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Erste Group Q1 net profit EUR 226 million

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Staff writer |
Erste Group
Erste Group   Net interest income declined

Erste Group postsed net profit of EUR 226 million in Q1 2015. Other operating result amounted to EUR -153.5 million.

Net interest income declined to EUR 1,098.5 million (EUR 1,123.9 million), mainly due to the persistently low interest rate environment and, as expected, lower loan volumes in Romania and Hungary.

January-March 2015 compared with January-March 2014; 31 March 2015 compared with 31 December 2014.

Net fee and commission income increased to EUR 461.0 million (EUR 452.1 million) on the back of an improved result from asset management and payment transfers.

Of the significant rise in the net trading and fair value result to EUR 72.4 million (EUR 50.4 million), almost one half was attributable to one-off effects, such as valuation results for financial liabilities in the Czech Republic. Operating income consequently remained unchanged at EUR 1,689.1 million (-0.1%; EUR 1,690.6 million).

General administrative expenses decreased to EUR 948.1 million (-1.6%, EUR 963.3 million), mostly due to a decline in other administrative expenses and in depreciation and amortisation. This led to a rise in the operating result to EUR 741.0 million (+1.9%; EUR 727.3 million) and an improved cost/income ratio of 56.1% (57.0%).

Net impairment loss on financial assets not measured at fair value through profit or loss decreased significantly to EUR 183.1 million or 57 basis points of average customer loans (-49.7%, EUR 364.2 million or 114 basis points) as a result of the substantial decline in Romania. The NPL ratio improved further to 8.1% (8.5%). The NPL coverage ratio decreased slightly to 67.9% (68.9%).

Other operating result amounted to EUR -153.5 million (EUR -119.8 million). This was largely due to provisions made for the full-year contributions to national resolution funds estimated to total EUR 54.9 million in 2015.

At EUR 91.8 million (EUR 99.8 million), banking and financial transaction taxes were again significant: EUR 29.5million (EUR 30.4 million) in Austria, EUR 5.8 million (EUR 10.3 million) in Slovakia, and EUR 56.5 million (EUR 59.1 million) in Hungary (including the full Hungarian banking tax of EUR 46.0 for 2015).

Taxes on income rose to EUR 118.6 million. This rise is primarily due to improved profitability and the assumption that contributions to resolution funds will not be tax-deductible. The net result attributable to owners of the parent increased to EUR 225.8 million (EUR 103.3 million).

Total capital rose to EUR 14.0 billion (EUR 13.4 billion). Common equity tier 1 capital (CET 1, Basel 3 phasedin) edged up to EUR 10.7 billion (EUR 10.6 billion). Total risk (risk-weighted assets including credit, market and operational risk, Basel 3 phased-in) increased to EUR 101.8 billion (EUR 100.6 billion). The common equity tier 1 ratio (CET 1, Basel 3 phased-in) stood at 10.5% (10.6%), the total capital ratio (Basel 3 phased-in) at 15.8% (15.7%).

Total assets rose to EUR 202.6 billion (EUR 196.3 billion), driven mainly by an increase in loan volume – with loans and receivables to customers (net) rising to EUR 123.4 billion (EUR 120.8 billion) – as well as in trading and investment securities and loans and receivables to credit institutions (net).

Within liabilities, customer deposits increased to EUR 124.8 billion (EUR 122.6 billion). The loan-to-deposit ratio stood at 98.9% (98.6%).

Operating environment anticipated to be conducive to credit expansion. Real GDP growth is expected to be between 2% and 3% in all major CEE markets, except Croatia, driven by solid domestic demand. For Austria, a real GDP growth below 1% is forecast.

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