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

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quarterly report

BAWAG P.S.K. reports strong quarterly net profit of EUR 121 million,
+51% from Q1 2014

o Net profit EUR 121 million, +51% versus prior year
o Annualized return on equity of 19.6%, +4.6pts
o Core revenues EUR 230 million, +13%
o Operating expenses down 4% to EUR 118 million
o Cost-income ratio improved to 45.3%, down 7.9pts
o Net interest margin improved by 38bps to 2.07%
o CET1 ratio (fully loaded) at 13.5%, up 1.4pts versus year-end 2014
o Reiterate confidence in meeting or exceeding 2015 targets

VIENNA, Austria - May 12, 2015 - BAWAG P.S.K. today reported net profit of EUR
121 million for the first quarter 2015, up 51% versus prior year. The increase
was driven by higher net interest income, reduced operating expenses and lower
risk costs. Annualized return on equity was 19.6%, up 4.6pts. Net interest
margin improved 38bps to 2.07% with business net interest margin up 20bps to
2.33%. Operating expenses were down by 4% and the cost-income ratio down 7.9pts
to 45.3%. Risk costs decreased by 44% with no impairments in the first quarter
2015. These strong results demonstrate the continued success from the

strategic actions the Bank undertook over the last years.

"As we closed out the first quarter 2015 we continued to see strong
momentum across all our business segments. Our continued strength and
results reiterate the success of our transformation and the
sustainability of our focused low risk business model", said Chief
Executive Officer Byron Haynes. "Over the past five quarters, our
core revenues have continuously grown and we expect this positive
development to continue throughout 2015. We are confident in our
targets and see no issue in meeting or exceeding those we have
communicated earlier this year."

"We will continue to execute on a variety of operational and
strategic initiatives during the course of 2015 that will further
drive operational excellence, greater efficiency and lead to
continued profitable growth", 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 last
non-sustainable Tier 1 capital of EUR 83 million has been called in
April 2015 and will be redeemed in the second quarter 2015. The
Bank's fully loaded CET1 ratio further improved to 13.5% (Dec 2014:
12.1%) and the total capital ratio to 17.1% (Dec 2014: 15.8%) as of
31 March 2015.

Key business highlights Q1 2015

BAWAG P.S.K. continued to successfully execute on its strategy
showing a very strong performance in the first three months of 2015,
positioning BAWAG P.S.K. as one of the best performing banks in
Austria and across all Europe.

Core revenues of EUR 230 million increased by 13% due to strength in
net interest income. Despite the continued low-interest rate
environment, net interest income rose 20% in Q1 versus the same
period in 2014. The increase came from our continued strong focus on
liability optimization measures. The net interest margin improved by
38bps to 2.07%, while the business net interest margin increased
20bps to 2.33%, reflecting the continuous efforts in asset and
liability re-pricing.

Operating expenses decreased by EUR 5 million, or 4%, to EUR 118
million driven by a reduction in personnel and other administrative
expenses. The cost-income ratio improved by 7.9pts to an all-time low
of 45.3% compared to last year's reporting period.

Risk costs decreased by 44% to EUR 11 million. This was mainly driven
by positive effects from de-risking actions and improved overall
credit quality of the core businesses. The portfolio continues to be
strong with no impairments in Q1 2015, just as in Q1 2014.

Net profit increased by EUR 41 million, or 51%, to EUR 121 million in
Q1 2015. The increase was driven by improvements in Corporate Lending
and Investments with its net profit up over 100% and in Retail
Banking and Small Business up 16%. In addition we had higher net
interest income, reduced operating expenses and lower risk costs.

Loans and receivables with customers increased by EUR 280 million or
1% to EUR 22 billion at the end of March 2015, primarily driven by
growing Retail and the International business segments. At the same
time, the Bank has further reduced its exposure in non-core legacy
loan assets from CEE countries: Overall, the remaining CEE-loan
exposure is less than 0.6% of total assets.

Segment reporting

Retail Banking and Small Business showed strong results as we
continued to focus our strategy on offering simple, fair and
transparent products and services through our multi-channel
franchise. Core revenues remained stable in Q1 2015 compared to the
same period in 2014. The continued efficiency improvements resulted
in a 10% decrease in operating expenses compared to previous year.
The segment's cost-income ratio further improved to 58%, representing
a 6pt decrease from the previous year. Overall, the segment achieved
EUR 48 million net profits in the reporting period, a 16% increase
compared to Q1 2014. Despite a slow growth market, BAWAG P.S.K. was
able to increase its consumer lending market share to 9.4%, up 40bps
since year-end 2014 and 90bps since first quarter 2014. Our new
business lending volume during the quarter was above EUR 100 million
with net asset growth of 4.9% against an overall market growth of
0.7%. We maintained disciplined underwriting and pricing standards,
which was reflected in our stable margins. Overall funding costs also
continued to decrease as we optimized product mix, volume and
pricing. At the end of Q1 we had a blended rate of 0.42% versus 0.5%
at year-end 2014 and 0.69% in Q1 last year. The direct banking
subsidiary easybank continued to increase the number of customer
accounts by +3% to a total of 522,000 accounts since year-end 2014.
Deposits grew by 7% to EUR 2.9 billion versus Q1 2014.

Corporate Lending and Investments was able to more than double its
net profit from EUR 25 million to EUR 54 million year over year. Core
revenues were up by 26% driven by higher net interest income of 37%
due to continued deleveraging of non-core products and reallocation
of capital into more profitable, capital-efficient assets. Core
business assets continued to see strength with EUR 800 million net
asset growth versus Q1 2014. The Austrian corporate business
continued to be restrained with new business volume flat compared to
Q1 2014. This was mainly due to flat domestic output, lower corporate
investment and continued concerns rising from CEE, Ukraine and
Russia. International business continued to see strength with new
investment volume of more than EUR 800 million in the first three
months. The focus remained on stronger Western European countries and
the United States. The international new business volume primarily
consists of investment grade loans with a general focus on more
defensive industries and on traditional real estate financings with
attractive loan-to-value (LTV), strong cash flow, shorter weighted
expected maturities and solid covenant characteristics. Low risk
costs and a NPL ratio of 1.0% 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 stable core revenues,
operating income and net profit. Selective new investments and
strategic sales decreased our risk-weighted assets by 23%. The
investment strategy continues to focus on investment grade securities
predominantly representing unsecured and secured bonds of financials
in core Europe and the United States as well as select sovereign bond
exposures and high-quality CLOs (100% AAA-rated at quarter end) in
order to maintain solid diversification. The total investment
portfolio amounted to EUR 5.4 billion with an average duration of 3.9
years comprising 100% of investment grade securities, 87% rated
single "A" or higher. Exposure to CEE countries represented less than
5% of the portfolio limited to select bonds (95% rate single "A" or
better). The portfolio has no direct exposures to Russia, Ukraine,
other South-Eastern European countries or HETA Asset Resolution AG.

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
includes 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.

Further inquiry note:
Financial Community:
Benjamin del Fabro (Investor Relations)
T: +43 (0) 5 99 05-22456
E-Mail: investor.relations@bawagpask.com
Media:
T: + 43(0) 5 99 05-31210
E-Mail: presse@bawagpsk.com
T: 43 (0)59905 - 31210
e-mail: presse@bawagpsk.com

end of announcement euro adhoc
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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