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Austria’s banking sector: Facts & Figures

Updated December 2020 – For earlier editions of Facts & Figures click here

Austria’s economy reached its cyclical peak in 2017 with a real GDP growth of 2.7%. In 2018, growth weakened to 2.3%, and to 1.5% in 2019. In both 2018 and 2019, Austria recorded growth that was 0.3 percentage points higher than in the euro zone.

The Austrian banking sector increased in size in 2019, while the number of banks continued to decline. The consolidated total assets of the Austrian banking sector jumped over the €1,000 billion mark in 2019 for the first time since 2016. At the same time, the number of banks dropped to 573. This corresponds to a reduction of 24 head offices over the last twelve months. The number of bank branches in Austria declined to 3,521, down by 3% compared to the previous year.

The number of payment transactions involving Austrian card holders dropped to 180 million in Q1 2020, after 196 million in Q4 2019. However, contactless payments saw an increase, the transaction limit having been raised to €50.

In 2019, 7.5% of the disposable income of private households went into savings. At the end of 2019, private households had accumulated financial assets amounting to €716.3 billion (180.0% of GDP). Private households are thus important providers of capital for the other sectors of the economy.

In Q4 2019, the Austrian household sector was indebted to 50.2% of GDP. This figure is well below the euro area average of 65.4%. Corporate debt in Austria was at 396% of gross operating surplus or 90.4% of GDP, also below the euro area average of 512.3% and 107.6% respectively. Lending to non-financial companies has been accelerating in Austria since mid-2017. In 2019, corporate loans increased by 6.2% year-on-year and loans to private households by 4.2%. Lending to property-related sectors and mortgage loans were the main drivers.

Austrian banks benefited from favourable economic conditions in 2019. The developments prevailing in Austrian banks until the end of 2019 largely reflect the cyclically induced positive developments of recent years. During this period, the profitability of Austrian banks recovered strongly, driven in particular by credit risk costs, which fell to historical levels, and also by the recent dynamic growth in credit. Capital resources have doubled over the past ten years and the liquidity position of the banks has also improved.

The profitability of credit institutions in Austria was supported in 2019 by the favourable economic environment, the accelerating credit growth and the historically low cost of borrowing due to low interest rates. As a result, domestic banks achieved a consolidated profit for the period (after tax) of €6.7 billion. The subsidiaries of Austrian banks in CESEE continue to benefit from the comparatively good economic conditions in the region. Credit growth (loans after provisioning) amounted to 10.2% in 2019. This development was mainly driven by the subsidiaries in the Czech Republic, Russia, Slovakia and Hungary.

Aggregated profit for the period (after tax) increased comparatively strongly year-on-year at the Austrian subsidiary banks in the Czech Republic (17%), Russia (12%) and Slovakia (7%).

The systemic risks arising from private residential real estate financing remain limited in Austria. To ensure that this remains so, sustainable lending standards are essential. The Central Bank of Austria (OeNB) continues to closely monitor developments on the real estate market and banks’ compliance with the sustainable lending standards communicated by the Financial Market Stability Board (FMSG). Credit quality continued to improve in 2019: the ratio of non-performing loans (NPLs) at the consolidated level was 2.2%; in the Austrian business segment it was 1.7% and at the Austrian subsidiaries in CESEE it was 2.4%.

The CET1 ratio of Austrian banks amounted to 15.6% in 2019. Rising credit growth and increasing dividend distributions make it difficult for the banks to increase their capital further.

Contributor: Bernhard Freudenthaler freudenthaler@bankenverband.at