The most recent profit figures are still a far cry from better years: Banks reaped profits of €7.5 billion in 2006. According to OeNB profits came mainly from foreign subsidies in 2010 while the Austrian motherships focused on cost cutting.
Reducing loan loss provisions is a cheap but risky way of window dressing and rather seen as a measure of last resort, especially when considering Austria's heavy exposure to Central Eastern Europe.
OeNB Governor Ewald Nowotny had said last Sunday that Austria has left the crisis behind. His - traditionally wrong - forecasts should be taken with a grain of salt again. Austria's banks still benefit from state capital infusions and a €100 billion blanket guarantee from the government.
Central Bank Expects Slow Growth 1H 2011
The strategy will only work when OeNB's optimistic economic forecasts come true that do not account for a bigger indirect fallout from the Japan crisis.
GRAPH: Austria's central banks expects slow growth in the first half of 2011 after the rebound in 2010. light blue: annual GDP change; dark blue: quarterly figures. Data: OeNB, ECBThe moderate outlook of 0.6% GDP growth in Q1 and 0.6% in Q2 (Q-o-Q) is mainly based on dampened consumer spending as private households would consolidate their budgets too, following a wave of "expansive fiscal policy", i.e. higher taxes.
Early indicators had shown an uptick in exports in the first two months of 2011. But the central bank also warned of "strongly rising" energy and commodity prices that could hamper growth.
Austrian finances are bound to take another hit on Thursday. Eurostat will announce which government owned entities will have to be included in future deficit figures.
It is expected that Austria will have to include bulging debts of the state-owned railway ÖBB in its government debt figures. This will add €6.5 billion to the government's tab, potentially raising the relative budget deficit figure to 4.6% instead of a projected 4.1% in 2010.
Corruption Crime Shakes Austrian Coalition Government
The tiny republic nestled between the Alps recently finds itself under the international spotlight after reporters of the Sunday Times exposed former interior minister Ernst Strasser as a brash lobbyist, who promised the journalists posing as businessmen to further their interests by direct intervention in the European Parliament (EP) where he held a seat.
Strasser has since resigned from all political functions.
His replacement in the EP, conservative Hubert Pirker, is a lobbyist too; a fact enraging the better part of Austria. When confronted with the fact that he owns EU lobbying firm EU Triconsult, he only took his company's website offline but still proceeded to his well-paid seat in the EP.
The scandals of conservative MEPs does not end here. Only today Austrian media reported that MEP Hella Ranner - her website is now offline too - had signed an arrangement with her bank to illegally fund the repayment of €7 million from her EU expense account. Ranner is in the middle of bankruptcy proceedings from her company that ironically tried to profit from buying and turning around troubled companies.
This has now started a discussion about the introduction of anti-lobbying laws for politicians who often wear two hats. Find a list of all Austrian MPs and their second jobs here. Initial statements from all political parties do not sound very motivated as politicians cling to their second incomes.
As in most EU countries, dissent between the government and the people is growing. Two thirds of Austrian have little to no trust into politicians anymore, recent polls have shown.