Erste Group Bank AG

Despite net loss of EUR -929.7 mn in the first half of 2014 CET 1-ratio rises;

Adhoc announcement according to article 48d section 1 BörseG

Vienna (pta011/31.07.2014/07:30) - Despite net loss of EUR -929.7 million in the first half of 2014, CET 1-ratio rises; improved asset quality

Financial data (table see enclosed pdf)

Highlights

January-June 2014 compared with January-June 2013; as of 30 June 2014 compared with 31 December 2013

Net interest income declined to EUR 2,243.6 million (EUR 2,339.9 million), mainly due to the persistently low interest-rate environment and FX translation effects. Net fee and commission income increased to EUR 907.0 million (EUR 894.1 million) driven by the securities business and the net trading and fair value result rose to EUR 138.0 million (EUR 103.6 million). Operating income amounted to EUR 3,421.7 million (-1.8%; EUR 3,483.0 million).

General administrative expenses declined by 3.3% to EUR 1,896.4 million (EUR 1,960.2 million), mainly due to lower personnel expenses. This led to an operating result of EUR 1,525.3 million (+0.2%; EUR 1,522.7 million) and an improved cost/income ratio of 55.4% (56.3%).

Despite the expected rise in 2014 risk costs announced in early July, net impairment loss on financial assets not measured at fair value through profit or loss (net) rose only moderately, by 1.5%, to EUR 796.1 million or 125 basis points of the average volume of customer loans (EUR 784.3 million or 120 basis points). This is attributable to the fact that a significant proportion of risk costs in Romania resulting from the sale of non-performing loans will only arise in the second half of the year. In addition, the item other operating result included EUR 130.3 million of the risk costs expected by Erste Group in relation to the consumer loan law passed by the Hungarian parliament in early July. On a stable volume of customer loans, the NPL ratio declined to 9.4% (9.6%) in the second quarter. The NPL coverage ratio improved to 64.0% (63.1%).

Other operating result amounted to EUR -1,271.8 million (EUR -377.6 million), primarily due to the write-down of intangible assets in the total amount of EUR 956.4 million, mostly in Romania (EUR 854.2 million). The entire goodwill (EUR 319.1 million), brand (EUR 294.6 million) and customer relationships (EUR 176.1 million) as well as other miscellaneous intangible assets (EUR 64.4 million) were written down - as well as goodwill related to business in Croatia. At EUR 154.1 million (EUR 184.7 million) levies on banking activities were again significant: EUR 63.2 million (EUR 83.3 million) in Austria, EUR 20.7 million (EUR 21.0 million) in Slovakia and EUR 70.1 million (EUR 80.4 million) in Hungary (included the full Hungarian banking tax of EUR 47.9 million for 2014).