BCR Group profits plummet to EUR 38 mln, down two thirds on H1, 2010

BCR net profit after taxes and net minorities declined by two thirds to EUR 38 million in 2011, compared to the first semester of 2010, which was attributable to low operational income and high risk provisions, show the Erste Group financial results released this week. The net interest income decreased by 14.5 percent, or EUR 60.3 million, to EUR 355 million. This development was mainly due to continuing weakness in credit demand, different asset mix and lower margins in the deposit business.

“While some of our markets, namely the Czech Republic, Slovakia and Austria, performed very well, banking markets in Hungary and Romania were still showing weak growth patterns,” said Andreas Treichl, CEO of Erste Group Bank.

The report shows that net interest income decreased by 14.5 percent, or EUR 60.3 million, to EUR 355 million. This development was mainly due to continuing weakness in credit demand, different asset mix and lower margins in the deposit business. Furthermore, net fee and commission income declined by EUR 13.4 million, or 16.8 percent from EUR 79.3 million in the first half of 2010 to EUR 66 million, as a result of lower contributions from the lending business. Net trading results registered a decrease from EUR 21.2 million by EUR 2.4 million, or 11 percent, to EUR 18.8 million and was mainly attributable to lower income from foreign exchange trading. In addition, operating expenses increased from EUR 183.5 million in the first half of 2010 by EUR 10,5 million, or 5.7 percent to EUR 194 million. This development was attributable to a 5 percent increase in VAT and additional other administrative expenses.

While the operating result decreased year on year from EUR 332 million to EUR 246 million, or a 25.7 percent decline in the first half of 2011, risk provisions were reduced from EUR 241 million in the first half of 2010 by EUR 17.6 million, or 7.3 percent, to EUR 224 million.

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Risk costs continued to be under pressure in markets with slower economic recovery like Hungary and Romania.
Erste Group expects significant economic growth for the Central and Eastern Europe markets, but the Hungarian and Romanian banking markets will lag behind.

The Austrian group ERSTE Bank has a 69 percent stake in BCR. A 30 percent stake is in the ownership of five financial investment companies (SIF).