Erste Bank Hungary, the Hungarian unit of the Vienna-based Erste Group, had net profit of €57.9 million in 2009 not counting minority holdings, down 47.1% from €109.5 million in 2008, Erste bank announced on Friday.
Erste Bank Hungary's currency-adjusted profit dropped 40.8%. Return-on-equity was 14.7%.
In the Hungarian retail and SME business, net interest income rose 8.4%, or 32.6% in currency-adjusted terms, to €353.6 million in 2009 from €298.7 million in 2008, mainly due to the continued marked expansion in average customer loans and pricing policy changes.
Net commission income dropped 34.1%, or 26.2% in currency-adjusted terms, to €86.2 million in 2009 from €130.7 million in 2008 due to the decreasing contributions from the securities and retail business and, primarily, to the different method of reporting of commission income from foreign-currency loans in the two years under review: in 2008, commissions from foreign currency loans were allocated to net commission income, while in 2009 they were reported in the net trading result. Adjusted for this effect, the drop in net commission income was 3.4%.
In conjunction with the steep increase in the net trading result to €29.9 million in 2009 from €4.5 million in 2008, which was due to the inclusion of commissions from foreign currency loans, the bank's operating profit rose 21.7%, or 36.3% in currency-adjusted terms to €255.7 million last year from €210.1 million the previous year.
Operating expenses declined by 4.4%, or 7.1% in currency-adjusted terms, to 214 million in 2009 from €223.8 million in 2008.
The currency-adjusted increase is explained by the hike in value-added tax in the second half of 2009.
The cost/income ratio improved substantially to 45.6% at the end of last year from 51.6% at year-end 2008. The general economic situation in Hungary and the related currency depreciation, especially in the first and second quarters of 2009, were also behind Erste Bank Hungary's rise in risk provisions, which increased to €170.8 million in 2009 from €73.5 million in 2008. (MTI-Econews)