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Markets News

Shares in Austrian bank BAWAG slide as earnings miss consensus

VIENNA, Oct 27 (Reuters) - Shares in Austrian bank BAWAG Group slid more than 6% on Tuesday after its quarterly net profit fell short of forecasts, dented by larger risk provisions that it said were part of a “cautious and conservative” approach.

Third-quarter net profit at BAWAG, which unlike many Austrian peers focuses on developed markets like Germany and Switzerland rather than eastern Europe, reached 78.8 million euros ($93.1 million).

That was down 37% year-on-year and fell short of analysts’ average forecast of 86.5 million, Refinitiv Eikon data showed.

Its risk costs, which include provisions and impairment losses, increased by 33% from the previous quarter to 50 million euros, under a conservative approach that assumes euro area gross domestic product will drop 12.6% this year in line with the European Central Bank's 'severe' scenario from June here.

The ECB already revised that figure to 10% in September here.

“Given the overall economic uncertainty and potentially longer-lasting impact of COVID-19, we continue to remain cautious and prudent in our provisioning,” BAWAG Chief Executive Anas Abuzaakouk said in a statement.

“While the economy recovered in the third quarter, there is still a great deal of uncertainty on how the situation will develop over the coming months.”

Credit Suisse analysts said in a research note: “This remains one of the most conservative GDP assumptions in our overall coverage universe, and is well below consensus.”

At 1235 GMT, BAWAG’s shares were down 6.6% at 31.94 euros.

The company adjusted part of its outlook upwards, predicting net interest income would rise by up to 4% this year versus up to 3% forecast in July. In the first three quarters it rose 4.2%.

BAWAG also said it expected core revenue - net interest income and net fee and commission income - to remain stable in the fourth quarter.

“Probably it’s rather conservative,” Chief Financial Officer Enver Sirucic told an analyst call when asked about that outlook. ($1 = 0.8461 euros) (Reporting by Francois Murphy; Additional reporting by Tapanjana Rudra in Bangalore; Editing by Jan Harvey)

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