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Bawag net profit dips in FY'17 as lender seeks takeovers in Germany, Austria

Bawag PSK is examining acquisition opportunities "primarily in Germany" and a "few in Austria," with a total balance sheet size of about €25 billion, Reuters reported, citing CEO Anas Abuzaakouk.

Earlier, the Austrian bank disclosed preliminary results for full year 2017, reporting net profit of €466.6 million, compared to €473.4 million a year earlier. The group booked pretax profit of €517.3 million, above its 2017 target of more than €500 million and up from €460.7 million in 2016.

Bawag noted that it signed an agreement with Austrian Post in February, with retroactive effect of Jan. 1, for an accelerated wind-down of their partnership and said it is targeting a complete separation by the end of 2019, one year earlier than expected. The agreement includes costs of about €110 million over the next two years that were fully accounted for in the 2017 results.

As of Dec. 31, 2017, Bawag's fully loaded common equity Tier 1 ratio stood at 13.5%, above its 2017 target of more than 12% and down slightly from 13.6% a year earlier. For 2018, the group is to maintain a regulatory minimum CET1 ratio, according to the ECB's Supervisory Review and Evaluation Process, of 10.625%, which includes a Pillar 2 guidance of 1%.

The lender reported returns on equity and tangible equity, of 15.3% and 17.9%, respectively, higher than its targets of more than 15% and 16%.

Bawag also disclosed a proposed dividend for the fourth quarter of 2017 of 58 cents per share, which represents 50% of the average quarterly net profit generated in 2017.

For 2018, the group expects to increase pretax profit by more than 5%, deliver an ROTE of above 15% and maintain a minimum fully loaded CET1 ratio of 12%. The company's three-year strategy includes generating pretax profit of more than €600 million in 2020 and maintaining a minimum ROTE of between 15% and 20% and a minimum fully loaded CET1 ratio of 12%.