The risk provisions were increased to 126 million euros, the profit is only 20 million euros.
High risk provisions caused the Volksbank group's profit to collapse in the 2020 financial year. According to preliminary figures, earnings after taxes “because of extensive provisions for the negative Covid-19 effects” melted from EUR 148.5 million in 2019 to EUR 20 million, the bank announced on Friday. Risk provisions were increased to EUR 126 million; in 2019, EUR 22.1 million was posted.
Less bad loans
The proportion of bad loans (non-performing loans / NPL) decreased year-on-year from 2.3 to 1.9 percent. In operational terms, net interest income fell from EUR 422.4 million to EUR 413.1 million, while net commission income increased from EUR 229.6 million to EUR 239.1 million. The customer loan volume remained almost unchanged at around EUR 21.3 billion.
The Common Equity Tier 1 capital ratio rose from 12.9 percent to 14.1 percent, the equity ratio was 19.2 percent (end of 2019: 17.8 percent). The operating expense ratio – the relationship between the bank's costs and income – improved from 80.1 to 73.6 percent.
This is mainly due to the lower administrative costs, it said in a press release from the bank. In 2020, these fell by 4.2 percent to 511.8 million euros; since the restructuring began five years ago, annual administrative costs have been reduced by more than 100 million euros. The Volksbanken group has carried out more than 40 mergers in the past few years in order to simplify its group structure.
Final figures in April
At Volksbank Wien, the largest of the Volksbanks, profit fell from EUR 57.0 million to EUR 30.8 million. Risk provisions amounted to EUR 26.6 million. The customer loan volume fell from around 5.5 billion to around 5.4 billion euros.
The Common Equity Tier 1 capital ratio rose from 14.9 percent to 16.8 percent, and the equity ratio increased from 29.8 percent to 32.7 percent. The final figures will be released on April 8th.
