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26.02.2021

Outlook 2021:

Erste Group expects economic upturn in 2021

  • GDP growth rates seen between +3% and +6%, with Hungary posting region’s strongest upswing
  • CEO Bernd Spalt: „We will experience an economic rebound in 2021“
  • Insolvencies: only trailing effect, no insolvency wave
  • Company outlook: lower risk costs, significantly higher profits

The stock exchange-listed Erste Group is optimistic about the current financial year. This optimism is based on the forecast economic upturn of between +3% and +6% in the economies of Central and Eastern Europe (CEE). Despite the trailing effect of insolvencies in Austria and the CEE region, the bank expects that the current year will see its risk costs come in lower and its profits rising once again

The stock exchange-listed Erste Group is optimistic about the current financial year. This optimism is based on the forecast economic upturn of between +3% and +6% in the economies of Central and Eastern Europe (CEE). Despite the trailing effect of insolvencies in Austria and the CEE region, the bank expects that the current year will see its risk costs come in lower and its profits rising once again

ONLY "TRAILING EFFECT" IN INSOLVENCIES, LOWER RISK COSTS

The Erste Group CEO does not see an oft-cited „insolvency wave“ hitting the region’s economies: “The signals we see now that the moratorium programmes are running out tend to be positive. The expiry of the state aid programs will, of course, contribute to insolvencies, but only as a trailing effect from previous years.”

Based on internal forecasts, Erste Group expects growth in the current year in both its lending volume and in the net commission income its generates through its fund management, securities, and insurance brokerage business. The bank can therefore expect - despite negative interest rates in the euro area – to post a rising operating result. In addition, it sees risk costs declining in 2021. Overall, Erste Group aims to improve its net result in the current year.

"The economic upswing will provide us with an opportunity to bring about an ecological turnaround and also enable decisive progress in digitization," Spalt is certain. The EU will invest large parts of its more than 700 billion euros recovery fund in climate-friendly and digital projects.

“As a bank, we want to support this transformation. We see ourselves as a companion to the companies and economies of our region. That’s why our growth will be built primarily on sustainability.“