Large Austrian Banks: 2025 Outlook Largely Stable Despite Higher Banking Levy and Credit Risks

Morningstar DBRS released a commentary analysing the 2024 results for three large Austrian banks: Raiffeisen International Bank, Erste Group Bank AG, and UniCredit Bank Austria AG.

Key highlights include:
-- Large Austrian banks showed sound performance in 2024, but Raiffeisen's net results were negatively affected by legal costs from its Russian subsidiary.
-- Our 2025 outlook for the Banks is largely stable despite the banking levy's increase, supported by still relatively high interest rates and stronger economic activity in the CEE.
-- Sluggish economic growth in Austria as well as ongoing challenges in the CRE market could pose a risk to asset quality.

"The planned bank tax hike would have a negative impact on the Austrian banking sector's profitability, but it would be manageable," said Halil Senturk, Assistant Vice President, European Financial Institution Ratings, Morningstar DBRS. "Sluggish economic growth in Austria and the ongoing challenges in the CRE market could continue to pose a risk to asset quality, but the country's strong labour market and continued economic recovery in CEE are comforting factors", he added.