Erste Group - Preliminary results 2018

P&L 2018 compared with 2017; balance sheet as of 31 December 2018 compared with 31 December 2017

Net interest income increased – mainly in the Czech Republic and in Romania, but also in Austria – to EUR 4,582.0 million (+5.3%; EUR 4,353.2 million). Net fee and commission income rose to EUR 1,908.4 million (+3.1%; EUR 1,851.6 million), primarily on the back of significantly higher income from payment services and asset management. While net trading result was down at EUR -1.7 million (EUR 222.8 million), the line item gains/losses from financial instruments measured at fair value through profit or loss improved to EUR 195.4 million (EUR -12.3 million). Operating income rose to EUR 6,915.6 million (+3.7%; EUR 6,669.0 million). General administrative expenses were nearly stable at EUR 4,181.1 million (+0.5%; EUR 4,158.2 million). This was mostly attributable to the reduction of other administrative expenses to EUR 1,234.9 million (-5.7%; EUR 1,309.6 million). Payments to deposit insurance systems included in this line item amounted to EUR 88.6 million (EUR 82.8 million). This reduction almost fully compensated the rise in personnel expenses to EUR 2,474.2 million (+3.6%; EUR 2,388.6 million) and in depreciation and amortisation (+2.6%). Overall, the operating result improved to EUR 2,734.6 million (+8.9%; EUR 2,510.8 million) and the cost/income ratio to 60.5% (62.4%).

The impairment result from financial instruments amounted to EUR 59.3 million due to net releases on the back of improved asset quality or, adjusted for net allocation of provisions for commitments and financial guarantees given, -14 basis points of average gross customer loans (net allocations of EUR 132.0 million or 9 basis points). This was attributable to the substantial improvement in net allocations to risk provisions for the lending business across almost all segments, most notably in Croatia and Austria. The NPL ratio based on gross customer loans improved again to 3.2% (4.0%), the NPL coverage ratio to 73.0% (68.8%).

Other operating result improved to EUR -304.5 million (EUR -457.4 million). It included expenses for the annual contributions to resolution funds in the amount of EUR 70.3 million (EUR 65.8 million). Banking and transaction taxes increased to EUR 112.2 million (EUR 105.7 million. Other taxes were positive at EUR 1.0 million (EUR -37.7 million) due to one-off effects. In the financial year 2017, other operating result had included EUR 45.0 million in provisions for losses from loans to consumers resulting from supreme court rulings regarding negative reference interest rates in Austria.

Taxes on income decreased significantly to EUR 332.4 million (EUR 410.1 million) as deferred tax assets were recognised, resulting in deferred tax income. The minority charge increased to EUR 369.1 million (+5.0%; EUR 351.5 million). The net result attributable to owners of the parent rose to EUR 1,793.4 million (+36.3%; EUR 1.316.2 million).

Total equity not including AT1 instruments rose to EUR 17.9 billion (EUR 17.3 billion). Transition to the new financial reporting standard IFRS 9 as of 1 January 2018 resulted in a reduction of total equity by EUR 0.7 billion. After regulatory deductions and filtering in accordance with CRR, common equity tier 1 capital (CET1, Basel 3 phased-in) amounted to EUR 15.5 billion (+5.3%; EUR 14.7 billion), total own funds (Basel 3 phased in) to EUR 20.9 billion (EUR 20.3 billion). Total risk (risk-weighted assets including credit, market and operational risk, Basel 3 phased-in) rose to EUR 114.6 billion (EUR 110.0 billion). The common equity tier 1 ratio (CET 1, Basel 3 phased-in) stood at 13.5% (13.4%), the total capital ratio (Basel 3 phased-in) at 18.2% (18.5%).

Total assets were up at EUR 236.8 billion (+7.3%; EUR 220.7 billion). On the asset side, cash and cash balances decreased to EUR 17.5 billion (EUR 21.8 billion), while loans and advances to credit institutions increased to EUR 19.1 billion (EUR 9.1 billion). Loans and advances to customers rose to EUR 149.3 billion (+7.0%; EUR 139.5 billion). On the liability side, deposits from banks increased to EUR 17.7 billion (EUR 16.3 billion) and customer deposits grew again – in all core markets – to EUR 162.6 billion (+7.7%; EUR 151.0 billion). The loan-to-deposit ratio stood at 91.8% (92.4%).

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