Erste Group posts net profit of EUR 430.3 million in the first nine months of 2013; risk costs decli

Highlights

• Net interest income decreased to EUR 3,651.6 million in 1-9 2013 (1-9 2012: EUR 3,968.9 million) due to subdued credit demand and low market interest rates. Net fee and commission income rose from EUR 1,284.3 million in 1-9 2012 to EUR 1,346.3 million as a result of higher income from the securities business. The net trading result improved from EUR 191.4 million to EUR 241.0 million.
• Operating income amounted to EUR 5,238.9 million (-3.8% versus 1-9 2012: EUR 5,444.6 million). Strict cost management reduced general administrative expenses by 2.9%, from EUR 2,826.1 million to EUR 2,743.0 million in 1-9 2013. This led to an operating result of EUR 2,495.9 million (-4.7% versus 1-9 2012: EUR 2,618.5 million) and a cost/income ratio of 52.4% (1-9 2012: 51.9%).
• Risk costs showed a positive trend and declined by 14.0% to EUR 1,260.0 million, or 129 basis points of average customer loans in 1-9 2013, from EUR 1,465.3 million, or 146 basis points, in 1-9 2012. The NPL ratio stood at 9.6% as of 30 September 2013 (year-end 2012: 9.2%), driven by the decline in the loan book and NPL inflows in the commercial real estate business. The NPL coverage ratio improved to 63.0% (year-end 2012: 62.6%).
• The other operating result amounted to EUR -578.5 million versus EUR -214.0 million in 1-9 2012. This development was largely attributable to the non-recurrence of - on balance - positive one-off effects in 1-9 2012 as well as to negative one-off effects (sale of Ukraine subsidiary, extraordinary taxes in Hungary, goodwill write-down in Croatia) of EUR 157.4 million in 1-9 2013. Banking and financial transaction taxes levied in Austria, Hungary and Slovakia had a negative impact of EUR 247.1 million (1-9 2012: EUR 173.0 million). Taxes on income benefited from a positive one-off effect of EUR 127.7 million in Romania.
• Net profit after minorities amounted to EUR 430.3 million in 1-9 2013 versus a profit of EUR 597.3 million in the previous year that had been driven by one-off effects.
• Following a capital increase of EUR 660.6 million and the full repayment of participation capital of EUR 1.76 billion, shareholders' equity2 stood at EUR 11.8 billion (year-end 2012: EUR 12.9 billion). Core tier 1 capital amounted to EUR 10.8 billion as at 30 September 2013 (year-end 2012: EUR 11.8 billion). The reduction of risk-weighted assets to EUR 99.0 billion (year-end 2012: EUR 105.3 billion) was primarily due to the deconsolidation of the Ukrainian subsidiary, lower exposure and the ongoing shift towards secured lending. The core tier 1 ratio (total risk; Basel 2.5) stood at 10.9% (year-end 2012: 11.2%).
• Total assets as of 30 September 2013 amounted to EUR 207.9 billion (year-end 2012: EUR 213.8 billion). The year-to-date decline was primarily attributable to lower asset volumes and to valuation changes. The underlying deposit base was stable at EUR 122.1 billion while loans and advances to customers declined to EUR 129.5 billion as of the reporting date. The latter reflected subdued loan demand in most business lines. The loan-to-deposit ratio improved to 106.1% as of 30 September 2013 (year-end 2012: 107.2%).