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BKS Bank: on Solid Ground in 2009
02-Apr-2010
“The course we have taken has proven itself during the crisis. We had no investments in the Lehman Brothers or in Iceland or in any other toxic securities. Because of this, we haven’t had to clean house. We were immediately able to focus on our customers to support them best through the crisis”, Heimo Penker, CEO of BKS Bank, summarizes the success factors that helped BKS Bank thrive in the market once again in 2009.
And the results are impressive:
• +5,7% growth in the balance sheet total (6,3 billion euros)
• +7,6% more savings deposits (1,8 billion euros)
• +4,2% increase in loan volume (4,5 billion euros)
“These numbers show that BKS Bank is a trustworthy banking partner in turbulent times both for its long-term customers and for numerous new customers.” The widely referred to credit crunch was no issue in BKS Bank. “We were able to fulfill the loan needs of our customers at all times. In comparison to last year, BKS Bank was able to expand loan volume to businesses by 5,3%, even though loan volume in all of Austria sank by 1,7%. Because we have always managed carefully, we didn’t really need to make any adjustments to be in line with lending guidelines”, according to Penker. 3,6 billion euros of the financing volume went to corporate and business customers, 0,9% went to retail customers. The expansion in the lending business was done almost exclusively in euro. “We haven’t granted any foreign currency loans to retail customers since the fall of 2008. Many customers have also used the chance to switch to a euro loan”, tells Penker. The only bitter pill was that BKS Bank had to increase credit risk. “The fact that the majority of our loan volume is with corporate and business customers naturally has an effect on credit risk during weak economic times. We had to adjust it accordingly”, Heimo Penker explained.
BKS Bank savings deposits are growing substantially stronger than the national average
Penker is especially pleased with the development of passive business: “Savings deposits increased in BKS Bank substantially more than the Austrian average of 2,3%. Our recorded growth was almost 3 times higher. As at the balance sheet date of December 31, 2009, depositors had entrusted us with deposits of 1,8 billion euros.” The BKS Bank CEO further emphasized that more securities issues were placed on the market than in the year before, namely a volume of approximately 170 million euros. “This shows that investors see our bonds as a low-risk investment form, and we are proud of this fact.”
Cost-saving program shows its effectiveness
Penker doesn’t only assess the volume development positively, but also the realized annual net profit. “In the first months of 2009 we expected a substantially lower annual net profit. We were in a deep recession, the securities business was almost non-existent and many customers had become cautious and reluctant”, the CEO reflected back on the beginning of 2009. The BKS Bank initiated a strict cost-saving program. “Our employees strongly supported us. We were able to reduce staff costs by 2,3 % through a rigorous reduction in overtime and flexi-time balances, despite hiring several new employees. Material expenses rose only marginally, which means that the total general administrative expenses of 88,2 million euros (+0,4 million euros) remained almost at the level of 2008.”
Annual net income before taxes 46,5 million euros
At the same time, sales initiatives were intensified. “As at the balance sheet date of Dec. 31, 2009, the net interest income before risk impairment of 132,2 million euros was already 1,6% over the same figure from 2008. The risk impairment decreased this result by 37,4 million euros, so that the net interest income was 94,9 million euros”, reported Penker. The net fee and commission income – the second most important earning position – of 39,7 million euros was only just below last year’s figure of 40,8 million euros. After allowing for all expense and earning positions, BKS Bank achieved a net income before taxes of 46,5 million euros, which is higher than last year’s figure of 44,4 million euros. “We are very pleased with this result, especially considering the external situation”, said Penker.
Additional Highlight: Successful capital increase, increased power through reorganizations
Herta Stockbauer, Chairman of the Board of BKS Bank, agrees. “We moved so much more in the last year; more than in any other year.” She mentions the capital increase through the issuance of 4.680.000 new ordinary shares done in October as a further example of success. “Our equity rose by about 73 million euros through this increase, the core capital ratio improved from 6,90% to 8,68% and we gained about 650 new shareholders”, said Stockbauer, pleased about the capital increase, which was slightly over subscribed.
Good regional development
Stockbauer is also pleased with the development of the regions where BKS operates. The most important regions for BKS Bank are, as always, Carinthia and Styria. “Both of these are regions where we have been on the market the longest. This year it will be almost 90 years in Carinthia and in Styria 27 years”, tells Stockbauer.
Slovenia
Slovenia is the international market where BKS Bank has operated the longest; it began in 1998 with the purchase of a leasing company, today’s BKS-leasing d.o.o. In the meantime, BKS Bank offers its Slovenian customers bank activities as well. In addition to the branches in Ljubljana and Maribor, a new branch in Celje was opened in 2009. A further office will be opened in Ljubljana in May. In addition, securities business was taken up a short while ago. BKS Bank’s most important business area in Slovenia is the lending business. As at the balance sheet date of Dec. 31, 2009, the 3 Slovenian branches showed a financing volume of 414,8 million euros. The leasing business BKS-leasing d.o.o. delivered a gratifying business result as well. Its business volume totaled approximately 65,1 million euros as at balance sheet date. Altogether the BKS Bank group in Slovenia employs a yearly average of 45 employees, of this 8 in the leasing subsidiary.
Croatia
BKS Bank is represented in Croatia with a leasing business – the BKS Leasing Croatia d.o.o. – as well as in banking business with the BKS Bank d.d. The BKS Bank d.d. was purchased in 2007 (then the Kvarner Banka d.d.), since reporting year 2009 BKS Bank is 100% owner. The BKS Bank d.d. concentrated its activities in 2009 on the expansion of its product range for retail customers. “Up to this point our Croatian subsidiary was specialized in financing for small and medium-sized industry. The infrastructure for a universal bank was created during the past fiscal year. Current accounts and online banking were introduced and additionally, customers were able to utilize personal loans and debit cards. Credit cards and insurance products will follow soon”, Stockbauer explained. With these diversifications, BKS Bank is creating improved growth opportunities and a higher degree of risk diversification in Croatia. As at balance sheet date, BKS Bank d.d. generated a balance sheet total of approximately 81 million euros with 53 employees. The leasing subsidiary BKS-Leasing Croatia d.o.o. achieved a leasing volume of 56,1 million euros with 9 employees.
Slovakia
BKS Bank’s market entry into Slovakia took place in 2007 with the purchase of a leasing business, today’s BKS-Leasing a.s. BKS-Leasing a.s. generated a business volume of 47,5 million euros and employed a yearly average of 29 employees. In addition to the headquarters in Bratislava, there are further offices in Zilina, Košice and Banská Bystrica. “We will expand our business scope in Slovakia and have already begun with preparations for the founding of a bank branch in Bratislava a short time ago, which is expected to take up business in 2011”, says the Chairman of the Board.
The most important key figures of the BKS Bank Group, klick here
Further Information:
Ms. Petra Ibounig-Eixelsberger, BKS Bank-Public Relations
T: 0463/5858-104,
M: 0664/805 567 194
E: petra.ibounig@bks.at
