Interim Report at 31 March 2011 · 2018-11-19 · Bank Austria · Interim Report at 31 March 2011 3 Bank Austria at a Glance Income statement figures (€ m) Q1 2011 Q1 2010 +/–

Interim Report at 31 March 2011

2Bank Austria · Interim Report at 31 March 2011

Contents

Bank Austria at a Glance 3

Interim Report at 31 March 2011 4The banking environment in early 2011 4Bank Austria in the first quarter of 2011 6Financial position and capital resources 12Development of business segments 13Outlook 20

Consolidated Financial Statements in accordance with IFRSs 22Statement of Comprehensive Income for the first quarter of 2011 22Statement of Financial Position at 31 March 2011 24Statement of Changes in Equity 25Statement of Cash Flows 26Notes to the Consolidated Financial Statements 27Statement by Management on the Interim Report 54

Additional Information 55Investor Relations, ratings, imprint, notes 55


Bank Austria at a Glance

Income statement figures(€ m) Q1 2011 Q1 2010 +/–

Net interest 1,128 1,081 4.3%Net fees and commissions 462 470 –1.7%Net trading, hedging and fair value income 114 76 50.2%Operating income 1,801 1,695 6.3%Operating costs – 950 – 911 4.4%Operating profit 851 784 8.5%Profit before tax 449 296 52.0%Net profit attributable to the owners of Bank Austria 341 242 41.1%

Key performance indicatorsQ1 2011 2010

Return on equity after tax (ROE) 8.0% 4.5%Cost / income ratio 52.8% 52.3%Risk/earnings ratio 31.9% 39.1%Provisioning charge/avg. lending volume (cost of risk) 1.16% 1.44%Marginal Economic Value Added € 66 m € 194 m Marginal RARORAC 2.67% 2.28%Total capital ratio (based on all risks, end of period) 12.33% 12.13%Tier 1 capital ratio 10.71% 10.35%Tier 1 capital ratio without hybrid capital (Core Tier 1 capital ratio) 10.38% 10.04%

Volume figures(€ m) 31 march 2011 31 dec. 2010 +/–

Total assets 190,301 193,049 –1.4%Loans and receivables with customers 128,553 130,093 –1.2%Primary funds 127,775 127,839 0.0%Equity 17,400 17,476 –0.4%Risk-weighted assets (overall) 122,045 127,906 –4.6%

Staff *)

31 march 2011 31 dec. 2010 +/–

Bank Austria (full-time equivalent) 59,670 59,653 0.0%Central Eastern Europe business segment 51,579 51,616 –0.1%Other business segments 8,091 8,037 0.7%

Austria 7,932 7,889 0.5%*) Employees of companies accounted for under the proportionate consolidation method are included at 100%.

Offices *)

31 march 2011 31 dec. 2010 +/–

Bank Austria 3,033 3,033 0.0%Central Eastern Europe business segment 2,734 2,734 0.0%Other business segments 299 299 0.0%

Austria 297 298 –0.3%*) Offices of companies accounted for under the proportionate consolidation method are included at 100%.


In the first quarter of 2011, the global economy showed a favourable underlying trend while being affected by persistent structural imbalances and new uncertainties: the worldwide upswing driven by industry was gaining momentum. As the year started better than expected, economists raised various growth forecasts for 2011. Following the renewed upswing, the business cycle entered its second – more moderate – phase. The strong regional variations seen in the previous year continued to exist: combined economic performance in the industrial countries is climbing at a much lower rate than in earlier business cycles, the output gap persists, and employment is lagging behind. This means that growth is mainly driven by the emerging markets: the catch-ing-up process is intensifying the reallocation of resources from the industrial countries to the new growth centres; strong capital inflows and rising commodity prices reflect this shift in emphasis. Crude oil prices rose by 21% to US$ 115.1 per barrel (Brent) in the first quarter of 2011, reaching a level that was almost 40% higher than in March 2010; the broad commodity price index (S&P GS) gained 13% in the first three months of 2011 and was up by 34% on the previous year; also in euro terms, external factors gave strong impetus to price increases.

divergent trends were seen both among and within the large aggregates. In the US, the first quarter of 2011 was again disap-pointing, mainly because of domestic demand. This means that the zero-rate monetary policy and quantitative easing will remain in place for the time being. The euro area as a whole probably achieved economic growth of 0.6% compared with the preceding quarter and 2.2% over the previous year, but this reflects develop-ments moving at two speeds. The core industrial countries saw strong growth driven by industry and gaining broad momentum, especially in Germany, where GDP is estimated to have been up by 4% on the previous year. In the southern part of the European Union, structural and financial problems curbed economic growth.

This pattern of economic developments – particularly in the US and the euro area – determined the financial market situation. Expectations of the interest rate turnaround had a strong influ-ence in the course of the second half of 2010. In the first quarter of 2011, short-term and medium-term market rates anticipated the first increase in the ECB’s key interest rate, which was effected as at 13 April 2011. Long-term benchmark interest rates also rose strongly (with the increase in euro interest rates being more pro-nounced than in the US dollar), putting an end to a multi-year bull market in bonds. The interest rate cycle was initiated despite the continued debt crisis, the dependence of some highly exposed banking sectors, and the real divergence within the euro area. This asynchronous pattern affected the US dollar, which depreciated against the other world currencies by 4.2% in the first quarter of 2011 and by 7.6% by the end of April 2011, and against the euro

by 5.6% and 8.3%, respectively. Fears in connection with the relaxed US monetary policy were also reflected in the sharp rise in the price of gold, which at the end of March 2011 was US$ 1,423 per ounce, up by 86% on a year earlier, and reached US$ 1,541 per ounce at the end of April.

Apart from the stronger economic trend and the turnaround in interest rates, continued uncertainties and new disturbances influenced investors’ decisions. The European government debt crisis continued to smoulder. More intensive use was made of the rescue scheme (now also by Portugal) and the range of instru-ments was widened. However, scepticism among lenders as to whether debt service capacity can be restored through cost sav-ings, bridge loans and various guarantees alone has increased. Most recently, Greek government bonds were quoted at about 70% for two-year (residual) maturities and about 55% for ten-year maturities. The natural catastrophe in Japan, followed by the disaster at a nuclear power station, caused uncertainty for some time in the middle of March – to say nothing of human grief and sorrow; the medium-term consequences, e.g. for the primary energy mix in Europe, are still unclear. The world stock index started the year in an upbeat mood; following the setback around the middle of March, the index at the end of that month was up by 2.7% on the year-end 2010 level and 7.2% higher than a year earlier. CEE stock markets achieved disproportionately strong improvements (MSCI Emerging Europe +6.2% in Q1 2011 and +17.7% year-on-year).

The austrian economy got off to an excellent start in 2011, thanks to strong export performance and a pick-up in investment activity. In the first three months, the Bank Austria Business Indi-cator remained at a level last seen in autumn 2007. We expect that GDP rose strongly, by 0.9%, in the first quarter of 2011 compared with the preceding quarter, an increase which would correspond to 3.4% growth in a year-on-year comparison. On this basis we raised our growth forecast for Austria for 2011 from 2.3% to 2.8%. Output, especially for exports, has expanded sig-nificantly in recent months, and the level of capacity utilisation in Austrian industry has risen to a level which is considerably higher than the multi-year average. Investment projects postponed in the past are now being implemented and employment is rising. This means that the domestic economy, including private consumption, is now also making a contribution to growth again. The only sec-tor which has not experienced any significant recovery is the con-struction industry. Overall, economic growth still tends to be a return to normal rather than a boom. Accordingly, credit expan-sion remained weak. Growing inflationary pressure, persistent uncertainty in the fiscal area, disturbances, and last but not least, the turnaround in interest rates prompted Austrian investors to act with pronounced restraint in the first quarter of 2011.

The banking environment in early 2011




The economies in central and eastern europe again achieved growth around the turn of the year. With the exception of Romania, they started 2011 at high levels of activity, with growth ranging between 1% and 1.5% in the first quarter. Developments varied considerably, reflecting local production patterns and confirming the trends seen in the previous year. Economic activity in the CIS coun-tries is benefiting from the global rise in energy prices, though this effect is offset by strong increases in food prices. The recovery of domestic demand in these countries has nevertheless made good progress, with unemployment declining significantly and real incomes rising. Economic developments in the Czech Republic and in Slovakia, and also in Hungary, still benefit from strong industrial activity in the core European countries and are unaffected by distur-bances in the global production chain (automotive industry, Japan). Domestic demand has become an engine of growth in these coun-tries as well. Turkey is far ahead in the business cycle and is now in the moderate middle phase; the country records the strongest increases in wages and salaries (after the CIS region). To ward off speculative capital inflows, Turkey’s central bank reduced interest rates and took determined quantitative action (including stricter minimum reserve requirements) which also affected credit expan-sion. But for most countries, rising commodity prices and food prices have become the main factors creating uncertainty; in some instances, higher prices also reflect increases in the rate of value added tax. After two years of dramatic reductions, current account deficits are now beginning to widen as the oil bill rises. But this effect is mitigated by capital imports, which have hesitantly started to flow again – later than in other world regions – thanks to improved fundamentals. The recovery in SEE is still fragile; this applies also to Romania and partly to Bulgaria. There are signs of a shift away from a relaxed monetary policy. In Serbia, such meas-ures were taken not least to support the dinar. Q2

2009 2010 2011Q3 Q4 Q3 Q4Q1Q1 Q1Q2

CEE currency movementsIndex 2009 average = 100, weekly levels and quarterly averages

96

98

100

102

104

106

108Appreciation/depreciation against

the euro, weighted by contribution to CEE operating profit of Bank Austria

(excluding Poland)

After strong appreciation in the first half of 2010, cee currencies as a whole started to depreciate against the euro in summer 2010. On the average for the first quarter of 2011, the index (weighted by con-tribution to Bank Austria’s operating profit) fell back to the level seen a year earlier (–0.3%; based on equal weightings, +0.4%). Cur-rency movements against the US dollar more or less reflected this trend, mainly because currency baskets guide movements in major currencies (including the Russian rouble and, informally, Kazakhstan, Ukraine); but a year-on-year comparison shows that overall changes were not significant (chart). The currencies of Russia and Kazakhstan (oil, gas) and Ukraine (steel) appreciated against the euro compared with the previous year. The Czech currency showed the strongest increase (+6%) due to capital inflows. This compared with currency depreciation in Croatia and Serbia. The value of the Turkish lira also declined against the euro, not least due to specific measures to fend off speculative inflows. – Overall, currency movements have only a small impact on a year-on-year comparison of Bank Austria’s income statement for the first quarter of 2011.



Bank Austria in the first quarter of 2011

Overview Bank Austria got off to a good start in 2011, making up for the weak fourth quarter of 2010 and achieving the best quarterly perform-ance in two years. Net profit attributable to the owners of Bank Austria for the first quarter of 2011 was € 341 m, up by 41% on the previous year (Q1 2010: € 242 m); adjusted for changes in the consolidation perimeter (Q1 2010 restated), the increase was 56%. The result for Q4 2010 was close to zero (– € 14 m) due to impairment losses on goodwill and a higher provisioning charge. This dip in performance has been overcome: net profit even exceeded the figure for the third quar-ter of 2010 (see chart). Earnings are still lagging behind the pre-crisis levels, in terms of absolute amount, growth and profitability.

These developments show that the very low level around the turn of 2009/2010 is now behind us and the return to normal has made good progress. When interpreting the year-on-year comparison, one should not forget that the banking sector had just emerged from the serious recession and its impact a year before (base effect). After the strong recovery in the first half of 2010, subsequent quarterly trends reflected a steady yet flat increase in lending volume (see chart). Operating performance in customer business – i.e. net operating profit after net write-downs of loans and provisions for guarantees and commitments of the Austrian customer business segments and the CEE business segment – also improved from quarter to quarter

from the end of 2009 onwards; this was only interrupted by a higher provisioning charge for CEE in Q4 2010. Net profit for the bank as a whole moved more or less in line with this development. However, in Q2 and Q4 2010, the income statement additionally reflected large impairment losses on goodwill. In the first quarter of 2011, a good operating performance, including a decline in net write-downs of loans and provisions for guarantees and commitments, fed through to bot-tom-line profits as non-operating items returned to more normal levels following the exceptional charges in the preceding quarter.

Profit before tax in the first quarter of 2011 reached € 449 m, an increase of over one-half (+52%) compared with the same period of the previous year. A comparison with restated figures for Q1 2010 (with comparative figures being adjusted to the current Group struc-ture, mainly by excluding the contribution from UniCredit CAIB, which was sold in June 2010) shows that profit before tax for the first quarter of 2011 was up by 74% from the particularly low Q1 2010 figure. The increase was due in equal measure to a higher operating profit and a lower provisioning charge (+ € 66 m and + € 63 m, respec-tively), and non-operating items (including the addition to provisions for risks and charges) were also lower. As a result of the higher charge for income tax, net profit attributable to the owners of Bank Austria increased at a lower rate than profit before tax, but still grew strongly (by € 99 m or 41%, on an adjusted basis: 56%).

Year-on-year comparisonQ1 11 Q1 10 +/– € m +/– % +/– % r)

Operating profit 851 784 +66 +8% 14%Net write-downs of loans and provisions for guarantees and commitments –376 –439 +63 –14% –14%Net operating profit 475 345 +130 +38% +54%Profit before tax 449 296 +154 +52% +74%Net profit attributable to the owners of Bank austria 341 242 +99 +41% +56%

r) restated: Q1 2010 adjusted to the current Group structure. At overall bank level, the restated figures mainly exclude UniCredit CAIB AG, which was sold within UniCredit in June 2010.

The change since the fourth quarter of 2010 shows a similar pat-tern. The higher provisioning charge in Q4 2010 and the goodwill impairment losses between profit before tax and net profit makes the profit improvement appear even more significant.

Quarter-on-quarter comparisonQ1 11 Q4 10 +/– € m +/– %

Operating profit 851 824 +26 +3%Net write-downs of loans and provisions for guarantees and commitments –376 –526 +150 –28%Net operating profit 475 299 +176 +59%Profit before tax 449 266 +184 +69%Net profit attributable to the owners of Bank austria 341 –14 +355 n.m.

Q22009 2010 2011

Q3 Q4 Q3 Q4Q1 Q1Q2

Quarterly trends in the past two years

Average lending volume

€ m

–50

0

50

100

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200

250

300

350

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450

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550

€ bn

121122123124125126127128129130

128

286

139 129

242

217

302

–14

341326

467

282

392

470513

411

533

125

123

124

128129 129 129

Net operating profit of customer business segments1)

Performance generated by the bank as a whole = net profit attributable to the owners of Bank Austria

2)

2)

1) Customer business segments = Austria (F&SME, PB and CIB) and CEE = Bank Austria without Corporate Center. / 2) Difference = operating profit of Corporate Center, restatement difference; provisions for risks and charges, integration costs, net income from investments, and goodwill impairment; income tax and non-controlling interests. Large impairment losses on goodwill in Q2 2010 and Q4 2010



A regional analysis shows that both of the two large sectors of Bank Austria’s operations – the Austrian business segments and CEE – contributed to the improvement in operating performance com-pared with the same period of the previous year. Austrian customer business developed more steadily and was affected in the first quar-ter of 2011 by changes in the interest rate environment and a slight increase in the provisioning charge. Net operating profit generated by Austrian customer business in Q1 2011 declined by 10% compared with the preceding quarter – despite a positive trend – but was still up by 39% on a year earlier. The CEE business segment matched the performance achieved in Q3 2010 and made up for the large provisioning charge in the preceding quarter; net operating profit generated in Q1 2011 therefore improved by about one-third over the same period of the previous year.

Since the end of 2009, volume at Bank Austria has shown an upward trend again (measured against average loans to customers, up by 4% compared with the same period of the previous year), although expansion in the past few quarters has been modest. Growth was again driven by the CEE Division, where volume rose by 10%. At € 190.3 bn, total assets were down by 1.4% from year-end 2010 and 5.3% lower than at the end of March 2010, with the proportion of customer business continuing to rise on the assets side and on the liabilities side. Leverage (without intangible assets) declined further, to 13.6 in March 2011; a year earlier, the leverage ratio based on the same definition was 14.9. capital ratios rose strongly as a result of the capital increase carried out a year ago, and they have continued to improve since then: at the end of March 2011, the Tier 1 capital ratio pursuant to the Austrian Banking Act was 10.71% (31 March 2010: 10.35%); the Core Tier 1 capital ratio (excluding hybrid capital) was 10.38% (31 March 2010: 10.01%). The total capital ratio reached 12.33% after 12.37% (based on all risks).

Details of the income statement Operating income of Bank Austria in the first quarter of 2011 was € 1,801 m, matching the level of the preceding quarter and exceeding the Q1 2010 figure by 6% or € 106 m. Based on a com-parison with the figures restated to reflect the current consolidation perimeter and the current segment structure, the increase is 10%. (At overall bank level, most of this adjustment relates to the exclu-sion of UniCredit CAIB, which was sold in June 2010.) Contributions to the increase in operating income came from the Austrian cus-tomer business segments – Family & SME Banking (F&SME), Pri-vate Banking (PB) and Corporate & Investment Banking (CIB) – and from the Central Eastern Europe business segment (CEE), with increases of 7% each.

The strongest growth compared with the previous year was achieved in net interest, which rose by € 46 m or 4% (up by 6% compared with the restated Q1 2010 figure). At € 1,128 m, net interest remains by far the most important income component. Given the rather flat underlying development of volume, net interest was mainly determined by the trend and structure of market interest rates in the past few months. The interest margin, reflecting the increase in short-term and medium-term market rates, declined from 368 basis points (bp) in Q3 2010 to 355 bp in Q4 2010 and most recently to 349 bp (measured as a proportion of average lend-ing volume); it was slightly higher than a year earlier (Q1 2010: 344 bp). In CEE, although volume rose, net interest was lower as the interest margin declined in the past two quarters; nevertheless, the figure for the first quarter of 2011 was up by 4% on Q1 2010. Austrian customer business recorded a weak volume trend, espe-cially in corporate banking, while the interest margin remained stable. Quarterly trends in the Family & SME Banking Division (F&SME), whose business is characterised by high levels of depos-its, and in the Corporate & Investment Banking Division (CIB) with its disproportionately large lending business moved in opposite direc-tions, a pattern that is typical of the early phase of the interest rate cycle. Overall, net interest in Austria was 1% below the figure for the preceding quarter (i. e. more or less stable in view of the lower number of interest days) and 2% higher than in the first quarter of the previous year.

Our new Group-wide format for the condensed income statement shows the individual income components without calculating sub-totals. If net interest, dividends and other income from equity invest-ments are added up according to previous practice to arrive at “net interest income”, the figure for the first quarter of 2011 shows an increase of 5% over the same period of the previous year.

Net fees and commissions amounted to € 462 m and thus accounted for 26% of operating income. After several good quarters in 2010, net fees and commissions recently fell back (down by 10% from Q4 2010) to a level that was 2% lower than a year earlier.

Customer business segments(Bank Austria without Corporate Center)

Central Eastern Europe

Austrian customer business

Q2

Customer business segments = Austria (F&SME, PB and CIB) and CEE = Bank Austria without Corporate Center

2009 2010 2011Q3 Q4 Q3 Q4Q1 Q1Q2

Net operating profit

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In CEE the strong expansion of fee-based business in previous years was interrupted (down by 8% from the preceding quarter, but up by 5% on Q1 2010); this was partly due to the seasonal pattern dis-cernible after the end of 2010. The situation in Austria was stable. Quite generally, commercial services including payment and card transactions supported fee and commission income while turnover in securities business was affected by renewed uncertainty among investors.

Despite the far-reaching restructuring of financial market trading activities, net trading, hedging and fair value income improved substantially compared with Q1 2010 and Q4 2010. At € 114 m, it was up by one-half (+ € 38 m) on the comparative figure for the previous year. In this context, two effects should be noted in con-nection with the sale of UniCredit CAIB in 2010: in the first quarter of 2010, CAIB generated a positive trading result, which was no longer included later in the year. On the other hand, Bank Austria has since the middle of 2010 participated in profits of the Markets product line of UniCredit’s CIB Division, and this participation offsets the income lost as a result of the Group-internal bundling of activi-ties. Net trading, hedging and fair value income generated by the customer business segments, which is not affected by the effects described above (restated and without the Corporate Center), was € 42 m for the first quarter of 2011, up by € 39 m from a year ear-lier, with Austria and CEE accounting for equal contributions to the increase. This is a noteworthy development because after the restructuring, most of the net trading performance is generated by customer-driven business. In the fourth quarter of 2010, net trading, hedging and fair value income in the customer business segments was even higher, at € 71 m.

Operating costs were reduced by 3% to € 950 m in the first quarter of 2011 compared with Q4 2010; as a result, the year-on-year increase was only € 40 m or 4%. Without the (pro-rata) expense for the bank levies in Hungary and Austria, operating costs rose by 1%. This means that we cushioned the effect of additional burdens by applying stringent cost management. The cost / income ratio continued to decline to 52.8%, or 51.3% without the bank levy (after 54.3% in Q4 2010 and 53.7% in Q1 2010). If operating costs are adjusted for those associated with the former UniCredit CAIB, the increase is 6.6% (or 3.5% without the bank levy). Given the lower staff intensity of the former investment bank UniCredit CAIB, the adjusted cost / income ratio would have been 54.4% in the first quar-ter of 2010, making the reduction of the cost / income ratio even more significant (with a decline of 3.1 percentage points instead of 1.6 percentage points, excluding the bank levy). In the three Austrian customer business segments, operating costs were 3% higher than in the same period of the previous year, one of the reasons being the employment initiatives launched in the F&SME Division. In CEE, the increase (without the bank levy) was over 4%. The cost / income ratio in CEE (45.9%) was considerably lower than in Austrian customer business (54.0%).

2010 saw a decline in net write-downs of loans and provi-sions for guarantees and commitments which started to ease the burden on the income statement. After a temporary interruption by a weaker Q4 2010, the favourable trend continued in early 2011. We believe that the improvement is sustainable, apart from the usual quarterly fluctuations. The provisioning charge for the bank as a whole was € 376 m in the first quarter of 2011, down by € 150 m or 28% from Q4 2010 and € 63 m or 14% lower than in Q1 2010 (see table below). The cost of risk (provisioning charge as a proportion of average lending volume in the period) recently fell to 116 basis points (116 bp = 1.16%); the peak level was 215 bp in Q4 2009.

Over one-quarter (27%) of net write-downs of loans and provisions for guarantees and commitments in the first quarter of 2011 related to Austria while CEE accounted for close to three-quarters (mainly booked locally, partly at the Vienna-based CEE headquarters, but always in the CEE business segment). In Austria, the provisioning charge in Q1 2011 was higher than in the third and fourth quarters of 2010. This was due to developments in the CIB Division while the provisioning charge in the F&SME Division declined steadily. The CIB Division, which serves large corporate customers, nevertheless recorded a satisfactory trend reflecting the economic environment: the low level of net write-downs of loans and provisions for guaran-tees and commitments in quarterly periods of 2010 is explained by the reduction of large-volume provisions made a year earlier. Apart from this, the quarterly trend presents a steady development at a relatively low level, with the cost of risk in CIB recently being only 44 bp. In the F&SME Division, which has included small and medium-sized enterprises (SMEs) since the beginning of 2011 (fig-ures for 2010 restated), quality improvements achieved in the previ-ous year in the Small Businesses sub-segment were maintained – the provisioning charge for this sub-segment had declined by one-half in 2010. The Swiss franc, which had strengthened against the euro in the previous year, depreciated again. This effect helped to ease the situation in business with private customers, together with numerous debt rescheduling arrangements. The cost of risk in F&SME in Q1 2011 was 102 bp, down by 32 bp from a year earlier.

Net write-downs of loans and provisions for guarantees and commitments (€ m)

Q1 11 Q4 10 Q1 10

Bank Austria as a whole 1) 376 526 439… Austria 2) 102 77 123… CEE 274 449 316

cost of risk (basis points) 3)

Bank Austria as a whole 116 bp 165 bp 142 bp … Austria 2) 64 bp 48 bp 76 bp… CEE 167 bp 286 bp 211 bp

1) Business segment figures restated, no difference compared with original figures at overall bank level. / 2) Three customer business segments plus Corporate Center. / 3) Provisioning charge / average loans to customers (net).



In the CEE business segment, the general impression is that the cri-sis has been overcome. It should be noted, however, that the various countries are at different stages of the business and credit cycles, and therefore individual exceptional charges may still be seen in future quarterly periods. Yet the negative impacts will probably taper off. At € 274 m in the reporting period, net write-downs of loans and provisions for guarantees and commitments declined to a level close to that seen at the end of 2008 (€ 215 m). (In the following com-mentary, the charge resulting from guarantees provided by the Vienna-based CEE headquarters is allocated to the countries to which the guarantees relate.) The provisioning charge for Kazakhstan, Ukraine and the Baltic countries in the first quarter of 2011 was close to € 100 m compared with € 163 m in the same period of the previous year. The situation in these countries seems to stabilise; they account for about 10% of lending volume in CEE and 36% of net write-downs of loans and provisions for guarantees and commit-ments. South-East Europe (SEE), lagging behind in the credit cycle in 2010 and in the early part of 2011, currently presents a mixed pic-ture: while the provisioning charge in Romania rose only slightly compared with the previous year, the cost of risk was still relatively high (316 bp); Bulgaria experienced a further significant deterioration (but at 261 bp, the cost of risk in that country was lower in absolute terms). In Croatia, on the other hand, the provisioning charge declined by 46% and the cost of risk fell to 82 bp. The situation in Russia also improved visibly, in line with the economic environment (provisioning charge down by 20%, cost of risk below 100 bp). Tur-key, which is ahead of other countries in the cycle, is a special case: benefiting from a strong economic momentum, the turnaround in Turkey took place a year ago. In the first quarter of 2010, there was a net release of loan loss provisions following large recoveries on loans previously written down. Despite a return to normal in the first quarter of 2011 (with a provisioning charge of € 12 m), the cost of risk at the bank in Turkey was still at the lower end of the scale, at 43 bp, even better than in Austria.

The NPL ratio, i. e. non-performing loans measured as a percentage of gross lending volume, stabilised at 4.6% compared with the year-end 2010 level (previous year: 3.6%). At the end of March 2011, the NPL coverage ratio was 64.7%, slightly higher than in December 2010 (62.6%). The proportion of impaired loans, the broadest defini-tion of problem loans, rose further (see table), a development which was exclusively due to the implementation of reporting rules in CEE, namely the obligation to continue to report a loan which has been successfully restructured as impaired for at least another year. This rule – which is stricter than the relevant Austrian regulations – became applicable to CEE loans for the first time at the beginning of 2011. All of the increase in impaired loans resulted from this meth-odological adjustment and this leads to a statistical break in the time series. As writedowns on restructured loans represent a much lower

proportion of the gross amounts, the coverage ratio declined but this decrease was not due to any underlying negative change. This means that the reporting period saw a decline in the provisioning charge and no further deterioration in asset quality.

Asset quality

eNd OF PerIOdmarch

2011dec. 2010

march 2010

Loans to customers (gross), € bn 135.6 137.0 132.6Write-downs, € bn 7.1 6.9 6.1

Impaired loans (gross) 13.31)

12.5 10.1as a percentage of loans to customers 9.8% 9.1% 7.6%… covered by specific write-downs 46.8% 48.4% 52.8%

of which: non-performing loans 6.2 6.4 4.8as a percentage of loans to customers 4.6% 4.6% 3.6%… covered by specific write-downs 64.7% 62.6% 70.3%

1) Break in time series due to regulatory change relating to CEE (see commentary).

Net operating profit for the first quarter of 2011 was € 475 m, up by € 130 m or 38% (restated: 54%) on the Q1 2010 figure. An item to be deducted from net operating profit is the net addition to provisions for risks and charges, which amounted to € 32 m and was down by € 39 m from the comparative figure for the previous year. Among the other non-operating items, integration costs were unchanged at € 1 m and net income from investments was € 8 m, down by € 15 m from the Q1 2010 figure, which included one-off gains on a sale recorded at a consolidated subsidiary (card com-plete). As non-operating items to be deducted were lower, profit before tax for the first quarter of 2011 rose more strongly than net operating profit, by € 154 m or 52% to € 449 m. Income tax was € 89 m, more than double the amount for the same period of the previous year, giving an effective tax rate of almost 20% (Q1 2010: about 12%). Non-controlling interests (previously: minority interests) declined by € 1 m to € 13 m.

The new format of the income statement combines items related to equity interest management, i. e. the Purchase Price Allocation (PPA) effect and goodwill impairment, in order to present the bank’s per-formance without the accounting impact of valuation measures. Net profit attributable to the owners of Bank austria before PPa amounted to € 347 m, an increase of € 101 m or 41% over the same period of 2010. In contrast to Q4 2010, the effects from Pur-chase Price Allocation and goodwill impairment in the first quarter of 2011 and in Q1 2010 were very low. Therefore bottom-line profit, i. e. net profit attributable to the owners of Bank austria, was € 341 m, an increase of € 99 m or 41% (restated: +56%) over the previous year.



Condensed income statement of Bank Austria1) (€ m)

chaNGe OVer Q1 2010 rest 2)

chaNGe OVer Q4 2010

Q1 2011 Q1 2010 € m IN % IN % Q4 2010 € m IN %

Net interest 1,128 1,081 +46 +4% +6% 1,142 –15 –1%

Dividend income and other income from equity investments 50 36 +14 +39% +38% 14 +36 +250%

Net fees and commissions 462 470 –8 –2% –2% 511 –49 –10%

Net trading, hedging and fair value income 114 76 +38 +50% >100% 49 +65 >100%

Net other expenses/ income 47 31 +16 +52% +32% 54 –7 –14%

Operating income 1,801 1,695 +106 +6% +10% 1,802 –1 –0%

Payroll costs –496 –480 –16 +3% +6% –491 –6 +1%

Other administrative expenses –386 –359 –27 +7% +9% –421 +35 –8%

Recovery of expenses 0 0 –0 –38% –39% 1 –0 –55%

Amortisation, depreciation and impairment losses on intangible and tangible assets –69 –72 +3 –4% –4% –67 –1 +2%

Operating costs – 950 – 911 –40 +4% +7% – 978 +28 –3%

Operating profit 851 784 +66 +8% +14% 824 +26 +3%

Net write-downs of loans and provisions for guarantees and commitments –376 –439 +63 –14% –14% –526 +150 –28%

Net operating profit 475 345 +130 +38% +54% 299 +176 +59%

Provisions for risks and charges –32 –71 +39 –54% –54% –33 +1 –3%

Integration costs –1 –1 +0 –20% –19% –1 +0 –19%

Net income from investments 8 22 –15 –65% –64% 1 +7 >100%

Profit before tax 449 296 +154 +52% +74% 266 +184 +69%

Income tax for the period –89 –36 –53 >100% >100% –56 –33 +60%

Profit for the period 360 260 +101 +39% +52% 210 +151 +72%

Non-controlling interests –13 –14 +1 –6% –6% –13 –0 +1%

Net profit before PPA 3) 347 246 +101 +41% +56% 197 +150 +76%

Purchase Price Allocation effect 4) –4 –4 +1 –13% –13% –2 –1 +59%

Goodwill impairment –3 0 –3 n.m. n.m. –208 +206 – 99%

Net profit 3) 341 242 +99 +41% +56% –14 +355 n.m.

n.m. = not meaningful 1) Bank Austria’s income statement as presented in this table is a reclassified format corresponding to the format used for segment reporting. / 2) Restated: comparative figures for 2010 adjusted to the current Group structure. At overall bank level, the restated figures mainly exclude UniCredit CAIB AG, which was sold within UniCredit in June 2010. / 3) Attributable to the owners of Bank Austria. / 4) PPA effects for Kazakhstan, Ukraine, Russia and Aton.



Volume, profitability and resourcesAverage loans and receivables with customers of Bank Austria as a whole rose steadily in the past year, with faster growth seen in the first six months and a slower increase from the middle of 2010. Exchange rate movements were one of the factors contributing to this development: strong appreciation was followed by a trend reversal in the final quarters, and these trends were reflected in CEE currency translation and varying movements in the main currencies against the euro. In the three Austrian business segments, average loans to customers declined slightly, while CEE recorded a strong increase compared with the same period of the previous year (see table below).

Resources and profitability in Q1 2011 compared with Q1 2010

BaNk austrIa austrIa 1) cee

relative sizeAverage loans to customers (€ bn) 2) 129.3 63.5 65.57

Change over previous year (Q1/Q1) +4.2% –1.6% +9.8%Average RWAs under Basel 2 (€ bn) 2) 125.0 41.3 78.8

Change over previous year +8.1% +4.6% +11.2%Operating income (€ m) 1,801 612 1,161

Change over previous year +9.8% +7.1% +7.2%

Profitability and value creationROE before tax 3) 10.3% 19.3% 12.1%Marginal EVA, € m 4) 66.0 54.8 74.3Marginal RARORAC 2.67% 6.97% 4.64%

equityAverage equity (€ bn) 5) 17.5 3.8 11.7

Change over previous year +11.9% +44.0% 7.8%

1) Family & SME Banking, Private Banking and Corporate & Investment Banking (CIB) Divisions; the difference of the total amount is shown in the Corporate Center (see page 46 of this report. / 2) Restated. / 3) ROE = profit before tax / institutional capital. / 4) Calculated on the basis of capital allocated under Basel 2. Difference = Corporate Center and inter-segment items, sum total calculated using bank’s own cost of capital. 5) Subsidiaries are included at actual IFRS capital.

Quite generally, risk-weighted assets (RWAs) are characterised by swings from quarter to quarter, making the underlying trends look more pronounced. In 2010, RWAs increased significantly from quar-ter to quarter. In the first quarter of 2011 they were 8.1% higher than a year earlier, despite the strong decline from Q4 2010 to Q1 2011. As usual, CEE recorded a dynamic increase (+11.2%), and RWA growth in Austria was also significant, at 4.6%. The latter was due to the particularly strong growth in the F&SME Division in

the course of the previous year, when exchange rate movements led to a disproportionately large increase in volume and calculated risk level. This development partly reversed in the first quarter of 2011 as the exchange rate situation eased and model parameters under Basel 2 in the risk-weight calculation for business with private cus-tomers were adjusted. A more favourable risk profile and refined measurement methodologies were among the factors enabling the bank to make this adjustment.

return on equity (ROE before tax = profit before tax /allocated equity, subsidiaries with institutional capital) in the first quarter of 2011 was 10.3%, up from a year earlier (7.6%) but still far below the long-term average (2005 – 2009: 14.0%). In the first quarter of 2011, economic Value added (marginal EVA, calculated on the basis of capital required in accordance with the target Tier 1 capital ratio) reached € 66 m at overall bank level, with the contributions from Austria and CEE being more balanced again. A comparison of average figures for IFrs equity in Q1 2010 and Q1 2011 shows the effect of the capital increase carried out in the previous year (the year-end 2009 figure before the capital increase was used in calcu-lating the average figure for Q1 2010).

BaNk austrIa austrIa 1) cee

GBs+cOrPOrate

ceNter 2)

employees (FTEs)End of March 2011 59,670 5,544 51,579 2,547End of 2010 (restated) 59,653 5,549 51,598 2,506

Change +16 –4 –19 +40

BranchesEnd of March 2011 3,033 299 2,734End of 2010 (restated) 3,033 298 2,735

Change 0 +1 –1

1) F&SME, Private Banking and Corporate & Investment Banking (CIB) Divisions 2) GBS = Global Banking Services plus remaining part of Corporate Center

The number of branches of Bank Austria did not change in the first quarter of 2011. staff numbers rose slightly, by 16 FTEs, but this development reflects larger changes. The number of employees in the Czech Republic, Russia and Kazakhstan rose by about 100 FTEs, an increase which was more than offset by a decline in Ukraine and normal staff turnover in other countries. In Austria, there was an organisational shift from support functions in customer business seg-ments to Service Lines of the Corporate Center. Initiatives have been launched for increasing staff numbers in the sales network in Austria.



Financial position and capital resources

Financial position in the first quarter of 2011

total assets declined by 1.4% to € 190.3 bn from year-end 2010 to 31 March 2011, and by 5.3% compared with the end of March 2010. The structure of the financial position continued to improve, as in the previous year. The improvement is reflected in the growing proportion of customer business on the assets side and the liabilities side.

On the assets side, cash and cash balances decreased (–26.5%), as did loans and receivables with banks (–7.2%), developments which are quite usual for the period following the end of a year. Financial assets held for trading declined further (–12.7%) from the previous year. Hedging derivatives fell 11.3% below the level at year-end 2010, while financial market investments increased by 7.8%, partly as a result of market valuations. Loans and receivables with customers contracted by 1.2% to € 128.6 bn, a development reflect-ing the most recent exchange rate developments among the major currencies. Loans and receivables with customers as a percent-age of total assets continued to rise, to 67.6% (after 67.4% at year-end 2010); a year ago the figure was 63.0%.

Interbank business also contracted on the liabilities side (–4.2%), together with financial liabilities held for trading (–16.4%) and hedg-ing derivatives (–32.5%). A slight 1.8% decline in deposits from customers (relating primarily to time deposits) to € 98.5 bn was offset by an increase in debt securities in issue (up by 6.3% to € 29.3 bn), so that primary funds – i.e. deposits from customers and debt securities in issue – remained unchanged at € 127.8 bn and accounted for 67.1% of total liabilities and equity. This means that loans and receivables with customers are covered by primary funds to the extent of 99%. As at 31 March 2011, equity amounted to € 17.4 bn; the marginal 0.4% or € 77 m decline over year-end 2010 resulted from income and expenses recognised in equity (– € 70 m): the net profit for the first quarter of 2011 was more than offset by a swing of foreign currency translation and reserves in accordance with IAS 39 into negative territory. The leverage ratio, pursuant to UniCredit standards and the cash concept (without intan-gibles), continued to improve slightly from 13.8 at the end of 2010 to 13.6 in March 2011; in the same period of the previous year the fig-ure was 14.9. The basic leverage ratio (equity / total assets) was 10.9 (after 11.0 and 11.6).

Capital resources pursuant to the Austrian Banking Act

risk-weighted assets (RWAs) as at 31 March 2011 were € 122.0 bn, down by € 5.9 bn (–4.6%) from year-end 2010. The change resulted primarily from the adjustment of risk parameters (– € 5.3 bn) and also from a decline in market risk (– € 1.0 bn). While several banking subsidiaries switched to the internal ratings-based (IRB) approach, this had a very small net effect in terms of RWAs: a € 10.8 bn increase in the IRB portfolio was more or less offset by a € 10.4 bn decrease in the portfolio under the standard-ised approach. As a result of lower RWAs, the capital requirement for credit risk declined to € 8.7 bn (down by 4.3%) and the capital requirement for all types of risk was € 9.8 bn (down by 4.6%).

Net capital resources as at 31 March 2011 were € 15.0 bn, down by € 0.5 bn or 3.1% from the year-end 2010 level. The decline resulted mainly from negative consolidation effects and a lower amount of subordinated capital eligible for inclusion.

Although net capital resources declined, capital ratios as at 31 March 2011 improved compared with the end of 2010, reflecting the higher proportion of the decline in RWAs. The Core Tier 1 capital ratio (Tier 1 capital ratio without hybrid capital) based on all risks rose from 10.04% to 10.38%. The Core Tier 1 capital ratio based on credit risk improved from 11.33% to 11.69%.

Capital ratios31 march 2011 31 dec. 2010

based on all risks 1) Tier 1 capital ratio 10.71% 10.35%... without hybrid capital (Core Tier 1 capital ratio) 10.38% 10.04%Total capital ratio 12.33% 12.13%

based on credit risk 2) Tier 1 capital ratio 12.05% 11.68%... without hybrid capital (Core Tier 1 capital ratio) 11.69% 11.33%Total capital ratio 12.87% 12.67%

1) Credit risk, operational risk, position risk and settlement risk. / 2) Capital resources less requirement for the trading book and for commodities risk, exchange rate risk and operational risk as a percentage of the risk-weighted assessment basis for credit risk.



Development of business segments

Family & SME Banking (F&SME)(€ m) Q1 2011 Q1 2010 1) chaNGe

Operating income 296 292 +5 +2%Operating costs –214 –208 –6 +3%Operating profit 83 84 –1 –2%Net write-downs of loans –55 –69 +14 –20%Net operating profit 27 15 +13 +86%Profit before tax 29 25 +4 +16%Loans to customers (avg.) 21,751 20,657 +1,094 +5%Risk-weighted assets (avg.) 2) 14,429 10,840 +3,589 +33%Average equity 3) 1,298 754 +544 +72%

1) For segment reporting purposes, the comparative figures for 2010 were restated to reflect the structure and methodology of the reporting period 2011 (see the segment reporting section in the notes to the consolidated financial statements on pages 44 to 51 of this report. / 2) Average risk-weighted assets under Basel 2 (all risks). / 3) Standardised capital; capital allocation to subsidiaries reflects actual IFRS capital. The difference compared with the consolidated equity of the Bank Austria Group is shown in the Corporate Center. See segment reporting section on pages 46 to 51. This information applies to all business segment tables.

The Family & SME Banking (F&SME) *) business segment got off to a good start in 2011 after a weaker second half-year in 2010: the last nine months have seen a marked improvement in net operat-ing profit, which reached € 27 m for the first quarter of 2011. This is 86% higher than the relatively good figure for Q1 2010. Factors which contributed to this achievement over the past quarterly periods were the trend in operating income and in particular the continued improvement in asset quality.

Volume growth in loans and deposits was moderate and revenue trends were closely linked to market rate movements, especially as the turnaround in interest rates – which was confirmed by the ECB in April – had been having an impact on margins and on the finan-cial decisions of customers since autumn 2010 (in summer 2010 interest rate levels and the interest rate structure had passed their multi-year low). Net interest was consequently 4% up on the pre-ceding quarter and, at € 178 m, it almost returned to the favourable level of Q1 2010 (–1%). As is usual at the beginning of an interest rate cycle, an underlying factor in this development were pro-nounced movements in lending business and deposit business: lending volume held up well; sustained growth in construction and housing finance was offset by declines in short-term loans and con-sumer loans for which there was less demand from households in light of the favourable trend in incomes and the interest rate envi-ronment. On the deposits side, volume rose slightly compared with Q1 2010, including that of medium and long-term deposits. Interest rate trends therefore led to an increase in margins on the deposit

side and a decrease in margins on the lending side, parallel devel-opments which more or less offset each other. Net fees and com-missions also improved in the first quarter of 2011 (+6% over Q4 2010 and +3% over Q1 2010). This reflects successful place-ments of the bank’s own bond issues, with income from other fee-based business remaining more or less unchanged. Operating income rose to € 296 m in the first quarter of 2011, which is 5% up on the Q4 2010 figure and 2% up on Q1 2010. After deduction of operating costs, which fell slightly over the preceding quarter and were only 3 % higher than in Q1 2010, operating profit came to € 83 m compared with € 65 m in Q4 2010 and € 84 m in Q1 2010.

In a situation characterised by stable revenues, an improvement in net write-downs of loans and provisions for guarantees and com-mitments had a decisive positive impact on the Division’s overall performance. Net write-downs of loans and provisions for guarantees and commitments have been steadily declining for about one year. This development has been supported by the eco-nomic upturn, the gradual improvement in employment and incomes, and, most recently, by the trend reversal in exchange rates. In Q1 2011 the provisioning charge totalled € 55 m, 20% down on the Q1 2010 figure. The cost of risk was 102 basis points (bp) in the reporting period (Q1 2010: 134 bp). The strong € 13 m or 86% rise in net operating profit compared with Q1 2010 was partly offset by a € 9 m decline in net income from investments (one-off gain on a sale recorded at a consolidated subsidiary in 2010). For this reason, profit before tax (€ 29 m) did not rise as strongly compared with Q1 2010 (+ € 4 m or 16%).

*) Since the beginning of 2011, F&SME has comprised not only the Mass Market, Affluent and Small Businesses sub-segments but also small and medium-sized enterprises (SMEs) with a turnover between € 3 m and € 50 m. Segment reporting was retrospectively adjusted to this new structure, so that a comparison with previous year’s figures can be made on a consistent basis.

% p.a.

2009 2010 2011Q3 Q4 Q3 Q4Q1 Q1 Q2Q2

Turnaround in interest rates

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.510-year

5-year

2-year

Money market(3 months)



Private Banking(€ m) Q1 2011 Q1 2010 chaNGe

Operating income 35 35 +0 +1%Operating costs –25 –24 –1 +4%Operating profit 10 11 –1 –5%Net write-downs of loans –1 0 –1 n.m.Net operating profit 9 11 –1 –14%Profit before tax 10 11 –1 –8%Total financial assets (avg.) 16,981 16,463 +518 +3%Loans to customers (avg.) 384 359 +25 +7%Risk-weighted assets (avg.) 548 497 +51 +10%Average equity 128 119 +9 +8%

n.m. = not meaningful

The Private Banking Division maintains a presence in 25 locations throughout Austria to serve the top segment of private customers – some 34,000 high net worth individuals –, and it is Bank Austria’s competence centre for foundations. With 547 employees and about € 17 bn in client assets, the Private Banking Division is market leader in Austria, claiming a market share of 19%.

The Division achieved a stable performance over the last few quar-ters, reflecting its strong advisory role and the long-term nature of its business. total financial assets increased by 3% to € 17.0 bn compared with the first quarter of 2010 (in terms of quarterly aver-ages). Direct deposits accounted for 34% of total volume, and assets under management (investment funds and asset management) and assets under custody (direct investments in securities /safe-custody business) for the remaining share. The relevant items in the income statement hardly changed in Q1 2011 compared with Q4 2010, nor was there much difference in a year-on-year comparison. Operating income in Q1 2011 (€ 35 m) was slightly above the Q1 2010 level. In 2010, net interest amounted to between € 10 m and € 12 m per quarter; in Q1 2011 (€ 11 m) it was slightly below the level of the preceding quarter (€ 12 m) but higher than the Q1 2010 figure (€ 10 m). Net fees and commissions, on the other hand, the most significant income component for private banking business, fluctu-ated strongly from quarter to quarter. While they include the revenue from asset management business, net fees and commissions also reflect investment turnover which is a result of investor behaviour. This in turn mirrors the mood prevailing on capital markets. Net fees and commissions generated in the first quarter of 2011 amounted to € 24 m, falling slightly short of the € 27 m achieved in the rela-tively good fourth quarter of 2010 and somewhat below the level of Q1 2010 (€ 25 m).

These developments are explained by entry into a new phase of the interest rate and business cycle, and by additional disruptions in the market environment in the first quarter of 2011. The year started on a strong footing, with optimistic growth forecasts and an indus-trial sector experiencing dynamic expansion. This was reflected in a favourable performance of equity markets in industrial countries, and in emerging markets in particular (see our commentary on the economic environment at the beginning of the Interim Report). The interest rate turnaround started to have an increasing impact against this background. Initially only anticipated, the turnaround was finally in place at the beginning of April, when the ECB took the first steps to raise interest rates. Bond yields had been rising for some time. In the first quarter of 2011, the performance of bench-mark government bonds was already slightly negative after years of strong capital appreciation; only market segments featuring higher interest rates were still positive (such as corporate bonds and emerging market bonds). While this change in the outlook signalled an end to a multi-year bull market in bonds and a shift in invest-ments, investors initially held back on account of new uncertainties. These include an overly relaxed US monetary policy, reflected in the surge in gold prices (31 March 2011: US$ 1,423 per ounce/+86% compared with Q1 2010) which was accompanied by a deprecia-tion of the US dollar, the scepticism over a sustainable solution for the European sovereign debt crisis, and the natural catastrophe in Japan that led to the meltdown at a nuclear power plant.

Operating income generated by the Private Banking Division in the first quarter of 2011 was lower than the Q4 2010 figure but a little above the Q1 2010 level (+1%). Conversely, costs were down on the preceding quarter (–8%), but 4% up on Q1 2010, partly as a result of initiatives to assure quality in advisory services (through training and the addition of portfolio quality analysts). Profit before tax in the first quarter of 2011, including non-operating items and net write-downs of loans and provisions for guarantees and com-mitments, came to € 10 m compared with € 11 m in the preceding quarter and in Q1 2010, respectively. As the business segment with the most advisory-intensive services and the most staff-intensive client relationships, the Private Banking Division had a cost / income ratio of 71% in the reporting period, and an ROE of over 30%. In meeting the needs and high demands of the important customer segments comprising high net worth individuals and foundations, the Division makes a consistent positive contribution to the bank’s overall results.



Corporate & Investment Banking (CIB)(€ m) Q1 2011 Q1 2010 chaNGe

Operating income 280 245 +35 +14%Operating costs – 92 –88 –4 +4%Operating profit 188 157 +32 +20%Net write-downs of loans –46 –53 +8 –15%Net operating profit 143 103 +40 +38%Profit before tax 146 104 +42 +40%Loans to customers (avg.) 41,687 43,503 –1,817 –4%Risk-weighted assets (avg.) 26,334 28,156 –1,822 –6%Average equity 2,401 1,785 +616 +35%

The Corporate & Investment Banking business segment continued to be a major source of revenue in the first quarter of 2011: with a profit before tax of € 146 m, the Division accounted for about 80% of the total contribution from Austrian customer business, and generated almost one-third of the profit before tax achieved by the bank as a whole although the SME sub-segment was transferred to the F&SME Division*). While profit before tax declined slightly, by 6%, from the Q4 2010 figure, mainly as a result of changes in the interest rate environment, it was 40% higher than the figure for Q1 2010. Contributions to this trend over the past few quarters came from a stronger commercial banking performance and from effective risk management. In the difficult years of crisis and reces-sion, efforts – made jointly with customers – focused on consolidat-ing the portfolio. This involved a reduction of risk-weighted assets (especially those associated with market risk) and a provisioning charge which was low when seen against the economic environ-ment. In the current year, however, the top priority is sustainable growth in corporate banking, and in business with real estate cus-tomers and public sector entities, via on-balance sheet products or capital market products.

Operating income in the first quarter of 2011 was 14% higher than in the same period of the previous year, despite a 3% decline from the Q4 2010 level. A similar trend was seen in net interest (the most important revenue component, accounting for 71% of operating income), which was up by 5% on Q1 2010. On-balance sheet volume declined in the previous year and did not yet increase in the first quarter of 2011 as demand remained weak. Therefore the increase in net interest was due to the trend in interest margins (net interest /average loans to customers). After an intermediate improvement from 174 basis points (bp) in Q1 2010 to 200 bp in Q4 2010, the interest margin recently declined slightly, to 190 bp, reflecting the turnaround in interest rates which has taken place in the meantime. On the deposit side, margins improved mainly on sight deposits and short-term customer deposits (especially in a

year-on-year comparison); on the other hand, margins came under pressure primarily in the area of short-term loans, as a result of ref-erence rate developments, but were still more or less maintained. Current interest rate trends have a strong influence on the CIB Divi-sion because lending volume in this business segment is more than double the volume of deposits. The favourable economic environment was also reflected in dividend income and other income from equity investments (especially in the real estate sector), which doubled from the previous year’s level. Overall, net interest income rose by 10% or € 19 m to € 217 m. After several very good quarters, net fees and commissions declined in Q1 2011 to more or less match the level of the same period of the previous year (–2%); this was mainly due to a weak trend in securities transaction volume. The past year’s reorientation in financial market trading activities to focus on cus-tomer-driven business has proved successful: the net trading result, which partly reflects this reorientation, was positive in the first quar-ter of 2011 (as in the preceding quarter); compared with the negative trading performance recorded in Q1 2010 there was a swing of € 20 m from a net loss to net income. The good performance of the Counterparts sub-segment shows the improvement even more clearly, though on a different basis: overall income (not only net trad-ing income) almost doubled. The past few quarters saw the usual fluctuations in operating costs between € 90 m and € 93 m; in Q1 2011, they were € 92 m, up by 4% on a year earlier. Based on significant revenue growth, the cost / income ratio improved from 36.0% to 32.7% in the reporting period.

The CIB business segment benefited from a stable revenue trend while keeping the provisioning charge under control: net write-downs of loans and provisions for guarantees and commitments in the first quarter of 2011 were € 46 m, down by 15% from the same period of the previous year. In the third and fourth quarters of 2010, the provisioning charge was even lower (€ 14 m and € 18 m, respectively) as improvements in the situation of companies permit-ted a release of loan loss provisions made in previous years. Even after the return to a more normal level in the reporting period, the cost of risk, at 44 basis points of average lending volume, was rela-tively low against the cyclical background. Net operating profit – i.e. operating profit minus net write-downs of loans and provisions for guarantees and commitments – in the first quarter of 2011 was € 143 m, up by € 40 m or 38% on Q1 2010. As non-operating items hardly changed (net income from investments up by € 2 m to € 3 m), profit before tax improved by 40% to € 146 m. Equity allo-cated to the business segment was significantly higher than in the same period of the previous year, reflecting the capital increase car-ried out in the meantime. return on equity (ROE before tax) never-theless improved from 23.4% to 24.3%. In the first quarter of 2011, economic Value added (marginal EVA) generated by the CIB busi-ness segment amounted to € 58 m, and the risk-adjusted return on risk-adjusted capital (RARORAC) was 12.1%. *) Comparative figures for the previous year restated to reflect the current business structure. In

the context of CIB, this mainly means that the restated figures exclude UniCredit CAIB and the SME customer sub-segment.



Central Eastern Europe (CEE)(€ m) Q1 2011 Q1 2010 chaNGe adJ.*)

Operating income 1,161 1,083 +78 +7% +7%Operating costs –532 –503 –29 +6% +6%Operating profit 628 580 +48 +8% +8%Net write-downs of loans –274 –316 +42 –13% –17%Net operating profit 354 263 +91 +34% +35%Profit before tax 354 267 +86 +32% +32%Loans to customers (avg.) 65,704 59,842 +5,862 +10% +10%Risk-weighted assets (avg.) 78,778 70,856 +7,923 +11% +11%Average equity 11,701 10,856 +845 +8% +8%

*) at constant exchange rates prevailing at year-end 2009

The Central Eastern Europe (CEE) business segment continued to drive Bank Austria’s growth in the first quarter of 2011, expand-ing its lending volume by almost 10% and improving profit before tax by about one-third. While the first half of 2010 had seen a strong upswing in volume and revenues, developments since the middle of the previous year have been characterised by a flatter and less dynamic trend than before the financial and economic crisis. The significant differences which became apparent between the various country groups and countries in 2010 con-tinued to exist. A comparison of Q1 2011 and Q1 2010 shows very clearly that conditions are returning to normal – revenues are getting close to the levels seen before the sharp drop in 2009. What is particularly noteworthy is the significant improve-ment – compared with both Q1 2010 and Q4 2010 – in net write-downs of loans and provisions for guarantees and commit-ments and, with some delay, also in asset quality as legacy prob-lems were resolved, restructuring in highly exposed countries made good progress and the economic upswing gained momen-tum. At € 354 m, profit before tax generated by the CEE Divi-sion in the first quarter of 2011 was up by 32% on a year earlier and 67% higher than in Q4 2010; our banking operations in Tur-key (37%), Russia (27%) and Croatia (19%) made a combined contribution of over 80% to the total figure, benefiting from mar-ket size and dynamic growth in Turkey and Russia, and the lead-ing market position in Croatia.

The large CEE business segment is characterised by significant regional and structural differences. Overall, recent performance reflects the generally stronger economic momentum and also the underlying differences in growth in the various country groups. Moreover, local economic policy measures – mostly of a restric-tive nature – have a strong influence on developments. These measures aim at balancing out state budgets and the balance of payments while keeping inflation under control.

Operating income in the first quarter of 2011 (€ 1,161 m = 64% of the figure for the bank as a whole) was slightly lower than in the two preceding quarters but up by 7% on the same period of the previous year. Operating income improved in all country groups. The Central European countries – the Czech Republic, Slo-vakia, Slovenia and also Hungary – achieved the strongest growth (a combined 12%), benefiting from the industrial boom. In Turkey (included at 41% under the proportionate consolidation method), a country which is ahead of the general business cycle and recorded a boom year in 2010, operating income in the first quarter of 2011 more or less matched the high level of the previous year (–2%). Banking subsidiaries in countries which are major produc-ers of commodities achieved strong growth, especially Russia, where operating income rose by € 41 m or 30%, accounting for about one-half of the total increase. Kazakhstan also generated strong revenue growth (+57%), and positive trends were seen in Croatia (+12%) and Serbia (+29%) as well. In the other SEE countries, which are lagging behind in the cycle (Romania and Bulgaria), operating income was below the previous year’s level although quarterly trends are pointing to an improvement.

Within the components of income, net interest of the CEE Division amounted to € 818 m (despite the lower number of interest days), which matched the figure for Q4 2010 and was up by 4% on the first quarter of the previous year. Average lending volume rose by a significant 10%, which clearly shows that the overall interest margin narrowed (from 526 basis points in Q1 2010 to 498 bp in Q1 2011). Again there are considerable regional differences: in Turkey, a large country, average lending volume grew by 32%, while net interest declined by 16% compared with the same period of the previous year. This development was due to the – overall restrictive – policy mix applied by the central bank: to fend off speculative capital inflows, the Turkish central bank reduced its key interest rate while raising minimum reserve requirements and suspending interest payments on minimum reserves as well as introducing upper limits on interest rates for some products, which had a direct adverse impact on banks. A restrictive monetary and financial policy was an important factor also in Romania (–20%). In Ukraine the decline in net interest (–16%) reflects the delever-aging process in the previous year. These burdens were offset by strong growth in Russia (+19%) as a result of more favourable funding terms, and Croatia also recorded a strong increase in net interest (+23%). In the Central European countries, the stronger economic trend led to a significant increase in deposits and double-digit growth in net interest (e.g. Slovakia: +23%).

Net fees and commissions (€ 288 m) in the first quarter of 2011 were lower than in Q4 2010, partly due to a seasonal fluctuation, and exceeded the Q1 2010 level by 5%. Turnover in securities



business did not yet reach the pre-crisis level in CEE, either. On the other hand, commercial banking services such as credit card business and interest-rate and exchange-rate management devel-oped favourably in almost all countries. Net trading, hedging and fair value income amounted to € 38 m. As was to be expected, the trading performance showed strong volatility (down by 44% from Q4 2010/almost double the figure for Q1 2010). These movements reflected the pronounced trends in interest rates and exchange rates and their impacts on financial instruments and FX trading positions measured at their fair values.

The CEE Division responded to the weaker revenue growth, which was due to market developments, by pursuing stringent cost man-agement as in previous quarters. As operating costs declined by 5% from the figure for Q4 2010, the cost / income ratio remained unchanged at 45.9%. This is an improvement of 0.6 percentage points compared with the first quarter of the previous year (Q1 2010: 46.5%), despite continued investment in business expansion (Turkey, Russia and the Czech Republic). Moreover, operating costs for the first quarter of 2011 included the pro-rata charge for the Hungarian bank levy. Operating profit of the CEE Division for the first quarter of 2011 was € 628 m, down by 5% from Q4 2010 but 8% higher than in Q1 2010.

In the CEE business segment, net write-downs of loans and provisions for guarantees and commitments declined from € 449 m in Q4 2010 to € 274 m in the reporting period, thus coming close to the level achieved at the end of 2008 (€ 215 m). The provisioning charge for Kazakhstan, Ukraine and the Baltic countries in the first quarter of 2011 was close to € 100 m com-pared with € 163 m in the same period of the previous year. The situation in these countries seems to stabilise; they account for about 10% of lending volume in CEE and 36% of net write-downs of loans and provisions for guarantees and commitments. South-East Europe (SEE), lagging behind in the credit cycle in 2010 and in the early part of 2011, currently presents a mixed picture: while the provisioning charge in Romania rose only slightly compared with the previous year, the cost of risk was still relatively high (316 bp); Bulgaria experienced a further significant deterioration, but at 261 bp, the cost of risk in that country was lower in abso-lute terms. In Croatia, on the other hand, the provisioning charge declined by 46% or € 16 m, and the cost of risk fell to 82 bp. The situation in Russia also improved visibly, in line with the economic environment (provisioning charge down by 21%, cost of risk below 100 bp). Turkey is a special case: benefiting from a strong eco-nomic momentum, the turnaround in Turkey took place a year ago. In the first quarter of 2010, there was a net release of loan loss provisions following large recoveries on loans previously written down. Despite a return to normal in the first quarter of 2011 (with

a provisioning charge of € 12 m), the cost of risk at the bank in Turkey was still at the lower end of the scale, at 43 bp, and thus better than in Austria. Apart from this special effect and the renewed increase in the provisioning charge in Bulgaria and Romania, the overall situation in CEE improved. We believe that this improvement is sustainable and – with the usual quarterly fluctuations – will continue to ease the burden on the income statement.

Net write-downs of loans and provisions for guarantees and com-mitments were down by € 175 m from Q4 2010 and declined by € 42 m compared with Q1 2010. This was the main factor con-tributing to the improvement in the CEE business segment’s oper-ating performance in the first quarter of 2011: net operating profit reached € 354 m, an increase of 67% over the preceding quarter and up by 34% on Q1 2010. As there was little change in non-operating items to be deducted, the improvement fed through to profit before tax, which was € 354 m, up by 67% on Q4 2010 and 32% higher than in the same period of the previous year.

2010 2011Q3 Q4Q1 Q1Q2

2009Q3 Q4Q1 Q2

2008Q3 Q4Q1 Q2

2007Q3 Q4Q1 Q2

Central Eastern Europe (CEE)

€ m

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

€ bn

50

60

70

80

Risk-weighted assets

Operating income

Operating costs

Operating profit

Net operating profit

Provisioning charge



Income statement of the consolidated banking subsidiaries in CEE

(€ m)

cee BusINess seGmeNt 1) cZech rePuBLIc sLOVakIa huNGary

Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010

Net interest income 819.8 787.2 64.6 56.7 20.4 16.5 55.7 52.3Net fee and commission income 288.4 274.7 29.2 25.8 7.2 6.4 24.7 22.8Net trading income 38.3 19.9 2.0 0.9 1.3 0.7 –0.2 –0.1Net other operating income/expenses 14.1 1.1 0.1 –0.2 –0.5 0.4 0.6 1.7Operating income 1,160.7 1,082.9 96.0 83.2 28.4 24.1 80.8 76.7Operating costs –532.4 –503.1 –45.1 –37.4 –17.6 –18.6 –39.3 –31.3Operating profit 628.2 579.8 50.8 45.8 10.7 5.5 41.6 45.4Net write-downs of loans –274.2 –316.3 –18.3 –11.9 –2.7 –3.9 –14.4 –20.8Net operating profit 354.1 263.5 32.5 33.9 8.0 1.6 27.2 24.6Provisions for risks and charges –1.6 –5.9 –0.1 0.0 0.1 –0.1 0.0 0.3Integration costs –0.8 –1.0 –0.8 –0.9 0.0 0.0 0.0 0.0Net income from investments 2.1 10.9 1.6 0.6 0.0 0.2 –2.6 –2.2Profit before tax 353.7 267.4 33.2 33.5 8.1 1.7 24.6 22.8 Cost / income ratio 45.9% 46.5% 47.0% 45.0% 62.2% 77.3% 48.6% 40.8%Risk/earnings ratio 33.4% 40.2% 28.4% 20.9% 13.5% 23.3% 25.9% 39.7%

Exchange rate 24.375 25.868 Euro Euro 272.428 268.522 Appreciation/depreciation against the euro +6.1% –1.4%

(€ m)

sLOVeNIa BuLGarIa rOmaNIa BaLtIcs

Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010

Net interest income 14.7 12.1 55.5 49.9 44.8 56.1 3.5 2.5Net fee and commission income 5.7 4.9 20.0 18.4 13.0 12.5 –0.5 –0.8Net trading income –0.4 –0.5 –0.2 1.3 9.0 6.6 0.2 2.5Net other operating income/expenses 0.0 0.0 0.2 0.2 0.1 0.1 0.0 0.1Operating income 20.0 16.6 75.5 69.8 66.9 75.2 3.2 4.3Operating costs – 9.6 – 9.1 –30.8 –30.4 –34.6 –34.2 –3.2 –3.4Operating profit 10.4 7.5 44.7 39.4 32.3 41.0 0.0 1.0Net write-downs of loans –6.8 –4.0 –25.3 –17.7 –23.7 –22.9 –0.4 –1.1Net operating profit 3.6 3.5 19.4 21.7 8.6 18.1 –0.3 –0.2Provisions for risks and charges 0.0 0.0 0.2 –0.1 0.1 –0.1 0.0 0.0Integration costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Net income from investments 0.1 1.1 0.0 0.3 0.1 0.0 0.0 0.0Profit before tax 3.7 4.6 19.5 21.9 8.7 18.0 –0.3 –0.2 Cost / income ratio 48.0% 55.0% 40.8% 43.5% 51.7% 45.5% 98.9% 78.0%Risk/earnings ratio –0.1% 0.0% –0.3% 0.3% –0.2% 0.2% 0.0% 0.0%

Exchange rate Euro Euro 1.956 1.956 4.221 4.113 0.705 0.709 Appreciation/depreciation against the euro 0.0% –2.6% +0.5%

1) Includes the Vienna-based CEE profit centre.



(€ m)

turkey 2) russIa kaZakhstaN ukraINe

Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010

Net interest income 141.7 168.6 144.2 121.3 40.2 37.8 54.9 65.1Net fee and commission income 90.5 84.9 33.6 30.1 –3.4 –10.5 11.0 9.8Net trading income 20.4 5.3 –6.0 –14.4 5.4 5.9 –1.2 1.9Net other operating income/expenses 8.5 7.8 5.8 –0.2 –0.1 –6.4 –1.1 –0.1Operating income 261.2 266.6 177.6 136.8 42.1 26.8 63.7 76.7Operating costs –118.1 –118.1 –60.4 –53.3 –21.8 –22.4 –27.8 –25.5Operating profit 143.0 148.5 117.2 83.5 20.4 4.4 35.9 51.3Net write-downs of loans –12.2 1.1 –22.7 –28.9 –27.6 –24.8 –25.7 –50.1Net operating profit 130.8 149.5 94.5 54.6 –7.3 –20.3 10.2 1.2Provisions for risks and charges –2.0 –5.6 0.0 0.0 0.0 0.0 0.1 0.0Integration costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income from investments 2.9 2.1 0.0 2.2 –0.4 4.5 0.0 0.0Profit before tax 131.7 146.1 94.5 56.9 –7.7 –15.8 10.2 1.2 Cost / income ratio 45.2% 44.3% 34.0% 39.0% 51.7% 83.5% 43.7% 33.2%Risk/earnings ratio 8.6% –0.6% 15.7% 23.8% 68.8% 65.5% 46.8% 76.9%

Exchange rate 2.159 2.087 39.998 41.270 200.240 204.213 10.877 11.080 Appreciation/depreciation against the euro –3.4% +3.2% +2.0% +1.9%

(€ m)

crOatIa BOsNIa serBIa

Q1 2011 Q1 2010 Q1 2011 Q1 2010 Q1 2011 Q1 2010

Net interest income 112.4 91.2 21.5 18.1 19.5 15.1Net fee and commission income 30.2 32.8 6.9 6.8 4.8 3.9Net trading income 5.7 8.1 1.3 1.1 0.9 0.6Net other operating income/expenses 2.1 2.0 –0.1 0.0 –0.1 –0.1Operating income 150.4 134.1 29.7 26.0 25.1 19.4Operating costs –64.9 –64.9 –19.1 –19.2 –8.8 –8.1Operating profit 85.5 69.2 10.5 6.9 16.3 11.3Net write-downs of loans –19.2 –35.4 –2.6 –3.2 –2.7 –2.8Net operating profit 66.4 33.7 7.9 3.7 13.6 8.5Provisions for risks and charges 0.2 –0.2 0.0 –0.2 0.0 0.0Integration costs 0.0 –0.1 0.0 0.0 0.0 0.0Net income from investments 0.3 1.2 0.0 0.8 0.2 0.0Profit before tax 66.8 34.7 7.9 4.3 13.7 8.5 Cost / income ratio 43.2% 48.4% 64.6% 73.7% 35.2% 41.7%Risk/earnings ratio –0.2% 0.2% 0.1% 0.9% 0.0% 0.1%

Exchange rate 7.402 7.285 1.956 1.956 103.954 98.718 Appreciation/depreciation against the euro –1.6% 0.0% –5.0%

2) pro quota



The general economic outlook outlined in our 2010 Annual Report, which was published a few weeks ago, remains intact. Global eco-nomic growth at the beginning of the year was more robust than expected, but the head wind has become stronger (EMU debt crisis, higher oil prices /growing inflationary pressure, geopolitical risks, catastrophe in Japan). We expect the global economy to grow by 4.25% in 2011 (weighted by purchasing power; 2012: 4.5%). The GDP of industrial countries will probably grow at a disproportionately low rate of about 2.25% and 2.5% in 2011 and 2012, respectively. China and Emerging Asia, which were the first to achieve a turnaround after the financial market crisis, will easily remain at the top of the growth league (2011 and 2012: 6.5%).

In the euro area, economic performance is somewhat stronger than previously assumed. In Germany, domestic demand is increasingly becoming a mainstay of economic growth, a development that is also discernible in France. However, on account of southern Europe’s structural growth weakness, GDP growth in the EMU countries will only match the previous year’s level (2012: 1.6%). In this context, and for comparisons of growth rates in average annual terms, one should note the strong growth momentum with which all countries have entered 2011: as the level of Q1 2011 growth is significantly higher than the average figure for the previous year, healthy growth rates for 2011 as a whole will be achieved even on the basis of a more modest pace in the remaining part of the year (annual forecasts for 2011: euro area 1.7%, Germany 2.8%, Austria 2.8%, CEE 4.1%). We expect monetary policy to be reflected in many small changes that will take place at quarterly intervals. At the end of 2011, the key refinancing rate is likely to be 1.75% or more. Aware of the situation in the debtor countries, the ECB will for the time being continue to give banking sectors unlimited access to liquidity. The different monetary and financial policies pursued by the US and the euro area are likely to result in a weak US dollar, but given also a possible escalation of the debt crisis in Europe, currency movements will probably be fairly volatile.

In austria, the upturn will slow down as the year progresses, and it will continue in a more balanced fashion. The Bank Austria Purchas-ing Managers’ Index for April (57.0) suggests that the dynamic growth experienced by Austrian industry since the beginning of 2011 is sub-siding. While the industrial sector is now in much calmer waters, it is still expanding at a fairly strong rate. We still expect industrial output to grow by 6% in 2011 as a whole, following the double-digit growth rates recorded in the first quarter. After growing by a robust 0.9% in the first quarter of 2011, GDP will remain strong in the current year, growing by 0.3% to 0.4% in the subsequent quarterly periods. Exports will continue to drive growth, even if export activity may be curbed slightly by the strong euro. Domestic economic activity will pick up. Pent-up demand is likely to cause investments in plant and equip-ment to expand by over 7% in 2011 as a whole. The outlook for pri-vate consumption has improved slightly as a result of the favourable labour market trend. Thanks to the significant increase in the number

of employed persons, the upturn in consumption will hardly be impacted by the higher inflation rate and budget cuts. We have there-fore revised our forecast for Austria’s economic growth in 2011 upward by half a percentage point to 2.8 per cent. High commodity prices will keep inflation at around 3% in the remaining part of the year. In 2011, for the second time since it adopted the euro, Austria will see annual inflation of over 3%. Neither this nor the renewed rise in interest rates will pose any serious threat to the economic upturn. Credit demand will remain low, given the relatively high cash flow in the corporate sector, and the savings ratio of private households will probably continue to decline in favour of current household spending.

In central and eastern europe, economic growth will reach almost 4% in 2011 (excluding Poland, weighted by GDP). For the first time in four years, all countries within our perimeter of operations are again predicting growth. In regard to the industrial sector, the current leading indicator (Purchasing Managers’ Index) has risen by a further 1.2 points to an unprecedented high of 56.9. This points more to an acceleration of growth than to a slowdown. Since the last forecast, rising commodity prices have become of greater relevance as the most important factor with a negative impact, but these in some cases have diametrically opposed effects on specific country groups. The growth forecasts (and exchange rate outlook) for the CIS coun-tries as exporters of oil and primary products were raised as follows: Kazakhstan +6.8%, Russia +4.6% and Ukraine +4.7%. The impact on the Central European countries is reflected more strongly in demand trends, from a current perspective we anticipate stable growth of 2.5%. The upturn will be somewhat more pronounced in Slovakia (+3.1%). Hungary is in the meantime also experiencing con-solidated growth as direct investments that had been in the pipeline for some time are now being implemented. Even South-East Europe will again experience positive growth in 2011 (+2.4% after –0.3%). The situation in Romania (+1.7%) is stabilising slowly, especially fol-lowing the support received from the IMF. Croatia (+1.6%) and Bos-nia and Herzegovina (+1.8%) are expecting, in the next few months, to make significant progress in their negotiations for EU accession. In the Baltic states growth will return to positive levels (between 3.7% and 4.5%) after a three-year slump. After its dynamic performance in the previous year (+8.2%), Turkey’s economy will return to sustaina-ble growth rates (+4.4%).

Banks will be faced with challenges in 2011 and subsequent years. In addition to economic factors (credit demand, interest rate structure, exchange rate volatility, private and sovereign debt levels), the banking sector’s profitability and performance capability will be burdened by additional regulatory requirements, possible limitations on banking products offered to customers and on capital transactions, and espe-cially by the levy on banks introduced in several countries. The more rigorous liquidity and equity capital requirements will increase compe-tition for equity capital in the banking sector. It is uncertain how the relationship between finance and the real economy – most particularly for internationally active banks – will develop in the future.

Outlook



Outlook for Bank Austria’s performanceWhile the outlook for Bank Austria’s performance in the remaining part of the year has hardly changed since the publication of our 2010 Annual Report a few weeks ago, opportunities and risks have become more clearly visible. Economic forecasts for the perimeter of our operations for 2011 have been revised upwards as the start-ing position for the year improved in the first quarter of 2011. Yet the upswing is expected to remain moderate while gradually becoming more broadly based. On the other hand, some of the risks are more tangible now, including external inflationary pressure in connection with rising commodity prices or exchange rate disrup-tions among major currencies. Scepticism about the public debt cri-sis has grown further. Finally, expectations of a turnaround in the interest rate cycle materialised quickly and in a distinct manner.

In response to the moderate growth in retail banking business we launched a number of service initiatives in 2011. The Family & SME Banking Division successfully started “Smart Banking”, a new serv-ice and advisory approach in business with private customers, which is aimed at activating new customer segments via modern communication channels. Our initiative for strengthening staff capacity in the branch network is under way, both internally and externally. And our customer service network for small and medium-sized enterprises (SMEs) with a turnover of up to € 50 m is now operative in almost 60 locations (up from the previous 22) throughout Austria. Advisory services related to financial assistance schemes for SMEs are being strongly expanded, and a new “Busi-ness Billion” for small and medium-sized businesses is supporting the economic upswing. In March 2011 we launched SME Informa-tion Days in Austria, offering advice on assistance schemes in coop-eration with a number of public, private and international partners.

In Private Banking we will consistently pursue our integrated serv-ice approach. Strong demand for Visa Infinite, a credit card offered exclusively by Bank Austria Private Banking, and strong growth in financing activities confirm that our integrated approach fully meets the needs of our clients. In the second quarter of 2011 we will start to present our special financial planning services (e.g. asset succession planning) to our clients throughout Austria. Another focus is on establishing our “Preferred Partner” concept: supported by a renowned consultant specialising in mutual funds, we have selected the ten best international providers of mutual funds as partners with a view to further optimising performance and services for our customers.

The CIB Division will concentrate on sustainable growth in 2011, after a phase of consolidation. Our objectives include expanding our position as companies’ partner of first choice for capital market

activities and drawing attention to advisory services and CIB’s expertise. Another focus will be on cross-border business, where we have already attained a market leadership position in some areas as a European banking group with a unique network.

In CEE, we will continue our organic growth and invest on a selec-tive basis, guided by market potential and the level of market pen-etration in the various countries. Below the country level we are giving attention to prosperity in individual regions while considering the minimum size thresholds for profitability. In 2011 we will open 139 branches and promote mobile sales networks for new-gener-ation multi-channel banking.

➔ For 2011 as a whole, we therefore continue to expect the upward trend in volume and revenues to strengthen. We also expect the exceptional burdens associated with credit risk which we had to absorb in the past year to gradually taper off and thus operating performance will further improve overall. The risks to this basic scenario are mainly seen in general interest rate trends and the development of credit spreads, i. e. on the funding side. Even after the reorientation of trading activities to focus on cus-tomer-driven business, the current financial market situation still has an influence on Bank Austria’s results and market risk contin-ues to exist. Volatility of interest rates and exchange rates will depend not least on future developments in the European public debt crisis, and the possibility of renewed external disruptions – resulting, for example, from the geopolitical situation – should also be taken into account.

➔ The scenario for future performance is modest. It should be noted that the banking sector is still far from achieving the mini-mum level of profitability which would be required for the banking sector to ensure a sustained risk-bearing capacity on its own. In many countries, the upswing in the financial services industry is still young and fragile. Even the most recent earnings improve-ment at major international banks will be modest for the year as a whole, although it may look large in absolute figures or in terms of rates of growth from a low base. The earnings improvement will, moreover, be used for strengthening the risk buffers which are demanded by national and international regulatory authorities and by shareholders and investors. The cumulative effect of vari-ous stricter regulatory requirements (Basel 3 package, additional equity capital buffers for major international banks, possibly finan-cial transaction taxes and restrictions on products) and additional fiscal ad-hoc burdens such as additional national bank levies or tax increases could sooner or later reach the limits of the banking sector’s performance capabilities and impact the banks’ impor-tant function for the overall economy.

Consolidated Financial Statements in accordance with IFRSs


of the Bank Austria Group for the first quarter of 2011

Statement of Comprehensive Income

Income statement (€ m)

1 Jan.–31 march 2011


Interest income and similar revenues 2,070 2,065Interest expense and similar charges – 942 – 983net interest margin 1,128 1,081Fee and commission income 584 577Fee and commission expense –122 –107net fees and commissions 462 470Dividend income and similar revenue 6 1Gains and losses on financial assets and liabilities held for trading 104 75Fair value adjustments in hedge accounting 1 –Gains and losses on disposal of: 8 19

a) loans 1 2b) available-for-sale financial assets 8 18c) held-to-maturity investments – –d) financial liabilities – –

Gains and losses on financial assets / liabilities at fair value through profit or loss 9 1Operating incOme 1,718 1,648Impairment losses on: –377 –440

a) loans –377 –437b) available-for-sale financial assets – 1c) held-to-maturity investments – –d) other financial assets – –4

net income from financial activities 1,341 1,208Premiums earned (net) 32 24Other income (net) from insurance activities –27 –19net income from financial and insurance activities 1,346 1,213Administrative costs: –883 –840

a) staff expense –496 –480b) other administrative expense –386 –360

Provisions for risks and charges –32 –71Impairment /write-backs on property, plant and equipment –48 –52Impairment /write-backs on intangible assets –26 –26Other net operating income 42 27Operating cOsts – 947 – 962Profit (loss) of associates 44 34Gains and losses on tangible and intangible assets measured at fair value – –2Impairment of goodwill –3 –Gains and losses on disposal of investments 1 7tOtal prOfit Or lOss befOre tax frOm cOntinuing OperatiOns 442 290Tax expense (income) related to profit or loss from continuing operations –88 –34net prOfit 354 255Attributable to:Owners of the parent company 341 242Non-controlling interests 13 14Earnings per share (in €, basic and diluted) 5.90 4.56



Other comprehensive income (€ m)



Gains/ losses on assets held for sale (available-for-sale reserve) –144 106Gains / losses on cash flow hedges (cash flow hedge reserve) –302 159Changes at companies accounted for under the equity method 2 7Foreign currency translation – exchange differences –117 548Foreign currency translation relating to assets held for sale – –Actuarial gains / losses on defined-benefit plans – –Taxes on items directly recognised in equity 108 –63Other changes 29 –recognised directly in equity –424 756net profit 354 255tOtal Of incOme and expenses recOgnised in the repOrting periOd –70 1,012Attributable to:Owners of the parent company –84 992Non-controlling interests 14 19

Taxes on items directly recognised in equity (€ m)



Gains/ losses on assets held for sale (available-for-sale reserve) 32 –25Gains / losses on cash flow hedges (cash flow hedge reserve) 77 –39taxes On items directly recOgnised in equity 108 –63



of the Bank Austria Group at 31 March 2011

Statement of Financial Position

Assets (€ m)

31 march 2011 31 dec. 2010

Cash and cash balances 2,227 3,030Financial assets held for trading 3,758 4,304Financial assets at fair value through profit or loss 228 304Available-for-sale financial assets 19,836 17,544Held-to-maturity investments 3,959 4,446Loans and receivables with banks 18,329 19,749Loans and receivables with customers 128,553 130,093Hedging derivatives 2,172 2,449Changes in fair value of portfolio hedged items (+/–) 27 44Investments in associates and joint ventures 2,572 2,518Insurance reserves attributable to reinsurers 1 –Property, plant and equipment 2,611 2,553

of which held for investment 727 479Intangible assets 3,659 3,751

of which goodwill 3,162 3,225Tax assets 1,265 1,254

a) current tax assets 248 248b) deferred tax assets 1,017 1,006

Non-current assets and disposal groups classified as held for sale 73 2Other assets 1,032 1,008tOtal assets 190,301 193,049

Liabilities and equity (€ m)

31 march 2011 31 dec. 2010

Deposits from banks 31,722 33,130Deposits from customers 98,495 100,284Debt securities in issue 29,280 27,555Financial liabilities held for trading 2,047 2,448Financial liabilities at fair value through profit or loss 1,588 1,651Hedging derivatives 1,962 2,909Changes in fair value of portfolio hedged items (+/–) – –Tax liabilities 455 543

a) current tax liabilities 120 126b) deferred tax liabilities 335 417

Liabilities included in disposal groups classified as held for sale 14 –Other liabilities 2,857 2,573Provisions for risks and charges 4,310 4,297

a) post-retirement benefit obligations 3,802 3,791b) other provisions 508 506

Insurance reserves 172 183Equity 17,400 17,476

of which non-controlling interests (+/–) 558 546tOtal liabilities and equity 190,301 193,049



Statement of Changes in Equity

(€ m)

sub- scribed capital

capital reserVes

retained earnings

fOreign currency

translatiOn

reserVes in accOrdance With ias 391)

actuarial lOsses in

accOrdance With ias 19

share- hOlders’

equity

nOn-cOn-trOlling

interests equity

as at 1 January 2010 1,469 5,325 9,295 –1,727 148 –660 13,850 539 14,388Capital increase 212 1,788 2,000 2,000Transaction costs of capital increase –20 –20 –20Changes in the group of consolidated companies 1 1Shares in controlling companies –3 –3 –3Recognised income and expenses 248 544 201 992 19 1,012as at 31 march 2010 1,681 7,089 9,543 –1,184 348 –660 16,819 559 17,378

1) Reserves in accordance with IAS 39 1 Jan. 2010 31 March 2010 Cash flow hedge reserve 62 207 Available-for-sale reserve 86 141 Total 148 348 of which reserves of companies classified as held for sale –48

sub- scribed capital

capital reserVes

retained earnings

fOreign currency

translatiOn

reserVes in accOrdance With ias 392)

actuarial lOsses in

accOrdance With ias 19

share- hOlders’

equity

nOn-cOn-trOlling

interests equity

as at 1 January 2011 1,681 7,096 10,121 –1,334 111 –746 16,931 546 17,476Changes in the group of consolidated companies – –Shares in controlling companies –5 –5 –5Recognised income and expenses 370 –116 –338 –84 14 –70Dividend paid –2 –2as at 31 march 2011 1,681 7,091 10,491 –1,450 –227 –746 16,841 558 17,400

2) Reserves in accordance with IAS 39 1 Jan. 20113) 31 March 2011 Cash flow hedge reserve 81 –145 Available-for-sale reserve 30 –82 Total 111 –227

3) Allocation restated to ensure full comparability with 31 March 2011.




Statement of Cash Flows


(€ m)

1 Jan.– 31 march 2011

1 Jan.– 31 march 2010

cash and cash equiValents at end Of preViOus periOd 3,030 3,244Cash flows from operating activities 1,590 –1,516Cash flows from investing activities –2,243 – 960Cash flows from financing activities –148 1,950Effects of exchange rate changes –2 –49cash and cash equiValents at end Of periOd 2,227 2,669


Notes to the Consolidated Financial Statements

Basis for the preparation of the financial statementsThe consolidated financial statements of the Bank Austria Group for the first three months of 2011 (1 January 2011 to 31 March 2011) are based on the financial statements of UniCredit Bank Austria AG and its subsidiaries. They have been prepared in euro, the Group currency. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), with IAS 34, “Interim Financial Reporting”, being applied. Unless indicated otherwise, all figures are in millions of euros (€).

The consolidated financial statements of the Bank Austria Group for the first three months of 2011 have not been audited. They include the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows, segment reporting and other financial information.

Application of amended and new IASs and IFRSs

Effects arising from changes in accounting methodsNo changes in financial reporting standards were applied in the first quarter of 2011.

Effects of amendments to IAS 39 and IFRS 7In accordance with the amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets”, published in October 2008, and in response to the rare circumstances presented by the financial market crisis, we reclassified asset-backed securities (ABSs / specific securitised assets) from “financial assets held for trading” into “loans and receivables with customers” with effect from 1 July 2008 at the fair values determined at that date. Regardless of this fact, the following disclosure table shows the effects as at 31 March 2011 of reclassification by item in the statement of financial position and in the income statement.

Reclassified financial assets: carrying amount, fair value and effects on comprehensive income (€ m)

accOunting pOrtfOliO befOre reclas-sificatiOn

accOunting pOrtfOliO after reclassificatiOn

carrying amOunt

as at 31 march

2011

fair Value as at

31 march 2011

incOme/expenses absent reclassificatiOn

(befOre taxes)

incOme/expenses recOgnised during the periOd (befOre taxes)

types Of instrumentsfrOm

measurement OtherfrOm

measurement Other

a. debt securities –1,366 –1,243 22 21 – 14HFT AFS –7 –7 – – – –HFT HTM –40 –43 2 1 – 1HFT Loans to banks – – – – – –HFT Loans to customers –1,318 –1,193 20 20 – 13AFS Loans to banks – – – – – –AFS Loans to customers – – – – – –

b. equity instruments – – – – – –c. loans – – – – – –d. units in investment funds – – – – – –tOtal –1,366 –1,243 22 21 – 14



Notes (CoNTINuEd)

Impairment testIn the Bank Austria Group the impairment test in respect of goodwill allocated to each cash-generating unit was performed as at 31 December 2010.

As at 31 March 2011, the projections used for the impairment test are still considered to be valid.

Depending on financial performance of the individual units, such projections may need to be revised prior to the date of the next regular impairment test (31 December 2011).

Group of consolidated companies and changes in the group of consolidated companies of the Bank Austria Group in the first quarter of 2011

Consolidated companiesnumber

Opening balance 124additions 6

Newly established companies 3Companies newly added to the group of consolidated companies 3

disposals 1Companies sold or liquidated –Mergers 1

clOsing balance 129

Companies accounted for under the proportionate consolidation methodnumber

Opening balance 17Additions –Disposals –clOsing balance 17

Companies accounted for under the equity methodnumber

Opening balance 25additions –

Newly established companies –Newly added companies –

disposals –clOsing balance 25



AdditionsNewly established companiesname Of cOmpany dOmicile additiOn as at

UniCredit Turn-Around Management GmbH Vienna 1 Jan. 2011UCTAM RK Limited Liability Company Almaty 1 Jan. 2011UCTAM Ukraine LLC Kiev 1 Jan. 2011

The objects of the Uctam companies are to acquire, manage, administer and sell equity interests, properties and other business assets, especially of or from real estate projects and other business undertakings, deriving from debt restructuring.

Companies newly added to the group of consolidated companiesname Of cOmpany dOmicile additiOn as at

VIENNA DC Tower 1 Liegenschaftsbesitz GmbH Vienna 1 Jan. 2011VIENNA DC Tower 2 Liegenschaftsbesitz GmbH Vienna 1 Jan. 2011VIENNA DC Bauträger GmbH Vienna 1 Jan. 2011

Companies newly added to the group of consolidated companies did not meet the materiality criterion before 2011.

Mergersname Of merged cOmpany dOmicile name Of absOrbed cOmpany dOmicile merger as at

UniCredit Factoring Penzügyi Szolgoltato Zrt. Budapest UniCredit Bank Hungary Zrt. Budapest 1 Jan. 2011

Notes (CoNTINuEd)



Notes to the income statement

Interest income/ Interest expense

Interest expense and similar charges (€ m)

1 Jan.–31 march 20111 Jan.–

31 march 2010

depOsits securitiesOther

transactiOns tOtal tOtal

Deposits from central banks –1 X – –1 –8Deposits from banks –188 X – –188 –160Deposits from customers –499 X – –499 –544Debt securities in issue X –206 – –206 –201Financial liabilities held for trading – – –21 –21 –39Financial liabilities at fair value through profit or loss – –6 – –6 –7Other liabilities X X – – –3Hedging derivatives X X –22 –22 –22tOtal –687 –212 –43 – 942 – 984

Interest income and similar revenues (€ m)


31 march 2010

debt securities lOansOther

transactiOns tOtal tOtal

Financial assets held for trading 15 – 23 39 69Financial assets at fair value through profit or loss 1 – – 1 2Available-for-sale financial assets 173 – – 173 109Held-to-maturity investments 60 – – 60 79Loans and receivables with banks – 70 – 70 61Loans and receivables with customers 16 1,587 – 1,603 1,612Hedging derivatives X X 122 122 129Other assets X X 2 2 3tOtal 266 1,656 147 2,070 2,065



Notes to the income statement (CoNTINuEd)

Fee and commission income (€ m)



guarantees given 52 52credit derivatives 1 2management, brokerage and consultancy services: 193 197

securities trading 16 16currency trading 57 62portfolio management 45 48custody and administration of securities 26 26custodian bank 15 10placement of securities 6 8reception and transmission of orders 2 2advisory services 6 3distribution of third party services 21 21

collection and payment services 198 178securitisation servicing – –factoring 4 10tax collection services – –management of multilateral trading facilities – –management of current accounts 50 49Other services 85 88tOtal 584 577

Fee and commission expense (€ m)



guarantees received –20 –7credit derivatives –8 –11management, brokerage and consultancy services: –30 –26

trading in financial instruments –1 –3currency trading – –portfolio management –7 –custody and administration of securities –13 –14placement of financial instruments – –off-site distribution of financial instruments, products and services –8 – 9

collection and payment services –57 –52Other services –7 –10tOtal –122 –107

Fee and commission income/Fee and commission expense

(€ m)

1 Jan.–31 march 2011 1 Jan.–31 march 2010

diVidendsincOme frOm units in

inVestment funds diVidendsincOme frOm units in

inVestment funds

Financial assets held for trading – – – –Available-for-sale financial assets 3 2 – 1Financial assets at fair value through profit or loss – – – –Investments – X – XtOtal 4 2 – 1

dividend income and similar revenue




Gains and losses on financial assets and liabilities held for trading(€ m)


31 march 2010unrealised

prOfitsrealised

prOfitsunrealised

lOssesrealised

lOsses net prOfit net prOfit

financial assets held for trading 10 76 –4 –67 14 152Debt securities 4 12 –2 –5 8 77Equity instruments 2 4 –1 –3 2 8Units in investment funds – – – – – 26Loans – – – – – –Other 4 60 – –59 4 41

financial liabilities held for trading – – –14 – –14 –7Debt securities – – – – – –Deposits – – – – – –Other – – –14 – –15 –7

Other financial assets and liabilities: exchange differences x x x x –148 49derivatives 415 234 –334 –256 252 –119

Financial derivatives 393 234 –334 –256 231 –135on debt securities and interest rates 309 231 –322 –252 –33 –47on equity securities and share indices 74 1 –5 –1 69 –6on currency and gold X X X X 193 –76other 10 2 –6 –4 2 –6

Credit derivatives 22 – – – 21 16tOtal 425 310 –352 –323 104 75

Fair value adjustments in hedge accounting (€ m)



gains on:Fair value hedging instruments 10 8Hedged asset items (in fair value hedge relationship) 16 2Hedged liability items (in fair value hedge relationship) 3 –Cash-flow hedging derivatives – –total gains on hedging activities 28 9losses on:Fair value hedging instruments –21 –7Hedged asset items (in fair value hedge relationship) –6 –1Hedged liability items (in fair value hedge relationship) – –2Cash-flow hedging derivatives – –total losses on hedging activities –27 –10net hedging result 1 –




(€ m)

1 Jan.–31 march 2011 1 Jan.–31 march 2010

gains lOsses net prOfit gains lOsses net prOfit

financial assetsLoans and receivables with banks – – – – – –Loans and receivables with customers 1 – 1 2 –1 2Available-for-sale financial assets 9 –2 8 23 –6 18

Debt securities 7 –2 5 10 –6 4Equity instruments – – – 13 – 13Units in investment funds 2 – 2 – – –Loans – – – – – –

Held-to-maturity investments – – – – – –tOtal assets 10 –2 8 26 –6 19

financial liabilitiesDeposits from banks – – – – – –Deposits from customers – – – – – –Debt securities in issue – – – – – –tOtal liabilities – – – – – –

tOtal 10 –2 8 26 –6 19

Gains and losses on disposals / repurchases

Net change in financial assets and liabilities at fair value through profit or loss

(€ m)


31 march 2010

unrealised prOfits

realised prOfits

unrealised lOsses

realised lOsses net prOfit net prOfit

financial assets 2 6 – 9 – –2 1Debt securities – 3 –1 – 2 1Equity instruments – – – – – –Units in investment funds 1 3 –8 – –4 –Loans – – – – – –

financial liabilities 7 1 –10 –3 –5 –41Debt securities 7 1 –10 –3 –5 –41Deposits from banks – – – – – –Deposits from customers – – – – – –

financial assets and liabilities in foreign currency: exchange differences x x x x – –credit and financial derivatives 23 1 –7 –1 16 41tOtal 32 7 –27 –3 9 1



Impairment lossesImpairment losses on loans (€ m)


31 march 2010

Write-dOWns Write-bacKs

specific

Write-Offs Other pOrtfOliO specific pOrtfOliO tOtal tOtal

Loans and receivables with banks – –3 – 3 – – 2Loans and receivables with customers –7 –593 –17 189 50 –377 –439tOtal –7 –596 –17 192 50 –377 –437

Impairment losses on other financial transactions (€ m)


31 march 2010


specific

Write-Offs Other pOrtfOliO specific pOrtfOliO tOtal tOtal

Guarantees given – –4 –2 5 – –1 –4Credit derivatives – – – – – – –Commitments to disburse funds – –3 –1 5 – 1 1Other transactions – – – – – – –tOtal – –8 –3 10 – 0 –4

Impairment losses on available-for-sale financial assets (€ m)


31 march 2010


specific

Write-Offs Other specific tOtal tOtal

Debt securities – – – – 1Equity instruments – – x – –Units in investment funds – – – – –Loans to banks – – – – –Loans to customers – – – – –tOtal – – – – 1


(€ m)



employees –484 –468Wages and salaries –350 –342Social charges –71 –69Severance pay – –Social security costs –14 –13Allocation to employee severance pay provision – –Provision for retirement payments and similar provisions –63 –55Payments to external pension funds –6 –6Costs related to share-based payments – –1Other employee benefits –11 –19Recovery of compensation*) 31 37

Others –12 –12tOtal –496 –480

*) This includes recovery of staff costs relating to Bank Austria employees who are not active within the Group.

Payroll




(€ m)


31 march 2010

prOVisiOnsreallOcatiOn

surplus tOtal tOtal

Other provisionsLegal disputes –36 5 –31 –71Staff costs – – – –Other –2 1 –1 –tOtal –38 6 –32 –71

Figures for the previous year adjusted to changes in presentation.

Net provisions for risks and charges

(€ m)



indirect taxes and duties –36 –15miscellaneous costs and expenses –351 –345

Advertising, marketing and communication –28 –25Expenses related to credit risk –7 –8Expenses related to personnel –14 –13Information and communication technology expenses – 97 – 97Consulting and professional services –14 –10Real estate expenses –83 –82Other functioning costs –108 –111

tOtal –386 –360

other administrative expenses

(€ m)


31 march 2010

depreciatiOnimpairment

lOsses Write-bacKs net prOfit net prOfit

property, plant and equipmentOwned –48 – – –48 –51

used in the business –47 – – –47 –50held for investment –1 – – –1 –2

finance lease – – – – –1used in the business – – – – –1held for investment – – – – –

tOtal –49 – – –48 –52

Impairment on property, plant and equipment

(€ m)


31 march 2010

amOrtisatiOnimpairment

lOsses Write-bacKs net prOfit net prOfit

intangible assetsOwned –26 – – –26 –26

generated internally by the company –1 – – –1 –1other –24 – – –24 –25

finance leases – – – – –tOtal –26 – – –26 –26

Impairment on intangible assets




Other operating expenses (€ m)



Costs for operating leases – –Reclassification of gains / losses associated with cash flow hedges of non-financial assets or liabilities from equity to profit or loss (IAS 39, paragraph 98a) – –Non-deductible tax and other fiscal charges – –Write-downs on improvements of goods owned by third parties – –Costs related to the specific service of financial leasing – –Other –19 –26tOtal Other Operating expenses –20 –27

other net operating income

Other operating income (€ m)



recovery of costs – –Other income 62 54

Revenue from administrative services 31 31Reclassification of valuation reserve relating to cash-flow hedging of non-financial assets / liabilities – –Revenues from rentals of real estate investments (net of operating direct costs) 5 4Revenues from operating leases 1 –Recovery of miscellaneous costs paid in previous years 1 1Revenues from finance lease activities – –Others 24 17

tOtal Other Operating incOme 62 54

Other net Operating incOme 42 27

(€ m)

1 Jan.–

31 march 20111 Jan.–

31 march 2010

companies subject to significant influenceincome 48 41

Revaluations 48 41Gains on disposal – –Write-backs – –Other gains – –

expense –4 –7Write-downs –4 –6Impairment losses – –Losses on disposal – –1Other negative changes – –

tOtal 44 34

Profit (Loss) of associates

Earnings per shareDuring the reporting period, no financial instruments with a dilutive effect on the bearer shares were outstanding. Therefore basic earnings per share in accordance with IAS 33 equal diluted earnings per share in accordance with IAS 33. Earnings per share are calculated on the basis of the average number of shares outstanding (231.2 million shares). Earnings per share for the first three months of 2011 were € 1.47 (comparative figure for the same period of the previous year: € 1.14, based on 211.7 million shares).



Financial assets held for trading (€ m)

31 march 2011 31 dec. 2010

fair Value leVel 1

fair Value leVel 2

fair Value leVel 3 tOtal

fair Value leVel 1

fair Value leVel 2


financial assets (non-derivatives) 709 665 14 1,388 625 1,246 15 1,886Debt securities 682 662 14 1,358 604 1,245 14 1,863

Structured securities 9 – – 9 11 – – 11Other debt securities 673 662 14 1,349 593 1,245 14 1,852

Equity instruments 17 2 1 19 9 1 1 11Units in investment funds 10 – – 10 11 1 – 11Loans – – – – – – – –

Reverse repos – – – – – – – –Other – – – – – – – –

derivative instruments 2 2,345 24 2,370 1 2,378 39 2,418Financial derivatives 2 2,340 22 2,364 1 2,374 39 2,414

Trading 2 2,340 22 2,364 1 2,374 39 2,414Related to fair value option – – – – – – – –Other – – – – – – – –

Credit derivatives – 5 1 7 – 4 – 4Trading – 5 1 7 – 4 – 4Related to fair value option – – – – – – – –Other – – – – – – – –

tOtal 711 3,010 38 3,758 626 3,625 54 4,304

Notes to the statement of financial position

Financial assets at fair value through profit or loss

This item shows assets in respect of which Bank Austria used the option to designate financial instruments as at fair value through profit or loss in order to avoid inconsistencies in the valuation of assets and liabilities which are connected with each other. Most of these assets are complex structures with embedded derivatives.

(€ m)

31 march 2011 31 dec. 2010

fair Value leVel 1

fair Value leVel 2


fair Value leVel 1

fair Value leVel 2


Debt securities 13 47 39 99 12 73 46 131Structured securities – – – – – – – –Other debt securities 13 47 39 99 12 73 46 131

Equity instruments – – – – 15 – – 15Units in investment funds 13 – 116 129 – – 157 158Loans – – – – – – – –

Structured – – – – – – – –Other – – – – – – – –

tOtal 26 47 155 228 27 73 204 304



Notes to the statement of financial position (CoNTINuEd)

Available-for-sale financial assets (€ m)

31 march 2011 31 dec. 2010

fair Value leVel 1

fair Value leVel 2


fair Value leVel 1

fair Value leVel 2


Debt securities 5,438 12,256 1,469 19,163 4,844 10,441 1,606 16,892Structured securities 5 185 419 609 – 1 419 420Other 5,433 12,071 1,050 18,554 4,844 10,440 1,187 16,472

Equity instruments 57 114 298 469 53 113 295 461Measured at fair value 57 114 257 428 53 113 256 421Carried at cost – – 41 41 – – 40 40

Units in investment funds 23 82 98 203 11 99 81 191Loans – – – – – – – –tOtal 5,518 12,453 1,865 19,836 4,908 10,654 1,982 17,544

Held-to-maturity investments (€ m)

31 march 2011 31 dec. 2010

bOOK Valuefair Value

leVel 1fair Value

leVel 2fair Value

leVel 3 bOOK Valuefair Value

leVel 1fair Value

leVel 2fair Value

leVel 3

Debt securities 3,959 2,495 1,259 320 4,446 2,896 1,543 180Structured securities – – – – – – – –Other securities 3,959 2,495 1,259 320 4,446 2,896 1,543 180

Loans – – – – – – – –tOtal 3,959 2,495 1,259 320 4,446 2,896 1,543 180

Loans and receivables with banks (€ m)

31 march 2011 31 dec. 2010

loans to central banks 5,235 6,155Time deposits 721 975Compulsory reserves 4,437 4,511Reverse repos 40 628Other 36 42

loans to banks 13,095 13,594Current accounts and demand deposits 2,914 3,527Time deposits 6,887 6,569Other loans 3,294 3,498

Reverse repos 714 951Finance leases – –Other 2,580 2,547

Debt securities – –Structured – –Other – –

tOtal (carrying amOunt) 18,329 19,749tOtal (fair Value) 18,400 19,836Loan loss provisions deducted from loans and receivables 49 61



Notes to the statement of financial position (CONTINUED)

Loans and receivables with customers (€ m)

31 March 2011 31 Dec. 2010

PerFOrMING IMPaIreD PerFOrMING IMPaIreD

Current accounts 11,733 222 11,764 325Reverse repos 412 – 385 –Mortgages*) 22,754 1,758 23,056 1,695Credit cards and personal loans, including wage assignment loans 8,293 204 8,703 154Finance leases*) 354 20 363 24Factoring 870 8 997 8Other transactions 75,411 4,849 76,694 4,167Debt securities 1,633 31 1,694 65

Structured securities – – – –Other debt securities 1,633 31 1,694 65

TOTal (carryING aMOuNT) 121,460 7,093 123,655 6,438TOTal (FaIr value) 121,618 7,080 124,477 6,391Loan loss provisions deducted from loans and receivables 846 6,234 896 6,040

*) amounts corrected as at 8 June 2011

Property, plant and equipment (€ m)

31 March 2011 31 Dec. 2010

assets for operational use 1,884 2,074Owned 1,834 2,025

Land 184 199Buildings 1,264 1,393Office furniture and fittings 142 147Electronic systems 148 180Others 95 105

leased 50 49Land – –Buildings 50 48Office furniture and fittings – –Electronic systems – –Others 1 1

held-for-investment assets 727 479Owned 727 479

Land 299 243Buildings 428 237

leased – –Land – –Buildings – –

TOTal 2,611 2,553




Intangible assets (€ m)

31 march 2011 31 dec. 2010

goodwill 3,162 3,225Other intangible assets 497 526

Assets carried at cost 497 526Intangible assets generated internally 30 39Other assets 467 487

Assets valued at fair value – –Intangible assets generated internally – –Other assets – –

tOtal 3,659 3,751

Non-current assets and disposal groups classified as held for sale(€ m)

31 march 2011 31 dec. 2010

individual assetsFinancial assets – –Equity investments – –Property, plant and equipment 2 2Intangible assets – –Other non-current assets – –total 2 2

asset groups classified as held for saleFinancial assets held for trading – –Financial assets at fair value through profit or loss – –Available-for-sale financial assets – –Held-to-maturity investments – –Loans and receivables with banks – –Loans and receivables with customers – –Equity investments 33 –Property, plant and equipment 28 –Intangible assets 3 –Other assets 8 –total 71 –

assets 73 2

This item shows Bank Austria Global Information Services GmbH, which is a consolidated company, and the companies UniCredit Business Partner S.p.A. and Credanti Holdings Limited, which are accounted for under the equity method.

In view of the planned sale, BAGIS is a disposal group but not a discontinued operation because• BAGISisnotamajorlineofbusinessorgeographicalareaoftheBankAustriasub-groupand• thesaleistheresultofareorganisationwithintheentireUniCreditGroup,accordingtowhichBankAustriawillcontinuetobeinvolvedin

Information System activities.

The UniCredit Accounting Policy on business combinations under common control (BCUCC) requires that no profit or loss be recognised when a sub-sidiary is sold to another Group company. Hence, assets and liabilities of the subsidiary are to be derecognised at their carrying amount. The difference between net assets and the consideration received is to be directly recognised in equity. Since the subsidiaries that are classified as held for sale will be sold to other Group companies, the same accounting rules are applied.



deposits from banks(€ m)

31 march 2011 31 dec. 2010

deposits from central banks 607 757deposits from banks 31,115 32,373

Current accounts and demand deposits 2,765 3,447Time deposits 11,869 12,809Loans 16,394 16,002

Reverse repos 1,490 967Other 14,904 15,034

Liabilities in respect of commitments to repurchase treasury shares – –Other liabilities 88 115

tOtal 31,722 33,130fair Value 32,267 33,782


deposits from customers(€ m)

31 march 2011 31 dec. 2010

Current accounts and demand deposits 41,765 41,842Time deposits 50,017 51,943Loans 1,026 893

Reverse repos 742 590Other 284 302

Liabilities in respect of commitments to repurchase treasury shares 575 565Other liabilities 5,113 5,042tOtal 98,495 100,284fair Value 98,755 100,762

debt securities in issue(€ m)

31 march 2011 31 dec. 2010

carrying amOunt

fair Value leVel 1

fair Value leVel 2

fair Value leVel 3

carrying amOunt

fair Value leVel 1

fair Value leVel 2

fair Value leVel 3

securitiesBonds 27,107 1,191 25,323 498 24,913 1,094 23,305 390

Structured 151 – – 151 130 – – 130Other 26,956 1,191 25,323 347 24,783 1,094 23,305 261

Other securities 2,173 7 1,081 1,084 2,642 23 1,498 1,119Structured 7 7 – – 23 23 – –Other 2,166 – 1,081 1,084 2,620 – 1,498 1,119

tOtal 29,280 1,198 26,403 1,582 27,555 1,117 24,803 1,510



Financial liabilities held for trading (€ m)

31 march 2011 31 dec. 2010

fair Value leVel 1

fair Value leVel 2


fair Value leVel 1

fair Value leVel 2


financial liabilities 12 9 – 20 9 30 – 39deposits from banks – – – – – – – –deposits from customers 12 9 – 20 9 30 – 39debt securities – – – – – – – –

Bonds – – – – – – – –Other securities – – – – – – – –

derivative instruments 5 1,972 49 2,026 18 2,326 65 2,409financial derivatives 5 1,913 28 1,947 18 2,252 42 2,312

Trading – 1,909 28 1,938 – 2,249 42 2,291Relating to fair value option 5 – – 5 18 – – 18Other – 4 – 4 – 4 – 4

credit derivatives – 59 21 80 – 73 23 97Trading derivatives – 59 21 80 – 73 23 97Relating to fair value option – – – – – – – –Other – – – – – – – –

tOtal 17 1,980 49 2,047 27 2,355 65 2,448

(€ m)

31 march 2011 31 dec. 2010

fair Value leVel 1

fair Value leVel 2


fair Value leVel 1

fair Value leVel 2


Deposits from banks – – – – – – – –Deposits from customers – – – – – – – –Debt securities – 1,588 – 1,588 – 1,651 – 1,651

Structured – 1,588 – 1,588 – 1,651 – 1,651Others – – – – – – – –

tOtal – 1,588 – 1,588 – 1,651 – 1,651

Financial liabilities at fair value through profit or loss

This item shows liabilities in respect of which Bank Austria used the option to designate financial instruments as at fair value through profit or loss in order to avoid inconsistencies in the valuation of assets and liabilities which are connected with each other. Most of these liabilities are debt securities and complex structures with embedded derivatives. In the first three months of 2011, changes in fair values resulting from changes in our own funding costs were – € 14.3 m (same period of the previous year: – € 15.6 m).





Liabilities included in disposal groups classified as held for sale(€ m)

31 march 2011 31 dec. 2010

liabilities associated with assets classified as held for saleDeposits – –Securities – –Other liabilities – –total – –

liabilities included in disposal groups classified as held for saleDeposits from banks – –Deposits from customers – –Debt securities in issue – –Financial liabilities held for trading – –Financial liabilities at fair value through profit or loss – –Provisions – –Other liabilities 14 –total 14 –

liabilities 14 –

Provisions for risks and charges(€ m)

31 march 2011 31 dec. 2010

pensions and other post-retirement benefit obligations 3,801 3,791Other provisions for risks and charges 508 506

Legal disputes 219 197Staff expenses 5 5Other 284 304

tOtal 4,310 4,297



Segment reporting

Reconciliation of reclassified accounts to mandatory reporting schedule(€ m)

1 Jan. – 31 march 2011

1 Jan. – 31 march 2010

Net interest 1,128 1,081Dividends and other income from equity investments 50 36

Dividend income and similar revenue 6 1minus: dividends from equity instruments held for trading 0 0

Profit (loss) of associates – of which: Income (loss) from equity investments valued at net equity 45 35net interest income 1,178 1,118Net fees and commissions 462 470Net trading, hedging and fair value income 114 76

Gains (losses) on financial assets and liabilities held for trading 104 75plus: dividends from equity instruments held for trading 0 0Fair value adjustments in hedge accounting 1 0Gains (losses) on disposal or repurchase of financial liabilities 0 0Gains (losses) on financial assets and liabilities designated at fair value through profit or loss 9 1

Net other expenses/ income 47 31Gains (losses) on disposals / repurchases of loans and receivables – not impaired 0 0Premiums earned (net) 32 24Other income (net) from insurance activities –27 –19Other net operating income 42 27

minus: other operating income – of which: recovery of expenses 0 0plus: Impairment on tangible assets – other operating leases 0 0

net non-interest income 623 577Operating incOme 1,801 1,695Payroll costs –496 –480

Administrative costs – staff expenses –496 –480minus: integration costs 0 0

Other administrative expenses –386 –359Administrative costs – other administrative expenses –386 –360

minus: integration costs 1 1Recovery of expenses = Other net operating income – of which: Other operating income – recovery of costs 0 0Amortisation, depreciation and impairment losses on intangible and tangible assets –69 –72

Impairment /Write-backs on property, plant and equipment –48 –52minus: impairment losses/write-backs on property owned for investment 0 0minus: Impairment on tangible assets – other operating leases 0 0

Impairment /Write-backs on intangible assets –26 –26minus: integration costs 0 0minus: Purchase Price Allocation effect 5 6

Operating cOsts – 950 – 911Operating prOfit 851 784



Segment reporting (CoNTINuEd)

1 Jan. – 31 march 2011

1 Jan. – 31 march 2010

Net write-downs of loans and provisions for guarantees and commitments –376 –439Gains (losses) on disposal and repurchase of loans 1 2

minus: gains (losses) on disposals / repurchases of loans and receivables – not impaired position 0 0Impairment losses on loans –377 –437Impairment losses on other financial assets 0 –4

net Operating prOfit 475 345Provisions for risks and charges –32 –71Integration costs –1 –1Net income from investments 8 22

Gains (losses) on disposal and repurchase of available-for-sale financial assets 8 18Gains (losses) on disposal and repurchase of held-to-maturity investments 0 0Impairment losses on available-for-sale financial assets 0 1Impairment losses on held-to-maturity investments 0 0

plus: Impairment losses/write-backs on property owned for investment 0 0Profit (loss) of associates 44 34

minus: Profit (loss) of associates – Income (loss) from equity investments valued at net equity –45 –35Gains and losses on tangible and intangible assets 0 –2Gains (losses) on disposal of investments 1 7

prOfit befOre tax 449 296Income tax for the period –89 –36

Tax expense (income) related to profit or loss from continuing operations –88 –34minus: Taxes on Purchase Price Allocation effect –1 –1

prOfit (lOss) fOr the periOd 360 260Non-controlling interests –13 –14net prOfit attributable tO the OWners Of the parent cOmpany befOre ppa 347 246Purchase Price Allocation effect –4 –4Impairment of goodwill –3 0net prOfit attributable tO the OWners Of the parent cOmpany 341 242



description of segment reportingThe segment reporting format is based on the internal reporting structure of business segments, which reflects management responsibilities in the Bank Austria Group in 2011. The business segments are presented as independent units with their own capital resources and responsibility for their own results. This also meets the requirements of IFRS 8.

Starting with the reporting period in 2011, segment reporting was adjusted to the new structure of the Group’s income statement. Goodwill impairment and the Purchase Price Allocation effect are now shown immediately before net profit attributable to the owners of Bank Austria.

The definition of business segments is primarily based on organisational responsibility for customers.

Family & SME BankingResponsibility for the Family & SME Banking Division covers Bank Austria’s business with private customers (except Private Banking customers) and small and medium-sized enterprises (SMEs) with a turnover of up to € 50 m. Also included in this Division are the credit card business and, from 2011, factoring business.

Private BankingPrivate Banking has responsibility for private customers with investments exceeding € 500,000. Schoellerbank AG and various other small subsidiaries are also included in the Private Banking Division.

Corporate & Investment BankingThe Corporate & Investment Banking segment covers the sub-segments large customers (international corporates, financial institutions, public sector) and real estate, business with corporate customers whose turnover exceeds € 50 m, and treasury activities. The Corporate & Investment Banking Division includes, beside others, Bank Austria Wohnbaubank AG, the Bank Austria Real Invest Group and smaller subsidiaries in CEE countries with a focus on investment banking as consolidated companies.

CEEThe CEE business segment includes the commercial banking units of the Bank Austria Group in the region of Central and Eastern Europe (including Turkey and Kazakhstan).

Corporate CenterCorporate Center covers all equity interests that are not assigned to other segments and it also includes the contribution from UniCredit Global Leasing, in which Bank Austria has a shareholding interest of 31.01% accounted for under the equity method. Also included are inter-segment eliminations and other items which are not to be assigned to other business segments.

MethodsNet interest income is split up according to the market interest rate method. Costs are allocated to the individual business segments from which they arise.

The result of each business segment is measured by the profit earned by the respective segment.

The interest rate applied to investment of equity allocated to the business segments is determined for one year in advance as part of the budgeting process. It is composed of a “risk-free” interest rate plus a margin of the historical average (6 years) of the 5-year CDS spread of UniCredit.

Overhead costs are allocated to the business segments according to a key of distribution applied within the Group on a uniform basis (50% costs, 20% revenues, 20% FTEs and 10% proportionately).

In 2011, capital allocated to the business segments in UniCredit Bank Austria AG, based on the Tier 1 capital ratio, is 7% of risk-weighted assets. Capital allocation to subsidiaries reflects actual IFRS capital. The adjustment item with respect to the consolidated IFRS capital of the Bank Austria Group is reflected in the Corporate Center.




Restatements for 2010:In 2010, a number of structural changes took place within the business segments and in the group of consolidated companies. This means that results for 2011 are not fully comparable with those for 2010. For this reason, the segment results for 2010 have been adjusted to the new structure. The difference compared with Bank Austria’s overall results is presented in a separate column showing “Restatement differences”.

The main pro-forma adjustments are as follows:• UniCreditCAIBandUniCreditCAIBSecuritiesUKLtd.weresoldtoUniCreditBankAG(theformerBayerischeHypo-undVereinsbankAG),Munich,

in June 2010. The result of the Corporate & Investment Banking Division for 2010 was therefore adjusted for this effect.• UniCreditCAIBRomaniaSRLwastransferredfromCEEtoCorporate&InvestmentBanking.• InJanuary2011,businesswithsmallandmedium-sizedenterprises(SMEs)withaturnoverbetween€3mand€50mwastransferredfromthe

Corporate & Investment Banking Division to the Family & SME Banking Division. As part of this transfer of customers, Factorbank AG was also trans-ferred from Corporate & Investment Banking to Family & SME Banking. The relevant comparative figures for 2010 were also restated.





(€ m)

family & sme banKing diVisiOn

priVate banKing diVisiOn

cOrpOrate & inVestment

banKing diVisiOn

central eastern

eurOpe diVisiOn

cOrpOrate center

restatement differences 1)

banK austria grOup

Net interest 1–3 2011 178 11 198 818 –77 – 1,1281–3 2010 179 10 189 787 – 98 15 1,081

Dividends and other income 1–3 2011 3 – 20 2 26 – 50from equity investments 1–3 2010 – – 9 1 27 – 36Net fees and commissions 1–3 2011 114 24 57 288 –21 – 462

1–3 2010 111 25 58 275 2 1 470Net trading, hedging and 1–3 2011 – – 4 38 72 – 114fair value income/ loss 1–3 2010 – – –17 20 28 45 76Net other expenses/ income 1–3 2011 2 – 2 14 29 – 47

1–3 2010 2 – 5 1 28 –5 31Operating incOme 1–3 2011 296 35 280 1,161 29 – 1,801

1–3 2010 292 35 245 1,083 –14 55 1,695Operating cOsts 1–3 2011 –214 –25 – 92 –532 –88 – – 950

1–3 2010 –208 –24 –88 –503 –69 –19 – 911Operating prOfit 1–3 2011 83 10 188 628 –59 – 851

1–3 2010 84 11 157 580 –83 36 784Net write-downs of loans and provisions 1–3 2011 –55 –1 –46 –274 – – –376for guarantees and commitments 1–3 2010 –69 – –53 –316 – – –439net Operating prOfit 1–3 2011 27 9 143 354 –59 – 475

1–3 2010 15 11 103 263 –83 36 345Provisions for risks and charges 1–3 2011 – 1 – –2 –31 – –32

1–3 2010 – – – –6 –65 – –71Integration costs 1–3 2011 – – – –1 – – –1

1–3 2010 – – – –1 – – –1Net income from investments 1–3 2011 1 – 3 2 1 – 8

1–3 2010 10 – 1 11 – 1 22prOfit befOre tax 1–3 2011 29 10 146 354 –89 – 449

1–3 2010 25 11 104 267 –148 37 296Income tax for the period 1–3 2011 –6 –2 –34 –67 21 – –89

1–3 2010 –2 –3 –18 –42 42 –13 –36prOfit (lOss) fOr the periOd 1–3 2011 22 7 112 287 –68 – 360

1–3 2010 23 8 87 225 –106 23 260Non-controlling interests 1–3 2011 –2 – – –15 4 – –13

1–3 2010 –7 – –1 –13 7 – –14net prOfit attributable tO the 1–3 2011 20 7 112 272 –64 – 347OWners Of the parent cOmpany befOre ppa

1–3 2010 16 8 85 212 – 99 23 246

Purchase Price Allocation effect 1–3 2011 – – – – –4 – –41–3 2010 – – – – –4 – –4

Goodwill impairment 1–3 2011 – – – – –3 – –31–3 2010 – – – – – – –

net prOfit attributable tO the 1–3 2011 20 7 112 272 –70 – 341OWners Of the parent cOmpany 1–3 2010 16 8 85 212 –103 23 242risk-weighted assets (rWa) (avg.) 1–3 2011 14,429 548 26,334 78,778 4,886 – 124,976

1–3 2010 10,840 497 28,156 70,856 5,226 1,352 116,927Equity (avg.) 2) 1–3 2011 1,298 128 2,401 11,701 1,969 – 17,496

1–3 2010 754 119 1,785 10,856 2,121 – 15,635Cost / income ratio in % 1–3 2011 72.1 70.9 32.7 45.9 n.m. n.m. 52.8

1–3 2010 71.2 69.0 36.0 46.5 n.m. n.m. 53.7Risk /earnings ratio in % 1–3 2011 30.6 n.m. 21.0 33.4 n.m. n.m. 31.9

1–3 2010 38.6 n.m. 27.0 40.2 n.m. n.m. 39.3

1) The segment results for 2010 have been restated. The difference compared to Bank Austria’s results for 2010 is presented in a separate column showing “Restatement differences”, which mainly relate to the sale of UniCredit CAIB AG.

2) Total IFRS capital for the subsidiaries allocated to the respective Division together with standardised capital for the rest of the respective Division. The difference compared to the consolidated equity of the Bank Austria Group is shown in the Corporate Center.


Segment reporting 1–3 2011/1–3 2010




Segment reporting Q1 2011/Q1–Q4 2010(€ m)




banKing diVisiOn

central eastern

eurOpe diVisiOn

cOrpOrate center


banK austria grOup

Net interest Q1/2011 178 11 198 818 –77 – 1,128Q4/2010 171 12 210 820 –69 – 1,142Q3/2010 174 11 212 846 –59 – 1,183Q2/2010 180 10 206 827 – 94 8 1,137Q1/2010 179 10 189 787 – 98 15 1,081

Dividends and other income Q1/2011 3 – 20 2 26 – 50from equity investments Q4/2010 3 – 13 2 27 – 45

Q3/2010 – – 5 5 19 – 30Q2/2010 1 – 17 3 25 – 46Q1/2010 – – 9 1 27 – 36

Net fees and commissions Q1/2011 114 24 57 288 –21 – 462Q4/2010 108 27 63 313 – – 511Q3/2010 106 19 64 305 –2 – 492Q2/2010 118 25 64 301 7 3 518Q1/2010 111 25 58 275 2 1 470

Net trading, hedging and Q1/2011 – – 4 38 72 – 114fair value income/ loss Q4/2010 –1 – 3 69 –21 – 49

Q3/2010 –1 – –23 42 25 – 43Q2/2010 – 1 –8 14 113 38 158

Q1/2010 – – –17 20 28 45 76Net other expenses/ income Q1/2011 2 – 2 14 29 – 47

Q4/2010 1 –1 1 19 34 – 54Q3/2010 –1 – 5 28 26 – 57Q2/2010 1 1 5 15 30 –3 48Q1/2010 2 – 5 1 28 –5 31

Operating incOme q1/2011 296 35 280 1,161 29 – 1,801q4/2010 282 38 290 1,222 –30 – 1,802q3/2010 277 30 263 1,226 8 – 1,804q2/2010 300 37 284 1,160 80 45 1,906q1/2010 292 35 245 1,083 –14 55 1,695

Operating cOsts q1/2011 –214 –25 – 92 –532 –88 – – 950q4/2010 –217 –27 – 90 –561 –83 – – 978q3/2010 –215 –25 – 93 –533 –70 – – 936q2/2010 –211 –25 – 90 –530 –70 8 – 918q1/2010 –208 –24 –88 –503 –69 –19 – 911

Operating prOfit q1/2011 83 10 188 628 –59 – 851q4/2010 65 11 200 661 –112 – 824q3/2010 62 5 171 693 –62 – 869q2/2010 90 11 194 630 10 53 988q1/2010 84 11 157 580 –83 36 784

Net write-downs of loans and provisions Q1/2011 –55 –1 –46 –274 – – –376for guarantees and commitments Q4/2010 –57 –2 –18 –449 – – –526

Q3/2010 –68 – –14 –337 – – –418Q2/2010 –70 – –61 –324 –1 – –457Q1/2010 –69 – –53 –316 – – –439

net Operating prOfit q1/2011 27 9 143 354 –59 – 475q4/2010 8 9 182 212 –112 – 299q3/2010 –6 5 157 356 –62 – 451q2/2010 20 12 133 306 9 53 532q1/2010 15 11 103 263 –83 36 345








banKing diVisiOn

central eastern

eurOpe diVisiOn

cOrpOrate center


banK austria grOup

Provisions for risks and charges Q1/2011 – 1 – –2 –31 – –32Q4/2010 –7 1 –20 –7 –1 – –33Q3/2010 1 – – –13 – – –13Q2/2010 –1 – – –11 –8 – –19Q1/2010 – – – –6 –65 – –71

Integration costs Q1/2011 – – – –1 – – –1Q4/2010 – – – –1 – – –1Q3/2010 – – – –1 – – –1Q2/2010 – – – –1 – – –1Q1/2010 – – – –1 – – –1

Net income from investments Q1/2011 1 – 3 2 1 – 8Q4/2010 1 – –6 7 –1 – 1Q3/2010 1 – 1 19 – – 22Q2/2010 1 – – 8 6 – 16Q1/2010 10 – 1 11 – 1 22

prOfit befOre tax q1/2011 29 10 146 354 –89 – 449q4/2010 2 11 156 211 –114 – 266q3/2010 –4 5 158 361 –62 – 459q2/2010 20 11 132 302 8 54 528q1/2010 25 11 104 267 –148 37 296

Income tax for the period Q1/2011 –6 –2 –34 –67 21 – –89Q4/2010 –1 –3 –51 –38 37 – –56Q3/2010 1 –1 –47 –76 5 –15 –133Q2/2010 –8 –3 –11 –72 4 –41 –132Q1/2010 –2 –3 –18 –42 42 –13 –36

prOfit (lOss) fOr the periOd q1/2011 22 7 112 287 –68 – 360q4/2010 1 8 104 173 –77 – 210q3/2010 –2 4 111 286 –57 –15 326q2/2010 12 8 121 231 12 13 396q1/2010 23 8 87 225 –106 23 260

Non-controlling interests Q1/2011 –2 – – –15 4 – –13Q4/2010 –5 – –1 –4 –3 – –13Q3/2010 –2 – 1 –24 7 – –17Q2/2010 – – – –16 9 – –7Q1/2010 –7 – –1 –13 7 – –14

net prOfit attributable tO the q1/2011 20 7 112 272 –64 – 347OWners Of the parent cOmpany q4/2010 –3 8 103 170 –81 – 197befOre ppa q3/2010 –4 4 112 262 –50 –15 310

q2/2010 12 8 121 215 21 13 389q1/2010 16 8 85 212 – 99 23 246

Purchase Price Allocation effect Q1/2011 – – – – –4 – –4Q4/2010 – – – – –2 – –2Q3/2010 – – – – –5 – –5Q2/2010 – – – – –5 – –5Q1/2010 – – – – –4 – –4

Goodwill impairment Q1/2011 – – – – –3 – –3Q4/2010 – – – – 9 –200 – –208Q3/2010 – – – – –3 – –3Q2/2010 – – – – –167 – –167Q1/2010 – – – – – – –








banKing diVisiOn

central eastern

eurOpe diVisiOn

cOrpOrate center


banK austria grOup

net prOfit attributable tO the q1/2011 20 7 112 272 –70 – 341OWners Of the parent cOmpany q4/2010 –3 8 103 161 –283 – –14

q3/2010 –4 4 112 262 –57 –15 302q2/2010 12 8 121 215 –151 13 217q1/2010 16 8 85 212 –103 23 242

risk-weighted assets (rWa) (avg.) q1/2011 14,429 548 26,334 78,778 4,886 – 124,976q4/2010 17,374 552 26,619 77,718 5,245 – 127,508q3/2010 16,046 556 27,118 77,120 5,427 – 126,267q2/2010 13,079 534 27,037 75,210 5,120 1,467 122,446q1/2010 10,840 497 28,156 70,856 5,226 1,352 116,927

Equity (avg.) 2) Q1/2011 1,298 128 2,401 11,701 1,969 – 17,496Q4/2010 768 118 2,232 11,287 3,039 – 17,444Q3/2010 748 125 2,068 11,088 3,534 – 17,562Q2/2010 745 128 2,167 10,878 3,398 – 17,316Q1/2010 754 119 1,785 10,856 2,121 – 15,635

Cost / income ratio in % Q1/2011 72.1 70.9 32.7 45.9 n.m. n.m. 52.8Q4/2010 77.0 70.5 31.1 45.9 n.m. n.m. 54.3Q3/2010 77.7 82.8 35.2 43.5 n.m. n.m. 51.8Q2/2010 70.2 68.6 31.7 45.7 n.m. n.m. 48.2Q1/2010 71.2 69.0 36.0 46.5 n.m. n.m. 53.7

Risk /earnings ratio in % Q1/2011 30.6 n.m. 21.0 33.4 n.m. n.m. 31.9Q4/2010 32.7 n.m. 8.1 54.6 n.m. n.m. 44.3Q3/2010 39.1 n.m. 6.3 39.5 n.m. n.m. 34.5Q2/2010 38.5 n.m. 27.5 39.1 n.m. n.m. 38.6Q1/2010 38.6 n.m. 27.0 40.2 n.m. n.m. 39.3


2) Total IFRS capital for the subsidiaries allocated to the respective Division together with standardised capital for the rest of the respective Division. The difference compared to the consolidated equity of the Bank Austria Group is shown in the Corporate Center.




Guarantees given and commitments(€ m)

31 march 2011 31 dec. 2010

financial guarantees given to: 5,304 6,195Banks 234 550Customers 5,070 5,645

commercial guarantees given to: 14,030 13,145Banks 860 1,442Customers 13,170 11,703

Other irrevocable commitments to disburse funds 17,028 14,737Banks 1,921 650

Usage certain 59 55Usage uncertain 1,862 596

Customers 15,107 14,086Usage certain 6,938 6,637Usage uncertain 8,169 7,449

underlying obligations for credit derivatives: sales of protection 859 869assets used to guarantee others’ obligations – –Other commitments 2,892 3,807tOtal 40,113 38,754

Additional disclosures

Employeesq1 2011 2010

Salaried staff 59,452 59,591Other employees 97 104tOtal*) 59,549 59,695

of which: in Austria 7,910 7,815of which: abroad 51,639 51,880

*) Average full-time equivalents of staff employed in the Bank Austria Group (employees of companies accounted for under the proportionate consolidation method are included at 100%), excluding employees on unpaid sabbatical or maternity / paternity leave.

Events after the reporting periodAfter the end of the reporting period there were no events that are required to be mentioned in this interim report.



Additional disclosures (CoNTINuEd)

Consolidated capital resources and regulatory capital requirementsNet capital resources of the Bank Austria group of credit institutions (€ m)

31 march 2011 31 dec. 2010

Paid-in capital (less own shares) 1,681 1,681

Reserves and minority interests 12,753 12,951

Intangible assets –531 –557Deductions from Tier 1 capital (in particular 50% deduction pursuant to Section 23 (13) 3 to 4d of the Austrian Banking Act) 1) –832 –833

core capital (tier 1) 13,072 13,242Net subordinated liabilities 2,632 2,857

Revaluation reserves and undisclosed reserves 167 167

Deductions from Tier 2 (50% deduction pursuant to Section 23 (13) 3 to 4d) 1) –832 –833

supplementary capital resources (tier 2) 1,967 2,191Deductions from Tier 1 and Tier 2 (deduction pursuant to Section 23 (13) 4a) 2) –137 –140

net capital resources (excl. tier 3) 14,902 15,293Tier 3 (re-assigned subordinated capital) 143 228

net capital resOurces (incl. tier 3) 15,045 15,520

Capital requirements of the Bank Austria group of credit institutions (€ m)

31 march 2011 31 dec. 2010

capital requirements ofa) Credit risk pursuant to standardised approach 5,367 6,201

b) Credit risk pursuant to internal ratings-based (IRB) approach 3,309 2,866

Credit risk 8,676 9,067

Operational risk 945 938

Position risk – debt instruments, equities, foreign currencies and commodities 143 228

Settlement risk – –

capital requirement 9,764 10,232Total RWA 122,045 127,906

Capital ratios31 march 2011 31 dec. 2010

Tier 1 capital ratio, based on all risks 10.71% 10.35%Total capital ratio, based on all risks 3) 12.33% 12.13%Tier 1 capital ratio, based on credit risk 12.05% 11.68%Total capital ratio, based on credit risk 4) 12.87% 12.67%

1) Capital components in non-consolidated companies and “shortfall” under Basel 22) Capital components in insurance companies3) Net capital resources (incl. Tier 3) as a percentage of the risk-weighted assessment basis for all risks4) Total capital resources less requirement for trading book, commodities risk, exchange rate risk and operational risk as a percentage of the risk-weighted assessment basis for credit risk



Statement by Management

We confirm to the best of our knowledge that the interim consoli-dated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards and that the interim report of the group for the first three months gives a true

and fair view of important events that occurred during the first three months of the financial year and their impact on the interim consolidated financial statements, and of the principal risks and uncertainties for the remaining nine months of the financial year.

Willibald Cernko(Chairman)

Helmut Bernkopf Jürgen danzmayr

Massimiliano Fossati Francesco Giordano

Rainer Hauser Gianni Franco Papa doris Tomanek

Vienna, 26 April 2011

The Management Board

on the Interim Report

Additional Information


Investor Relations

Financial calendar

4 August 2011 Results for the first six months of 201115 November 2011 Results for the first nine months of 2011All information is available electronically at http:// ir.bankaustria.at

Published byUniCredit Bank Austria AGA-1010 Vienna, Schottengasse 6 – 8Telephone within Austria: 05 05 05-0; from abroad: + 43 5 05 05-0Fax within Austria: 05 05 05-56155; from abroad: + 43 5 05 05-56155Internet: www.bankaustria.ate-mail: [email protected]: BKAUATWWAustrian routing code: 12000Austrian Register of Firms: FN 150714pVAT registration number: ATU 51507409

Editor: Identity & Communications, Michael Trischler

Creative concept: BBH Partners LLP, London

Cover illustration: James Taylor, Illustrator c /o Debut Arts, London

Basic design: Mercurio – Studi di promozione pubblicitaria, Milan

Graphics: www.horvath.co.at

Contact:Bank AustriaIdentity & CommunicationsP. O. Box 22.000A-1011 Vienna, Austriae-mail: [email protected]: within Austria: 05 05 05-0; from abroad + 43 5 05 05-0

NotesThis report contains forward-looking statements relating to the future performance of Bank Austria. These statements reflect estimates which we have made on the basis of all information available to us at present. Should the assumptions underlying forward-looking statements prove incorrect, or should risks – such as those mentioned in this report – materialise to an extent not anticipated, actual re-sults may vary from those expected at present. Market share data are based on the most recent information available at the editorial close of this report.

“Bank Austria” as used in this report refers to the group of consolidated companies. “UniCredit Bank Austria AG” as used in this report refers to the parent company.

In adding up rounded figures and calculating the percentage rates of changes, slight differences may result compared with totals and rates arrived at by adding up component figures which have not been rounded off.

DisclaimerThis edition of our Interim Report is prepared for the convenience of our English-speaking readers. It is based on the German original, which is the authentic version and takes precedence in all legal respects.

UniCredit Bank Austria AG/Corporate Relations

Lassallestrasse 5, A-1020 Vienna, AustriaTel: (+43) (0) 5 05 05-572 32 Fax: (+43) (0) 5 05 05-89572 32e-mail: investor. [email protected] Internet: http:// ir.bankaustria.atGünther Stromenger, Head of Corporate RelationsTel: (+43) (0) 5 05 05-572 32Thomas KirinTel: (+43) (0) 5 05 05-527 74Andreas PetzlTel: (+43) (0) 5 05 05-595 22

RatingsLonG-TErm SUBordinATEd LiABiLiTiES ShorT-TErm

Moody’s1) A1 A2 P-1Standard & Poor’s2) A A – A-1

Public-sector mortgage bonds of Bank Austria are rated Aaa by Moody’s.1) Grandfathered debt remains rated Aa2, subordinated debt rating remains Aa3.2) Grandfathered debt and subordinated debt remain rated AA+.

Documents

Interim Report at 31 March 2011 · 2018-11-19 · Bank Austria · Interim Report at 31 March 2011 3 Bank Austria at a Glance Income statement figures (€ m) Q1 2011 Q1 2010 +/–