Erste Group´s Q1 2011 results
Erste Group increases Q1 2011 net profit to EUR 260.6 million on lower risk costs, despite negative impact from banking taxes.
- Net interest income amounted to EUR 1,295.7 million in the first quarter 2011 (-2.1% versus Q1 2010). This was in part due to a slight decrease in the net interest margin to 2.88% (versus 3.03% in Q1 2010), which was attributable to a marginally changed balance sheet structure, as well as continued low market interest rates.
- Net commission income grew by 2.1% to EUR 481.2 million in the first quarter of 2011, driven by increased fees from securities business and payment transfers.
- The net trading result remained flat at EUR 139.7 million (-1.1%).
- Operating expenses: On the back of ongoing tight cost control and despite rising inflation, operating expenses remained stable in the first quarter 2011 at EUR 963.0 million (+1.0%, currency-adjusted +0.3%). This resulted in a cost/income ratio of 50.2% (compared to Risk costs declined by 13.4% from EUR 531.2 million (164 basis points of average customer loans) in Q1 2010 to EUR 460.1 million or 138 bps, respectively, in the first quarter of 2011. This development was primarily due to the gradual economic recovery − albeit at different pace in various countries − in Central and Eastern Europe. The NPL ratio in relation to customer loans remained stable at 7.7% at the end of the first quarter of 2011 (year-end 2010: 7.6%). The NPL coverage ratio improved to 61.4%, compared to 60.0% at year-end 2010.49.2% in Q1 2010).
- Net profit after minorities rose to EUR 260.6 million in the first quarter of 2011, up 2.1% year-onyear. In light of the extraordinary charges of EUR 47.9 million (pre-tax) for banking taxes in Austria and Hungary, this was a very satisfactory performance.
- The loan-to-deposit ratio continued to improve, 111.4% at 31 March 2011 (31 December 2010: 113.4%), driven by increased customer deposits (+1.9% to EUR 119.2 billion) with loan demand remaining subdued. Otherwise, the growth in total assets, up 3.7% to EUR 213.5 billion, was principally related to higher interbank business volumes in the first quarter of 2011.
- Erste Group's shareholders' equity2 improved further in the first quarter 2011 to EUR 14.1 billion, mainly due to the increased net profit. In line with the still moderate loan growth, risk-weighted assets remained flat at EUR 119.8 billion versus year-end 2010. Prior to the inclusion of retained earnings, this resulted in a tier 1 ratio (total risk) of 10.4%, compared to 10.2% at year-end 2010 and a core tier 1 ratio (total risk) of 9.4% (year-end 2010: 9.2%).
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