BAWAG ups targets, dividend after estimate-beating 2018 earnings
VIENNA, Feb 19 (Reuters) - Austrian bank BAWAG Group lifted its 2020 profit target and proposed paying a higher dividend after its focus on retail and small businesses paid off last year with an unexpected 14 percent increase in pre-tax profit.
The former trade union bank, which is backed by U.S. private equity group Cerberus Capital Management, said on Tuesday it aims to reach a pre-tax profit of more than 600 million euros ($678 million) this year, moving its 2020 forecast forward by one year. It now sees the 2020 figure at more than 640 million euros.
The lender has been focusing on bolt-on takeovers and retail-partnerships in the German speaking region to drive growth. It cooperates with wholesaler Metro Austria, electronics chain MediaMarktSaturn Austria and retailer Rewe and has bought two companies in Germany and Switzerland specialised in dental sector billing.
Retail and small businesses contributed 70 percent of its 2018 profit before tax, which came in at 573 million euros. Analysts had expected 561 million euros, according to Refinitiv Eikon data.
Bawag's fully loaded CET1 ratio, a measure of capital strength, stood at 14.5 percent at the end of December, up from 13.5 percent at the end of 2017. However, BAWAG aims to trim that ratio to between 12 and 13 percent this year and next.
"We outperformed all of our targets, focused on the things we control, and delivered on our promise of being good stewards of capital all while continuing to shape the BAWAG Group of tomorrow," Chief Executive Anas Abuzaakouk said in a statement.
The group said it would propose a dividend of 2.18 euros per share for 2018 after 0.58 euros per share the previous year.
The lender has a policy of paying out around half its net profit to shareholders. BAWAG said it was actively evaluating stock buyback options to distribute remaining excess capital.
Net interest income was up 6 percent in 2018 at 840.5 million euros. Net fee and commission income grew 30.4 percent to 282.8 million euros.
BAWAG shares were indicated to open 1 percent higher.
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