Austrian banks must do more to bolster capital, central bank says

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VIENNA, July 1 The Austrian banking system's common equity tier 1 (CET 1) capital ratio, a measure of financial strength, rose faster than that of European peers last year but it must do more to catch up with international rivals, Austria's central bank said on Friday."It remains to be seen whether Austrian banks' profitability has improved sustainably, in particular since banks will have to adjust their cost structures further to match lower business volumes," the Austrian National Bank (ONB) said in a statement on its semi-annual Financial Stability Report.

It added that it was watching mortgage lending closely, given the continued rise in property prices.

"In view of the high and still rising real estate prices, particularly in Vienna, the ONB is paying special attention to housing finance," it said, adding that variable-rate housing loans still represented a large share of the total.