VIENNA-Austria's largest bank by assets Erste Group Bank AG's
(EBS.VI) said Thursday that its first-quarter net profit soared
after a balance sheet clean up in 2014.
In the first three months of the year, net profit increased to
225.8 million euros ($254.2 million) from EUR103.3 million a year
ago, beating analysts" expectations.
Earnings were buoyed by improved risk provisioning, which
decreased 50% to EUR183.1 million, down from EUR364.2 million. The
decrease was mainly due to an improved macroeconomic environment in
Romania. Net interest income however fell 2.3% to EUR1.10 billion,
down from EUR1.12 billion a year ago, due to the continued low
interest-rate environment and lower loan volumes in Hungary and
Romania. Erste Group's net trading and fair value result increased
to EUR72.4 million, up from EUR50.4 million the year prior, can be
attributed to one-off events such as valuation results for
financial liabilities in the Czech Republic, the bank said. Erste
Group's core equity tier one ratio-a measure of a bank's capital
buffers-decreased slightly in the first quarter to 10.5%, down from
10.6% a year ago.
In a poll conducted by The Wall Street Journal, analysts had
expected net profit to reach EUR176 million and net interest income
to decrease to EUR1.11 billion.
Erste Group also confirmed its 2015 earnings forecast. The bank
expects the environments in its markets to be conducive to credit
expansion. Erste Group sees loan growth in the low single digits in
2015 and risk costs declining to around EUR1.0 billion to EUR1.2
billion. The bank expects its return on tangible equity to be
between 8% and 10% in 2015 and its operating result to decline to
the mid-single digits.
-Write to Nicole Lundeen at nicole.lundeen@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
