Annual Financial Statements 2011 of Bank Austria

Management Report
Management Report (CONTINUED)
Negotiations for private sector involvement in connection with the
second bailout measures for Greece, which resulted in specific
undertakings shortly before the editorial close of this report, involved
additional price losses in anticipation of the announced debt restructuring
and the loss in value as a result of the rescheduling of remaining
bonds (interest rates, extension of the relevant periods). The valuation
of holdings of Greek government bonds resulted in a writedown
of € 396 m, which is recognised in the income statement for
2011. € 257 m of this amount is reflected in the Corporate Center,
€ 20 m in the CIB Division and € 119 m at banks in the CEE Division.
➔ Overall, the balance of non-operating income/expenses in 2011
was a net expense of € 441 m after a net expense of € 79 m in
2010. When this amount is deducted from net operating profit, profit
before tax is € 1,291 m. In a comparison with the original figures
for 2010, this represents a decline of € 258 m or 16.6%; based on
the comparative figures for 2010 recast to reflect the current consolidation
perimeter, profit before tax is down by € 165 m or 11.3%.
The three Austrian customer business divisions generated a combined
profit before tax of € 672 m (+6.4%) and the CEE business
segment contributed € 1,462 m (+28.0%), while the Corporate
Center recorded a negative result (– € 844 m after – € 319 m).
➔ After deduction of income tax of € 261 m and of non-controlling
interests (€ 50 m), net profit before Purchase Price Allocation
amounted to € 980 m.
As part of the multi-year planning process for all units of UniCredit –
and ahead of the capital increase of UniCredit SpA – the mediumterm
scenarios for all business segments and regions were updated
in the third quarter of 2011 and coordinated with the current plan.
Performance trends which were below the original assumptions used
for planning purposes required the recognition of an impairment
loss of € 350 m on goodwill related to JSC ATF Bank in Kazakhstan
and the recognition of an impairment loss of € 329 m on goodwill
related to PJSC Ukrsotsbank in Ukraine as at the end of 2011.
After the valuation adjustment, and after taking exchange rate
movements into account, the statement of financial position includes
residual goodwill for these two group companies of € 129 m and
€ 168 m, respectively. Impairment losses on goodwill relating to
UniCredit Securities International Limited Cyprus and CJSC
UniCredit Securities in Russia, which are currently being restructured,
totalled € 47 m, reducing the relevant goodwill to nil.
Net profit (€ m)
2011 2010 CHAngE
Bank Austria as a whole 209 747 –538 –72.1%
Austrian customer busines 503 455 +48 +10.6%
Central Eastern Europe (CEE) 1,178 850 +329 +38.7%
Corporate Center –1,473 –595 –877 >100%
➔ The total charge for goodwill impairment and the Purchase
Price Allocation effect impacted the consolidated financial statements
of Bank Austria with € 772 m, corresponding to 60% of
the profit before tax. net profit attributable to the owners of
Bank Austria for 2011 was € 209 m, after € 747 m in the previous
year (original figures).
The improved operating performance was strong enough to absorb
the inevitable valuation adjustments and other non-operating
charges such as the write-downs on Greek government bonds, debt
restructuring and levies on banks. These valuation adjustments were
made to relieve any impact on future earnings.
Bank Austria · Annual Financial Statements 2011
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