This is due to the higher interest rate environment, the increased loan volume and a better trading result, the bank said in a press release on Monday. Since the economists are quite optimistic about the bank’s core markets, Erste Group is targeting a dividend of 2.7 euros per share this year – after 1.90 euros for 2022.
Risk costs should remain at a low level
Ultimately, the bank expects net loan growth of 5 percent and a return on equity of 15 percent. The bank also announced that risk costs should remain at a low level.
In the first three quarters, customer loans rose by 2 percent to 206.2 billion euros, and customer deposits rose sharply – especially in the Czech Republic and Austria. There was an increase of 5.3 percent to 235.8 billion euros. The loan-to-deposit ratio was 87.4 percent.
The economy has deteriorated this year
“The economy has deteriorated significantly this year. Nevertheless, we were able to increase our loan volume in the first nine months”noted Erste Group CEO Willi Cernko. “The quality of our loan portfolio remains excellent and the proportion of non-performing loans is historically low and is around two percent across all countries.”
Due to interest rate increases and the higher loan volume, net interest income rose by 23.7 percent to 5,422.3 million euros, and net commission income rose by 5.9 percent to 1,937.6 million euros. The trading result improved to 337.4 million euros, after minus 848.5 million euros in the same period of the previous year. The result from financial instruments, however, deteriorated to minus 17.7 million euros, after 743.3 million euros in the same period of the previous year.
Administrative expenses increased significantly
Administrative expenses rose by 8.7 percent to 3.675 billion euros, not least due to the 11.6 percent increase in personnel costs to 2.195 billion euros. Value adjustments on credits and loans amounted to minus 127.5 million euros, with net releases for loan commitments and financial guarantees as well as payments from receivables that had already been written off having a positive impact. All in all, operating profit rose by 44.6 percent to 4.178 billion euros.