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

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quarterly report

BAWAG P.S.K. REPORTS STRONG Q1 2017 - PROFIT BEFORE TAX OF EUR 123
million

- Profit before tax of EUR 123 million, +1% versus prior year
- Return on tangible equity (@ 12% CET1) of 17.2%
- Core revenues of EUR 247 million, +4%
- Operating income of EUR 265 million, +6%
- Operating expenses up 3% due to recent acquisitions
- Cost-income ratio improved to 40.5%, -1.1pts
- Net interest margin improved to 2.23%, +3bps versus Q4 2016
- Fully loaded CET1 ratio of 15.7%, +60bps versus year-end 2016

VIENNA, Austria - May 4, 2017 - BAWAG P.S.K. today reports a strong
profit before tax of EUR 123 million for the first quarter 2017, up
1% versus the prior year and up 18% compared to the fourth quarter
2016, driven by higher operating income. The return on tangible
equity (@12% CET1) came in at 17.2%. Higher operating expenses and
higher risk costs were driven by fully absorbing the Bank's recent
acquisitions that were completed during the fourth quarter 2016.
Nevertheless, the cost-income ratio was down 1.1pts to 40.5%. The net
interest margin was up 3bps to 2.23% versus the fourth quarter 2016.
The Bank has increased its fully loaded CET1 ratio by 60bps to 15.7%
versus year-end 2016.

"After a record 2016, BAWAG P.S.K. is off to a strong start in 2017,
delivering strong results in the first quarter 2017 backed by solid
operational developments and progress on various strategic
initiatives. We continue to maintain our low-risk strategy focused on
the DACH region, with Austria as our foundation, while providing our
customers with simple, transparent and best-in-class products and
services. The most recent upgrades of our ratings by Moody's in April
2017 make BAWAG P.S.K. the best-rated Austrian bank and are a
testament to the strength of the Bank, in particular its
capitalization, asset quality and sustained profitability. Our first
quarter results reiterate that BAWAG P.S.K. is well positioned to win
in this competitive and evolving European banking landscape. We are
well on track to meet or exceed our full-year 2017 targets,"
commented Chief Executive Officer Anas Abuzaakouk.

Strong capital ratios

The management team continues to run the Bank on a fully loaded basis
from a capital standpoint. The fully loaded CET1 ratio improved by
60bps to 15.7% (Dec 2016: 15.1%) and the fully loaded total capital
ratio by 50bps to 18.5% (Dec 2016: 18.0%), driven by organic earnings
while at the same time funding acquisitions. Thereby, the capital
position significantly exceeded both regulatory requirements and the
Bank's CET1 target ratio of greater than 12%.

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

In April 2017, the long-term senior unsecured debt, issuer and
deposit ratings were all raised by one notch to A2 while the positive
outlook on these ratings was maintained. At the same time, the Bank's
standalone rating as well as its subordinate debt rating were also
upgraded by one notch to baa1 and Baa2, respectively. Taken together
with our Fitch rating, this makes BAWAG P.S.K. one of the few banks
across Europe with two ratings in the single A category.

BAWAG P.S.K. awarded as "Austria's Best Bank 2017" by Global Finance

In addition to the Moody's upgrades, Global Finance, one of the
leading magazines for finance and capital market issues, awarded
BAWAG P.S.K. as "Austria's Best Bank 2017" in March 2017. After
having received The Banker's "Bank of the Year 2016" award for
Austria in December 2016, we are again proud to be recognized for the
successful development of the Bank.

Acquisition of PayLife

In February 2017, easybank signed a purchase agreement to acquire the
commercial card issuing business of SIX Payment Services Austria
(PayLife). The acquisition of the PayLife card issuing business will
not only be accretive day 1, but easybank will look to continue using
their partnerships and distribution channels to further grow its
customer franchise in Austria and abroad. The transaction is expected
to close in the second half of 2017.

Key business highlights in Q1 2017

BAWAG P.S.K. successfully executed on its business plans in the first
quarter 2017, delivering another quarter of strong results.

Operating income increased by 6% to EUR 265 million. Despite a
continued low-interest rate environment, net interest income rose 6%
to EUR 197 million in the first quarter 2017, primarily driven by net
asset growth and lower funding costs. Net commission income decreased
by 2% to EUR 50 million. The net interest margin increased by 3bps to
2.23% compared to the fourth quarter 2016, reflecting the Bank's
dedicated focus on risk-adjusted pricing and optimizing the liability
structure.

Higher operating expenses and risk costs in the first quarter 2017
were driven by fully absorbing the recent acquisitions that were
completed during the fourth quarter 2016. Despite higher operating
expenses, the cost-income ratio in the first quarter 2017 further
improved by 1.1pts to 40.5%. The operating expenses will decrease as
integration efforts from our recent acquisitions are realized through
the course of the year.

The Bank continues to maintain a conservative risk profile
characterized by disciplined underwriting, low leverage and a
business model focused on developed markets in Austria and Western
Europe. This is best reflected in a risk cost ratio of 14bps and a
stable NPL ratio of 2.1% as of March 2017.

Regulatory charges increased by 53% to EUR 25 million as we had to
front-load approximately 80% of the total regulatory charges
anticipated for the full year during the first quarter.

For comparison purposes, BAWAG P.S.K. focuses on profit before tax as
net profit last year was significantly impacted by a one-time tax
benefit booked in the first quarter 2016. Profit before tax was EUR
123 million, up 1% compared to the first quarter 2016 and up 18%
compared to the fourth quarter 2016 driven by higher operating
income.

Loans and receivables with customers remained stable and stood at EUR
28.2 billion as of 31 March 2017. The overall customer loan book
continued to be comprised of two-thirds exposure to Austria and
one-third to Western Europe and the United States. The total new
origination volume in the first quarter was more than EUR 900
million.

The funding of BAWAG P.S.K. continues to be based on stable customer
deposits of EUR 25.5 billion, representing two-thirds of the overall
funding base. The increase compared to the first quarter 2016 mainly
results from the acquisition of start:bausparkasse and IMMO-BANK. The
funding costs continued to decrease as the product mix, volume and
pricing were optimized. At the end of the first quarter 2017, the
blended overall retail deposit rate stood at 0.22%, down 7bps versus
a year ago.

Segment reporting

The BAWAG P.S.K. Retail segment, consisting of the Bank's retail and
small business lending to domestic customers, social housing
activities and real estate leasing, also includes start:bausparkasse
and parts of IMMO-BANK. The segment achieved a profit before tax of
EUR 43 million in the first quarter 2017, up 11% compared to the same
period last year, while delivering a pre-tax return on equity (@12%
CET1) of 20.9% and a cost-income ratio of 51.1%. Higher core revenues
deriving from the recent acquisitions of start:bausparkasse and
IMMO-BANK more than offset the increase in regulatory charges,
reflecting the already booked full-year contribution to the deposit
guarantee scheme. Overall risk metrics reflect the high credit
quality of the retail business, with a risk cost ratio of 37bps and
an NPL ratio of 1.9% (down 30bps versus the first quarter 2016).

The easygroup segment, comprising Austria's leading direct bank
easybank, the auto and mobile leasing platforms as well as
residential mortgage portfolios in Western Europe, achieved a profit
before tax of EUR 31 million in the first quarter 2017, up 33%
compared to the first quarter 2016, with a pre-tax return on equity
(@12% CET1) of 37.4% and a cost-income ratio of 20.8%. The underlying
performance reflects the purchase of a high-quality performing
residential mortgage portfolio in Western Europe in December 2016.
The segment will largely benefit from the announced acquisition of
the PayLife card issuing business, bringing over half a million new
customers, an elite credit card team and important distribution
partnerships.

The DACH Corporates & Public Sector segment includes corporate and
public lending activities and other fee-driven financial services for
mainly Austrian customers and select client relationships in Germany
and Switzerland. The segment contributed EUR 21 million to the Bank's
profit before tax, up 31% compared to the first quarter 2016 and
delivering a pre-tax return on equity (@12% CET1) of 19.1%. Core
revenues were up 3%, driven by the acquisition of IMMO-BANK in
December 2016. The overall quality of the portfolio further improved
compared to the first quarter 2016 with an NPL ratio of 0.7%, down
40bps versus the prior year. This is a reflection of the prior years'
de-risking activities and the overall high asset quality.

The International Business segment comprises international corporate,
real estate and portfolio lending outside the DACH region, primarily
in Western Europe and the United States. The segment contributed EUR
22 million to the Bank's profit before tax in the first quarter 2017,
down 13% compared to the same period last year due to higher
operating expenses and risk costs, while still delivering a pre-tax
return on equity (@12% CET1) of 19.5%. Despite
higher-than-anticipated early redemptions and a general pressure on
margins, core revenues remained stable. Similar to the DACH corporate
lending business, the international business is characterized by
high-quality assets and a low NPL ratio of 0.3%.

Treasury Services & Markets manages the Bank's investment portfolio
of financial securities of EUR 5.6 billion and a liquidity reserve of
EUR 2.8 billion. The investment portfolio's average maturity was five
years, comprising 96% of investment grade rated securities, of which
85% were rated single A or higher. As of 31 March 2017, the portfolio
had no direct exposure to China, Russia, Hungary or South-Eastern
Europe. Direct exposure to the UK is moderate and focuses on
internationally diversified issuers with solid credit quality. The
segment contributed EUR 14 million to the Bank's profit before tax in
the first quarter 2017, up 45% compared to the same period in 2016,
delivering a pre-tax return on equity (@12% CET1) of 17.1%. Operating
income was up 30%, supported by higher gains from financial
instruments.

*) Return on tangible equity calculated at a fully loaded CET1 ratio
of 12%.

About BAWAG P.S.K.

With more than 2.2 million customers, BAWAG P.S.K. is one of
Austria's largest, most profitable and best capitalized banks
operating under a well-recognized national brand. We apply a
low-risk, highly efficient, simple and transparent business model
focused on Austria and other developed markets - with two-thirds of
our customer loans within Austria. The remaining customer loans are
predominantly in Western Europe and the United States. We serve
Austrian retail, small business and corporate customers across the
country, offering comprehensive savings, payment, lending, leasing,
investment, building society and insurance products and services. Our
Austrian business is complemented by international activities focused
on retail, corporate, commercial real estate and portfolio lending in
Western developed countries. This strategy provides us with earnings
diversification and growth opportunities, while maintaining a
conservative risk profile with disciplined underwriting.

We run the Bank in a safe and secure manner with a strong balance
sheet, low leverage and solid capitalization. Delivering simple,
transparent and best-in-class products and services that meet our
customers' needs is our consistent strategy across all business
units.

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

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

This text can also be downloaded from our website:
https://www.bawagpsk.com

Note: In this press release, any data is presented on the BAWAG
Holding Group level (referred to as "BAWAG P.S.K." throughout the
document) unless stated otherwise.

For charts please refer to the attached PDF press release

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

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

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

Original-Content von: BAWAG P.S.K. Bank f?r Arbeit und Wirtschaft und ?sterreichische Postsparkasse Aktiengesellschaft, übermittelt durch news aktuell