After loss last year, Erste Hungary earns profit in H1

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Erste Bank Hungary Group had a net profit of €100.7 million in the first half of this year, an improvement over last yearʼs net loss of €34.6 mln, as the release of risk provisions, the lower bank levy and a gain through the sale of VISA Europe shares compensated for a drop in operating profit, Erste bank revealed today.

Operating income of the group fell 8.3% in one year to €165 mln, according to the report, which was carried by the Hungarian state news agency, MTI.  

The report also said:

  • Overall income was significantly helped by a €71.7 mln in positive income from the release of risk provisions, related to the retail portfolio and the cleaning/sale of the groupʼs commercial property portfolio. In H1 2015 the Hungary segment booked a loss of €58.8 mln on the same line.
  • Other results were also lifted by a €12.8 mln gain related to the sale of shares in VISA Europe. Other results included the €1.8 mln contribution to the resolution fund. 
  • Net interest income fell a steep 22.0% year-on-year to €88.0 mln, mainly due to lower loan volumes and the impact of the consumer loan law, as well as narrowing net interest margins.
  • Net income from fees and commissions fell 2.1% to €68.6 mln, but net trading and fair value results became a positive €6.5 mln against losses of €3.5 mln in H1 2015.
  • Operating expenses rose by 7.2% to €93.3 mln, due to the booking of the full year contribution to the deposit insurance fund of €7.1 mln as well as higher personnel costs. Operating results fell as a consequence by 22.7% to €71.7 mln and the cost/income ratio rose to 56.6%, up from 48.4% in H1 2015. 
  • The loss on other results shrank 41.1% to €37.3 mln mainly due to the reduction of the Hungarian bank levy, to €19.6 mln from €46.0 mln, the report said, noting that provisions for contingent credit risk liabilities still increased.

The state of Hungary and the European Bank for Reconstruction and Development (EBRD) each acquired 15% stakes in the Hungarian unit of Austrian banking group Erste on June 20, in line with an agreement signed in February 2015.

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