Statement
by the Chairman of the Board
In 2004 the world's economy achieved the biggest growth in about 11/2 decades. Thanks to the lively export dynamics, economic growth in Austria reached nearly 2% in 2004 - as was the case for the euro area. The modest economic recovery during the first half of the year was slowed down already in the second half of the year by the growing reluctance of consumers to buy, the strong rise of the euro rate and high crude-oil prices. With regard to interest rates, the expected increase of capital-market rates did not materialize, whereas the money-market rates remained unchanged at a very low level. In spite of these difficult overall economic conditions, we were once again able to obtain an extremely good result for the Group. When the ÖGB (Austrian Trade Unions' Federation) took over the share holdings of Bayerische Landesbank, with 30 June 2004 as the effective date, BAWAG was transferred back into 100% Austrian ownership. This development proves the confidence which the ÖGB has in our group of banks, and it confirms the close bonds that have existed between the ÖGB and BAWAG since its foundation. As part of the most far-reaching cooperation in Austria's bank history, our group of companies pooled its payment transactions with "Erste Bank der oesterreichischen Sparkassen AG" at the beginning of the year under review. About 40% of payment transactions in Austria will be handled in the framework of this cooperation in the future. Since the completion of the merger between LBA Landesbausparkasse AG and Bausparkasse Wüstenrot AG during the third quarter of the previous year, the BAWAG P.S.K. Group cooperates exclusively with Wüstenrot in the building-society sector, holding a share of about 7.4% in the new building-society partner. We took a big step towards coming closer to our declared goal of being the leading retail bank in Austria, by successfully completing the second stage of our modern core-banking system "allegro". Once the previous system of BAWAG has been replaced completely in the course of the current year, all customers and products of P.S.K. will be transferred to the new system in a fourth step, so that it will be possible to provide better services still to all customers of our Group at every branch office of Austria's biggest distribution system with centralized control.
The BAWAG P.S.K. Group continued its expansion in Central Europe by taking over the Czech subsidiary of Dresdner Bank Frankfurt. That take-over was completed in the fall of last year and doubled our presence in the Czech Republic at one go. After the merger of our two subsidiary banks, which is planned for the first half of 2005, we intend to obtain profitable growth in the Czech Republic, especially by expanding the retail business. For a further expansion of our marketing base on an enlarged home market, the BAWAG P.S.K. Group will also set up a subsidiary bank in Slovenia. The youngest foreign subsidiary bank of the Group will concentrate on Slovenian corporate customers for the time being. As is the case with other subsidiary banks in Central and Eastern Europe, the retail business will be built up gradually on a medium-term basis. Without the outstanding commitment of our staff members it certainly would not have been possible so brilliantly to master the challenges of the past year. We have gained many new customers and were able to expand our market shares in many seg- ments, and we managed all of that while implementing one of the biggest IT projects in Europe. I would like to expressly thank all our staff members for their outstanding performance. They certainly are the most valuable capital of our corporate group. Let me close by also thanking all our customers for their confidence and loyalty, as well as our shareholder for its support.
Johann Zwettler
Chairman of the Board and Chief Executive Officer