Erste Group Bank AG

Preliminary results 2014; outlook confirmed

Adhoc announcement according to article 48d section 1 BörseG

Vienna (pta008/27.02.2015/07:30) - 2014 closed with profitable quarter, as loan growth re-emerges, asset quality improves and capital position strengthens

Financial Data - for table please see pdf

HIGHLIGHTS P&L 2014 compared with 2013; balance sheet 31 December 2014 compared with 31 December 2013

Net interest income declined to EUR 4,495.2 million (EUR 4,685.0 million), mainly due to the persistently low interest rate environment and FX translation effects. Net fee and commission income increased to EUR 1,869.8 million (EUR 1,806.5 million) on the back of an improved result from securities business and asset management. The net trading and fair value result rose to EUR 242.3 million (EUR 218.8 million). Operating income amounted to EUR 6,877.9 million (-1.7%; EUR 6,995.1 million).

General administrative expenses declined to EUR 3,787.3 million (-2.8%; EUR 3,896.1 million), mainly due to lower personnel expenses on the back of lower average headcount and decreased depreciation and amortisation. This led to an operating result of EUR 3,090.7 million (-0.3%; EUR 3,099.0 million) and an improved cost/income ratio of 55.1% (55.7%).

Net impairment loss on financial assets not measured at fair value through profit or loss went up to EUR 2,159.2 million or 169 basis points of average customer loans (+21.7%; EUR 1,774.4 million or 137 basis points). This rise was attributable in particular to additional risk costs in Romania incurred in connection with the accelerated NPL reduction. The NPL ratio declined substantially to 8.5% (9.6%) on the back of successful NPL sales in Romania. The NPL coverage ratio improved significantly to 68.9% (63.1%).

Other operating result amounted to EUR -1,752.9 million (EUR -1,008.6 million). This was primarily due to the write-down of goodwill in the amount of EUR 475.0 million as well as of brand and customer relationships in Romania of EUR 489.8 million in total. At EUR 256.3 million (EUR 311.0 million) levies on banking activities were again significant: EUR 130.5 million (EUR 166.5 million) in Austria, EUR 31.5 million (EUR 41.2 million) in Slovakia and EUR 94.2 million (EUR 103.4 million) in Hungary - including EUR 47.9 million in banking tax. In addition, the item other operating result included EUR 336.8 million in expenses resulting from the consumer loan law passed by the Hungarian parliament. The net burden of the law and the conversion of the foreign-currency loans was EUR 312.2 million.