Erste Bank Hungary Reports Higher After-Tax Result

At the end of the first half of 2023, the Bank reported a profit after tax of HUF 47.1 billion, HUF 37.3 billion higher than in the first half of the previous year. The significant increase in pre-tax profit for the first half of the year was due to higher operating revenues and lower operating expenses overall compared to the previous year, as a result of the full reimbursement of the OBA fee related to Sberbank, which was settled last year, the bank reported on the website of the Budapest Stock Exchange.

Net interest income was -23% ( HUF -15.3 billion) lower compared to June 2022. On the revenue side, there was a more significant improvement (HUF 219.2 billion), due to the dynamic growth of customer loan portfolios, in addition to repricing, and increased free liquidity, which the Bank invested in the form of short-term placements in addition to securities, allowing interest income to grow further.

The increase of HUF 234.5 billion on the expense side is partly explained by higher interest expenses on institutional customers and interbank deposits compared to the same period last year. In addition, there was a change in the accounting treatment of foreign exchange swaps, whereby the interest component of these swaps was reclassified from trading profit to interest income in order to comply with Erste Bank Group's Accounting Policy. As a result of the change, HUF -41.2 billion was reclassified to interest expense.

The Bank's net fee and commission income increased dynamically compared to the previous year, with a total of HUF 7 billion (+21.7%) higher than the result for the first half of 2022. Fee and commission income related to all activities was higher in the first half of 2023, with the largest increases related to card and payment services and investment services income.