Erste Group's 1Q Net Profit +2.1% On Year To EUR260.6M

04.28.2011 By Florentina Dragu

Austria's Erste Group Bank AG (EBS.RO) Thursday said its net profit rose 2.1% on the year to EUR260.6 million in the first quarter, on lower risk costs, despite negative impact from banking taxes.

Austria's Erste Group Bank AG (EBS.RO) Thursday said its net profit rose 2.1% on the year to EUR260.6 million in the first quarter, on lower risk costs, despite negative impact from banking taxes.

"Erste Group has made a good start to the new financial year, posting an increase in net profit as a result of declining costs and despite the significant negative impact from the banking taxes in Austria and Hungary," said Andreas Treichl, Chief Executive Officer of Erste Group Bank AG.

The group posted operating profit of EUR953.6 million in the first quarter, down 3% on the year.

Overall, operating income declined 1.7% on the year to EUR1.9 billion, largely due to 2.1% lower net interest income. Net interest income rose 2.1% to EUR481.2 million.

The net trading result remained flat at EUR139.7 million.

Total assets rose by 3.7% to EUR213.5 billion since year-end 2010.

Treichl noted that macroeconomic fundamentals in Central and Eastern Europe continued to improve in the first quarter, except in Romania and Hungary, where economy is not expected to pick up before the second half of 2011.

"Due to the delayed recovery in Hungary and Romania, risk costs will remain elevated in those countries in 2011," Erste said in its financial report.

In Romania, Erste reported net interest income in the retail and SME business of EUR186 million in the first quarter, down 12.7% on the year (or currency-adjusted -10.9%).

At the same time net fee and commission income was nearly unchanged at EUR34.7 million, the Austrian lender said.

It said the group's operating expenses in Romania increased by 4.8% (currency-adjusted +6.9%) on the year to EUR98.8 million in the first quarter.

Risk provisions fell 10.6% (currency-adjusted -8.8%) to EUR109.4 million.

The group's cost/income ratio in Romania improved to 44.5% in March from 39.2% in the same month a year earlier.

In 2006, Erste bought a 61.88% stake in BCR for EUR3.75 billion from the state, the European Bank for Reconstruction and Development and International Finance Corporation. The Austrian group subsequently raised its stake to 69.3%, by taking over shares from BCR employees.

BCR group includes BCR bank, BCR Banca pentru Locuinte, BCR Administrare Fond de Pensii, BCR Leasing, BCR Asset Management, BCR Securities, Anglo Romanian Bank Limited and BCR Chisinau