Erste Bank announced yesterday that it plans to raise its net profit by at least 25% in 2003 (this would correspond to EUR 319 mil., and an EPS of EUR 5.33), Reuters reported, which is in line with our estimate (+27% y-o-y, EUR 324 mil.). Moreover, the bank said that it intends to increase its 2003 gross per-share dividend to EUR 1.50, up from EUR 1.24 in 2002. This would be almost 12% below our estimate of EUR 1.70 per share. The proposal thus suggests that the bank would decrease its payout ratio to 28% (or less) of the 2003 net profit, down from 29% of the 2002 net profit, and it would improve its capital position through higher retained earnings. Erste also reiterated its 2005 financial targets: ROE of 15%, cost/income ratio of 60-62%, and net profit of EUR 500 mil. Neutral.
Jan Hajek