Austrian Banks: Back on a More Profitable Footing

DBRS Morningstar published a commentary on the Austrian banking market. Summary highlights include:

• Despite a significant contraction of the Austrian economy in 2020 corporate profitability and household income held up comparatively well due to various government measures.
• H1 2021 results of the three major Austrian banks were solid, as reserve releases, fee income growth and positive valuation results compensated for lower net interest income (NII).
• Asset quality remains strong, however, DBRS Morningstar considers that uncertainty surrounding asset quality persists, as support measures will be withdrawn. Reflecting the more benign outlook on credit, Austrian banks are gradually loosening credit standards again.
• DBRS Morningstar considers the large Austrian banks have sound capital levels. We expect those capital ratios could decline, once the current economic uncertainties subside and regulatory changes take effect.

"However, we expect the Banks to remain well capitalised given the Banks’ robust capital cushions and recurrent profit generation" said Sonja Förster from DBRS Morningstar’s Global Financial Institutions team.