Erste Group 1st Half Profit Rose on Increased Rates, Loan Growth -- Update

   By Ed Frankl 
 

Erste Group Bank AG said Monday that its first-half profit grew as it took advantage of increasing interest rates in eastern Europe on the back of on solid loan growth.

The Austrian lender said its net profit came to 1.14 billion euros ($1.17 billion) in the six months to the end of June, up from EUR918 million in the same period last year.

Net interest income rose to EUR2.84 billion, from EUR2.45 billion in 1H 2021, helped by interest-rate increases in Czech Republic, Hungary and Romania, the bank, which focuses on central and eastern Europe, said.

Loan volume growth rose 6.3% to EUR191.5 million, helped especially by its corporate segment and for mortgage loans, 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," recently appointed Chief Executive Willi Cernko said.

Mr. Cernko took over from Bernd Spalt after he said he wouldn't renew his contract over disagreements on the long-term direction of the Vienna-based bank.

The net profit rise was also due to a strong operating result, which grew 10% to EUR1.86 billion, and release of provisions, Erste said.

The company released EUR132 million from provisions surrounding 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 it now expects net loan growth in the high single-digit percentage range for the full year. At its first-quarter earningsin April, it said it expected growth in the mid-single digits.

It kept its full-year guidance for double-digit return on tangible equity, though its outlook was based on the assumption that its core markets could import adequate quantities of gas from Russia this year.

The company added that it plans to pay a dividend of EUR1.90 a share in 2022.

Write to Ed Frankl at [e-mail]

(END) Dow Jones Newswires

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

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