Erste Bank: 4Q06 results preview, due on February 28, Wednesday

Erste Bank is scheduled to report its 4Q06 results on February 28. We expect the bank to report net earnings of EUR 229.2m, up 13.2% q/q and 11.6% y/y, in line with the consensus estimate of EUR 228m (with a range of EUR 177m - EUR 260.0m, according to Reuters). Although Erste Bank is expected to book a further mark-to-market loss of EUR 8m-9m related to shares of Bwin Interactive Entertainment, this should be more than offset by a capital gain of some EUR30m on the sale of one of its industrial holdings (a construction company). Another feature of the results will be the first-time consolidation of Romanian acquisition BCR, which is expected to contribute EUR 12.8m, after restructuring charges of EUR 33m. Whilst press rumours on the Romanian market have put the full-year net earnings of BCR at some EUR 240m, the management of Erste Bank have maintained their guidance for EUR 250m, before the inclusion of restructuring charges.

Apart from these elements, the drivers of Erste Bank's earnings growth are expected to remain largely unchanged, with revenues to be spurred by strong loan growth and asset management, costs to be contained apart from expansion costs and rising wages in CEE, and provisioning requirements to be supported by strong loan quality in a favourable economic environment.