“In the second quarter of 2011, Erste Group built upon its good start to the financial year. The operating result increased by 6.3% quarter on quarter on the back of record net interest income and a stable cost base,” said Andreas Treichl, CEO of Erste Group Bank AG.
The group posted operating profit of EUR1.96 billion in the first half-year, down 1.2% from the same period a year earlier. Operating income remained almost unchanged in the first half of 2011 at EUR3.89 billion, while general administrative expenses were up 1.5% to EUR1.9 billion
In Romania, Erste’s bank Banca Comerciala Romana (BCR), reported net interest income of EUR354.9 million in the first half of the year, down 14.5% on the year (or currency-adjusted: -14.1%).
“This development was mainly due to continuing weakness in credit demand, different asset mix and lower margins in the deposit business,” Erste said in its financial report.
Net fee and commission income declined 16.8% (currency-adjusted: -16.4 to EUR65.9 million, because of lower contributions from the lending business.
Erste said operating expenses in Romania increased by 5.7% on the year (currency-adjusted: +6.2%) to EUR194 million in the first half, due to a higher value added tax rate and additional administrative expenses incurred to meet statutory requirements.
However, risk provisions on the local market dropped to EUR224.1 million at the end of June, from EUR241.7 million in the year-ago period.
The cost/income ratio rose from 35.6% in the previous year to 44.1% in the first half of 2011.
In 2006, Erste bought a 61.88% stake in BCR for EUR3.75 billion from the state, the European Bank for Reconstruction and Development and International Finance Corporation. The Austrian group subsequently raised its stake to 69.3%, by taking over shares from BCR employees.
BCR group includes BCR bank, BCR Banca pentru Locuinte, BCR Administrare Fond de Pensii, BCR Leasing, BCR Asset Management, BCR Securities, Anglo Romanian Bank Limited and BCR Chisinau.