“The sluggish economy and turbulence arising in both geopolitical and global trade terms present a major challenge for the Austrian economy – only a stable and profitable financial economy can provide support in mastering this challenge”, remarked the Executive Directors of the Austrian Financial Market Authority (FMA), Helmut Ettl and Eduard Müller, at today’s presentation of the FMA’s 2024 Annual Report: “Our forward-looking, consistent and stability-oriented supervision work particularly pays off in difficult years.” In contrast to during the Global Financial Crisis of 2008 or the Euro crisis at the start of the 2010s, the financial system is currently not part of the problem, but instead is able to be part of the solution, remarked Ettl and Müller. However, this is the precise reason why we must not submit to the temptation of seeking salvation in deregulation. “The resilience that is currently being observed, has been built up piece by piece over the last 15 years by the financial economy. It would be imprudent to put everything on the line now,” remarked Ettl and Müller. The large profits arising from the European Central Bank’s reversal of interest rates, should be handled carefully. “The capital basis needs to be further strengthened, and investments in digital transformation and the transition to a sustainable economy need to be financed,” stated the FMA Executive Director. The significant increase in insolvencies is currently already being reflected among the banks by an erosion of credit quality. The crisis in the construction, real estate and export economy will still prevail for some time to come, and will leave its mark on the balance sheets of financial services providers.
2024: Austria’s financial economy proves itself in difficult times
During the reporting year, Austria’s banks were able to maintain a high level of consolidated profits of around €11.5 billion (compared with €12.6 billion the previous year – despite significant provisions for credit risks and individual geopolitically-related burdens. Interest income has been the key driver of profits in the past two years. The Common Equity Tier 1 (CET-1) capital ratio changed only marginally at 17.5% (compared to 17.6% in the previous year) and is over double the level it was prior to the financial crisis, and stands close to the Euro area average. In contrast, the proportion of non-performing loans (NPLs) has increased significantly and now stands at 3% (compared to 2.2% last year), and is therefore higher than the European average. Regarding the financing of commercial real estate, the NPL ratio has increased from 3.3% to 5% within one year. The area therefore remains a priority for supervision in 2025.
Insurance undertakings have managed to come through recent years unscathed, and have an average Solvency Capital Ratio (SCR) of around 254%, more than double the amount of financial means necessary for the fulfilment of their contractual obligations, even in the event of a dramatic deterioration of economic conditions. The difficult situation for life insurers has continued to ease as a result of the normalisation of the interest rate environment, and this group was even able to post a slight increase in premiums in 2024. Insurers posted a slight fall in terms of the result from ordinary activities (EGT) as a result of the widescale damage caused by the storms in Central Europe in September – although the EGT remained high at €1.6 billion.
The relevant stock markets once again finished the year up (ATX: +6.6%) but enjoyed a veritable rollercoaster ride during the opening months of 2025. This was due to US President Donald Trump taking office, on the one hand boosting some investors’ hopes, and on the other hand due to uncertainty as a result of the announcement and repealing of measures especially in relation to tariffs. Austrian investment funds benefited from the upswing on the markets, with fund volume increasing by 9.3% to €221 billion, with net inflows of €3.1 billion. Pension companies and corporate provision companies also reported positiong performance in 2024 (of 7.8% and 4.9% respectively).
Digital transformation: cybersecurity and crypto-assets
Digital transformation presents opportunities and risks for the financial sector, and supervision has entered new legal territory. The European Union has drawn up a legal framework in recent years in this regard: this includes the Markets in Crypto-Assets Regulation (MiCAR) and the Regulation regarding Digital Operational Resilience (cybersecurity) known as DORA. In the meantime, both are fully applicable. Regarding the regulation of crypto-assets, the FMA’s focus in its supervisory work is in ensuring that consumers and investors remain protected and that crypto-assets are not able to be used to circumvent anti-money laundering measures. When granting licences for crypto-asset service providers – in which there is considerable international interest – quality is prioritised over speed. Hacker attacks and system outages repeatedly show how important the resilience of computer systems and networks is in the financial sector. DORA has seen important new standards, ensuring among other things that ICT third-party service providers, that play an increasingly important role are also in scope and monitored.
A sustainable financial economy
In the past year, the FMA has fundamentally revised its cross-sector Guide for Managing Climate and Sustainability Risks. Following a consultation process with various stakeholders and industry, the revised version was published in March. The Guide, which was initially published in 2020, is intended to serve as guidance for the supervised entities when considering climate and sustainability risks within the scope of their business activities. One priority for supervisory activity this year is the implementation of the European Securities and Markets Authority (ESMA) Guidelines on funds’ names using sustainability-related terms that apply from this month for all investment funds.
The annual report can be downloaded from the FMA website here.
Journalists may address further enquiries to
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43 (1) 249 59-6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]