Facts on Austria and its banks

In the early 2000s and following the introduction of the euro as the single European currency, economic activity in Austria was characterised by a calm external environment and above-average growth. 2008 saw the global financial and economic crisis, which was followed by a catch-up process and then the European sovereign debt crisis. It was not until the mid-2010s that the Austrian economy returned to a longer period of growth, which came to an end in 2019. Since then, the Austrian economy has been hit by a series of external shocks, some of which have had a major impact on economic growth: Brexit, trade conflicts and ensuing uncertainty, the COVID-19 pandemic, Russia’s war of aggression against Ukraine and the war in the Middle East, as well as the resulting soaring inflation rates. From the second half of 2022 to end-2024, Austria experienced the longest recession since 1945. The economic contraction was significantly less pronounced than in previous recessions, however. The recovery of the Austrian economy from end-2024 onwards has been dampened by several factors: For one, price levels in the export-orientated industrial sector made it initially hard to compete globally. Other factors include the erratic US tariff policy, the necessary fiscal consolidation and an international environment that is marked by great uncertainty and economic volatility, in particular following the war in the Middle East in early 2026.

Overall, this means that, also in 2026, the Austrian economy is growing near its potential, i.e. more slowly than in previous recovery times. In the medium and long term, demographic trends will increasingly dampen the growth potential, leaving it at barely 1% in the medium term. Therefore, Austria needs structural reforms to return to a robust and sustainable growth path in an increasingly challenging international environment that is undergoing political upheaval.

Given that Austria is a highly developed economy, the tertiary sector plays a crucial role. Private sector services, i.e. information and communication, financial and insurance activities, real estate activities, other business activities and other services, made the largest contribution to gross value added in 2025, with a share of around 30%. Next came activities classified under “Quarrying, manufacturing, electricity and water supply” as well as “trade, transportation, hotels and restaurants,” which accounted for around 20% each. Manufacturing is characterised by a wide variety of industries in Austria.

In the face of the challenging macroeconomic environment in recent years, the Austrian labour market has proven relatively resilient. Employment growth was positive in 2025 and working hours, which had declined slightly in 2024, recovered again.

Amid weak economic growth, the unemployment rate (Eurostat definition) has increased slightly in the past years. In the first half of 2026, it remained relatively stable at around 5.7%. Due to demographic change, the labour market is increasingly faced with labour shortages in different sectors. Rising participation rates are counteracting this trend, but the positive impact on labour supply has been dampened by a sharp increase in part-time employment. By European standards, Austria’s unemployment rate continues to be low.

Driven by higher energy prices, Austria’s inflation rate as measured by the Harmonised Index of Consumer Prices (HICP) rose from 1.4% in 2020 to 8.6% in 2022. Initially, this was attributable to supply bottlenecks and strong catch-up effects in the aftermath of the COVID-19 pandemic. Subsequently, Russia’s war of aggression against Ukraine caused many energy and commodity prices to surge. Inflation in Austria became increasingly entrenched, also in the services sector, due to multiple upward adjustments of index-linked wages and prices. Substantial wage increases helped ward off greater real wage losses. In turn, inflation in Austria went down more slowly than the euro area, still averaging 7.7% in 2023. Only in 2024 did the inflation shock largely subside, with inflation receding to just under 3%. The temporary rise in inflation to 3.6% in 2025 was attributable to the expiry of various measures designed to reduce energy prices, e.g. the electricity price cap, which contributed around 1 percentage point to inflation. The outbreak of the war in the Middle East has again driven up energy prices and, by extension, inflation. However, this rise will be significantly lower than in 2022 and 2023. The OeNB expects inflation to average out at some 3% for 2026 as a whole.

During the COVID-19 pandemic, people in Austria saved more because they had fewer options to consume, especially services. After that marked increase, the saving ratio started to decline again in recent years. At 10% in 2025, the annual average remained well above the average for the years 2012–2019. The high saving ratio is primarily ascribable to the elevated level of uncertainty following the inflation shock, the ongoing geopolitical tensions, the repercussions of the recession of 2023 and 2024 and future consolidation needs. Moreover, the inflation shock in Austria also led to a significant reduction in real financial assets, which in early 2026 were around 10% below the long-term trend. Holding total gross financial assets of around EUR 950 billion (185% of GDP) at end-2025, households are the most important source of capital for other sectors in Austria. Household debt, as a percentage of disposable income, came to 74% at the end of 2025, well below the value recorded in 2019 prior to the crisis (92%). Corporate debt expressed as a percentage of GDP had also fallen slightly over the past years and stood at 95% at end-2025. Relative to the aggregate gross operating surplus, corporate debt increased sharply because profits visibly declined in 2024 and 2025. Both household and corporate debt levels in Austria are below the euro area average.

Around 7% of all bonds issued by Austrian issuers are classified as sustainable. This refers to bonds that meet specific ESG criteria established by the ECB (ESG stands for environment, social and governance). This puts Austria in 7th place in the euro area – ahead of large countries such as Spain (5.5%) and Italy (4.7%) – and close to the capital-weighted average of all euro area countries.

In absolute terms too, sustainable bond financing in Austria has reached a considerable scale: the outstanding volume of ESG-certified debt securities in Austria rose to a new high of EUR 45.9 billion at the end of 2025. ESG investing considers environmental, social and governance factors. This value exceeds numerous other regionally oriented bond markets such as Finland (EUR 35.4 billion), Portugal (EUR 14.5 billion) or Slovenia (EUR 4.6 billion). Even internationally oriented markets like Luxembourg (EUR 48.6 billion) or Ireland (EUR 39.2 billion) are at a comparable level.

At EUR 19.3 billion, the Republic of Austria accounts for a large portion of the total outstanding volume of sustainable bonds. It is therefore the most important issuer in this market segment.

In the euro area, financing through sustainable bonds is concentrated in France (EUR 519 billion), Germany (EUR 351 billion) and the Netherlands (EUR 275 billion). These three countries account for around two-thirds of the total volume outstanding in the euro area.

Not only was the inflationary shock of 2022 and 2023 more pronounced in Austria than the euro area average, but the associated loss of purchasing power was also fully offset in the Austrian wage-setting process. As a result, hourly wages rose more sharply than in Germany and in the euro area. Productivity trends show that productivity growth failed to offset the sharp rise in wages seen in recent years. Consequently, Austria’s unit labour cost position relative to its main trading partners has deteriorated significantly. The decline in price competitiveness in recent years is also reflected in the trend in real effective exchange rates. Beginning with the wage agreements concluded since autumn 2025, this has led to a reversal: For one thing, most agreements are now concluded at rates below the inflation rate, and for another, multi-year agreements with fixed wage increases have become more common. This means that Austria’s relative unit labour cost position vis-à-vis the euro area will not deteriorate further. In other words, Austria’s price competitiveness has stabilised after years of significant losses.

In 2025, more than half of Austria’s goods exports went to the euro area. Hence, such exports were not exposed to any direct exchange rate risks. Among Austria’s trading partners, Germany is still the most important by far, accounting for a share of close to 30% in Austria’s total goods exports, followed by the USA, Italy and Switzerland. In the same vein, the countries of Central, Eastern and Southeastern Europe (CESEE) remain a very important export market for Austria, accounting for a combined share of more than 20%. Roughly 30% of Austrian exports are services, with travel and tourism accounting for one-third.

The sectoral structure of Austria’s external goods trade follows the pattern typically observed in highly industrialised nations. The biggest share of Austria’s goods exports is made up by machinery and transport equipment, ranging from 35% to 40%. Other important pillars of Austrian export activity include manufactured goods (around 20%) and chemicals (around 15%).

Austria has recorded a current account surplus since 2002. The only exception was 2022, when, as a result of the COVID-19 pandemic and the shock in energy import prices, there was a slight current account deficit of 1.3%. As both factors became less relevant, a surplus was again achieved as early as in 2023. This surplus expanded to EUR 9.5 billion or 1.9% of GDP in 2025.

Thanks to the current account surpluses recorded in recent years, Austria has gradually improved its net international investment position (IIP). In 2013, its net IIP entered positive territory for the first time. In 2025, it came to EUR 135 billion (26% of GDP). Overall, Austria’s net IIP is fairly balanced, compared with countries recording large deficits, such as Greece, Ireland and Cyprus, and countries recording large surpluses, like Germany, Denmark and the Netherlands.

In 2025, Austria’s budget balance stood at -4.2% of GDP. Austria is currently subject to an excessive deficit procedure of the European Commission and is therefore required to reduce new borrowing. While the adopted consolidation measures help curb the budget deficit, rising interest payments, higher EU contributions and additional age-related expenditure are simultaneously preventing a more significant improvement. Due to these factors, the OeNB forecasts a budget deficit above the 3% mark in 2026, but the deficit will gradually get closer to this value. Public debt rose to 81.5% of GDP in 2025. Without any further consolidation, it will continue to increase slightly in the subsequent years.

Banks account for slightly more than half the Austrian financial system. The Austrian banking sector, whose total assets amount to around EUR 1.3 trillion, is characterised by a large number of credit institutions, although this number has declined steadily in recent decades. The banking sector is highly concentrated, with the three largest banking groups holding more than half of the consolidated total assets. Banks are grouped into seven sectors, with the majority operating in the cooperative sector. At the end of 2025, a total of 67,996 employees were employed in the Austrian banking sector, representing 1.5% of Austria’s workforce. In the last decade, the size of the Austrian banking sector relative to GDP has consistently been above the euro area average (255% vs 212% at end-2025). Loans and deposits make up more than two thirds of the sector’s consolidated assets and liabilities. This balance sheet structure therefore essentially reflects Austrian banks’ customer-oriented business model, encompassing both retail and corporate banking, while trading activities play a comparatively minor role. Credit risks accounted for around 84% of banks’ total capital requirements at the end of 2025, making it by far the most significant risk category. At just 3%, market risks played only a minor role.

The Austrian banking sector has undergone a comprehensive consolidation process, particularly since the global financial crisis of 2008/09. Between 2008 and end-2025, the number of head offices decreased by approximately 49%, namely from 867 to 445. This means that consolidation in the Austrian banking sector has consistently outpaced the European trend for years. Compared with other European countries, Austria’s banking sector is characterised by a large number of small institutions and a high density of bank branches (3,057 at end-2025). As a case in point, the average balance sheet total of Austrian banks is EUR 2.4 billion. By contrast, total assets of banks based in the euro area average out at EUR 8 billion. At 33.2, Austria also exceeds the euro area average of 29.2 in terms of bank branches per 100,000 inhabitants. The number of credit institutions licensed in Austria accounts for around 12% of all credit institutions in the euro area. Moreover, the Austrian banking sector operates through a large network of European subsidiary banks.

Central, Eastern and Southeastern Europe (CESEE) is a very important market for Austrian banks in terms of size and profits, with 33 subsidiaries operating in 14 CESEE countries, 19 of which are in EU member states. At the end of 2025, their total assets amounted to EUR 321 billion. Around 85% of Austrian banks’ CESEE exposure relates to EU countries. The most significant subsidiaries are located in Czechia and Slovakia and account for around 54% of Austrian banks’ total assets in CESEE. Other CESEE EU subsidiaries operate in Romania, Hungary, Croatia and Slovenia (listed in the order of their total assets). In 2025, subsidiaries in CESEE EU countries accounted for the lion’s share (85%) of Austrian banks’ profits earned in the region. In 2026, Austrian banks’ presence in CESEE will continue to grow as a result of an acquisition in Poland, which has already been completed, and a planned acquisition in Romania.

The risk-bearing capacity of Austrian subsidiaries has remained sound and their business activities are primarily funded locally. This is also attributable to the proactive implementation of micro- and macroprudential measures (such as the systemic risk buffer and the Austrian Sustainability Package), which has significantly reduced contagion risks.

Over the past few years, and especially since 2022, the net profit of Austrian banks has risen steadily, mainly driven by the increase in the net interest margin (2025: 2.0%). From a structural perspective, the interest rate turnaround in 2022 marked the end of a long period of low interest rates and led to a significant improvement in the banking sector’s profitability. In 2025, the Austrian banking sector recorded the second-highest annual profit in its history, at EUR 11.8 billion, which represented an increase of 9.1% compared with the previous year. The positive performance in recent years was attributable to steadily rising net interest income. In 2025, net interest income remained at a high level, but edged down by 0.8% compared with 2024. At the same time, operating income remained broadly stable at around EUR 37.2 billion, exceeding EUR 37 billion for the third consecutive year. By contrast, operating expenses rose more sharply once again (+6%) due to higher staff, tax and IT costs. As a result of higher operating expenses, operating profit fell by 7% year on year to EUR 17.4 billion in 2025, which marks the second consecutive year of decline. However, the decline in operating profit was more than offset by significantly lower risk provisions (EUR 2.9 billion, or -31%) and higher earnings contributions from participations and subsidiaries. This development was accompanied by an increase in the cost-to-income ratio, which stood at 53% at the end of 2025.

Operations in CESEE have also made a significant contribution to this development. In 2025, CESEE subsidiaries reported a net profit of EUR 4.8 billion, which was 11% lower than the previous year’s figure due to higher operating expenses and a negative one-off effect in Russia. Having declined compared with previous years, CESEE profits accounted for 41% of the Austrian banking sector´s consolidated net profit. At 1.8%, the ratio of non-performing loans (NPL ratio) in CESEE continued to be significantly lower than the Austrian level.

The consolidated NPL ratio of Austrian banks (including CESEE) remained unchanged at 3% in 2025. Credit quality deteriorated for small and medium-sized enterprises (SMEs, NPL ratio: 6.3%) and for commercial real estate loans (NPL ratio: 8.3%). By contrast, the NPL ratio for consumer loans improved to 5.2% and that for residential real estate loans remained at 1.3%. The consolidated coverage ratio fell to 36%, which was slightly below the EU average. Since interest rates began to rise in 2022, Austrian banks have seen a sharp increase in the NPL ratio of commercial real estate loans: from 0.9% at the end of 2022 to 8.3% at the end of 2025. In the other business sectors, the NPL ratio showed a significantly more moderate trend. Austrian banks are more exposed to commercial real estate loans than their euro area peers. With commercial real estate loans accounting for 43% of all Austrian corporate loans, Austria is among the top three countries in the euro area in this respect. The respective euro area average stood at 27% at the end of 2025. Austria's high level of commercial real estate financing also reflects a private rental market that is substantial by European standards. 46% of the Austrian population live in rented housing, compared with an average of 32% across the EU. Consequently, at 54%, the home ownership rate is significantly lower in Austria than the EU average of 69%. Austria ranks second-lowest in the EU, just above Germany (47%).

Over the past decade, credit growth has been driven primarily by residential real estate loans as well as loans to corporates. At the end of 2025, the outstanding volume of residential real estate loans stood at EUR 132 billion (+49% since 2014) and that of corporate loans at EUR 212 billion (+55% since 2014). From mid-2022 onwards, rising interest rates and high inflation led to a significant slowdown in growth rates across all segments. Demand for new residential real estate financing increased sharply in 2024, driven by rising real household income and falling interest rates, and this trend gained further momentum in 2025. By contrast, demand for corporate loans remained subdued in 2025. As a result, the volume of lending in the three segments went up slightly in 2025.

To mitigate systemic risks from residential real estate loans, the Austrian Financial Market Authority (FMA) introduced borrower-based measures in 2022 (KIM-V regulation for sustainable lending standards for residential real estate financing), which have significantly improved lending standards for new residential real estate loans. Systemic risks associated with residential real estate financing were reduced effectively and lending standards improved notably. In light of this and the increased capitalisation of the Austrian banking system, the Financial Market Stability Board (FMSB) stated, in December 2024, that it had identified no systemic risks arising from residential real estate financing that could have serious adverse consequences for financial stability. The legally binding borrower-based measures therefore expired at the end of June 2025. Since the expiry of the KIM-V regulation, banks have continued to comply with the 20% exemption bucket of new lending as recommended by the FMSB. This requirement was already in place when the regulation was in force. To safeguard the established lending standards, two further key measures were implemented. First, the FMA published its supervisory expectations in a circular. Second, the OeNB continued its macroprudential monitoring and published a residential real estate dashboard, which makes relevant developments more transparent.

In contrast to residential real estate financing, risks associated with commercial real estate financing remain elevated. To address the elevated exposure to the commercial real estate sector and the steep increase in the NPL ratio, particularly compared with other EU countries, a sectoral systemic risk buffer (sSyRB) of 1% was implemented with effect from 1 July 2025. Following a recommendation by the FMSB in December 2025, the FMA moreover decided to increase the sSyRB rate in stages. Accordingly, the buffer was raised to 2% on 1 July 2026; a further increase to 3.5% is scheduled for 1 July 2027. The sSyRB is intended to strengthen banks’ resilience to risks arising from the commercial real estate sector on a sustainable basis.

The OeNB's residential real estate dashboard and commercial real estate dashboard highlight key developments in the respective real estate sectors in Austria. The chart-based dashboards provide an overview of current trends in the Austrian residential and commercial real estate markets and place them in the context of financial stability. The OeNB uses these dashboards to monitor lending trends at an aggregate level and to keep a close eye on general market developments.

The capitalisation of the Austrian banking sector has improved significantly since the global economic and financial crisis of 2008–2009. In line with tighter prudential requirements, the capital ratio has nearly doubled, reaching 22.4% at the end of 2025. The common equity tier 1 (CET1) ratio increased by 288% over the same period. At the end of 2025, the CET1 ratio stood at 19.0% (+1.2 percentage points on the previous year), which was well above the EU average of 16.8%. This positive trend has been driven in particular by the high profitability of the banking sector, the retention of profits - as recommended by the OeNB - and capital-based macroprudential measures. However, owing to completed and planned acquisitions by Austrian banks, the CET1 ratio is expected to decline in 2026. Nevertheless, the banking sector’s resilience continues to be strengthened by the existing macroprudential capital buffers. The systemic risk buffer (SyRB) addresses structural systemic risks, and the buffer for other systemically important institutions (O-SII buffer) aims to increase the loss-absorbing and risk-bearing capacity of systemically important banks.

Austrian banks benefit from a high and stable share of retail and corporate deposits, reflecting their business models. They have a sound deposit base both in Austria and abroad. The loan-to-deposit ratio (consolidated, including foreign business) amounted to about 98% in December 2025.

The Austrian banking sector has a solid liquidity profile, which is also reflected in the key regulatory indicators. Both the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR) show that Austrian banks have sufficient liquidity buffers to meet their short- and long-term funding requirements, even under stress conditions. Although the LCR of the consolidated Austrian banking sector fell slightly to 167% in 2025, it continued to indicate a comfortable level of short-term liquidity. The NSFR, which measures the ability of the banking sector to resist funding and liquidity shocks in the medium term, also declined only slightly. At the end of 2025, it stood at 135%.

Both ratios remained well above the regulatory minimum requirements of 100%, and they also stood above the European average (LCR: 161%, NSFR: 127%). The robust liquidity buffers underscore the high level of stability and resilience of the Austrian banking sector.

Footnotes

1. The top three banking groups, starting from the largest: Erste Group, Raiffeisen Bank International, UniCredit Bank Austria. ↩︎
2. Joint stock banks and private banks, savings banks, state mortgage banks, Raiffeisen credit co-operatives, Volksbank credit co-operatives, building and loan associations and special purpose banks. ↩︎
3. Two fewer Austrian subsidiaries in CESEE compared with 2024 (affected countries: Croatia and Romania). ↩︎
4. This corresponds to 25% of the consolidated total assets of the entire banking sector. ↩︎
5. Increased profits in Romania (+18%), Czechia (+10%) and Slovakia (+8%). ↩︎
6. In 2025, interest income accounted for 68% of the total income of the Austrian banking sector. From 2013 to 2021, net interest income consistently contributed less than 60% to operating income. ↩︎