Annual Financial Statements 2011 of Bank Austria

Management Report
Management Report (CONTINUED)
fee-based income. Net fees and commissions, the most significant
income component for private banking business, accounted for
59% of operating income and was 7.3% down on the figure for
the previous year. While including revenue from fund and asset
management business, which develops in a more predictable manner,
they also reflect investment turnover which is a result of investment
behaviour. This in turn mirrors the mood prevailing in capital
markets. Brokerage business made a much smaller contribution to
net fees and commissions.
While operating income increased by 6.7% despite the difficult
environment, costs remained stable in 2011. They even fell a little
(–0.5%) as of the end of 2011, although staffing levels were
slightly up, by 12 FTEs (+2.2%), on the previous year following the
recruitment of experts. Less net write-downs of loans and provisions
for guarantees and commitments (€ 4 m), this resulted in a
profit before tax of € 47 m (+21.4%) for 2011. 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 67.4% in 2011, which is an improvement of
4.9 percentage points in a comparison with 2010. Return on equity
before tax for 2011 was 35.6% after 31.5% in the previous year.
Performance of major asset classes in 2011
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2010
2011
Shares: Euro Stoxx
10-year € benchmark bond
10-year Greek bond
Gold (US$ per ounce)
Swiss franc in euro
BBB corporate bonds
Commodities, Rogers, €
For bonds and shares:
total return, i.e. price + reinvested coupon or price + reinvested dividend
Average for Q1 2010 = 100
Gold (US$)
Swiss
franc/€
€ benchmark
bond
Corporate
bonds
Shares
Commodities
Greece
The Private Banking business segment generated an Economic Value
Added (EVA) of € 32 m and a risk-adjusted return on risk-adjusted
capital (RARORAC) of 84%.
The Private Banking Division’s investment strategy and service
approach always give priority to preserving wealth over achieving
short-term performance, and have always managed risk through wide
diversification. In Private Banking, the process chain starts with the
professional analysis of needs and transparent contract structures
throughout the entire spectrum, from client safe-custody accounts to
discretionary mandates. At the end of the process chain is our financial
planning advisory strategy, an instrument for providing our
wealthiest clients with integrated advisory services. At present, there is
no competitor in the Austrian market capable of offering clients advisory
services of such a comprehensive nature and such high quality.
As market leader in the private foundations sub-segment, the Division
set up a private foundations centre in May 2011. The team of
experts assigned to this centre supports clients throughout Austria
with economic and legal issues, and with succession planning in particular.
Meeting the needs of Austrian private foundations is a strategic
focus of the Private Banking Division’s activities.
In the course of 2011, Private Banking took a number of further initiatives
to expand its position in the market: after implementing an
ongoing review of portfolio quality by the bank’s own portfolio analysts
and within the international network of UniCredit experts, the Preferred
Partners concept has resulted in a simplification of products and
services, and in quality enhancement. The focus on ten outstanding
fund management companies as partners provides a basis for optimum
coordination of current market evaluation by the Division’s
experts, and for precise quality management and quality control. Asset
management services benefit from the international dimension provided
by the global investment strategy (GIS) of UniCredit’s Private
Banking Division. The 5Invest asset management approach is
based on these two components. Clients can select the investment
strategy that best suits their needs, depending on their risk tolerance
and specific investment goals. The quality of the 5Invest portfolio was
audited and certified by Institut für Vermögensaufbau, an independent
institution.
At the end of November 2011, for the seventh time in succession, the
German “Elite Report” awarded its top grade – “summa cum laude” –
to Schoellerbank: based on the number of points gained, it was
thereby recognised as one of the five best asset managers in German-speaking
countries among 349 well-known providers in four
countries, and as the best private banking institution in Austria.
Since December 2011, Schoellerbank has been the exclusive contact
in Austria for high net worth individuals served by UniCredit in Central
and Eastern Europe (CEE). In this way, Schoellerbank has become the
Private Banking competence centre for clients from Central and Eastern
Europe.
Bank Austria · Annual Financial Statements 2011
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