

Treasury Services and Markets reported net interest income up 5% and
operating income up 16% since first half 2013 driven by new
investments and strategic sales. Increased operating efficiency led
to a decrease of operating expenses of 40%. The total investment
portfolio amounted to EUR 5.7 billion with an average duration of 3.9
years. 100% of the securities are investment grade, of which 71% were
rated single A or higher. The geographic mix of the portfolio is
quite diverse with no direct exposure in South-East Europe, Hungary,
Ukraine and Russia.

For charts please see attached PDF-document of this press release.

About BAWAG P.S.K.

BAWAG P.S.K. is one of Austria's largest retail 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 include lending, savings, payment, card, investment and
insurance services for private and small business customers. Austrian
corporate lending activities and other fee-driven financial services
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 and commercial real estate financing primarily in
Western Europe. Treasury Services and Markets include 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.'s aim is to have a
capital efficient, low risk and low leverage business model while
being the most efficient, centrally managed bank across Austria.
Delivering competitive, transparent and simple products and services
to our customers is the core of our strategy.

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

Attachments with Announcement:
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http://resources.euroadhoc.com/us/4b2lo5Dl
http://resources.euroadhoc.com/us/THhA5sXz

Further inquiry note:
Mag. Sabine Hacker, Konzernpressesprecherin
T: 43 1 534 53 - 31210
F: 43 1 534 53 - 33015
e-mail: presse@bawagpsk.com

end of announcement euro adhoc
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Attachments with Announcement:
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http://resources.euroadhoc.com/us/4b2lo5Dl
http://resources.euroadhoc.com/us/THhA5sXz

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