Annual Financial Statements 2011 of Bank Austria

Management Report
Management Report (CONTINUED)
Multi-year trend in total assets, by quarter (€ bn)
240
220
200
180
230
221
209 229
Total assets
203
222
196
191
160
154
140
120
100
80
60
40
20
Leverage ratio
(without intangible assets)
0
D M J S D M J S D M J S D M J S D M J S D
2007 2008 2009 2010 2011
214 208
194
204
21.9
13.3
201
200 191
198
190
193 194
199
Loans to customers
Primary funds
22
20
18
16
14
12
10
The largest growth in percentage terms was recorded in countries where
our banking subsidiaries enjoy particularly strong confidence among customers
because they are international banks, especially in Russia and
Turkey, as well as in Ukraine and Kazakhstan. debt securities in issue
rose by € 2.4 bn or 8.6% to € 29.9 bn, mainly through successful
mortgage bond issues, with high placement rates in Austria making an
important contribution in this regard. As a result of these developments,
primary funds (the sum total of deposits from customers and debt
securities in issue) rose to € 134.7 bn compared with the end of 2010
(+€ 6.8 bn or +5.3%). This means that customer loans were fully
funded by customer deposits in a wider sense as of year-end 2011.
Among the remaining items on the liabilities side, deposits from banks
were slightly below the previous year’s level (–1.1% to € 32.8 bn). The
combined sum total of financial liabilities held for trading, financial liabilities
at fair value through profit or loss and hedging derivatives was also
lower at the end of 2011 compared with year-end 2010.
As of 31 December 2011, equity was € 17.7 bn, € 185 m or 1.1%
above the level at the end of 2010. It accounted for 8.9% of total liabilities
and equity. This development is explained by two factors: first, the
net profit included in retained earnings was very low in 2011 (€ 258 m
after € 798 m) as a result of exceptional non-operating expenses and
the goodwill impairment charge. Second, the effects from foreign currency
translation related to capital consolidation were very negative in
2011 compared with the previous year (– € 571 m). This negative
impact was not quite offset by an increase in reserves in accordance
with IAS 39 (amounting to a combined figure of +€ 533 m) and the
other items directly recognised in equity; the balance of income and
expenses recognised directly in equity was slightly negative (– € 23 m).
Together with the net profit and including the changes in the group of
consolidated companies (– € 28 m) and distributions (– € 23 m) – both
only concern non-controlling interests – the change in equity amounts
to € 185 m.
Capital resources pursuant
to the Austrian Banking Act
� Risk-weighted assets (RWAs) as at the end of 2011 were € 125.2 bn,
down by € 2.7 bn (–2.1%) from the year-end 2010 level. In Austria,
the change resulted primarily from the adoption of the internal ratingsbased
(IRB) approach for additional exposures and from the adjustment
of risk parameters. While several banking subsidiaries switched to the
IRB approach, this had a very small net effect in terms of RWAs: a
€ 12.4 bn increase in the IRB portfolio was more or less offset by a
€ 12.2 bn decrease in the portfolio under the standardised approach.
On the other hand, business expansion in CEE led to an increase,
which was partly offset by exchange rate movements.
The implementation of CRD III, which involved a higher capital requirement
for stressed value-at-risk and incremental risk charge, led to
a € 1.3 bn increase in RWAs from the trading book at the end of
December 2011 compared with the previous year.
As a result of lower RWAs, the capital requirement for credit risk
declined to € 8.8 bn (–3.7%) and the capital requirement for all types
of risk was € 10.0 bn (–2.1%).
� In 2011, net capital resources rose by € 0.4 bn (+2.3%) to
€ 15.9 bn. Negative consolidation effects were reduced by write-downs
on equity interests and capital measures. The shortfall-related deduction
declined by € 0.2 bn as write-downs rose. Tier 2 capital declined
by € 0.2 bn as a lower amount of subordinated capital was eligible for
inclusion in view of its residual maturity.
� The increase in Tier 1 capital in combination with the RWA reduction
compared with the end of 2010 resulted in higher Tier 1 capital ratios and
total capital ratios. The Core Tier 1 capital ratio (Tier 1 capital ratio without
hybrid capital) based on all risks rose from 10.04% to 10.55%. The Core
Tier 1 capital ratio based on credit risk rose from 11.33% to 12.10%.
Capital ratios
31 dEC. 2011 31 dEC. 2010
based on all risks 1)
Tier 1 capital ratio 10.88% 10.35%
… without hybrid capital (Core Tier 1 capital ratio) 10.55% 10.04%
Total capital ratio 12.68% 12.13%
based on credit risk 2)
Tier 1 capital ratio 12.47% 11.68%
… without hybrid capital (Core Tier 1 capital ratio) 12.10% 11.33%
Total capital ratio 13.37% 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.
Bank Austria · Annual Financial Statements 2011
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