VIENNA (Reuters) - Austrian bank BAWAG PSK said its 2017 profit fell 1.4 percent, partly due to costs for a long-term incentive programme, higher restructuring reserves and expenses connected to the termination of its cooperation with Austrian Post.
BAWAG, backed by U.S. financial investor Cerberus, said on Tuesday its annual profit fell to 466.6 million euros ($575 million), but that still beat the average analyst forecast of 449.2 million euros, according to Thomson Reuters data.
Austria's fourth-biggest bank said it signed an agreement with Austrian Post in February for an accelerated wind-down of the partnership and was targeting a complete separation by end of next year, one year earlier than expected.
The agreement includes costs for BAWAG of around 110 million euros over the next two years, which have been fully accounted for in 2017.
"That agreement will allow us to rapidly right-size our branch network by targeting a smaller but more efficient stand-alone network of approximately 100 branches," it said in a statement.
BAWAG, a former trade union bank, was majority owned by U.S. private equity firm Cerberus Capital Management until Cerberus sold down its stake in October in Austria's biggest ever initial public offering.
The lender aims to expand in developed European markets, targeting especially Germany, Austria and Switzerland. This strategy differentiates the lender from other Austrian peers such as Erste Group and RBI, whose focus is on Central and Eastern Europe.
Considering new regulatory requirements, BAWAG targets a fully loaded CET1 ratio - a measurement of banks' financial strength - of at least 12 percent in 2018 after 13.5 percent in 2017.
Pre-tax profit is expected to rise at least 5 percent this year after a 12 percent increase to 517 million euros in 2017.
The result was driven by higher operating income as loans and receivables with customers increased by 8 percent and deposits from customers rose by 19 percent.
BAWAG said it planned to propose a dividend of 0.58 euros per share, or 58.3 million euros in total, for the fourth quarter after having paid 51.6 million euros in the third quarter.
(Reporting by Kirsti Knolle; Editing by Maria Sheahan)
