Erste Bank Hungary Plc.'s operating profit increased from HUF 67.4 billion to HUF 150.4 billion in the first nine months of this year compared to the same period last year, the company told MTI on Wednesday.
Profit after tax was HUF 89.9 billion, while the bank closed the first nine months of 2022 with a profit of HUF 18.4 billion.
Operating income also increased significantly, by more than 56%, according to the statement prepared in accordance with international accounting standards (IFRS). Fee and commission income rose by almost 11%, while the revaluation of subsidized loans reduced operating income by HUF 28.3 billion last year, but increased it by HUF 30.6 billion this year.
The increase in profits was partly explained by one-off items, with the HUF 7.9 billion OBA (National Deposit Insurance Fund) payment related to Sberbank raising costs last year and reducing them this year through reimbursement. Operational expenses were down 2.5%, mainly due to this, they said.
The stock of customer loans and bonds at the end of September was 5.8% higher than a year earlier. However, new funding volumes were 45% below their performance in the first nine months of 2022.
Total retail lending increased by 5%, but the value of new originations fell by 31.9% in the first nine months of this year, mainly due to a decline in demand for mortgage loans. New home loan disbursements were 54% lower than a year ago, while consumer-type loan disbursements declined by 13%, including a 5% drop in demand for personal loans and a 34% drop for the Baby Loan scheme.
For small business, new disbursements increased by 48%. The total value of retail assets under management by Erste Group in Hungary increased to HUF 5,156 billion, up 10% from the end of September last year.
In the corporate sector, the combined bond and loan portfolio rose by 6.1% to more than HUF 1,190 billion. In addition to financing small and medium-sized enterprises, the growth was driven by loans taken over from Commerzbank Plc, which was acquired in 2022. Loans and bonds to small and medium-sized enterprises increased by 17%, while commercial real estate decreased by 7% and large companies and municipalities increased by 8%. In the first nine months, the volume of new bonds and loans was 54% below a year earlier.
Erste expects retail demand for loans to pick up in the last quarter of the year, partly due to the voluntary interest rate freeze and partly due to the pick-up in demand in the housing market. This will be supported by a correction in house prices and an increase in rents, while applications in the Baby Loan are picking up ahead of the introduction of the new scheme next year. Erste increased its new retail lending by 10% in October compared to the previous month, and had its best month of the year in both mortgage lending and the Babaváró [state supported loan for prospective parents], they added.
According to a previous statement, Erste Hungary's profit after tax for the first half of the year was HUF 46.7 billion, compared with HUF 4.4 billion in 2022 and HUF 31.7 billion in 2021. On a year-on-year basis, profit after tax last year was 9.7% lower at HUF 53.5 billion compared to 2021.
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