2/3 of Austrian bank profits to cover bad loans

GMT 05:06 2014 Tuesday ,08 July

Arab Today, arab today 2/3 of Austrian bank profits to cover bad loans

Austrian bank profits used to cover loans
Vienna - XINHUA

Austrian banks have used two-thirds of their profits or almost 60 billion U.S. dollars to cover bad loans since the beginning of the financial crisis in 2008, the country's National Bank (OeNB) stated Monday.
The latest Financial Stability Report from the central bank revealed that in 2013 the figure even reached 88 percent of profits. It was reported last week that the Erste Group Bank AG is expecting record losses of over two billion dollars in 2014, primarily from its Romanian and Hungarian operations.
OeNB Governor Ewald Nowotny said despite the recent high losses and write-offs in the Eastern European operations of Austrian banks, the activity in the region has as a whole been an "economic success story," the Wirtschaftsblatt business newspaper reported.
He added he did not see a reason for banks to withdraw from Eastern Europe apart from in some individual cases, though warned domestic banks must "proactively address" risks in the region, which he said was not a "unified area. "
The situation in the Czech Republic, Poland, and Slovakia is different to that of Ukraine and Hungary, he said.
In its report findings the OeNB called for a "further strengthening of the sustainability of the business models of Austrian banks," with an emphasis on improving the equity situation. Despite some improvement in this area, Austrian banks are still capitalized below average, and the gap between capitalization of domestic banks and comparable European banks has grown, it was claimed.
OeNB Vice Governor Andreas Ittner said the banks also need to improve their profitability, having some of the lowest margins in Europe, the opposite of which is required for a more stable banking system.

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