Annual Financial Statements 2011 of Bank Austria

Management Report
Management Report (CONTINUED)
segments, and a gradual decrease of the impaired portion of
the portfolio. In Q4 2011, loans were made mainly to sectors
such as wholesale trade, agriculture and transportation. There
was a seasonal outflow of big ticket deposits in Q4 2011 in
large corporates mainly related to annual tax and dividend payments
by clients. The retail segment experienced a significant
increase of almost 10% in the deposit base in Q4 2011. Overall,
the bank was able to increase customer deposits by about
9% y/y. Net interest income grew by 18% q/q in Q3 2011
and by 7% y/y thanks to an increase in the loan books and to
the further optimisation of the funding base. The increase in
net fees and commissions in Q4 2011 was generated mainly
by the retail and Private Banking segments as a result of the
enlarged client base and an improved range of products.
Compared to the previous year, the bank increased revenue
by more than 50% and lowered the cost of risk thanks to the
improvement of asset quality.
� In Q4 2011, the 3 Baltic countries (Estonia, Lithuania
and Latvia), witnessed further signs of economic recovery.
This was particularly the case in Estonia which has one of
Europe’s most dynamic GDP growth rates, driven mainly by
buoyant exports. Estonia has been given the second highest rating
in Eastern Europe by Standard & Poor’s (AA–). Lithuania was on
track to post a strong and sustainable recovery in 2011 with
impressive GDP growth in excess of 5%. Despite some slowdown
in Q4 2011, the main indicators for consumption continue to show
strong gains. Latvia’s GDP growth lags behind the other Baltic
states but it is nonetheless strong and catching up. Inflation, as
everywhere in the Baltics, remains at a fairly high level y/y on the
back of energy and food prices.
Net interest income of UniCredit Bank remained at a high level in
Q4 2011, thus making a strong contribution to the full-year result;
fee and commission income also contributed significantly to total
revenues in Q4 2011, and also throughout 2011. At the same
time, the bank is continuing to pursue its tight cost discipline, with
a positive impact on the cost/income ratio. After posting an operating
loss in 2010, the bank achieved an operating profit in 2011
and its performance improved significantly in 2011. UniCredit
Bank is well capitalised, with a capital adequacy ratio of close to
13%. External funding was also raised via institutions such as the
European Investment Bank and the Nordic Investment Bank for the
purpose of diversifying funding sources.
Bank Austria · Annual Financial Statements 2011
47