Erste Group Bank AG: Net profit of EUR 487.2 million in H1 15

NPL ratio improves to 7.7%, CET 1 ratio (B3FL) advances to 11.3%

Wien (pta005/07.08.2015/07:30 UTC+2) Financial data - see pdf

Highlights
January-June 2015 compared with January-June 2014; 30 June 2015 compared with 31 December 2014

Net interest income declined to EUR 2,211.9 million (EUR 2,243.6 million), mainly due to the persistently low interest rate environment and expected developments in Romania and Hungary. Net fee and commission income rose to EUR 917.4 million (EUR 907.0 million) on the back of better results from the securities and custody business and payment transfers. The net trading and fair value result declined to EUR 136.5 million (EUR 138.0 million). Operating income declined marginally to EUR 3,399.4 million (-0.7%; EUR 3,421.7 million).

General administrative expenses were unchanged at EUR 1,896.8 million (EUR 1,896.4 million). The operating result decreased to EUR 1,502.6 million (-1.5%; EUR 1,525.3 million). The cost/income ratio amounted to 55.8% (55.4%).

Net impairment loss on financial assets not measured at fair value through profit or loss dropped significantly to EUR 373.9 million or 58 basis points of average gross customer loans (-53.0%; EUR 796.1 million or 125 basis points), primarily due to a substantial decline in Romania but also due to a positive trend in all Austrian segments. The NPL ratio improved further to 7.7% (8.5%). The NPL coverage ratio stood at 68.2% (68.9%).

Other operating result amounted to EUR -200.6 million (EUR -1,271.8 million). The significant positive change was attributable to the non-recurrence of high negative one-off effects in the first half year of 2014 (primarily intangible writedowns). Provisions for the 2015 full-year contributions to national resolution funds in the projected total amount of EUR 55.2 million are already included. At EUR 137.2 million (EUR 154.1 million), banking and financial transaction taxes were again significant: EUR 60.1 million (EUR 63.2 million) in Austria, EUR 11.6 million (EUR 20.7 million) in Slovakia, and EUR 65.5 million (EUR 70.1 million) in Hungary (including the full Hungarian banking tax of EUR 46.0 million for 2015).

Taxes on income amounted to EUR 273.4 million (EUR 335.6 million), translating into a tax rate of 28.4%. Due to the good risk development at the Savings Banks and the turnaround in Romania, the minority charge reached a historic high at EUR 203.4 million (EUR 52.7 million). The net result attributable to owners of the parent increased to EUR 487.2 million (EUR -929.7 million).

Total equity (IFRS) rose to EUR 14.0 billion (EUR 13.4 billion). Including the interim profit, common equity tier 1 capital (CET1, Basel 3 phased-in) increased to EUR 11.6 billion (EUR 10.6 billion), total eligible own funds (Basel 3 phased-in) amounted to EUR 16.8 billion (EUR 15.8 billion). Total risk, i.e. risk-weighted assets including credit, market and operational risk (Basel 3 phased-in) decreased to EUR 100.3 billion (EUR 100.6 billion). The common equity tier 1 ratio (CET1, Basel 3 phased-in) stood at 11.6% (10.6%), the total capital ratio (Basel 3 phased-in) at 16.8% (15.7%).

Total assets rose to EUR 197.5 billion (EUR 196.3 billion), driven mainly by the increase in customer lending volume - with loans and receivables to customers (net) rising to EUR 123.5 billion (EUR 120.8 billion) - as well as in loans and receivables to credit institutions (net). Within liabilities, customer deposits increased to EUR 124.5 billion (EUR 122.6 billion). The loan-to-deposit ratio stood at 99.2% (98.6%).

Outlook

Operating environment anticipated to be conducive to credit expansion. Real GDP growth is expected to be between 2% and 4% in all major CEE markets, except Croatia, driven by solid domestic demand. For Austria, a real GDP growth below 1% is forecast.

Return on tangible equity (ROTE) expected at 8-10% in 2015 (YE 14 TE: EUR 8.4 billion). Operating result is expected to decline in the mid-single digits on the back of lower but sustainable operating results in Hungary (due to FX conversion related effects of lower average volume) and Romania (lower unwinding impact) as well as the persistent low interest rate environment.

For 2015, loan growth in the low single digits and a decline in risk costs to about EUR 0.9-1.1 billion are anticipated. Banking levies are expected to amount to about EUR 360 million, including parallel contributions to national as well as European bank resolution and deposit insurance funds. Related discussions with the Austrian government are still ongoing.

Risks to guidance. Consumer protection initiatives such as a potential CHF borrower support scheme in Croatia as well as geopolitical risks could have negative economic impacts.

Presentation of results via audio webcast and telephone conference
for portfolio managers and analysts

Date Friday 7 August 2015

Time 9:00 Vienna / 8:00 London / 3:00 New York
The presentation will be held in English.

Live audio webcast http://www.erstegroup.com/investorrelations (slide presentation)

Dial-in for analysts
UK: +44 (0)20 3427 1904, 0800 279 4841
US : +1 212 444 0895, 1877 280 1254

Confirmation Code 1038822

Replay Will be available at http://www.erstegroup.com/en/Investors/Webcasts-Videos.

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Emitter:	Erste Group Bank AG Milchgasse 1 1010 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+ 43 (0)5 0100 - 17741
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)