Market Report, "Austria Commercial Banking Report Q4 2010", published

Sept. 17, 2010 - PRLog -- Our baseline scenario is for a fairly smooth adjustment towards a lower growth trajectory for the Austrian banking sector over the medium term. However, we warn that systemic risks emanating from a relatively high degree of foreign currency loans held by households, potentially insufficient capital buffers and Greece's ongoing economic crisis could yet destabilise the recovery. Although the Austrian banking sector has so far evaded a systemic crisis and continues to muddle through the global economic downturn, we warn that underlying risks to stability remain.     While there are signs that provisions for bad loans to emerging Eu rope may have already peaked, according to Bank Austria CEO Willibald Cernko, we highlight four key risks going forward.     Fiscal Consolidation Could Bite Hard Given the growing pressures on EU governments to start reining in overstretched fiscal deficits, domestic demand will be weighed down over the medium term. Should governments withdraw fiscal stimulus measures too early and cut budgets too far then there is a risk of a double-dip scenario materialising. This would have a negative impact on employment and corporate profitability, sending non-performing loans higher and weighing on overall asset quality.     FX Exposure Poses A Significant Risk     There are also risks stemming from the high degree of foreign currency loans held by Austrian households. Approximately 30% of all outstanding client loans are in foreign currencies, mainly Swiss francs but also in Japanese yen. As such, households remain exposed to exchange rate risks, which could yet reduce their refinancing capacity should the euro continue to weaken. Such is the severity of this risk that Bank Austria started to increase the pressure on local banks in March 2010 to curb FX lending. Although the share of new loans issued in foreign currencies has fallen by about 8% since Q308, the majority of the EUR36bn in FX liabilities is the in the form of long-term mortgages, which will take time to expire, leaving the banking sector at risk from a major adverse currency move. This risk has elevated in recent months due to the sharp depreciation of the euro on the back of the Greek economic crisis.     Failing To Build Up Reserves     Helmut Ettl, an executive board member of the Austrian Financial Market Authority (FMA), has warned of the industry's lack of capital buffers. Under Bank Austria's baseline case, local banks will endure EUR10bn in asset writedowns over the next two years, with an additional EUR10bn possible in a worst case scenario. However, capital buffers were in declin e leading up to the international financial crisis, leaving the banking sector vulnerable to deteriorating loan performance.The Greek economic crisis could rock systemic stability in Austria. Although the five largest banks in Austria pledged to remain committed to the Greek market and not to speculate against the economy, contagion from the stricken EU and eurozone member to elsewhere in the region could elevate risks to systemic stability. While Austria's exposure is fairly small, major exposure by German and French banks gives cause for concern, with a default likely to have knock-on effects across the EU. In our baseline scenario, we forecast a significant slowdown in industry growth, with assets projected to expand by an average of 4.8% over 2010-2014, compared to 12.1% during 2004-2008. However, given the risks discussed above, growth may slow further below our forecasts.

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Partial Table of Contents:

Executive Summary
- Table: Levels (EURbn)
- Table: Levels (US$bn)
- Table: Levels At March 2009
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (EURbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Austria Commercial Banking SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Austria Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Developed States Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
- Table: Developed States Banks' Bond Portfolios
- Table: Developed States Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits, 2008-2009 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates & Bond Yields, 2009-2010
Europe Banking Sector Outlook
Austria Banking Sector Outlook
Economic Outlook
- Table: Austria Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Table: Protagonists In Austria's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Major Banks
Company Profiles
- BAWAG PSK
- Volksbank
- Raiffeisen Zentralbank Osterreich
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Erste Group
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Bank Austria
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Hypo Group Alpe Adria
- Kommunalkredit
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
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Full Table of Contents is available at:
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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.