BAWAG P.S.K.: Customer-Focused Investment and Growth
BAWAG P.S.K. is one of the largest banks in Austria offering a wide range of products and services predominantly in Austria, but also in other countries. The Bank's business activities cover retail and corporate banking as well as the financial markets segment.
The clear focus of BAWAG P.S.K. is on our core competence, retail and corporate banking in Austria. While the emphasis in past years lay on repositioning the Bank, we are now entering a new phase of investment and growth in which our successful business model will be expanded and enhanced for the benefit of our customers.
Key steps for the growth of the Bank were already taken in the financial year 2010 including:
- Expansion of our Austrian retail banking franchise, with its strong deposit base continues to be the main pillar of the Bank's excellent liquidity position. An investment budget of over EUR 100 million for the coming years underscores the strategic importance of this segment. The merger of the BAWAG and P.S.K./post office branches into a uniformly managed outlet network that was started in October 2010 will open up significant growth potential.
- The profitability of Austrian corporate banking was improved substantially, and lending in this segment grew markedly. Our focus on providing integrated financial and capital market solutions will create additional value for our customers.
- We are selectively complementing our Austrian business activities with a careful and risk-mitigating expansion of our international corporate banking business, focused primarily in Western Europe.
- In the first half of 2010, we initiated a comprehensive programme to drive the improvement of our customer service and cost-income ratio, based on extensive investments in efficiency and productivity, covering all customer-related and internal units of the Bank.
Retail and Small Business Customers
The Bank has a traditionally strong position in the retail market with 1.6 million customers, and together with our partner Österreichische Post AG, we have the largest centrally managed branch network in Austria. Thanks to our coverage of almost the entire Austrian market, BAWAG P.S.K. was able to hold its strong deposit base despite the challenging market conditions. This supports the Bank's strong liquidity position.
The expansion and intensification of the collaboration between BAWAG P.S.K. and Österreichische Post AG in 2010 will enable the Bank to offer its full spectrum of banking services inat approximately 520 branches (280 outlets in rural areas and 240 in urban areas) throughout Austria in the future. Postal services will also be available at these outlets.
Each of the branches will have three areas:
- Self-service zones in the foyer area
A self-service area will offer account statement printers, payment transfer scanners and cash dispensers to enable customers to conveniently cover their basic banking needs 24 hours a day.
- Counter zone
Transactions for financial and postal services will be handled in the counter zone
- Advisory zone for financial services
Advice on bank products and services will be provided in the advisory zone that is clearly separated from the remainder of the branch.
This new branch concept will be implemented consistentlytinuously throughout the country. The experience gathered during daily operations will be used to improve the further implementation of this major branch concept. This groundbreaking project of BAWAG P.S.K. and Österreichische Post AG is to be completed by 2012.
The new sales strategy will also be underpinned by a new brand image, as the Bank will be operating under a single strong brand throughout Austria: BAWAG P.S.K.
Our first joint branch with Österreichische Post AG was successfully opened in Innsbruck on 15 December 2010.
In addition to expanding our branch network, we are also continuously working to improve and broaden our product range. When developing our products, we always take into account the wishes and needs of our customers, and focus on providing transparent and fairly priced products. Our Security Barometer clearly shows our customers the security and earnings profile of each of our products at a glance. Our product range includes our strong current account range "Kontobox", attractive savings products such as our "Kletterzins Sparbuch", investment products such as the "MinMax Floater" and our successful Wohnbaubank bonds, and fairly priced loans such as the "Superschnell Kredit" private loan or housing loans with energy savings service.
Our subsidiaries easybank and BAWAG P.S.K. Invest offer additional retail products.
easybank is the second-largest direct bank in Austria and manages over 300,000 accounts. A key goal is to expand its position as a main direct bank for retail customers. easybank offers its customers clear, simple solutions for their financial needs. Lean organisational structures make it possible to offer its products at extremely competitive terms. It is also the centre of competence for credit card business within BAWAG P.S.K. Group. The 2010 financial year brought the best result in the history of easybank. A survey by the Chamber of Labour (AK) named easy gratis, easybank's salary and pension account, the best of all tested accounts in Austria for the fifth time.
BAWAG P.S.K. Invest grew its fund volume by over 10 per cent despite the difficult market conditions in 2010. In achieving this, the company not only outperformed the market, but also passed the EUR 4 billion assets under management mark. BAWAG P.S.K. Invest's funds took prizes at the Lipper Fund Awards, the Austrian Fund Prize, the Austrian Umbrella Fund Awards and the VisioFund Award in multiple categories in 2010.
Corporate Customers and Financial Markets
In commercial banking, the Bank is pursuing the same successful strategy that it has been following over the past years. Most of the customers in this segment are located in Austria, and BAWAG P.S.K. offers a broad range of products to meet their needs for doing business locally as well as expanding their international activities. These include standard products as well as tailor-made financing and investment solutions that make BAWAG P.S.K. a particularly valuable and reliable partner for Austria's economy.
It has become clear in recent years that developments on the financial markets have a direct impact on the real economy and vice versa. This made it a logical step to merge the formerly separate business areas Austrian Corporates and Financial Markets into a single area of competence at BAWAG P.S.K. This approach is being supplemented by the introduction of a unique business solution partner concept. In the future, our corporate customers will have a single point of contact that will be able to react more quickly to each customer's needs by creating comprehensive but individualised financial solutions without having to coordinate with different operating units within the Bank.
The Financial Markets unit conducts financial market transactions for our customers and is also responsible for trading for the Bank's own account. Financial Markets works continuously to design attractive and innovative financial market products to supplement our retail spectrum and the offerings from third-party banks.
In 2010, the Bank was the lead or co-lead manager for nearly all corporate bond placements on the Austrian market. Thus, we were able to optimally leverage our many years of experience in corporate banking in combination with our strong retail sales base.
Another success in 2010 was BAWAG P.S.K.'s return to the international capital markets, which led to an enthusiastic investor response. The Bank issued almost EUR 2 billion in financial instruments in the reporting period, including Wohnbaubank bonds and four covered bonds denominated in Euros and Swiss francs.
The BAWAG P.S.K. Leasing Group strengthened its position as one of the top leasing providers in the Austrian market in 2010. Especially the stable growth of motor vehicle leasing through the distribution partners of BAWAG P.S.K. Leasing and the realisation of a number of major real estate transactions in close collaboration with the banking sales units played a key part in this success. BAWAG P.S.K. Leasing increased its new business volume by 10 per cent in Austria, the Czech Republic, Hungary, Poland and Slovakia compared to 2009.
For 2011, the Bank's business solution partners and the leasing product specialists will be working closely together to offer BAWAG P.S.K.'s corporate customers leasing products in a more focused and effective manner. At the same time, BAWAG P.S.K. Leasing will be increasing its focus on indirect sales through distribution partners and on its collaboration with Generali Versicherung.
International Business
Our service range is rounded out by selective transactions with key international accounts within a pre-defined and conservative risk framework. In geographical terms, our International Business focuses predominantly on Western Europe.
Additionally, selected commercial properties were gradually financed in Western Europe in the financial year 2010. This business area is to be expanded further in the following years.
Efficiency and Productivity Enhancement Programme
A project was launched in the first half of 2010 to increase the efficiency and productivity of the Bank and to improve the standard of service that we provide to our customers. It is to run for three years and will focus on improving processes and workflows within the Bank and on streamlining the Bank's organisational structure. A large share of the projected cost savings envisaged in the programme will result from natural staff fluctuation and retirements, and will reduce the net number of full-time staff by 500 by 2013.
The Bank also plans to invest approximately EUR 40 million in new technology over the coming three years to support this programme.
Outlook
BAWAG P.S.K. is positioning itself to successfully master the continued challenging conditions on the Austrian and international financial markets through an expansion of our Austrian retail franchise, by combining the competences for Austrian Corporates and Financial Markets into a single unit, and by selectively expanding our International Business activities. The strategic position that we have achieved and the consistent improvement of our processes have contributed significantly to the growth of our earnings power in the reporting period, and will ensure stable growth in the coming years.