Erste Group Bank

Preliminary results 2016, guidance for 2017 confirmed

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Vienna (pta006/28.02.2017/07:00) - HIGHLIGHTS
P&L 2016 compared with 2015; balance sheet 31 December 2016 compared with 31 December 2015

Net interest income declined to EUR 4,374.5 million (-1.6%; EUR 4,444.7 million), mainly due to a market envi-ronment of persistently low interest rates and large-scale NPL reductions. This development was not fully offset by lending growth. Net fee and commission income decreased to EUR 1,783.0 million (-4.2%; EUR 1,861.8 million) reflecting a decline in income from lending business and payment services as well as lower income from the securities business. Net trading and fair value result rose to EUR 272.3 million (+29.6%; EUR 210.1 mil-lion). Consequently, operating income declined to EUR 6,691.2 million (-1.2%; EUR 6,771.8 million). General administrative expenses increased to EUR 4,028.2 million (+4.1%; EUR 3,868.9 million), driven mainly by higher IT and consultancy costs as well as a rise in personnel expenses to EUR 2,339.3 million (+4.2%; EUR 2,244.6 million). This resulted in a decline of the operating result to EUR 2,663.0 million (-8.3%; EUR 2,902.9 million). The cost/income ratio stood at 60.2% (57.1%). Result from financial assets and liabilities not measured at fair value through profit and loss (net) include a gain, posted in the second quarter, from the sale of shares in VISA Europe in the amount of EUR 138.7 million.

Net impairment loss on financial assets declined substantially to EUR 195.7 million or 15 basis points of aver-age gross customer loans (-73.2%; EUR 729.1 million or 56 basis points), on the back of a significant decline of non-performing loans and higher income from the recovery of loans already written off in Romania and Hungary. The NPL ratio improved significantly to 4.9% (7.1%). The NPL coverage ratio increased markedly to 69.1% (64.5%).

Other operating result amounted to EUR -665.0 million (EUR -635.6 million). This includes expenses for the annual contributions to resolution funds in the amount of EUR 65.6 million (EUR 51.3 million). Banking and fi-nancial transaction taxes amounted to EUR 388.8 million (EUR 236.2 million). This rise was attributable to a one-off payment of banking tax pursuant to the Austrian Bank Tax Act (Stabilitätsabgabegesetz) in the amount of EUR 200.9 million preceding a significant reduction of future annual banking tax payments in Austria. Overall, banking levies in Austria amounted EUR 306.7 million (EUR 128.6 million). In Hungary, banking levies declined significantly to EUR 57.0 million (EUR 84.0 million) and in Slovakia amounted to EUR 25.1 million (EUR 23.6 million).