Bank Austria profit drops, loan writedowns prove boom times over
The drop in first-half profits and loan writedowns of Bank Austria proved that boom times are over in central and eastern Europe (CEE). Net profits for the first-half of the year of CEE's top lender dropped 12%. The UniCredit unit revealed that the drop represented EUR 566 million, giving proof that emerging markets like the CEE cannot anymore be relied upon to boost the global economy. The financial transaction tax in Hungary was also detrimental to the bank's earnings in addition to the more than EUR 100 million or USD 133 million in costs it incurred for bank levies.
Moreover, loan writedowns and provisions for guarantees and commitments increased to 41.5% or EUR 688 million and have also impeded the region's economic development. In a statement, Bank Austria said, "The higher provisioning charge in CEE was due to economic developments as recovery is not progressing as rapidly as we hoped, and it also resulted from our conservative risk management as we improved the coverage ratio in several countries."
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