Erste Group Bank AG: Preliminary results 2023

Net profit of EUR 2,998 million in 2023; proposed dividend of EUR 2.7 per share

Vienna (pta006/29.02.2024/07:30 UTC+1)

Financial data

HIGHLIGHTS

P&L 2023 compared with 2022; balance sheet 31 December 2023 compared with 31 December 2022

Net interest income increased significantly to EUR 7,228 million (+21.5%; EUR 5,951 million), most strongly in Austria, on the back of higher market interest rates as well as larger loan volume. Net fee and commission income rose to EUR 2,640 million (+7.6%; EUR 2,452 million). Growth was registered across all core markets, most notably in payment services but also in asset management and in lending. Net trading result improved to EUR 754 million (EUR -779 million); the line item gains/losses from financial instruments measured at fair value through profit or loss declined to EUR -306 million (EUR 731 million). The development of these two line items was mostly attributable to valuation effects. Operating income increased to EUR 10,552 million (+23.1%; EUR 8,571 million). General administrative expenses were up at EUR 5,020 million (+9.7%; EUR 4,575 million). Personnel expenses rose to EUR 2,991 million (+12.1%; EUR 2,668 million) driven by salary increases. The rise in other administrative expenses to EUR 1,468 million (+8.3%; EUR 1,356 million) was primarily due to higher IT and marketing expenses. Contributions to deposit insurance schemes included in other administrative expenses declined to EUR 114 million (EUR 143 million), most notably in Hungary (where in the comparable period of 2022, the Sberbank Europe deposit insurance case had resulted in higher expenses). Amortisation and depreciation amounted to EUR 560 million (+1.7%; EUR 551 million). Overall, the operating result increased markedly to EUR 5,532 million (+38.4%; EUR 3,996 million). The cost/income ratio improved to 47.6% (53.4%)

The impairment result from financial instruments amounted to EUR -128 million or 6 basis points of average gross customer loans (EUR -300 million or 15 basis points). Net allocations to provisions for loans and advances were posted in all core markets, with the exception of Croatia and Hungary. Positive contributions came from net releases of provisions for commitments and guarantees as well as from income from the recovery of loans already written off (in both cases most notably in Austria). The NPL ratio based on gross customer loans deteriorated slightly to 2.3% (2.0%). The NPL coverage ratio (excluding collateral) also slipped to 85.1% (94.6%).

Other operating result amounted to EUR -468 million (EUR -399 million). Expenses for annual contributions to resolution funds declined (most notably in Austria and the Czech Republic) to EUR 113 million (EUR 139 million). Banking levies – currently payable in two core markets – were lower at EUR 183 million (EUR 187 million). Thereof, EUR 137 (EUR 124 million) were charged in Hungary. In Austria, banking tax declined to EUR 46 million (EUR 63 million). Valuation effects had an adverse impact on other operating result.

Taxes on income amounted to EUR 874 million (EUR 556 million). The rise in the minority charge to EUR 923 million (EUR 502 million) was attributable to significantly better results from the savings banks – primarily due to higher net interest income. The net result attributable to owners of the parent rose to EUR 2,998 million (EUR 2,165 million) on the back of the strong operating result and low risk costs.

Total equity not including AT1 instruments rose to EUR 26.1 billion (EUR 23.1 billion). After regulatory deductions and filtering in accordance with the CRR, common equity tier 1 capital (CET1, final) rose to EUR 22.9 billion (EUR 20.4 billion), as were total own funds (final) to EUR 29.1 billion (EUR 26.2 billion). Total risk – risk-weighted assets including credit, market and operational risk (CRR, final) – increased to EUR 146.5 billion (EUR 143.9 billion). The common equity tier 1 ratio (CET1, final) improved to 15.7% (14.2%), the total capital ratio rose to 19.9% (18.2%).

Total assets increased to EUR 337.2 billion (+4.1%; EUR 323.9 billion). On the asset side, cash and cash balances increased to EUR 36.7 billion (EUR 35.7 billion), loans and advances to banks rose to EUR 21.4 billion (EUR 18.4 billion), most notably in Austria and the Czech Republic. Loans and advances to customers rose to EUR 207.8 billion (+2.8%; EUR 202.1 billion) with both retail and corporate loan volumes up. On the liability side, deposits from banks declined to EUR 22.9 billion (EUR 28.8 billion). Customer deposits rose in nearly all core markets – most strongly in Austria and the Czech Republic – to EUR 232.8 billion (+3.9%; EUR 224.0 billion). The loan-to-deposit ratio stood at 89.3% (90.2%).

OUTLOOK 2024

Erste Group's goal for 2024 is to achieve a return on tangible equity (ROTE) of about 15%. Three key factors will support achievement of this goal: firstly, a moderate improvement in economic growth compared to 2023 in Erste Group's seven core markets (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia and Serbia) despite continued geopolitical risks, which, should they materialise, would likely negatively impact economic performance; secondly, a continued broadly positive, even if slightly deteriorating credit risk environment; and, finally, the continuous ability of Erste Group to attract new and retain existing customers through continuous development of its product portfolio and its brand. The key headwind to achievement of this goal is the magnitude and timing of the expected central bank rate cuts in all of Erste Group's markets. Overall, Erste Group expects a slight decline in operating result, which hit a historic high in 2023, and, consequently, a moderate deterioration in the cost/income ratio to a level of about 50%, also from a historic best in 2023 of 47.6%.

The expectation by economists is for Erste Group's core markets to post improved real GDP growth in 2024. Inflationary pressures are expected to continue their downward trend in 2024. Continued strong labour markets should be supportive of economic performance in all of Erste Group's markets. Current account balances are projected to remain at sustainable levels in most countries, while fiscal deficits should continue their path of consolidation. Public debt to GDP in all Erste Group markets is projected to be broadly stable, and hence remain materially below the euro zone average.

Against this backdrop, Erste Group expects net loan growth of about 5%. Retail and corporate business should contribute in all markets towards the achievement of this goal. Loan growth is projected to offset some of the interest rate headwinds detailed above, resulting in a moderate, decline of about 3% in net interest income versus 2023, following a historic upswing over the past two years. The second most important income component – net fee and commission income – is expected to rise by about 5%. As in 2023, growth momentum should again come from payment services, insurance brokerage fees as well as asset management and securities business with the latter being dependent on a constructive capital markets environment. The net trading and fair value result, which recovered significantly in 2023, is expected to normalise at historically observed levels in 2024. This, however, will depend substantially on the actual short- and long-term interest rate environment.

The remaining income components are forecast to remain, by and large, stable. Overall, operating income is therefore expected to decrease slightly in 2024, albeit from a historic high in 2023. Operating expenses are expected to rise by approximately 5%. With this the cost/income ratio should remain at a solid level of about 50%.

Based on the macro-outlook presented above, risk costs should remain at a low level in 2024. While precise forecasting is hard at current low risk cost levels, Erste Group believes that in 2024 risk costs will be below 25 basis points of average gross customer loans.

While a forecast for other operating result and various categories of gains and losses from financial instruments not measured at fair value is challenging, this combined item is likely to improve versus 2023 in the absence of significant one-off effects. Assuming an effective group tax rate of below 20% and lower minority charges compared to 2023, Erste Group aims to achieve a ROTE of about 15% in 2024. The CET1 ratio is expected to remain strong, providing enhanced capital return and/or M&A flexibility, despite Erste Group targeting the execution of a share buyback in the amount of EUR 500 million in 2024.

Potential risks to the guidance include (geo)political and economic (including monetary and fiscal policy impacts) developments, regulatory measures as well as changes to the competitive environment. International (military) conflicts, such as the war in Ukraine and in the Mid East do not impact Erste Group directly, as it has no operating presence in the regions involved. Indirect effects, such as financial markets volatility, sanctions-related knock-on effects, supply chain disruptions or the emergence of deposit insurance or resolution cases cannot be ruled out, though. Erste Group is moreover exposed to non-financial and legal risks that may materialise regardless of the economic environment. Worse than expected economic development may put goodwill at risk.

PERFORMANCE IN DETAIL

January-December 2023 compared with January-December 2022

Net interest income

Net interest income rose significantly both in the retail and in the corporate business. This marked increase was due to higher market rates most notably in Austria, Hungary, Croatia and Romania as well as higher loan volumes in nearly all core markets. In the Czech Republic, net interest income was negatively impacted by higher interest expense on deposits and slow repricing of retail loans. The net interest margin (calculated as the annualised sum of net interest income, dividend income and net result from equity method investments over average interest-bearing assets) widened markedly to 2.50% (2.21%).

Net fee and commission income

Growth was achieved across all core markets and nearly all fee and commission categories. Significant rises were recorded most notably in payment services in nearly all segments, with the exception of Serbia, driven by a larger number of transactions as well as repricing. Income from asset management and lending continued its positive trend.

Net trading result & gains/losses from financial instruments measured at fair value through profit or loss

Net trading result as well as the line item gains/losses from financial instruments measured at fair value through profit or loss are materially affected by the fair value measurement of debt securities issued. The related valuation is shown in the fair value result, the valuation of corresponding hedges in the net trading result.

Net trading result turned positive to EUR 754 million (EUR -779 million) due to valuation effects resulting from interest rate moves in the securities and derivatives business as well as higher income from foreign currency transactions. Gains/losses from financial instruments measured at fair value through profit or loss trended in the opposite direction and deteriorated to EUR -306 million (EUR 731 million). While the valuation of debt securities in issue resulted in losses, gains were posted from the valuation of the loan portfolio measured at fair value in Hungary as well as from the valuation of the securities portfolio in Austria (in the Savings Banks segment).

General administrative expenses

Personnel expenses increased in all core markets – most significantly in Austria, the Czech Republic and Romania – driven mostly by higher collective salary agreements. The increase in other administrative expenses was primarily attributable to higher IT, marketing and office-related expenses. By contrast, contributions to deposit insurance schemes declined to EUR 114 million (EUR 143 million). In Hungary, expenses dropped to EUR 5 million (EUR 18 million) as contributions in the comparative period had been higher due to a deposit insurance case (Sberbank Europe). In Austria, contributions declined to EUR 68 million (EUR 80 million), in Slovakia to EUR 2 million (EUR 10 million). The cost/income ratio improved to 47.6% (53.4%).

Headcount as of end of the period

Gains/losses from derecognition of financial instruments not measured at fair value through profit or loss

Gains/losses from derecognition of financial instruments not measured at fair value through profit or loss amounted to EUR 141 million (EUR 75 million). This includes most notably negative results from the sale of securities in Austria.

Impairment result from financial instruments

The impairment result from financial instruments amounted to EUR -128 million (EUR -300 million). Net allocations to provisions for loans and advances declined to EUR 264 million (EUR 336 million), primarily on the back of releases in Romania. Positive contributions came from income from the recovery of loans already written off, most notably in Austria, the Czech Republic and Croatia, in the amount of EUR 80 million (EUR 82 million) as well as from net releases of provisions for loan commitments and financial guarantees in the amount of EUR 70 million (net allocations of EUR 28 million).

Other operating result

Other operating result is significantly affected by contributions to resolution funds and taxes and levies on banking activities. Contributions to resolution funds declined in all markets to EUR 113 million (EUR 139 million). The most notable decline was recorded in Austria, to EUR 65 million (EUR 74 million). Taxes and levies on banking activities were lower at EUR 183 million (EUR 187 million). Thereof, EUR 46 million (EUR 63 million) were payable by Austrian entities. In Hungary, banking levies rose to a total of EUR 137 million (EUR 124 million): in addition to regular Hungarian banking tax of EUR 17 million (EUR 15 million), a windfall tax based on the previous year's net revenues was posted in the amount of EUR 48 million (EUR 50 million). Financial transaction tax amounted to EUR 71 million (EUR 59 million). The balance of allocations/releases of other provisions deteriorated to EUR -23 million (EUR 46 million). In addition, impairment losses on tangible and intangible assets were recognised in the amount of EUR 70 million (EUR 44 million).

FINANCIAL RESULTS – QUARTER-ON-QUARTER COMPARISON

Fourth quarter of 2023 compared to third quarter of 2023

Net interest income declined by 3.0%, mainly due to increased interest expense on customer deposits in Austria and modification losses related to government-imposed interest rate caps in Hungary and Serbia. Net fee and commission income was up 5.9%. While income from payment services, brokerage and asset management increased, income from securities business declined.

Net trading result improved primarily due to positive valuation effects resulting from the development of interest rates in securities and derivatives trading as well as higher income from foreign currency transactions. Gains/losses from financial instruments measured at fair value through profit or loss deteriorated primarily on the back of valuation losses of debt securities in issue driven by market rate developments.Gains from the valuation of the loan portfolio measured at fair value in Hungary increased to EUR 32 million (EUR 29 million). The securities portfolio in Austria (Savings Banks segment) was likewise up on the third quarter.

General administrative expenses rose by 11.9%. Personnel expenses were 8.1% higher, primarily due to seasonal bonus provisions. The increase in other administrative expenses (+25.5%) was mainly attributable to higher marketing costs in Austria. The cost/income ratio stood at 49.8% (44.7%).

Gains/losses from derecognition of financial instruments not measured at fair value through profit or loss amounted to EUR -138 million (EUR -5 million). This includes losses from the sale of securities in Austria, Hungary and Croatia.

The improvement in the impairment result from financial instruments was attributable in particular to lower allocations to provisions for credit risks in Austria, Romania and Hungary as well as net releases of provisions for loan commitments and guarantees.

Other operating result deteriorated. Taxes and levies on banking activities amounted to EUR 36 million (EUR 27 million). Thereof, EUR 18 million (EUR 18 million) were charged in Hungary. In Austria, banking tax amounted to EUR 17 million (EUR 9 million). In the fourth quarter, allocations to provisions for legal risks in several core markets resulted in expenses of EUR 39 million (EUR 2 million). Additional adverse impacts came from the write-down of computer software and licenses.

DEVELOPMENT OF THE BALANCE SHEET

31 December 2023 compared with 31 December 2022

Cash and cash balances amounted to EUR 36.7 billion (EUR 35.7 billion). Trading and investment securities held in various categories of financial assets increased to EUR 63.7 billion (EUR 59.8 billion).

Loans and advances to credit institutions (net), including demand deposits other than overnight deposits, grew – primarily in Austria and in the Czech Republic – to EUR 21.4 billion (EUR 18.4 billion). Loans and advances to customers (net) increased to EUR 207.8 billion (EUR 202.1 billion), most notably due to organic growth in Slovakia and Croatia as well as inorganic growth in the Czech Republic. Both retail and corporate loan volumes increased.

Loan loss allowances for loans to customers were nearly unchanged at EUR 4.1 billion (EUR 4.0 billion). The NPL ratio – non-performing loans as a percentage of gross customer loans – deteriorated slightly to 2.3% (2.0%), the NPL coverage ratio (based on gross customer loans) slipped to 85.1% (94.6%).

Financial liabilities – held for trading amounted to EUR 2.3 billion (EUR 3.3 billion). Deposits from banks, including term deposits in an amount of EUR 6.4 billion (EUR 15.6 billion) carrying amount of TLTRO III funds, declined to EUR 22.9 billion (EUR 28.8 billion); deposits from customers rose to EUR 232.8 billion (EUR 224.0 billion) due to strong growth in term deposits of financial institutions. The loan-to-deposit ratio stood at 89.3% (90.2%). Debt securities in issue increased to EUR 43.8 billion (EUR 35.9 billion).

Total assets rose to EUR 337.2 billion (EUR 323.9 billion). Total equity increased to EUR 28.5 billion (EUR 25.3 billion). This includes AT1 instruments in the amount of EUR 2.4 billion. After regulatory deductions and filtering according to the Capital Requirements Regulation (CRR) common equity tier 1 capital (CET1, CRR final) rose to EUR 22.9 billion (EUR 20.4 billion) as were total own funds (CRR final) to EUR 29.1 billion (EUR 26.2 billion). Total risk – risk-weighted assets including credit, market and operational risk (CRR final) – increased to EUR 146.5 billion (EUR 143.9 billion).

The total capital ratio, total eligible qualifying capital in relation to total risk (CRR final), rose to 19.9% (18.2%), well above the legal minimum requirement. The tier 1 ratio increased to 17.3% (15.8%), the common equity tier 1 ratio advanced to 15.7% (14.2%) (both ratios CRR final).

BUSINESS DEVELOPMENT

January-December 2023 compared with January-December 2022

The tables and information below provide a brief overview of the development in the core markets by geographical segments (operating segments) focusing on selected and summarized items. For more details please see Note 28 Segment reporting. At www.erstegroup.com/investorrelations additional information is available in Excel format.

Operating income consists of net interest income, net fee and commission income, net trading result, gains/losses from financial instruments measured at fair value through profit or loss, dividend income, net result from equity method investments and rental income from investment properties & other operating leases. The latter three listed items are not shown in the tables below. Net trading result and gains/losses from financial instruments measured at fair value through profit or loss are summarized under one position. Operating expenses correspond to the position general administrative expenses. Operating result is the net amount of operating income and operating expenses. Risk provisions for loans and receivables are included in the position impairment result from financial instruments. Other result summarizes the positions other operating result and gains/losses from financial instruments not measured at fair value through profit or loss, net. The cost/income ratio is calculated as operating expenses in relation to operating income. The return on allocated capital is defined as the net result after tax/before minorities in relation to the average allocated capital.

AUSTRIA

Erste Bank Oesterreich & Subsidiaries

The Erste Bank Oesterreich & Subsidiaries (EBOe & Subsidiaries) segment comprises Erste Bank der oesterreichischen Sparkassen AG (Erste Bank Oesterreich) and its main subsidiaries (e.g. sBausparkasse, Salzburger Sparkasse, Tiroler Sparkasse, Sparkasse Hainburg).

Net interest income increased due to higher market interest rates and higher customer loan volumes, only partially offset by higher interest expenses for repriced customer deposits and a moderate shift from current accounts to term deposits and savings accounts. Net fee and commission income rose mainly on the back of higher payment fees. Net trading result and gains/losses from financial instruments at FVPL improved on valuation effects. The increase of operating expenses was driven by higher personnel, IT and marketing expenses. The deposit insurance contribution decreased to EUR 27 million (EUR 32 million). Consequently, operating result and the cost/income ratio improved notably. Impairment result from financial instruments worsened due to negative changes in customer creditworthiness. Other result deteriorated mainly due to lower real estate selling gains. The banking tax decreased to EUR 16 million (EUR 23 million). The payment into the resolution fund decreased to EUR 16 million (EUR 17 million). Overall, the net result attributable to owners of the parent increased.

Savings Banks

The Savings Banks segment includes those savings banks which are members of the Haftungsverbund (cross-guarantee system) of the Austrian savings banks sector and in which Erste Group does not hold a majority stake but which are fully controlled according to IFRS 10. The fully or majority owned savings banks Erste Bank Oesterreich, Tiroler Sparkasse, Salzburger Sparkasse, and Sparkasse Hainburg are not part of the Savings Banks segment.

Net interest income increased due to higher market interest rates and higher customer loan volumes, only partially offset by higher interest expenses for repriced customer deposits and a moderate shift from current accounts to term deposits and savings accounts. Net fee and commission income increased mainly on the back of higher payment fees. Valuation effects led to the improvement of the net trading result and gains/losses from financial instruments at FVPL. Operating expenses increased due to higher personnel, IT and marketing expenses, partially compensated by a lower contribution to the deposit insurance fund of EUR 41 million (EUR 48 million). Consequently, operating result as well as the cost/income ratio improved notably. Impairment result from financial instruments deteriorated mainly due to negative changes in customer creditworthiness observed in the fourth quarter of 2023. Other result deteriorated due to lower real estate selling gains and higher provisions for legal cases. Banking tax decreased to EUR 5 million (EUR 18 million) due to a one-off payment in 2022. Overall, the net result attributable to the owners of the parent increased.

Other Austria

The Other Austria segment comprises the Corporates and Group Markets business of Erste Group Bank AG (Holding), Erste Group Immorent, Erste Asset Management and Intermarket Bank.

Net interest income decreased moderately due to a lower contribution of money market and interest related derivatives in Group Markets, only partially compensated by a one-off payment related to a successful restructuring case and higher customer deposit margins in the Corporates business. Net fee and commission income improved due to higher asset management fees, higher lending fees in the Corporates business and higher fees from origination business in Group Markets. Net trading result and gains/losses from financial instruments at FVPL improved on valuation effects. Overall, operating income increased. Higher operating expenses on the back of higher personnel and project related costs led to a slight increase of the cost/income ratio. The impairment result from financial instruments improved significantly; rating upgrades and recoveries as well as muted NPL inflows resulted in a net release. This was supported by improved risk parameters and reviewed criteria for collective SICR assessment (mainly for energy intensive industries). Other result improved mainly on lower level of litigation provisions, it included the resolution fund contribution of EUR 8 million (EUR 8 million). Overall, the net result attributable to owners of the parent improved.

CENTRAL AND EASTERN EUROPE

Czech Republic

The segment analysis is done on a constant currency basis. The CZK appreciated by 2.3% against the EUR in the reporting period. Net interest income in the Czech Republic segment (comprising Česká spořitelna Group) decreased on the back of higher funding costs – customer deposit repricing combined with a shift of volumes from current accounts towards term and savings deposits. The increase in net fee and commission income was mainly driven by higher securities fees as well as higher payment fees.

Valuation effects led to the reduction of net trading result and gains/losses from financial instruments at FVPL. Operating expenses increased mainly due to higher personnel as well as IT costs. Contributions into the deposit insurance fund rose to EUR 20 million (EUR 13 million). Overall, the operating result decreased, and the cost/income ratio worsened. Impairment result from financial instruments was impacted by provisions related to the newly integrated Sberbank and Hello bank portfolios, whereby risk costs related to the existing portfolio decreased. Other result improved on significantly lower selling losses from bonds. Contribution to the resolution fund decreased to EUR 32 million (EUR 39 million). Altogether, these developments led to a decline in the net result attributable to the owners of the parent.

Slovakia

Net interest income in the Slovakia segment (comprising Slovenská sporitel'ňa Group) increased due to higher customer loan volumes and higher market interest rates leading to a repricing of loans, which was only partially offset by the repricing of liabilities and higher expenses for issued bonds. Net fee and commission income increased on the back of higher income from lending, payment and insurance brokerage fees. Net trading result and gains/losses from financial instruments at FVPL decreased slightly on valuation effects. Operating expenses increased due to higher personnel and IT expenses, partially compensated by lower contributions into the deposit insurance fund of EUR 2 million (EUR 10 million). Consequently, operating result increased and the cost/income ratio improved. Impairment result from financial instruments improved due to rating upgrades for corporate customers as well as net releases driven by review of criteria for collective SICR assessment (stage overlays, mainly for energy intensive industries). Other result improved slightly due do the lower contribution to the resolution fund of EUR 4 million (EUR 6 million) and lower impairments of participations. Overall, the net result attributable to the owners of the parent increased.

Romania

The segment analysis is done on a constant currency basis. The RON depreciated by 0.3% against the EUR in the reporting period. Net interest income in the Romania segment (comprising Banca Comercială Română Group) was positively impacted by higher market interest rates combined with higher business volumes. Net fee and commission income increased mainly on higher lending fees. The decline of the net trading result and gains/losses from financial instruments at FVPL was attributable to lower trading result from bonds, money market instruments and interest rate derivatives. Operating expenses went up mainly due to higher personnel expenses, contributions to the deposit insurance fund decreased to EUR 5 million (EUR 9 million). Overall, operating result increased and the cost/income ratio improved moderately. Impairment result from financial instruments improved due to lower allocations on the back of methodological changes and net releases caused by refinancing in the fourth quarter. Other result improved mainly on lower provisions for other commitments. The contribution to the resolution fund amounted to EUR 10 million (EUR 12 million). Overall, the net result attributable to the owners of the parent increased.

Hungary

The segment analysis is done on a constant currency basis. The HUF appreciated by 2.3% against the EUR in the reporting period. Net interest income in the Hungary segment (comprising Erste Bank Hungary Group) was negatively impacted by a P&L neutral shift from net trading result to interest expense (mainly intra-group transactions) as well as modification losses related to the mortgage interest cap prolongation. These developments were only partially offset by significantly higher interest rates supported by money market placements. Net fee and commission income rose on higher payment and securities fees. Net trading result and gains/losses from financial instruments at FVPL improved due to valuation effects as well as the positive impact of the P&L neutral shift to net interest income. Operating expenses increased due to higher personnel and IT expenses, partially compensated by lower contributions into the deposit insurance fund of EUR 5 million (EUR 18 million, predominantly driven by last year's Sberbank Europe deposit insurance case). Consequently, both operating result and the cost/income ratio improved notably. Impairment result from financial instruments improved due to parameter updates. The deterioration of other result was driven by selling losses from bonds, impairment of non-financial assets, provisions for legal expenses and higher financial transaction tax of EUR 71 million (EUR 59 million), partially offset by releases of provisions for other commitments. The banking tax remained by and large stable at EUR 66 million (EUR 65 million); it included the regular banking tax and a windfall profit tax of EUR 48 million (EUR 50 million). The contribution to the resolution fund decreased to EUR 2 million (EUR 4 million). Overall, the net result attributable to the owners of the parent increased.

Croatia

Net interest income in the Croatia segment (comprising Erste Bank Croatia Group) increased due to higher market interest rates and customer loan volumes as well as higher income from securities. Net fee and commission income went up due to higher payments, securities and documentary fees. Net trading result and gains/losses from financial instruments at FVPL deteriorated driven by lower foreign currency transactions as a result of euro introduction. Operating expenses went up on the back of higher personnel and IT costs. The contribution into the deposit insurance fund rose to EUR 9 million (EUR 8 million). Overall, operating result increased and the cost/income ratio improved. Impairment result from financial instruments benefited from net releases driven by the implementation of a new rating model and parameter updates as well as review of rules for collective SICR assessment (stage overlays). Other result worsened mainly on selling losses from bonds. The resolution fund contribution decreased to EUR 0.3 million (EUR 5 million). Consequently, the net result attributable to the owners of the parent increased.

Serbia

The segment analysis is done on a constant currency basis. The Serbian Dinar (RSD) appreciated by 0.2% against the EUR in the reporting period. Net interest income in the Serbia segment (comprising Erste Bank Serbia Group) increased due to higher loan volumes and market interest rates, partially offset by a modification loss related to the newly introduced interest cap on housing loans. Net fee and commission income increased marginally. The net trading result and gains/losses from financial instruments at FVPL improved on a higher contribution of foreign currency transactions. Operating expenses rose mainly due to higher personnel and IT costs. Contributions into the deposit insurance fund amounted to EUR 5 million (EUR 5 million). Although the operating result improved, the cost/income ratio worsened. Impairment result from financial instruments improved on lower allocations driven by a review of rules for collective SICR assessment (stage overlays). Other result improved on lower provisions for legal expenses. Overall, the net result attributable to owners of the parent increased notably.

APPENDIX: Preliminary results 2023 of Erste Group Bank AG (IFRS)

Consolidated income statement

Consolidated statement of comprehensive income

Group balance sheet

Operating segments: Geographical segmentation – overview

Operating segments: Geographical area – Austria

Operating segments: Geographical area – Central and Eastern Europe

Business segments (1)

Business segments (2)

(end)

Emitter:	Erste Group Bank AG Am Belvedere 1 1100 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+43 (0)50100-17326
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)
Other Stock Exchanges:	Bucharest Stock Exchange, Prague Stock Exchange