Erste Bank’s consolidated 1H 2004 operating profit came out worse than expected due to rather weak net interest income that was affected by poor figures from Austrian savings banks and a y-o-y drop in the NII of Slovenska sporitelna (Erste's 80%-owned Slovak subsidiary), which was however expected. Another disappointment was a y-o-y decline in trading profit. Nevertheless, below the operating level, the results were supported by lower-than-expected provisioning, corporate income tax and minority interest as a result of the weak figures from Austrian saving banks that are members of the Cross-Guarantee System. Overall, we assess the results as marginally disappointing due to weak operating figures.
1H04 1H03 change
Net interest income 1,317 1,290 2.1%
Operating revenues 2,004 1,900 5.5%
Operating costs 1,292 1,223 5.6%
Operating result 712 677 5.2%
Other operating results -15 -61 -76.1%
Profit before provisions 698 616 13.3%
Provisioning -197 -206 -4.4%
Pre-tax profit 501 410 22.1%
Net income 240 165 45.5%
EPS (EUR) 0.99 0.69 45.5%
The bank reiterated its goals for 2004 and 2005: net profit of EUR 500m and EUR 600m respectively, ROE of at least 18% and a cost / income ratio of up to 62%, both for next year. We see the targets as largely achievable at the moment.
A teleconference will be held at 3.30 pm CET and will be hosted by Andreas Treichl, CEO of Erste Bank. The dial-in telephone No. for the UK is +44 (0)20 7984 7582, for Germany +49 (0)69 22222 0408 and for the US +1 718 354 1158.
Jan Hájek, Patria Finance