Erste Group Records €332.6 Million Profit

Austrian bank Erste Group reported on Friday a nearly 27 percent increase in net profit in the first quarter of 2018 compared to the previous year, thanks to reduced risks in a favorable economic environment.

Net profit in the first quarter reached €332.6 million, according to the business report. Operating income increased to €1.651 billion, up from €1.617 billion in the same period last year.

>>>Erste Bank Introduced Contactless Cash Withdrawal Service

Net interest income rose by three percent to €1.08 billion.

Net fees and commissions also increased by 4.6 percent to €478.6 million.

Net trading results sharply decreased to €11.6 million, down from €48.6 million.

“Demand for loans continues to strengthen, especially in the Czech Republic and Slovakia,” emphasized CEO Andreas Treichl.

“The far greatest contribution came from an environment of exceptionally benign risks, which resulted in net releases of provisions,” added the head of the Austrian bank.

>>>Applications Open for Erste Bank Student Internships General Rehearsal and IT Lab

Thus, the bank recorded a positive result in the loss provisions item in the first quarter due to improved asset quality, releasing €54.4 million in provisions for credit operations. In the same period last year, it reserved €65.8 million for potential loan losses.

The share of non-performing loans decreased to 3.7 percent in the first quarter, down from four percent in the previous three months, while the coverage of non-performing loans by provisions increased to 72.5 percent, up from 68.8 percent, according to Erste Group’s statement.

“Overall, all conditions for the continuation of the positive trend have been met,” concludes Treichl, pointing to the reduced share of non-performing loans and solid economic growth forecasts in which Erste operates.

>>>EIF and Erste: New €100 Million for Small and Medium Croatian Entrepreneurs

Operating costs increased by nearly five percent in the same period to €1.065 billion, so when the line is drawn, operating profit amounted to €586.7 million, which is two percent lower compared to the previous year.

“Employee costs have risen. Given that unemployment rates are low in most of our core markets, further pressures on these costs can be expected. Significant costs related to IT projects remain, many of which have arisen from regulatory requirements,” notes the CEO of the Austrian bank.