Erste Group’s first-half profit increased on higher rates and loan growth – Update

   By Ed Frankl 

Erste Group Bank AG said on Monday its first-half profit rose as it benefited from rising interest rates in Eastern Europe thanks to solid loan growth.

The Austrian lender said its net profit was 1.14 billion euros ($1.17 billion) in the six months to the end of June, compared with 918 million euros in the same period l last year.

Net interest income reached 2.84 billion euros, compared to 2.45 billion euros in the first half of 2021, helped by interest rate hikes in the Czech Republic, Hungary and Romania, it said. the bank, which focuses on Central and Eastern Europe.

Loan volume growth rose 6.3% to 191.5 million euros, helped in particular by its corporate segment and for mortgages, it said.

“The geopolitical situation and high inflation are clouding the outlook in Europe. Nevertheless, the economies in the eastern part of the EU have so far shown resilience,” said Willi Cernko, newly appointed chief executive.

Mr Cernko took over from Bernd Spalt after he said he would not renew his contract due to disagreements over the long-term direction of the Vienna-based bank.

The rise in net profit was also due to a strong operating result, which rose 10% to 1.86 billion euros, and the release of provisions, Erste said.

The company released 132 million euros of provisions related to Covid-19, legal risks related to Romanian consumer protection legislation and other geopolitical issues.

Its Common Equity Tier 1 capital ratio, a measure of financial strength, was 14.2%

Erste said he now expects net loan growth in the single-digit percentage range for the full year. During its first-quarter results in April, it said it expected mid-single-digit growth.

It maintained its full-year forecast of a double-digit return on tangible equity, although its outlook is based on the assumption that its major markets could import adequate amounts of gas from Russia this year.

The company added that it plans to pay a dividend of EUR 1.90 per share in 2022.


Write to Ed Frankl at


(END) Dow Jones Newswire

August 01, 2022 03:10 ET (07:10 GMT)

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