Annual Financial Statements 2010 of Bank Austria

More documents

Recommendations

Info

Management Report Management Report (CONTINUED) Outlook Global economic trends � After a temporary slowdown in summer 2010 the global economy started to gather momentum around the turn of the year. We expect overall growth to reach 4.5% (weighted by purchasing power) in 2011 – and also in 2012. China was the first country to manage the turnaround after the financial market crisis, and will remain the major provider of impetus with growth rates of just below 10%. The Third World economy as a whole will expand by 6.5%. The combined GDP of industrialised countries, on the other hand, is expected to grow at a disproportionately low rate of 2.5% in the next two years. With the inventory cycle now past its final stage, and with the effects of the backlog boom now receding, global economic performance will be dampened by the switch from fiscal incentives to consolidation. Higher commodity prices and a more restrictive monetary policy are also having an impact. GDP growth in the US, which was comparatively low in summer 2010 at a level between 1.75% and 2.5% (on an annualised basis), started to rise towards year-end 2010. At the same time there were increasing signs of a self-sustaining upswing. On this basis we expect the US economy to grow by 3.3% in the current year (2012: +2.7%), also in light of recent decisions concerning massive tax reductions. It is nevertheless unlikely that interest rates will be raised in the near future. As persistent (mediumterm) economic risks outweigh fears of inflation, the additional measures of quantitative easing will probably be implemented. The Fed is not expected to abandon its zero rate policy before the beginning of 2012 (current target rate: 0%-0.25%). The expansionary economic policy also involves risks: the US fiscal position is precarious and convincing plans for consolidation are not in sight. This is weakening the US dollar – in fundamental terms at least – and suggests future volatility. The heterogeneous character of world economic trends and increasing imbalances in the global balance of payments also put a question mark over future developments. � Although the pronounced countermovement to recession in 2010 is tapering off, the euro area got off to a better-than-expected start in 2011. In Germany, the high level of export-driven industrial activity has stimulated domestic demand. The same applies to France. This benefits economies such as Austria and countries in CEE/Central Europe, which have close economic links with the large euro area countries. The upswing in the core countries has largely become selfsustaining. Nevertheless, massive fiscal consolidation measures and wide variations in terms of productivity in the euro area will curb economic growth. In 2011, the euro area’s GDP should be able to grow by 1.7% in real terms. Strong growth in the core countries and imported price increases are preparing the ground for subsequent effects and inflationary expectations. Despite the continued debt crisis, recurrent doubts about the solidarity of European banks and Eurosystem members’ varying use of facilities made available by the European Central Bank, the ECB will raise its main refinancing rate, currently at 1%, in the spring, thus initiating the end of the low interest rate phase. Long-term interest rates will continue to move closely in line with US rates. It is not until summer 2011, when the Fed’s first step to raise interest rates will also appear on markets’ time horizon, that long-term yields will also turn upwards for a sustained period. We expect that by the end of 2011, yields on 10-year Treasury bonds will have risen to 4% and the euro benchmarks to 3.5%. On this basis we will see an upward shift and some flattening of the yield curve. Interest rate spreads of highly indebted euro member states will remain high. Debt ratios are rising further for the time being and rollover problems continue to exist, despite the austerity measures put in place. The rescue fund is likely to be used by additional countries. The markets have so far not been convinced by efforts to find a solution with a credible medium-term consolidation path and a European set of rules including the possibility of imposing sanctions. Economic outlook for our markets � Overall, the economies in Central and Eastern Europe (CEE) have returned to a stable growth path. Economic growth (CEE 17 without Poland) of 3.6% in 2010 compares with a strong contraction of 5.9% in the crisis year 2009. In the current year and in 2012, growth is expected to reach 3.8% and 4.2%, respectively. The momentum will accelerate as countries which are currently lagging behind in the cycle, mainly economies in South-East Europe, catch up over time (see table). GDP growth, a general indicator of economic developments, is reviving across the region without any exceptions. The starting position differs widely within CEE, depending on a country’s output structure and the degree of international integration. As Turkey achieved very strong growth already in 2010 (+7.1%), growth rates will return to normal levels there in 2011 and 2012 while remaining above average at 4.1% and 5.1%, respectively. The CIS countries which are major exporters of raw materials are also expected to record stable economic growth of over 4% (Russia) and over 5% (Ukraine and Kazakhstan). The highly integrated export- oriented countries in Central Europe will benefit from strong expansion in the European core area, with growth rates exceeding those for the euro area as a whole (+2.3% in 2011 and +3.5% in 2012). Hungary is a special factor with its economic policy geared to autonomous development. The only country group which is still affected by the repercussions of the crisis and by the need for adjustment is South-East Europe, primarily Romania and the Balkan countries Croatia and Bosnia. While there are considerable differences among the countries in Central and Eastern Europe, it should be noted that all of them were quick to respond to the new environment through their economic policy. All of these countries took determined action to address the twin deficits – external and domestic debt – and some of them did so with IMF/EU support. In this way they successfully dealt with the risk of contagion emanating from the debt crisis in the peripheral countries of the euro area, and now their debt ratios are comparatively low. Expressed as a percentage of GDP, the average public sector deficit in Bank Austria · Annual Financial Statements 2010 44
Management Report Management Report (CONTINUED) the region was down from 7.0% in 2009 to 5.4% in 2010, with a further decline to 4.7% expected for the current year. Public debt will remain below 40% of GDP in 2011. The adjustment had, and still has, an adverse impact on domestic demand, which means that there is no risk of the economy overheating. Yet the risk of inflation has increased. Commodity prices have gone up, partly as a result of geopolitical crises; food prices have also inceased, partly as a consequence of natural disasters (such as the drought in Russia); and excise duties have been raised. All of these factors point to accelerating inflation: we expect the average inflation rate for the CIS region to rise to over 7% after 6.4% in 2009, with particularly high rates in Ukraine (11%) and Kazakhstan (7%), Serbia (9.4%) and Russia (9.1%) – the latter mainly because of excessive growth of the money supply. The interest rate environment will thus become more restric- Economic growth (real GDP, % over the previous year) 2008 2009 2010 2011 2012 World (purchasing power parities) +2.8 –0.7 +4.7 +4.4 +4.4 USA +0.0 –2.6 +2.9 +3.3 +2.7 Euro area +0.3 –4.0 +1.7 +1.7 +1.6 … Austria +2.2 –3.9 +1.9 +2.3 +2.0 Czech Republic +2.5 –4.1 +2.3 +1.8 +3.3 Slovakia +5.8 –4.8 +3.9 +3.1 +4.5 Hungary +0.6 –6.3 +1.2 +2.5 +3.4 Slovenia +3.7 –8.1 +1.2 +2.5 +2.8 Central Europe +2.7 –5.3 +2.1 +2.3 +3.5 Poland +5.1 +1.7 +3.8 +4.4 +3.9 Bulgaria +6.2 –4.9 +0.1 +2.8 +3.5 Romania +7.1 –7.1 –2.5 +1.7 +3.4 Croatia +2.4 –5.8 –1.5 +1.6 +2.0 Bosnia and Herzegovina +5.4 –2.9 +0.5 +1.8 +2.5 Serbia +5.5 –3.1 +1.8 +2.7 +3.5 Estonia –3.6 –14.1 +2.4 +3.9 +3.9 Latvia –4.6 –18.0 –0.9 +3.9 +3.9 Lithuania +2.8 –15.0 +0.9 +3.7 +3.7 SEE and Baltic states +4.4 –8.0 –0.9 +2.4 +3.3 Russia +5.2 –7.9 +3.4 +4.3 +4.1 Turkey +0.7 –4.7 +7.4 +4.1 +5.1 russia and turkey +3.8 –6.9 +4.6 +4.2 +4.4 Kazakhstan +3.3 +1.2 +6.0 +5.3 +5.5 Ukraine +2.1 –15.1 +4.0 +5.0 +5.0 kazakhstan and Ukraine +2.6 –8.2 +4.8 +5.1 +5.2 CEE (with Poland, GDP-weighted) +3.8 –5.9 +3.6 +3.9 +4.2 CEE (without Poland, GDP-weighted) +3.6 –6.9 +3.6 +3.8 +4.2 CEE (Bank Austria-weighted) *) +3.2 –6.1 +2.9 +3.3 +3.9 Bank Austria market (GDP-weighted) +3.5 –6.6 +3.4 +3.6 +4.0 Bank Austria market (Bank Austria-weighted) +2.9 –5.4 +2.6 +2.9 +3.3 *) weighted by contribution of Bank Austria’s subsidiaries to operating income in CEE region Source: UniCredit Research. Forecasts CEE: 21 January 2011, rest of world: 21 February 2011 tive in the entire region. As long-term perspectives of the CEE countries are intact and the countries have coped with the crisis comparatively well, net capital inflows have resumed in the past few months. For these reasons, apart from exchange rate fluctuations of the euro against the US dollar, we do not anticipate any major pressure for currencies to depreciate. Overall, the crisis has prompted a modification of the CEE growth model and its funding, with implications for the banking sector. Before the crisis, an overabundant supply of liquidity in international markets and low sovereign risk costs supported dynamic credit growth in the region. In light of low domestic savings ratios, loans were refinanced externally, via inflows of international capital; personal loans and foreign currency loans experienced a boom. The loan/deposit ratio declined in 2010, and in the next few years efforts will continue to focus on identifying local funding opportunities. Given stronger nominal growth, banks will nevertheless again pursue a more active lending strategy involving a greater diversification of loan products due to the prevailing shortage of capital, with a stronger focus on sustainability considerations. This will be at the expense of consumer loans while promoting corporate loans and project finance, including capital market instruments. Before the crisis, the banking sector had failed to properly appraise asset quality, especially in the retail segment, and the strong growth of the system had the effect of keeping the NPL ratio at a low level for too long. Overall, the marked rise of the provisioning charge is likely to have passed its peak in the CEE region. Impaired loans as a proportion of total lending volume are set to peak, or will pass their peak in the first half of 2011. Turkey took the lead in this regard (end of 2009), with the situation easing in most CEE countries at a high level in the middle of 2010. Hungary, Ukraine and Romania are lagging behind, while conditions in Kazakhstan, Bulgaria and Latvia will probably not improve until later in 2011. The crisis years have not impacted the long-term potential in Central and Eastern Europe. Convergence in the banking sector is still under way. The regional growth model, which is based on capital inflows, rising productivity and a higher standard of living, remains intact. The macroeconomic environment will be complemented by growing financial intermediation and the modernisation of financial services. In this context, market penetration with mortgage-based financing is not likely to amount to more than 8% of GDP, compared with 40% in the euro area. In CEE, the volume of business loans amounts to 26% of GDP; the figure for the euro area is 52%. There is moreover substantial untapped market potential in the areas of asset management and financial services offered to corporate customers. The next few years will see further growth in terms of volume and turnover in banking business, even if it is unlikely that this will match the growth rate of pre-crisis years. A vigorous upturn in domestic demand in CEE would be required for approaching the growth rates seen in the past. Bank Austria · Annual Financial Statements 2010 45
Page 1: Annual Financial Statements 2010 of
Page 4 and 5: Bank Austria at a Glance Income sta
Page 6 and 7: Management Report Consolidated Fina
Page 8 and 9: Management Report Management Report
Page 50: Management Report Management Report
Page 53 and 54: Consolidated Financial Statements i
Page 57: Consolidated Financial Statements i
Page 60 and 61: A - Accounting policies A.1 - Infor
Page 96 and 97:
Consolidated Financial Statements i
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
D - Segment reporting D.1 - Reconci
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
F - Additional disclosures F.1 - Ti
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 159 and 160:
II. UniCredit Bank Austria AG Preli
Page 161 and 162:
Management Report of UniCredit Bank
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Financial Statements of UniCredit B
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Notes to the Financial Statements 2
Page 193 and 194:
Notes to the Financial Statements P
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Notes to the Financial Statements D
Page 205 and 206:
Page 207 and 208:
Notes to the Financial Statements T
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Shares in group companies and equit
Page 215 and 216:
Supervisory Board and Management Bo
Page 217 and 218:
Financial Statements for 2010 Trans
Page 219 and 220:
Financial Statements for 2010 Prüf
Page 221 and 222:
Financial Statements for 2010 Bank
Page 223 and 224:
Financial Statements for 2010 State
show all

Annual Financial Statements 2010 of Bank Austria

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?