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Erste Bank Hungary racks up HUF 157.6 billion loss in 2011

MNB

Erste Bank Hungary had a consolidated after-tax loss of HUF 157.6 billion in 2011, the bank said on Thursday, citing preliminary IFRS data.

The bank attributed the loss to the deterioration of the macroeconomic outlook, extreme market circumstances, unfavorable regulatory changes, an early foreign currency-denominated mortgage repayment scheme and a big rise in risk reserves.

Erste Bank Hungary closed 2010 with a slim profit of HUF 109 million.

The 2011 data show a pre-tax loss of HUF 152.2 billion.

The bank had total assets of HUF 3,253 billion on December 31, 2011, up 9% from twelve months earlier. Stock of client loans reached HUF 2,315.3 billion to give the bank a loan-to-deposit ratio of 192%, among the highest in the sector, said chairman-CEO Radovan Jelasity. They intend to raise deposits significantly, he added.

Radovan said a government-initiated scheme that allowed borrowers to repay their foreign currency-denominated mortgages in full, at discounted exchange rates, had generated a HUF 59.6 billion loss for the bank in the fourth quarter. He added that about 25,000 of the banks' clients had availed of the scheme, repaying HUF 157 billion for mortgages with a market value of about HUF 216.6 billion.

He said that the bank's risk reserves had climbed to HUF 237.3 billion during the full year.

The proportion of non-performing loans in the bank's portfolio rose to 20.5% in 2011 from 11.7% in 2010. The rate in the retail portfolio increased to 16.3% from 11.4%, while the rate in the corporate portfolio climbed to 29% from 12.5%.

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