Erste Group Bank AG: Net profit of EUR 764.2 million in 1-9 15

NPL ratio improves to 7.4%, strong capital ratios

Vienna (pta005/06.11.2015/07:30 UTC+1) Financial data - see pdf

Highlights
January-September 2015 compared with January- September 2014; 30 September 2015 compared with 31 December 2014

Net interest income declined moderately to EUR 3,324.3 million (EUR 3,369.6 million), mainly due to the persistently low interest rate environment and expected developments in Romania and Hungary which could not be fully offset by loan growth. Net fee and commission income was stable at EUR 1,372.6 million (EUR 1,372.7 million) on the back of better results from the securities and custody business and asset management. The net trading and fair value result improved to EUR 193.0 million (EUR 166.5 million). Operating income declined marginally to EUR 5,090.9 million (-0.5%; EUR 5,117.5 million). General administrative expenses rose to EUR 2,852.4 million (EUR 2,783.7 million). This resulted in a decline of the operating result to EUR 2,238.5 million (-4.1%; EUR 2,333.8 million). The cost/income ratio amounted to 56.0% (54.5%).

Net impairment loss on financial assets not measured at fair value through profit or loss declined significantly to EUR 518.4 million or 53 basis points of average gross customer loans (-67.6%; EUR 1,599.4 million or 167 basis points), primarily due to a substantial decline in Romania but also due to a positive trend in all Austrian segments. The NPL ratio improved further to 7.4% (8.5%). The NPL coverage ratio stood at 69.2% (68.9%).

Other operating result amounted to EUR -377.4 million (EUR -1,628.6 million). The significant positive change was attributable to the non-recurrence of high negative one-off effects posted in the first nine months of 2014 (primarily intangible write-downs). Current figures already include provisions for the 2015 full-year contributions to national resolution funds expected to amount to EUR 56.2 million as well as for losses resulting from legislation requiring the conversion of customer loans (Swiss francs to euro) in Croatia in the amount of EUR 144,9 million. At EUR 187.7 million (EUR 208.7 million), banking and financial transaction taxes were again significant: EUR 95.6 million (EUR 95.3 million) in Austria, EUR 17.5 million (EUR 31.5 million) in Slovakia and EUR 74.6 million (EUR 81.8 million) in Hungary (including the full Hungarian banking tax of EUR 46.2 million for 2015).

Due to the good risk development at the Savings Banks and the turnaround in Romania, the minority charge was high at EUR 275.0 million (EUR 94.6 million). The net result attributable to owners of the parent rose to EUR 764.2 million (EUR -1,424.6 million).

Total equity (IFRS) rose to EUR 14.4 billion (EUR 13.4 billion). Including the half year interim profit and deducting risk costs of the third quarter of 2015, common equity tier 1 capital (CET1, Basel 3 phased-in) increased to EUR 11.6 billion (EUR 10.6 billion), total eligible own funds (Basel 3 phased-in) amounted to EUR 16.9 billion (EUR 15.8 billion). Total risk, i.e. risk-weighted assets including credit, market and operational risk (Basel 3 phased-in) decreased to EUR 100.4 billion (EUR 100.6 billion). The common equity tier 1 ratio (CET1, Basel 3 phased-in) stood at 11.5% (10.6%), the total capital ratio (Basel 3 phased-in) at 16.8% (15.7%).

Total assets rose to EUR 201.2 billion (EUR 196.3 billion), driven mainly by the increase in customer lending volume with loans and receivables to customers (net) rising to EUR 124.5 billion (EUR 120.8 billion). Within liabilities, customer deposits increased to EUR 125.4 billion (EUR 122.6 billion). The loan-to-deposit ratio stood at 99.3% (98.6%).

Outlook

Operating environment anticipated to be conducive to credit expansion. Real GDP growth in 2015 is expected to be between 2% and 4% in all major CEE markets, except Croatia, driven by solid domestic demand. For Austria, a real GDP growth below 1% is forecast.

Return on tangible equity (ROTE) expected at approximately 10% in 2015. Operating result is expected to decline in the mid-single digits while loan growth in the low single digits is anticipated. The risk costs guidance of EUR 750-950 million reflects the accounting treatment of Croatian CHF conversion costs of EUR 144.9 million in other operating result. Banking levies are expected at about EUR 320 million, including parallel contributions to national as well as European bank resolution and deposit insurance funds. Related discussions with the Austrian government are still ongoing.

Return on tangible equity (ROTE) expected at 10-11% in 2016.

Risks to guidance. Consumer protection initiatives or geopolitical risks that could have negative economic impacts.

Presentation of results via audio webcast and telephone conference for portfolio managers and analysts

Date Friday 6 November 2015
Time 9:00 Vienna / 8:00 London / 3:00 New York
The presentation will be held in English.
Live audio webcast http://www.erstegroup.com/investorrelations (slide presentation)

Dial-in for analysts UK: +44 (0)20 3427 1909, 0800 279 4992
US : +1 646 254 3388, 1877 280 1254
Confirmation Code 1378074

Replay Will be available at http://www.erstegroup.com/en/Investors/Webcasts-Videos.

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Emitter:	Erste Group Bank AG Milchgasse 1 1010 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+ 43 (0)5 0100 - 17741
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)