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Erste Bank Hungary profits rise 31% in 2008

  Erste Bank Hungary had unaudited consolidated IFRS after-tax profit of HUF 32.4 billion in 2008, 30.8% more than in the previous year, chairman-CEO Edit Papp said on Thursday.

Pre-tax profit rose 33.5% to HUF 43.8 billion. Erste Bank Hungary had total assets of HUF 2,630.5 billion on December 31, 2008, more than 26% over the level twelve months earlier.

Client loans rose 32.6% to HUF 2,014.2 billion. Client deposits grew a tiny fraction to HUF 945.9 billion. Loans from other banks to Erste Bank Hungary reached HUF 1,332.9 billion, mainly because of refinancing from the bank’s parent.

The bank’ share of the retail lending market was more than 12%, including a 14.8% share of the home loan market. It took 6.9% of the retail deposit market, a 0.8 percentage point increase of 2007.

Erste Bank Hungary’s share of the corporate lending market was 8.6%. It had 5.4% of all corporate lending deposits in Hungary.

Net interest revenue rose 15.8% to HUF 79.0 billion according to unaudited figures. Net revenue from commissions and fees climbed 3.6% to HUF 34.7 billion.

In spite of the financial crisis, Erste Bank maintained its position as Hungary’s second-biggest commercial bank, with 900,000 clients and 203 branches. The financial and economic crisis affected the bank little, which shows the effect of earlier cost cuts and improvements to client services, Ms Papp said.

Erste Bank Hungary halted Swiss franc-based lending in the Q4, and EUR-based loans came to centre stage, though subsidized forint loans were also popular.

Competition to attract deposits is growing, but Erste Bank Hungary’s partnership with postal company Magyar Posta is playing a major role on this front, Ms Papp said. By the end of 2008, more than 157,000 clients had opened current accounts with Erste at post offices.

Retail clients and SMEs will continue to be the main focus of the bank’s strategy, Ms Papp said. Another goal will be to lessen the impact of the negative consequences of the economic crisis on clients by allowing them to change the run of loans, if necessary.

From March, the bank will offer a new home mortgage product that offers the security of an insurance policy to cover repayments if the borrower is suddenly out of work or for other reasons unable to pay them, she added.

Answering a question, Ms Papp said a decision on a dividend on last year’s profits had not yet been made. She noted that the bank’s Austrian parent could decide to raise capital at its Hungarian unit, if market trends or a possible further expansion require it.

Erste Bank Hungary does not plan any layoffs, Ms Papp said. Other banks with similar total assets operate with more employees, she added. (MTI-Econews)