Recent report: Austrian banking institutions have a good capital base
Vienna, November 16, 2017 – The latest report on the stability of banks in Austria showed that Austrian banking institutions enjoy a good capital base, with core capital rising from the first level “CET1” to 18.6% in the middle of this year, thanks to banks retaining a large portion of 2024 profits.
The report issued by the Austrian National Bank “OeNB” revealed the success of Austria’s banks in maintaining their financial strength and stability, despite the country’s continued suffering from the longest period of economic recession since World War II, following the decline of the Corona epidemic, and monitoring the gradual return of the economy to growth, with difficulties slowing down the recovery process due to the decline in the construction and consumer services sectors, the high savings rate, the increase in corporate bankruptcies, and the continued weakness of companies’ demand for bank loans.
The report explained that commercial real estate represents the biggest challenge to credit quality in Austria, with non-performing loans in this sector reaching 5% and rising to 8.4% in the project financing sector, which prompted the Financial Market Stability Board to recommend the application of a 1% systemic risk reserve as of last July, while monitoring the demand for loans to recover slightly in the first half of 2025.
At the conclusion of its report, the bank recommended that banking institutions protect their capital base and enhance capital by reviewing profit distribution policies, reducing dividends, controlling costs, and investing more in the areas of digitization and cybersecurity.
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