Signa "legacy"

Slump in profit at Hypo Vorarlberg

Hypo Vorarlberg wants to reduce its risk in future.

(Bild: Mathis Fotografie)

The bank adjusted its risk strategy, earnings before taxes amounted to EUR 53.1 million in 2023 - significantly less than a year ago (EUR 160.7 million). 

Hypo Vorarlberg Bank AG once again emphasized the "good operating result" on Friday at the presentation of the 2023 business figures. The bank, which made headlines in connection with the Signa Group, generated earnings before taxes (EBT) of EUR 53.1 million (2022: EUR 160.7 million). The result was burdened by EUR 78 million in risk provisions, which in particular reflect possible Signa defaults. The Bank's strategy is the right one, it was emphasized.

Hypo Vorarlberg's positive business in 2023 was due in particular to net interest income of EUR 233.7 million (2022: EUR 167.8 million). Net profit for the year amounted to EUR 40.1 million (2022: EUR 120.1 million). In contrast to other banks, the credit volume increased from 10.6 billion to 11.1 billion euros. According to CEO Michel Haller and his fellow board member Wilfried Amann, business in Switzerland also made a "significant contribution". However, the majority of the lending business - 65 percent - is conducted in Austria. Two thirds of loans are granted to companies, while lending in the residential sector declined sharply last year due to high interest rates, strict lending criteria - keyword: KIM regulation - and high market prices for real estate.

CEO Michel Haller.

(Bild: Mathis Fotografie)

"Better result than 2022"
Looking at the operating result and excluding risk provisions and fair value measurement effects, the result in 2023 was better than in 2022, said Haller. The profit will be allocated to own funds, which have grown to EUR 1.43 billion since 2012 (EUR 743 million). A ratio of 16.09% (2022: 16.17%) was achieved for common equity tier 1 capital and 19.16% (2022: 19.51%) for total equity - over EUR 1.71 billion.

Haller and Amann repeatedly emphasized the correctness of Hypo Vorarlberg's strategy, which according to its own information is the eleventh largest bank in Austria and operates branches outside Vorarlberg - for example in Vienna, Graz and Wels, but also in St. Gallen in Switzerland - and is active in the D-A-CH region. Hypo's involvement outside Vorarlberg had been criticized in connection with the Signa financing - around EUR 130 million is in question, which Hypo could lose as a result. Haller noted, however, that only 40 percent of business is done in Vorarlberg. The growth achieved in recent years had only been possible on the basis of supra-regionality. Amann emphasized the balance of the business model. If one area is not doing too well, this is compensated for by another area.

Company shares have lost a lot of value
All possible steps are being examined in the Signa matter. "We are registering all claims in the proceedings and checking whether legal action can be taken against individual persons," said Haller. Of seven loans with the Signa Group, six are considered to be in default, although three of the companies are not currently insolvent and are servicing their loans. One loan to the Benko private foundation in the amount of EUR 47.3 million, for which a ten percent share in the company was accepted as collateral - which has lost a lot of value - is causing particular pain. "It was a different world back then, the loan decision was well justifiable at the time it was granted," Haller also noted.

In response to the transactions with the Signa Group, Hypo Vorarlberg has since adjusted its risk strategy in agreement with the Supervisory Board. Maximum limits have been set and no more than EUR 140 million may be lent to one customer. "In the area of tension between risk and return, we are taking back some risk," said Haller. In operational terms, the current year is also going "quite well so far", said the CEO. However, loan growth is still modest.

Hypo Vorarlberg, based in Bregenz, is almost 77 percent owned by the state. It operates 15 branches in Vorarlberg and employed 897 people in 2023 (739 full-time equivalents, up ten on 2022). The personnel market is tight, with around 40 vacancies at any one time.