The Structure, Development, and Regional Economic Importance of Lower Austrian Banks in 2022

Structure and development

The density of bank branches in Lower Austria will be the highest in Austria in 2022 with 63 main branches and 718 branch branches. The Raiffeisen sector is particularly dominant: almost every second bank branch can be assigned to this sector (46.61%). In addition, savings banks (23.18%), stock banks (17.16%) and Volksbanks (8.71%) also play a role. Compared to previous years, there has been a decline in the number of bank branches. While in 2017 there were 57 per 100,000 inhabitants, in 2022 it will only be 45.45. Study author Eric Ferstl estimates that “efficiency considerations were the deciding factor here”. “In addition,” says Ferstl, “increasing digitalization is increasingly shifting communication channels away from personal contact towards digital services and advice.”

Around one in nine people employed in banking works in Lower Austria, with a constant decline in the number of employees from 2013 to 2022. This decline continued during the corona pandemic. There has also been a permanent decline in employment for Austria as a whole since 2013, although this is more volatile than in Lower Austria.

A total of 64,957 people will be employed in Austrian banking in 2022. Lower Austria is in third place with 6,976 employees or a share of around 11%, behind Vienna (21,919 employees, around 34%) and Upper Austria (10,195 employees, around 16%). Employees in the Lower Austrian banking industry make up around 1.07% of the employed employees in Lower Austria.

Performance

The operating profit of Lower Austrian banks will amount to 644 million euros in 2022 – with a steady increase since 2016. Productivity, measured in terms of operating profit per employee, will be 92,400 euros in 2022 with an average annual increase rate of 18.36% over the last six years . The cost-income ratio will be 0.58 in 2022 and exceeds the Austrian average. Cost efficiency has improved continuously since 2016.

The net interest margin will be 1.59% in 2022, which is well above the Austrian average. The taxed return on capital is 0.70%.

Companies account for over 55% of existing claims. The growth of existing loans to companies in Lower Austria has been the highest compared to the federal states since 2006, at an average of 7.04% pa. In Lower Austria it is higher than that of existing loans as a whole and the nominal gross regional product, which shows that Lower Austria’s banks have provided above-average support to economic activities. The same also applies to the time during the corona pandemic. In 2020, support was provided in particular through loan deferrals, pre-financing of short-time work and guarantees.

In the first year of the Corona pandemic in 2020, the growth in deposits was at a very high level despite declining incomes (Lower Austria 9.15%, Austria 8.59%). The financial deposits of Lower Austrian banks consist of 66% deposits without a bond and 34% deposits with a bond. The owners are predominantly private households with around 80%.

Regional economic importance

Lower Austrian banks play a central role in the regional economy. Banks promoted economic growth even during the Corona crisis by keeping the share of receivables in gross regional product “relatively stable and high,” as Ferstl emphasizes. The banks are also committed to Corporate Social Responsibility (CSR) with expenditures of almost 8.2 million euros. In addition, emphasis is placed on the Green Deal and apprenticeship training.

And: Lower Austria’s financial service providers will contribute around 3% of gross value added in 2021 – with above-average growth compared to Austria. Productivity has increased, but remains below the Austrian average.

The 2008 financial crisis affected the banking sector and caused a high level of uncertainty. According to Ferstl, the fact that the share of receivables in the gross regional product remains stable to this day proves “the reliability of the house banking principle in the region” and was particularly visible in 2020, when Lower Austria’s banks “supplied the economy with sufficient liquidity despite negative growth”.