Erste Group - Investor information 2019

Highlights

P&L 1-6 2019 compared with 1-6 2018; balance sheet as of 30 June 2019 compared with 31 December 2018

Net interest income increased – mainly in the Czech Republic, but also in other core markets – to EUR 2,329.7 million (EUR 2,213.8 million). Net fee and commission income rose to EUR 980.4 million (EUR 959.3 million), primarily on the back of payment services and from lending. While net trading result improved significantly to EUR 310.1 million (EUR 11.9 million), the line item gains/losses from financial instruments measured at fair value through profit or loss declined to EUR -140.1 million (EUR 66.6 million), the development of both line items was driven by valuation effects. Operating income rose to EUR 3,592.9 million (+6.5%; EUR 3,374.1 million). The increase in general administrative expenses to EUR 2,146.0 million (+3.3%; EUR 2,076.5 million) was mainly attributable to a rise in personnel expenses to EUR 1,255.9 million (+3.2%; EUR 1,216.7 million). Other administrative expenses included almost all payments to deposit insurance systems expected in 2019 in the amount of EUR 92.9 million (EUR 80.2 million). The increase in amortisation and depreciation to EUR 264.6 million (EUR 232.3 million) is attributable to the first-time application of the new financial reporting standard for leases (IFRS  16) as of 1 January 2019, while a corresponding positive effect was recorded in other administrative expenses. Overall, the operating result increased to EUR 1,446.9 million (+11.5%; EUR 1,297.6 million) and the cost/income ratio improved to 59.7% (61.5%).

Due to net releases on the back of continued solid asset quality, the impairment result from financial instruments amounted to EUR 42.8 million or, adjusted for net allocation of provisions for commitments and guarantees given, 2 basis points of average gross customer loans (EUR 73.2 million or -12 basis points) This was mainly attributable to substantial income received from the recovery of loans already written off, primarily in the Czech Republic and in Hungary, as well as from releases of provisions for commitments and guarantees in Austria, the Czech Republic and Romania. The NPL ratio improved further to 2.8% (3.2%). The NPL coverage ratio increased to 75.4% (73.4%).

Other operating result amounted to EUR -351.0 million (EUR -204.6 million). The deterioration is attributable to a provision in the amount of EUR 150.8 million set aside for losses expected from a decision of the Romanian High Court in relation to the business activities of a local subsidiary. The expenses for the annual contributions to resolution funds included in this line item rose – in particular in the Czech Republic – to EUR 76.3 million (EUR 71.3 million). Banking and transaction taxes were slightly higher at EUR 64.7 million (EUR 63.3 million), including EUR 12.6 million (EUR 13.8 million) in Hungarian banking taxes posted upfront for the full financial year. Other taxes were nearly unchanged at EUR 6.4 million (EUR 6.5 million).

The minority charge rose due to significantly better results from the savings banks to EUR 205.2 million (EUR 165.5 million). The net result attributable to owners of the parent declined to EUR 731.9 million (EUR 774.3 million).

Total equity not including AT1 instruments rose to EUR 18.2 billion (EUR 17.9 billion). After regulatory deductions and filtering in accordance with the CRR, common equity tier 1 capital (CET1, final) amounted to EUR 16.1 billion (EUR 15.5 billion), total own funds (final) to EUR 21.8 billion (EUR 20.9 billion). Interim profit is included in the above figures. Total risk – risk-weighted assets including credit, market and operational risk (CRR, final) – rose to EUR 118.8 billion (EUR 115.4 billion). The common equity tier 1 ratio (CET1, final) stood at 13.5% (13.5%), the total capital ratio at 18.3% (18.1%).

Total assets rose to EUR 248.3 billion (EUR 236.8 billion). On the asset side, cash and cash balances decreased to EUR 16.8 billion (EUR 17.5 billion), while loans and advances to credit institutions increased to EUR 23.0 billion (EUR 19.1 billion). Loans and advances to customers rose to EUR 155.3 billion (+4.0%; EUR 149.3 billion). On the liability side, deposits from banks increased to EUR 19.0 billion (EUR 17.7 billion) and customer deposits grew again – most notably in the Czech Republic and in Austria – to EUR 169.7 billion (+4.3%; EUR 162.6 billion). The loan-to-deposit ratio stood at 91.5% (91.8%).

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