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Results 2011

28.10.2011 Erste Group takes extraordinary charges leading to a net loss of EUR 973.0 million in the first nine months of 2011 and significantly reduces CDS exposure

IR News 28.10.2011 [pdf; 193.5 KB]
Erste Group Key Financials Q3 2011 [xls; 450.5 KB]
Erste Group Restatement Q3 2011 [xls; 517.0 KB]
Erste Group Interim Report Q3 2011 [pdf; 781.6 KB]
Presentation Telephone and Analyst Conference Q3 2011 [pdf; 783.3 KB]
Audio Webcast Telephone Conference, London - Q3 2011 results
Video Webcast Analyst Conference, London - Q3 2011 results

Highlights (1)

  • As pre-announced on 10 October 2011, significant charges (write-down of goodwill in Hungary and Romania, additional risk provisions in Hungary, and expenses resulting from the change in the fair value of the CDS portfolio) resulted in a net loss after minorities(2) of EUR 973.0 million (1-9 2010: net profit of EUR 633.8 million). Banking taxes in Austria and Hungary came to EUR 140.2 million (before taxes).
  • In the first nine months of 2011, net interest income rose by 0.9% to EUR 4,134.1 million (1-9
    2010: EUR 4,095.8 million). Meanwhile, net commission income declined by 1.3% to EUR 1,352.0 million (1-9 2010: EUR 1,370.0 million). At EUR 37.4 million, the net trading result – substantially negatively affected by the volatility of the CDS portfolio – was 87.1% lower than in the first nine months of 2010 (EUR 290.4 million).
  • Despite higher inflation, general administrative expenses grew only by a moderate 0.7% to
    EUR 2,891.6 million (1–9 2010: EUR 2,871.7 million). The change in the fair value of the CDS
    caused the operating result to decline by 8.8% from EUR 2,884.5 million to EUR 2,631.9 million in the first nine months of 2011. The cost/income ratio stood at 52.4% (same period 2010: 49.9%).
  • Risk costs were up 17.0% from EUR 1,588.4 million (162 basis points of average customer loans) in the first three quarters of 2010 to EUR 1,859.2 million, or 184 basis points. This was largely due to the need for additional risk provisions in Hungary (partly a consequence of continuing political intervention). Asset quality improved in the Czech Republic, in Slovakia and in Austria. The NPL ratio in relation to customer loans rose to 8.2% at 30 September 2011 (year-end 2010: 7.6%). The NPL coverage ratio improved to 63.9% (year-end 2010: 60.0%).
  • Total assets, at EUR 216.1 billion, were up 5.0% for the year to date from EUR 205.8 billion. The loan-to-deposit ratio improved to 111.2% at 30 September 2011 (year-end 2010: 113.1%). While customer deposits, at EUR 121.6 billion, were up 3.9% year to date, lending volume rose by just 2.2% to EUR 135.2 billion.
  • Erste Group’s shareholders’ equity(3) amounted to EUR 11.9 billion at 30 September 2011 (year-end 2010: EUR 13.1 billion) and core tier 1 capital to EUR 10.6 billion (year-end 2010: EUR 11.0 billion). With loan volume stable, total risk-weighted assets were largely unchanged versus yearend 2010 at EUR 119.9 billion. The tier 1 ratio (total risk) stood at 9.8% (year-end 2010: 10.2%) and the core tier 1 ratio (total risk) at 8.8% (year-end 2010: 9.2%).

(1) Due to the volatility on capital and financial markets the management of Erste Group analysed the outstanding portfolio of Credit Default Swaps (CDSs) within its International Business Division with regards to the strategic business orientation of Erste Group. Based on this analysis, the accounting of these instruments classified in prior periods as financial guarantees has been consequently restated to classify and measure them as financial instruments at fair value through profit and loss. The harmonisation and improvement of the IT-Tools within Erste Group has lead to restate prior calculation of the effective interest rate of loans and advances to customers. In accordance with IAS 8, comparative figures have been restated to reflect the above (see tables in the appendix). The figures presented as comparable data in this document for prior periods are restated data.
(2) The term “net profit/loss for the period after minorities” corresponds to the term “net profit/loss for the period attributable to the owners of the parent”.
(3) The term “shareholders’ equity” corresponds to the term “total equity attributable to the owners of the parent”.

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