Business Review 2018

Key financial and operating data

The figures for the comparative period 2014 are restated according to IAS 8 (for details about the resulting retrospective changes in the presentation, please refer to chapter B on significant accounting policies in the 2015 consolidated financial statements).

CRR: Capital Requirements Regulation

Shares outstanding include Erste Group shares held by savings banks that are members of the Haftungsverbund (cross-guarantee system).


Erste Group strives to be the leading retail and corporate bank in the eastern part of the European Union, including Austria. To achieve this goal, Erste Group aims to support its retail, corporate and public sector customers in realising their ambitions by offering excellent financial advice and solutions, lending responsibly and providing a safe harbour for deposits. Erste Group’s business activities will continue to contribute to economic growth and financial stability and thus to prosperity in its region.

Financial and operating performance

Net interest income increased – mainly in the Czech Republic and in Romania, but also in Austria – to EUR 4,582.0 million (+5.3%; EUR 4,353.2 million). Net fee and commission income rose to EUR 1,908.4 million (+3.1%; EUR 1,851.6 million), primarily on the back of significantly higher income from payment services and asset management. While net trading result was down at EUR -1.7 million (EUR 222.8 million), the line item gains/losses from financial instruments measured at fair value through profit or loss improved to EUR 195.4 million (EUR -12.3 million). Operating income rose to EUR 6,915.6 million (+3.7%; EUR 6,669.0 million). General administrative expenses were nearly stable at EUR 4,181.1 million (+0.5%; EUR 4,158.2 million). This was mostly attributable to the reduction of other administrative expenses to EUR 1,234.9 million (-5.7%; EUR 1,309.6 million). Payments to deposit insurance systems included in this line item amounted to EUR 88.6 million (EUR 82.8 million). This reduction almost fully compensated the rise in personnel expenses to EUR 2,474.2 million (+3.6%; EUR 2,388.6 million) and in depreciation and amortisation (+2.6%). Overall, the operating result improved to EUR 2,734.6 million (+8.9%; EUR 2,510.8 million) and the cost/income ratio to 60.5% (62.4%).

The impairment result from financial instruments amounted to EUR 59.3 million due to net releases on the back of improved asset quality or, adjusted for net allocation of provisions for commitments and financial guarantees given, -14 basis points of average gross customer loans (net allocations of EUR 132.0 million or 9 basis points). This was attributable to the substantial improvement in net allocations to risk provisions for the lending business across almost all segments, most notably in Croatia and Austria. The NPL ratio based on gross customer loans improved again to 3.2% (4.0%), the NPL coverage ratio to 73.0% (68.8%).

Other operating result improved to EUR -304.5 million (EUR -457.4 million). It included expenses for the annual contributions to resolution funds in the amount of EUR 70.3 million (EUR 65.8 million). Banking and transaction taxes increased to EUR 112.2 million (EUR 105.7 million. Other taxes were positive at EUR 1.0 million (EUR -37.7 million) due to one-off effects. In the financial year 2017, other operating result had included EUR 45.0 million in provisions for losses from loans to consumers resulting from supreme court rulings regarding negative reference interest rates in Austria.

Taxes on income decreased significantly to EUR 332.4 million (EUR 410.1 million) as deferred tax assets were recognised, resulting in deferred tax income. The minority charge increased to EUR 369.1 million (+5.0%; EUR 351.5 million). The net result attributable to owners of the parent rose to EUR 1,793.4 million (+36.3%; EUR 1.316.2 million).

Total equity not including AT1 instruments rose to EUR 17.9 billion (EUR 17.3 billion). Transition to the new financial reporting standard IFRS 9 as of 1 January 2018 resulted in a reduction of total equity by EUR 0.7 billion. After regulatory deductions and filtering in accordance with CRR, common equity tier 1 capital (CET1, Basel 3 phased-in) amounted to EUR 15.5 billion (+5.3%; EUR 14.7 billion), total own funds (Basel 3 phased in) to EUR 20.9 billion (EUR 20.3 billion). Total risk (risk-weighted assets including credit, market and operational risk, Basel 3 phased-in) rose to EUR 114.6 billion (EUR 110.0 billion). The common equity tier 1 ratio (CET 1, Basel 3 phased-in) stood at 13.5% (13.4%), the total capital ratio (Basel 3 phased-in) at 18.2% (18.5%).

Total assets were up at EUR 236.8 billion (+7.3%; EUR 220.7 billion). On the asset side, cash and cash balances decreased to EUR 17.5 billion (EUR 21.8 billion), while loans and advances to credit institutions increased to EUR 19.1 billion (EUR 9.1 billion). Loans and advances to customers rose to EUR 149.3 billion (+7.0%; EUR 139.5 billion). On the liability side, deposits from banks increased to EUR 17.7 billion (EUR 16.3 billion) and customer deposits grew again – in all core markets – to EUR 162.6 billion (+7.7%; EUR 151.0 billion). The loan-to-deposit ratio stood at 91.8% (92.4%).


Erste Group’s segment reporting is based on IFRS 8 Operating Segments, which adopts the management approach. Accordingly, segment information is prepared on the basis of internal management reporting that is regularly reviewed by the chief operating decision maker to assess the performance of the segments and make decisions regarding the allocation of resources. Within Erste Group the function of the chief operating decision maker is exercised by the management board.

Erste Group’s segment reporting is based on the matrix organisation (business and geographical information) and provides comprehensive information to assess the performance of the business and geographical segments.

Business segmentation

The segment reporting comprises six business segments reflecting Erste Group’s management structure and its internal management reporting in 2018.

Geographical segmentation

For the purpose of segment reporting by geographical areas the information is presented based on the location of the booking entity (not the country of risk). In case of information regarding a partial group, the allocation is based on the location of the respective parent entity according to the local management responsibility.

Geographical areas are defined according to the country markets in which Erste Group operates. Based on the locations of the banking and other financial institution participations, the geographical areas consist of two core markets, Austria and Central and Eastern Europe and a residual segment Other that comprises the remaining business activities of Erste Group outside its core markets as well as the reconciliation to the consolidated accounting result.

The geographical area Austria consists of the following three segments:
_   The Erste Bank Oesterreich & Subsidiaries (EBOe & Subsidiaries) segment comprises Erste Bank der oesterreichischen Sparkassen AG (Erste Bank Oesterreich) and its main subsidiaries (e.g. sBausparkasse, Salzburger Sparkasse, Tiroler Sparkasse, Sparkasse Hainburg).
_   The Savings banks segment is identical to the business segment Savings banks.
_   The Other Austria segment comprises Erste Group Bank AG (Holding) with its Corporates and Group Markets business, Erste Group Immorent GmbH,  Erste Asset Management GmbH and Intermarket Bank AG.

The geographical area Central and Eastern Europe (CEE) consists of six segments covering Erste Group’s banking subsidiaries located in the respective CEE countries:
_   Czech Republic (comprising Česká spořitelna Group)
_   Slovakia (comprising Slovenská sporitel’ňa Group)
_   Romania (comprising Banca Comercială Română Group)
_   Hungary (comprising Erste Bank Hungary Group)
_   Croatia (comprising Erste Bank Croatia Group), and
_   Serbia (comprising Erste Bank Serbia Group).

The residual segment Other covers mainly centrally managed activities and items that are not directly allocated to other segments. 

Non-financial report

For Erste Group, considering the impact of its entrepreneurial activities on society is nothing new. On the contrary, looking beyond financial performance is very much in line with the idea of social responsibility to which Erste österreichische Spar-Casse committed itself when it was founded in 1819.

Resolving the conflicting targets of profitability and the ecological and social impact of its business is also a key element for the management of Erste Group. In this regard, Erste Group’s Statement of Purpose offers valuable guidance by defining the following tasks and principles:

_   Disseminating and securing prosperity
_   Accessibility, independence and innovation
_   Profitability
_   Financial literacy
_   It is about people
_   Serving civil society
_   Transparency, stability, simplicity

The founding concept of Erste österreichische Spar-Casse, the predecessor of Erste Group, already embraced the idea of contributing to the common good. Erste Group has expanded its core activities from those of a traditional savings bank focused on retail lending and deposit-taking to include those of an international bank providing financial services to all sectors of the economy in its core markets. Unlike the operations of many other financial service providers, Erste Group’s business has always been firmly embedded in the real economy. Customer savings deposits fund the loans for housing construction or purchases or investments by companies. This is how Erste Group creates sustainable value for society. As one of the leading banks in Central and Eastern Europe, Erste Group is also an important employer, taxpayer and customer of – mostly local – suppliers.

According to Erste Group’s own definition, sustainability means to operate the Bank’s core business profitably while also taking into account social and ecological criteria. 

Corporate Governance

In 2003, Erste Group Bank AG declared its commitment to complying with the rules of the Austrian Code of Corporate Governance (Austrian CCG – see with the objective of ensuring responsible and transparent corporate governance.

In addition, the management board adopted a Statement of Purpose in 2015. This statement reaffirms and states in more detail the purpose of Erste Group Bank AG to promote and secure prosperity throughout the region in which Erste Group is active. Building on this Statement of Purpose, a Code of Conduct defines binding rules for day-to-day business. Erste Group values responsibility, respect and sustainability in pursuing its business activities. The Code of Conduct therefore helps to protect the reputation of Erste Group and to strengthen stakeholder confidence.