Net profits of Austria's largest bank, Bank Austria, dropped 12 per cent to 1.06 billion euros (1.66 billion dollars) in the first half of 2008, data released by the bank showed Friday, as trading losses offset growth in Central and Eastern Europe, according to dpa. Bank Austria, a subsidiary of the Italian UniCredit group, said the international banking crisis affected trading especially in the first quarter. Therefore, the bank accrued trading losses of 198 million euros for the first half of this year, compared with a positive result of 224 million euros in the same period last year. As expansion of business in Central and Eastern Europe caused operating costs to rise by nine per cent, Bank Austria's half-year operating profit dropped by 10 per cent to 1.35 billion euros, down from 1.51 billion euros last year. Net interest income was the bank's main income component in the first six months of 2008, rising 26 per cent to 2.31 billion euros. Fees and commissions stagnated at 1.04 billion euros, down from 1.05 billion euros last year, as sales of securities, risk management products and structured investment instruments declined. Profits in the the Bank's CEE division increased by 36 per cent to 926 million euros, up from 679 million euros in the first half of 2007. As part of UniCredit's plan to grow its business in the Central and Eastern Eurpope while cutting jobs in Italy, German and Austria, Bank Austria plans to open a total of 500 branches in the CEE region in 2008. The expansion will focus on Turkey, Russia, Romania and the Ukraine, the bank said. Bank Austria CEO said that "as the credit market crisis is not yet over and economic activity is weakening, the market environment remains difficult." However, the bank benefited from "very good progress in our sustainable revenue components and from the favourable cost trend", owing to strong growth in the CEE region and its "sound business model," Hampel said.
