PwC on Austria banks: Hungary, Romania worst performers

MNB

Multinational professional services firm PricewaterhouseCoopers (PwC) has released a new report on Austria-based asset quality, not surprisingly listing Hungarian and Romanian operations as the worst performers in the CESEE region.

According to PwC, the total loan portfolio of Austrian banks in the Central Europe/South Eastern Europe (CESEE) region is valued at €400 billion. Of this, about €46 billion, were deemed “risky” by PwC, and that approximately 30% of the risky loans were held by the top six Austria-based banks: Erste Group, Raiffeisen Bank International (RBI), Bank Austria, Hypo Group, Bawag and VBAG.

Further, some 18% of the loans of Hungarian households were classified as non-performing by PwC, and over 11% of those with loans are unable to repay; the non-performing loans are valued at €4 billion, representing 4% of the country’s GDP.

In August, RBI released half-year results for 2013 that showed a serious downturn for the bank, and “catastrophic results in Hungary” were said to account for €700 million in losses in the previous 12 months; as a result, CEO Karl Sevelda announced scaling back of operations in Hungary, Slovenia and possibly Croatia.

Erste Bank likewise noted its Hungarian “ordeal” when presenting its own half-year results, but remains slightly more optimistic that operations may be turned around in CESEE. Nevertheless, Erste CEO Andreas Triechl said at that time that “I don't believe we will have a positive result in Hungary next year. If it happens, I would be surprised and happy but currently that's not in our planning.”

PwC noted that Bank Austria has the greatest exposure in the region, with a loan volume of €70 billion, or 53% of all Austria-based loans in CESEE.

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