PRESS RELEASE OF KOMMUNALKREDIT AUSTRIA AG
Steinbichler: “Eventful business year 2014”
Kommunalkredit Austria publishes its 2014 results
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IFRS profit for the year before tax of EUR 9.0 million
Strong capital base: total capital ratio 24.8%; core capital ratio 18.4% (Basel III)
High portfolio quality: 95% investment grade; non-performing-loan ratio 0.39%
Course for the future set through agreement on partial sale signed on 13 March 2015
(Vienna, 26 March 2015) – Kommunalkredit Austria (KA) has today published its 2014 results. In
the business year 2014, KA generated an IFRS profit for the year of EUR 9.0 million before
tax and EUR 8.1 million after tax; its comprehensive income according to IFRS amounted to
EUR 8.8 million in 2014, these figures being above budget. The result was achieved after a EUR
7.0 million risk provision for a bond issued by Heta Asset Resolution AG (HETA; formerly Hypo
Alpe Adria) and subscribed to in 2006 in a nominal amount of EUR 35 million, which is
guaranteed by a surety of the Province of Carinthia pursuant to § 5.2 of the Carinthian Provincial
Holding Act (Kärntner Landesholdinggesetz). This provision was included in the 2014 annual
accounts after the announcement of the measures to be taken under the Federal Act on the
Reorganisation and Resolution of Banks (BaSAG). With a non-performing-loan (NPL) ratio of
0.39%, including the HETA position, the asset quality of the remaining portfolio is consistently
high. KA succeeded in further strengthening its capital base in the course of 2014, with its total
capital ratio increasing from 21.8% to 24.8% and its core capital ratio up from 15.3% to 18.4%,
which is significantly above the regulatory minimum requirements.
The partial sale process, based on the decision taken by the European Commission (EC) on 19
July 2013, was launched in the second half of the year under review through a public tender
announced on 14 August 2014. The signing of the share purchase agreement on 13 March 2015
was an important milestone in this process, setting the course for the future orientation of KA.
The owner of KA, the Financial Markets Holding Company of the Republic of Austria (FIMBAG),
accepted the bid submitted by a buyer consortium consisting of the English Interritus Limited and
the Irish Trinity Investments Limited for the purchase of its 99.78% share held in KA.
The consortium has stated its intention to continue and expand the current activities of KA in the
public infrastructure sector (structuring, advisory services, financing) and in the area of support
scheme management in Austria and in Europe.
The entire business operations of KA, including all its subsidiaries, will be transferred to a newly
incorporated company (KA New) by way of a proportionate demerger for new incorporation
pursuant to § 1.2.2 of the Austrian Demerger Act (Spaltungsgesetz). This includes loans and
securities of the existing KA in the amount of approximately EUR 3.5 billion out of total assets
according to the Austrian Company Code of approximately EUR 4.3 billion. The remaining part of
KA (KA Residual) with total assets of approximately EUR 7 billion will be merged into
KA Finanz AG (KF). It is to be underlined that the demerger meets a condition imposed by the
EC, according to which the divestiture must not exceed 50% of the total assets of KA for reasons
of competition. The assets to be transferred to KF are of high quality, i.e. with an average rating
of AA-.
The transaction is expected to be closed by mid-2015; it is subject to the corresponding
approvals to be granted by the competent bodies of KA as well as the competent bank
supervisory authorities, the EC and other authorities.
1
Kommunalkredit Public Consulting (KPC), KA’s 90% subsidiary specialising in the
management of support programmes, above all in the fields of environmental protection, water
management and energy, carried on its comprehensive activities successfully in 2014. At the
beginning of 2014, KPC took over the operational management of support programmes in the
field of protective water management on behalf of the Federal Ministry of Agriculture, Forestry,
Environment and Water Management. Under a new contract awarded by the Federal Ministry of
Finance this year, KPC is in charge of implementing and managing the “crafts bonus”
programme, a support scheme for private individuals contracting licensed crafts businesses for
home improvement work. Across all support programmes, almost 60,700 projects were approved
and funding in the amount of EUR 429.4 million was granted in 2014. With an underlying
investment volume of EUR 2.5 billion, the projects thus are a relevant factor in stimulating
economic activity at regional and local level.
Kommunalnet E-Government Solutions GmbH (Kommunalnet), a 45% subsidiary of KA, is
the leading working and information platform for local authorities in Austria. At the end of
December 2014, Kommunalnet had 12,905 registered users from over 2,000 Austrian local
authorities and associations of local authorities. Thus, Kommunalnet holds a unique position in
the Austrian market with a market penetration rate of 94.2%.
Balance-sheet structure
As at 31 December 2014, the KA Group had total assets according to IFRS of
EUR 12.6 billion (2013: EUR 12.3 billion). The slight increase over the year before reflects the
build-up in liquidity at the end of 2014 in view of the maturity date of a EUR 1 billion bond at the
beginning of February, which was redeemed on schedule. KA has a sound capital base with total
capital in the amount of EUR 383.2 million (2013: EUR 361.0 million); its core capital amounts
to EUR 285.0 million (2013: EUR 252.9 million). With risk-weighted assets of
EUR 1,323.8 million (2013: EUR 1,426.4 million), the bank reports a total capital ratio of 24.8%
(2013: 21.8%) and a core capital ratio of 18.4% (2013: 15.3%).
Throughout 2014, KA continued to meet its funding needs in the free market entirely without
government support. Based on the Amendment Decision of the EC of 19 July 2013, KA would
be allowed to obtain equity and liquidity support from the Republic of Austria, if need arises.
These terms and conditions laid down in the Amendment Decision of the EC will no longer apply
to KA New after the closure of the partial sale process.
Asset quality
KA’s credit portfolio shows a high asset quality; 94.9% of its credit exposure is in the investmentgrade range; 61.6% of the exposure is rated AAA/AA. The exposure-weighted average rating of
the total exposure is AA- (according to the S&P rating scale). The NPL ratio, taking account of
the EUR 35 million HETA bond, currently stands at 0.39%. Besides the EUR 7.0 million risk
provision for the HETA bond, an impairment of 50% or EUR 1 million was booked on an exposure
of EUR 2 million.
Income position
KA’s net interest income in 2014 amounted to EUR 22.3 million. The significant increase
compared with the year before (2013: EUR 3.2 million) reflects the absence of the negative oneoff effects from the first half of 2013. Net fee and commission income amounted to
EUR 16.7 million (2013: EUR 15.8 million). It mainly comprised the gross revenues of KPC
generated in the fields of support scheme management and consultancy services in the amount
of EUR 16.6 million (2013: EUR 15.7 million).
2
The net trading and valuation result of EUR 5.2 million (2013: EUR 41.4 million) comprises,
among other items, income from asset sales and the early redemption of own issues within the
framework of balance-sheet optimisation measures. It also includes the EUR 7 million risk
provision for the HETA bond. The positive valuation result of 2013 was significantly influenced by
the market-related positive valuation of securities and loans in the fair value portfolio.
Net administrative expenses declined by EUR 0.9 million or 2.6% from the previous year to
EUR 35.9 million (2013: EUR 36.8 million).
Results according to the Austrian Company Code/Austrian Banking Act
KA’s total assets, as reported in the separate financial statements prepared according to
Austrian GAAP, amounted to EUR 10.5 billion as at 31 December 2014 (2013: EUR 10.8
billion). As in the previous year, the result for the period under review according to Austrian
GAAP was balanced, after the transfer of EUR 4.8 million to a general risk provision pursuant to
§ 57 of the Austrian Banking Act. Moreover, as at 31 December 2014 an amount of
EUR 32 million was reclassified from the risk provision pursuant to § 57(1) to the risk provision
pursuant to § 57.3 of the Austrian Banking Act, the latter being eligible as core capital and thus
strengthening the core capital base. The remaining provision pursuant to § 57.1 of the Austrian
Banking Act stood at EUR 8.4 million as at 31 December 2014. In total, general risk provisions
pursuant to § 57.1 and § 57.3 of the Austrian Banking Act amount to EUR 40.4 million (2013:
EUR 35.5 million), thus constituting a positive risk buffer under Austrian GAAP.
Rating
KA has a Fitch rating of A in the long-term segment and F1 in the short-term segment. The longterm rating was put on “negative outlook” on 26 March 2014 in view of the adoption of the Bank
Recovery and Resolution Directive (BRRD), which was transposed into national law through the
Federal Act on the Reorganisation and Resolution of Banks (BaSAG). Moreover, certain issues
were put on “watch negative” on 19 March 2015. Fitch announced a review at closing of the
partial sale.
Moody’s downgraded KA’s long-term rating from Baa3 to Ba1 on 20 June 2014; the short-term
rating was downgraded from P-3 to NP. As the same time, another eleven Austrian issuers were
downgraded in the wake of a bill introduced by the Austrian federal government, and
subsequently adopted, regarding the subordinated liabilities of an Austrian credit institution.
The rating agreement with Moody’s for unsecured funding instruments was terminated by KA
prior to the downgrade, effective as of 20 June 2014. Therefore, the ratings which continue to be
published by Moody’s are no longer mandated by KA. The rating for covered bonds was kept and
downgraded from Aa2 to Aa3 with “review for downgrade” on 23 June 2014.
Outlook
The development of business in 2015 will be determined largely by the strategic setting of the
bank in the course of its partial sale. The transaction, in which the consortium of buyers will take
over the 99.78% share in KA New held by FIMBAG, is expected to be closed by mid-2015 and is
subject to approval by the competent bodies of KA as well as the competent bank regulators, the
EC and other authorities.
3
Upon completion of the transaction, KA New will again be in a position to offer its comprehensive
expertise in the structuring and financing of public infrastructure projects, as well as in support
scheme management, to its many customers in Austria and throughout Europe. The activities of
the bank are concentrated in the core segments of Social Infrastructure, Energy & Environment,
and Transport.
KA New will focus, in particular, on the arrangement and structuring of projects and the provision
of finance for the construction phase; to a growing extent, the financing of the operational phase
will be syndicated by institutional investors, such as insurance companies or mutual funds. Given
the new regulatory provisions and the low interest rate environment, institutional investors will
have a growing demand for long-term assets generating stable cash flows. At the same time,
restrictive regulatory requirements under the Basel III regime, such as the net stable funding
ratio, will limit the possibility for banks to carry long-term assets on their balance sheets. KA acts
as a link between its customers, the public sector, project sponsors and project developers, as
well as institutional investors.
It is important to note that until the closing of the partial sale, KA is bound by the conditions of the
EC’s Amendment Decision of 19 July 2013. Under these conditions, KA is subject to a prohibition
of dividend pay-out on profit-dependent equity instruments. Ad-hoc disclosures to that effect were
published on 31 March 2011 and 19 July 2013 and remain valid. Therefore, no coupon or
dividend payments will be made on profit-dependent equity instruments in 2015 for the business
year 2014.
For enquiries please contact:
Kommunalkredit Austria
Marcus Mayer (Communication & Marketing)
Tel.: +43 (0)1/31 6 31-593 or +43 (0)664/80 31631 593
mailto:[email protected]; www.kommunalkredit.at
4
Balance Sheet of the Kommunalkredit Group according to IFRS
Assets
in EUR 1,000
Cash and balances with central banks
31.12.2014
31.12.2013
267,026.8
142,322.5
Loans and advances to banks
1,181,809.6
892,193.7
Loans and advances to customers
6,833,184.3
6,906,386.4
Assets at fair value
2,988,821.4
2,945,587.7
451,768.5
435,649.0
Assets available for sale
Assets held to maturity
Derivatives
Investments in associates
Property, plant and equipment
0.0
271,470.4
824,533.4
686,098.1
2,106.3
2,056.0
28,024.2
29,236.5
357.8
436.2
99.7
220.7
Intangible assets
Current tax assets
Deferred tax assets
6,283,0
6,965.6
Other assets
8,227.9
11,432.6
Total assets
12,592,243.1
12,330,055.4
Liabilities and equity
in EUR 1,000
31.12.2014
31.12.2013
Amounts owed to banks
3,013,820.4
Amounts owed to customers
1,228,470.6
997,849.9
Derivatives
1,957,741.5
1,420,695.5
Securitised liabilities
5,944,532.9
6,532,118.4
Subordinated liabilities
85,121.6
85,126.4
Provisions
13,303.1
10,719.0
Current tax liabilities
Other liabilities
Equity
of which subscribed capital
of which capital reserves
2,943,322.4
1,378.5
1,023.7
15,454.3
15,535.4
332,420.2
323,664.7
225,337.1
225,337.1
8,973.6
8,973.6
of which statutory reserves
27,805.7
27,805.7
of which AFS/CFH reserve
-24,086.5
-26,776.7
44,185.5
-50,210.1
138,373.3
138,373.3
of which other reserves (incl. consolidated result for the year)
of which participation capital
of which non-controlling interests
Total liabilities and equity
202.5
161.7
12,592,243.1
12,330,055.4
5
Income Statement of the Kommunalkredit Group according to IFRS
Income Statement
in EUR 1,000
Net interest income
Interest and similar income
Interest and similar expenses
Loan impairment charges
1.1.2014 31.12.2014
1.1.2013 31.12.2013
22,312.2
3,232.3
537,074.2
650,897.3
-514,762.0
-647,664.9
-999.9
-420.9
Net fee and commission income
16,713.2
15,844.0
Fee and commission income
17,653.5
16,741.7
-940.3
-897.7
Fee and commission expenses
Dividend income
Income from investments in associates
Net trading and valuation result
General administrative expenses
Other operating result
Other operating income
Other operating expenses
Consolidated profit for the year before tax
Taxes on income
Consolidated profit for the year
359.9
81.2
50.3
258.6
5,160.8
41,385.4
-45,321.3
-47,001.4
10,701.3
6,999.8
11,099.2
12,032.9
-398.0
-5,033.1
8,976.5
20,379.0
-877.3
-15,305.3
8,099.3
5,073.8
8,013.9
5,024,2
85.4
49.5
of which:
attributable to owners
attributable to non-controlling interests
6
Balance Sheet of Kommunalkredit Austria AG according to the
Austrian Company Code/Austrian Banking Act
Assets
in EUR 1,000
31.12.2014
31.12.2013
Cash and balances with central banks
267,026.4
142,313.4
Public-sector debt instruments
eligible as collateral for central bank funding
316,565.6
577,554.7
Loans and advances to banks
1,168,449.9
842,821.8
Loans and advances to customers
7,952,291.6
8,363,054.8
581,121.2
652,197.6
850.1
400.1
6,339.8
6,339.8
357.8
436.2
1,904.2
1,904.2
138,366.6
179,538.4
25,246.8
28,044.6
10,458,519.9
10,794,605.6
Bonds and other fixed-income securities
Participations
Investments in associates
Intangible non-current assets
Property, plant and equipment
Other assets
Accruals
Total assets
Liabilities and equity
in EUR 1,000
31.12.2014
31.12.2013
Amounts owed to banks
3,014,313.7
2,942,674.6
Amounts owed to customers
1,198,266.7
994,727.6
Securitised liabilities
5,618,338.2
6,259,635.3
Other liabilities
192,730.7
198,497.3
Accruals
17,447.8
19,615.1
Provisions
34,486.8
28,452.7
Fund for general banking risks
32,000.0
0.0
Supplementary capital
69,944.3
70,011.2
Participation capital
138,373.3
138,373.3
Subscribed capital
225,337.1
225,337.1
8,973.6
8,973.6
Capital reserves
Revenue reserves
Statutory reserve persuant to § 23(6) Austrian Banking Act
Net loss
Total liabilities and equity
508.7
508.7
27,297.0
27,297.0
-119,498.0
-119,498.0
10,458,519.9
10,794,605.6
7
Income Statement of Kommunalkredit Austria AG according to the
Austrian Company Code/Austrian Banking Act
in EUR 1,000
1.1.-31.12.2014
1.1.-31.12.2013
1.
Interest and similar income
2.
Interest and similar expenses
I.
Net interest income
3.
Income from securities and investments
4.
Fee and commission income
1,446.2
978.2
5.
Fee and commission expenses
-2,566.9
-2,024.7
6.
Income/expenses from financial transactions
7.
Other operating income
II.
Operating income
8.
General administrative expenses
9.
Value adjustments in respect of assets shown in
asset-side items 8 and 9
10.
Other operating expenses
III.
Operating expenses
IV.
11.
Operating result
Income from the reversal of impairments of
receivables and appropriation to provisions for
contingent liabilities and credit risks
12.
Income from value adjustments of investment
securities and of participations and investments in
associates
537,063.5
-518,105.8
650,998.7
-652,438.7
18,957.7
-1,440.0
1,602.0
1,027.3
105.9
116.0
13,226.5
13,432.4
32,771.5
12,089.1
-34,762.7
-35,033.2
-362.7
-430.2
-16.0
-4,622.9
-35,141.4
-40,086.3
-2,369.9
-27,997.2
23,317.4
15,575.6
11,084.7
11,990.2
V.
13.
Profit on ordinary activities
32,032.2
-431.3
Extraordinary expenses
-32,000.0
0.0
14.
Extraordinary result
-32,000.0
0.0
15.
16.
Taxes on income
-7.5
470.7
VI.
Result for the year
-24.7
0.0
-39.4
0.0
VII.
Net result for the year
0.0
0.0
17.
Loss carried forward
-119,498.0
-119,498.0
VIII.
Net result
-119,498.0
-119,498.0
Other taxes not tob e reported under item 15
8