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Post-Crisis Growth and Integration in Europe

Post-Crisis Growth and Integration in Europe

Catching-up Strategies in CESEE Economies

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

Against the backdrop of the financial crisis that unfolded in 2008, this book deals with policy challenges going forward, focusing in particular on the ongoing catching-up process in Central, Eastern and South-Eastern European countries.

Chapter 26: Challenges for Banking in the CESEE Region – the Situation in Austria and CESEE in November 2010

Michael Hysek

Subjects: economics and finance, financial economics and regulation


Michael Hysek Economic developments in the second quarter of 2010 appeared to be much better than expected, which caused GDP forecasts for 2010 to be revised upwards. The IMF, for example, raised its GDP forecast for Austria from 1.3 per cent (forecast in April 2010) to 1.6 per cent yearon-year real GDP growth (forecast in October 2010) and for the euro area from 1 per cent to 1.7 per cent. The revision of Germany’s forecast (from 1.2 per cent to 3.3 per cent) turned out to be especially pronounced, which contributed significantly to the rise in Austria’s external demand: according to the Oesterreichische Nationalbank (OeNB), an increase in real exports of 4.6 per cent year-on-year is expected for 2010 following a decline of 15 per cent year-on-year in 2009. Given this incipient economic recovery and overall improved macroeconomic conditions, the profitability of Austrian banks shows the first signs of a recovery. Based on data reported for the first half of 2010, the consolidated return on assets (after taxes) is expected to be approximately 0.4 per cent in 2010. By comparison, this ratio reached only 0.2 per cent in 2009 and a mere 0.1 per cent in 2008. Concerning asset quality, the fast growth in the consolidated loan loss provision ratio of Austrian banking groups observed in recent years has decelerated so that the ratio reached 3.9 per cent in the second quarter of 2010. A more stable trend was observed in the Austrian market: the unconsolidated loan loss provision ratio,...

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