Erste Group Bank AG
by Thomas Sommerauer/Simone Pilz
Company announcement for the Vienna capital market (pta/October 31, 2024/07:30) – Comparison of financial figures Income statement in EUR million Q3 23 Q2 24 Q3 24 1-9 23 1-9 24 Net interest income 1,861 1,835 1,903 5,422 5,591 Net commission income 663 711 735 1,938 2,158 Trading result & gains/losses from financial instruments FVPL 113 109 110 320 358 Operating income 2,692 2,734 2,798 7,853 8,319 Operating expenses -1,202 -1,265 -1,262 -3,675 -3,809 Operating result 1 ,489 1,468 1,536 4,178 4,510 Result from impairment of financial instruments -156 -31 -86 -128 -211 Operating result after value adjustments 1,333 1,437 1,451 4,051 4,299 Profit for the period attributable to owners of the parent company 820 846 886 2,310 2,516 Interest margin (on average interest-bearing assets) 2.50% 2.43% 2.45% 2.50% 2, 46% cost -Earnings ratio 44.7% 46.3% 45.1% 46.8% 45.8% Value adjustment ratio (on average customer loans, gross) 0.30% 0.06% 0.16% 0.08% 0, 13% Tax rate 18.0% 21.0% 20.5% 18.0% 20.5% Return on equity 17.7% 16.1% 18.2% 16.7% 16.7% Balance sheet in EUR million Sep 23 Jun 24 Sep 24 Dec 23 Sep 24 Cash and balances 31,922 26,231 23,972 36,685 23,972 Trading & financial assets 63,504 64,161 68,446 63,690 68,446 Loans and loans to credit institutions 28,094 34,966 3 3,212 21,432 33,212 Loans and advances to customers 206,153 211,276 213,462 207,828 213,462 Intangible assets 1,313 1,282 1,277 1,313 1,277 Other assets 6,175 6,225 6,160 6,206 6,160 Total assets 337,161 344,141 346,529 337,155 346,529 Financial liabilities – Held for Trading 2,428 2,003 1,770 2,304 1 ,770 Deposits from credit institutions 23,223 17,484 16,889 22,911 16,889 Deposits from customers 235,773 240,238 239,734 232,815 239,734 Securitized liabilities 41,089 47,917 51,265 43,759 51,265 Others Liabilities 6,961 7,527 6,759 6,864 6,759 Total equity 27,687 28,973 30,112 28,502 30,112 Total liabilities and equity 337,161 344,141 346,529 337,155 346,529 87.4% 87.9% 89.0% 89.3% 89.0% NPL Ratio 2.0% 2.4% 2.4% 2.3% 2.4% NPL coverage ratio (AC loans, without collateral) 96.7% 80.6% 78.7% 85.1% 78.7 % Texas quota 15.1% 17.6% 17.4% 16.6% 17.4% CET1 quota (final) 14.5% 15.5% 15.1% 15.7% 15.1% HIGHLIGHTS Income statement figures: 1-9 2024 compared to 1-9 2023 Balance sheet figures: September 30, 2024 compared to December 31, 2023 Net interest income rose to EUR 5,591 million in all core markets except Austria due to the higher loan volume and lower interest expenses from customer deposits ( +3.1%; EUR 5,422 million). Net commission income increased to EUR 2,158 million (+11.4%; EUR 1,938 million). There was growth in all core markets, particularly in payment services and asset management. The trading result increased to EUR 428 million (EUR 337 million), the item gains/losses from financial instruments, recognized at fair value through profit or loss, deteriorated to EUR -70 million (EUR -18 million). The development of both positions was mainly due to valuation effects. Operating income increased to EUR 8,319 million (+5.9%; EUR 7,853 million). Administrative expenses increased to EUR 3,809 million (+3.7%; EUR 3,675 million). Due to salary increases, personnel expenses rose to EUR 2,318 million (+5.6%; EUR 2,195 million). Material expenses rose to EUR 1,086 million (+2.3%; EUR 1,062 million). While the contributions to deposit protection systems recorded in material expenses – almost entirely booked for 2024 – decreased to EUR 72 million (EUR 119 million), IT expenses increased to EUR 451 million (EUR 403 million). Depreciation amounted to EUR 405 million (-2.9%; EUR 417 million). Overall, the operating result rose significantly to EUR 4,510 million (+7.9%; EUR 4,178 million), the cost-income ratio improved to 45.8% (46.8%). The result from impairments of financial instruments amounted to EUR -211 million or 13 basis points of the average gross customer loan portfolio (EUR 128 million or 8 basis points). Additions to value adjustments for loans and advances were made primarily in Austria. Receipts from written-off receivables (also particularly in Austria) had a positive effect. The NPL ratio based on gross customer loans increased slightly to 2.4% (2.3%). The NPL coverage ratio (excluding collateral) fell to 78.7% (85.1%). Other operating income amounted to EUR -289 million (EUR -327 million). This includes the allocation of a provision in connection with the interbank exemption in accordance with Section 6 Paragraph 1 Item 28 (2nd sentence) UStG in the amount of EUR 90 million. This exemption could be classified as aid incompatible with Union law by the European Court of Justice or the European Commission and could be reclaimed. The expenses for annual contributions to resolution funds already recorded for the entire year 2024 fell significantly to EUR 28 million (EUR 113 million), as no regular contributions will be collected in the Eurozone in 2024. Bank levies were paid in four core markets. Other operating income includes EUR 194 million (EUR 148 million), of which EUR 137 million (EUR 119 million) was attributable to Hungary. The bank tax in Austria was EUR 30 million (EUR 29 million), in Romania it was EUR 27 million (newly introduced in 2024). The bank tax in Slovakia of EUR 74 million is recorded under taxes on income. Taxes on income amounted to EUR 817 million (EUR 670 million). The result for the period attributable to non-controlling interests decreased to EUR 653 million (EUR 741 million) due to the lower profitability of the savings banks. The profit for the period attributable to the owners of the parent company increased to EUR 2,516 million (EUR 2,310 million) thanks to the strong operating result and the improved other operating income. Total equity adjusted for AT1 capital increased to EUR 27.4 billion (EUR 26.1 billion). After applying the deductions and filters specified in the Capital Requirements Regulation (CRR), the Common Equity Tier 1 capital (CET1, final) was EUR 23.6 billion (EUR 22.9 billion), the total regulatory capital (final) was EUR 29.9 billion ( EUR 29.1 billion). The calculation took into account the interim profit for the first half of the year, but not that for the third quarter. Total risk (risk-weighted assets), which includes credit, market and operational risk, increased to EUR 155.9 billion (EUR 146.5 billion). The common equity Tier 1 capital ratio (CET1 ratio, final) was 15.1% (15.7%) and the total capital ratio was 19.2% (19.9%). Total assets rose to EUR 346.5 billion (+2.8%; EUR 337.2 billion). On the assets side, cash and balances fell to EUR 24.0 billion (EUR 36.7 billion), loans to banks increased – especially in Austria and the Czech Republic – to EUR 33.2 billion (EUR 21.4 billion). Customer loans have increased since the end of the year to EUR 213.5 billion (+2.7%; EUR 207.8 billion). On the liabilities side, there was a decline in deposits from credit institutions to EUR 16.9 billion (EUR 22.9 billion). Customer deposits rose to EUR 239.7 billion (+3.0%; EUR 232.8 billion), particularly in the Czech Republic and Romania. The loan-to-deposit ratio was 89.0% (89.3%). OUTLOOK Based on the good business development in the first nine months of 2024, Erste Group is again raising its outlook for 2024 and is aiming for a return on equity (ROTE) of over 16% (instead of over 15%). The net result, which is expected to be better than previously expected, should result primarily from higher net interest income, for which we forecast an increase of more than 2% for the full year compared to 2023 (rather than remaining approximately the same). The reasons for this are positive effects of interest rate adjustments on customer deposits and fixed-rate loans, expected credit growth of around 5% (unchanged) and higher returns from the bond portfolio, which together are expected to more than offset the negative effects of central banks’ interest rate cuts. The forecasts for net commission income (around 10% above that of 2023) and cost developments (an increase of around 5% compared to the previous year) remain unchanged. This should also improve the cost-income ratio; we expect a value of around 48% or less. As before, we expect risk costs of less than 20 basis points of average customer loans (gross), as expectations for economic development in our core markets have remained broadly unchanged, despite a range for expected GDP growth of around 0 to 4% . Risk factors for the forecast include (geo-)political and economic (e.g. effects of monetary and fiscal policy) developments, regulatory measures and changes in the competitive environment. International (military) conflicts such as the war in Ukraine and the Middle East have no direct impact on Erste Group as it does not operate in these regions. However, indirect effects, such as volatility on the financial markets, the impact of sanctions, interruptions in supply chains or the occurrence of deposit insurance or resolution events, cannot be ruled out. Erste Group is also exposed to non-financial and legal risks that can occur regardless of the economic environment. A worse-than-expected economic development may also require a goodwill write-down. (End) Sender: Erste Group Bank AG Address: Am Belvedere 1, 1100 Vienna Country: Austria Contact person: Thomas Sommerauer/ Simone Pilz Tel.: +43 (0)50100-17326 Email: [email protected] Website : www.erstegroup.com ISIN(s): AT0000652011 (share) Stock exchanges: Official trading in Vienna Other trading venues: Bucharest Stock Exchange, Prague Stock Exchange © pressetext Nachrichtenagentur GmbH Mandatory announcements and financial news transmitted by pressetext. Archive: . The sender is responsible for the content of the message. Contact for inquiries: [email protected] or +43-1-81140-300.
