Erste Group 9-months profit at EUR 597 mln on lower risk cost

The net profit of Austrian Erste Group amounted to EUR 597.3 million on nine months from a loss of EUR 973 million in the same period of last year, sustained by a stable operating result and lower risk costs, according to Andreas Treichl, CEO of Erste Group Bank.

Erste’s operating result fell slightly by 0.5 percent to EUR 2.6 billion due to lower operating income and a reduction of operating expenses.

The operating income lost 1.4 percent to EUR 5.4 billion by September due to lower interest margins. The net interest income decreased by 4 percent to EUR 3.9 billion on reduced credit demand.

The weak securities business in Austria and the Czech Republic sent the net fee and commission income down 5 percent to EUR 1.2 billion. In the same time, the trading income soared four fold to EUR 191.4 million.

The Austrian lender reduced administrative expenses by 2.3 percent to EUR 2.82 billion after cutting office-related expenses. Subsidiaries in Hungary, Romania and Ukraine went through reorganizations that lead to a 2.1 percent decrease in headcount to 49,380 employees. Erste was able to lower the cost-income ratio to 51.9 percent.

“The continued good performance in the important core markets Austria, Czech Republic and Slovakia as well as a certain degree of stabilization in Romania were crucial in this respect. Margins rose in Romania during the third quarter for the first time in six quarters, while NPL formation also declined,” said Treichl.

Erste’s risk provisions fell by 21 percent to EUR 1.4 billion, due to declines in Hungary and Czech Republic and that offset the risk costs that peaked in the Romanian subsidiary BCR.

The solvency ratio stood at 13.7 percent at end-September, with the core Tier 1 ratio at 10.4 percent. Erste says it will be able to meet capital requirements of Basel 3. Erste’s total assets moved up by 3.3 percent to EUR 217 billion.

Lending to customers lost 0.9 percent to EUR 133 billion by September while deposits added 2.8 percent to EUR 122 billion, due to gains in Austria, the Czech Republic and Slovakia.