Austrian Erste 2009 Net Profit Falls 6% To EUR976.6M

In its financial report, the group said end-December assets reached EUR201.7 billion.

Net profit after minorities rose 5.1% on the year to EUR903.4 million in 2009, despite a 92% rise in risk costs to EUR2.056 million.

The global economic crisis has hit Europe and Erste Group's region in equal measure, the Austrian lender said. "This led to substantially higher risk costs", explained Andreas Treichl, CEO of Erste Group Bank AG.

"On a positive note, demand for simple and transparent deposit and loan products rose on the back of the uncertainty created by the crisis," he added.

Erste Group posted a record operating result of EUR3.771 million in 2009, up 25.8% on the previous year. As a result, the cost/income ratio also improved to its best ever level at 50.2%, the Austrian group said.

The increase was broadly fueled by higher operating income, which rose 8.3% to EUR7.58 million, and a marked decline in operating expenses, which fell by 4.9% to EUR3.8 million.

The solvency ratio in relation to total risk was 12.7% as of end 2009, following the issuance of participation capital in the amount of EUR 1.76 billion and the capital increase of EUR 1.74 billion.

"The past year has also proved that the countries of Central and Eastern Europe - despite weaknesses in the institutional framework - coped much better with the crisis than expected by many," Treichl said.

All Erste's subsidiaries in the CEE region, except for Erste Bank Ukraine, continued to operate profitably in 2009, the group said.

"Despite the economic crisis, the CEE region continues to be an attractive region for Erste Group, thanks to stable margins, slowly rising credit demand and growing customer deposits, especially in the retail business", Treichl concluded.

For 2010, the Austrian lender expects the CEE region to post a moderate economic growth.

"While this should continue to have positive effects on asset quality, any improvement will be gradual in nature and influenced by the development of key economic variables, most notably unemployment. Accordingly, Erste Group continues to expect risk costs to remain elevated for the better part of 2010," the report noted.

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

On the Bucharest bourse Thursday, Erste closed down 0.7% at 113.7 lei (EUR1=RON4.1255) a share.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.