Erste Group doubles profit and increases dividend

Austria’s largest bank earned more than expected last year at 1.92 billion euros. The Ukraine conflict is currently leaving incalculable consequences on the continent, says CEO Bernd Spalt.

Austria’s largest bank, Erste Group, does not see itself directly affected by the war in Ukraine. The money house has no subsidiaries in Russia, Ukraine or Belarus and the credit exposure to other countries is insignificant, Erste Group said on Monday when it published its financial year figures. The institute assumes that no noteworthy additional risk provisions will be necessary. The proportion of bad loans (NPL ratio) should remain below 3.0 percent.

“The latest developments surrounding Russia’s war with Ukraine shock everyone who believes in the European idea of ​​peace, democracy and prosperity,” said bank boss Bernd Spalt. “The conflict is currently leaving incalculable consequences on the continent – politically, economically but above all in humanitarian terms.” Although Russia’s economic role as an export market for the countries of Central Europe has steadily decreased over the past few years, most countries are still dependent on imports of Russian energy sources.

CFO Stefan Dörfler believes that Erste Group, which is active in many Eastern European countries, is well positioned to master the current challenges. “We have a proven business model, a strong presence in the dynamic economies of Central Europe and are solidly capitalized,” said the manager.

In the past financial year, Erste Group was able to more than double its bottom line profit to EUR 1.92 billion after EUR 783.1 million in the same period of the previous year. The operating result climbed by 17.1 percent to 3.44 billion euros. The bank thus slightly exceeded the expectations of the analysts it surveyed, who had expected an average net profit of 1.86 billion euros. As previously announced, shareholders can expect a higher dividend of EUR 1.60 per share.

Net interest income increased by 4.2 percent to EUR 5.0 billion in 2021. Net commission income increased by 16.5 percent to EUR 2.3 billion. The expense ratio – the ratio of costs to income – decreased to 55.6 percent after 59.0 percent in the same period of the previous year. The bank’s Common Equity Tier 1 (CET1) ratio rose to 14.5 (14.2) percent. For the current financial year, Erste Group expects credit growth in the mid-single digits. Net fee and commission income is targeted to increase in the low to mid single digits.

(APA/Reuters)

–