Annual Report 2020: audited figures confirm solid operating performance in Covid year

Erste Group Bank AG has just published its Annual Report for the business year 2020. The new Annual Report, which is available on the Erste Group website, provides comprehensive segment reporting and audited financial statements; Erste Group released preliminary financial results for 2020 on February 26. In addition to financial figures, the Annual Report contains a non-financial report outlining the banking group’s activities in the fields of sustainability, social banking and diversity.

The audited figures in the Annual Report confirm the preliminary results published at the end of February: Erste Group ended the Corona year 2020 with a solid operating result of 2.9 billion euros (-1.3% year-on-year). The banking group formed almost 1.3 billion euros in risk provisions for possible loan losses in the aftermath of the pandemic. As a result, net income fell by 46.7% to 783 million euros. Customer loans, on the other hand, increased by 3.6% to 166.1 billion euros and customer deposit volumes rose by 9.9% to 191.1 billion euros. The common equity tier 1 ratio (CET1, final) rose again, from 13.7% to 14.2%.

Stable in a crisis year, well-positioned for the rebound

In the Annual Report’s introductory “Letter from the CEO”, Bernd Spalt stresses that the Covid year 2020 has confirmed the group’s strategy and the fundamental strength of the CEE region. Despite the challenging environment brought about by the global pandemic, Erste Group managed to keep its operating result largely stable and posted solid net lending growth on the back of “genuine” demand in both the retail and corporate segments. The banking group also benefitted from strong customer uptake of its digital banking platform George, as well as of its investment products and prosperity advice offerings. The upswing that Central and Eastern Europe should experience in 2021 provides Erste Group with opportunities to support the region’s companies and economies in their transition to a greener and more digital future, Spalt writes.

Dividend proposal to be put forward to AGM

As already announced on February 26, Erste Group’s management board will – following the current recommendation of the ECB -- propose a dividend of 50 cents per share for 2020 at the Annual General Meeting, which will be held on May 19. The management board has also reserved EUR 1 per share for a potential additional dividend payout once the restrictions have been lifted.

Shareholders at the AGM will also be provided with detailed reports outlining the renumeration policies and practices that Erste Group applies for members of its management board. Erste Group will be making these reports, which Austria’s Stock Corporation Act requires for all exchange-listed companies, available online in mid-April.