Erste Bank Hungary closed the first quarter of this year with a profit after tax of HUF 15.1 billion. Operating income was 24.1% higher than in the same period of the previous year, while expenses increased by a much lower 6.3 %.
Lending growth in both the retail and corporate segments slowed compared to last year, although loan balances increased thanks to the moratorium. Retail customer assets grew by 24% and corporate deposits by 34% over a year.
Erste Bank had a good start to the year, the bank’s first quarter report points out. The financial institution's operating income, as reported in accordance with International Financial Reporting Standards (IFRS), was 24.1% higher than a year earlier in the period from January to March, partly due to one-off effects. Within this, net interest income rose by 25.1%, fee and commission income by 15%, while trading and conversion income more than doubled. Operating expenses grew at a much slower pace, by 6.3% over the year, thus the financial institution's operating profit rose by 44% to HUF 25.3 billion. The cost/income ratio also improved strongly year-on-year, falling to 45.5% at the end of March from 53.2% a year earlier. Profit after tax increased to HUF 15.1 billion, Erste Bank Hungary CEO Radovan Jelasity said at an online press conference presenting the bank's first quarter results.
The stock of customer loans at the end of March was 6% higher than a year earlier. At the same time, new loan originations slowed, falling a third short of the performance in the first quarter of 2020. The NPL ratio rose to 2.9% at the end of March 2020 from 2.2% at the end of March, Radovan Jelasity added.
In the retail area, the value of new lending was 18% below a year earlier, as the economic impact of the crown virus epidemic was not yet felt much in the first quarter of last year, László Harmati, deputy CEO for the retail area at the financial institution said. In mortgage lending, the value of new loans was 5% higher than a year earlier, thanks in part to the introduction of the home renovation loan. In consumer loans, the Baby Loan largely compensated for the shortfall in personal loans due to the epidemic, but new lending was still down 29% year-on-year. For small entrepreneurs, new lending is up 39% year-on-year, showing that they are not giving up and are confident in the current period of viral crisis.
The retail assets under management by Erste Group in Hungary – investments and deposits – increased by 24% in one year to HUF 3,867 billion at the end of March, of which investments accounted for 59%. The savings generated by the decline in household consumption flowed into securities investments at a higher rate than before, Róbert Cselovszki, CEO of Erste Investment Plc. said.
In the corporate business, loans decreased by 4% to HUF 781 billion. Erste is actively participating in the national bank’s ‘NHP Hajrá’ program, having signed loan or lease agreements worth HUF 120 billion by the end of March 2021. The bank is also a major participant in the National Bond Program, with eleven subscriptions totaling more than HUF 33 billion, Richárd Szabados, head of the bank's corporate business added.
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