Erste's Profit Up by HUF 15 Bn in Two Years

Erste Bank Hungary's profit after tax, including one-off effects, amounted to HUF 46.7 billion in the first half of the year, compared to HUF 4.4 billion in the same period last year and HUF 31.7 billion in the first half of 2021, the CEO of Erste Bank Hungary, Jelasity Radovan said at a press conference in Budapest on Wednesday.

He pointed out that operating expenses, for example, were down 8.1% this year due to the reimbursement of the OBA payment related to Sberbank, an item that boosted expenses last year.

He pointed out that the bank's operating income in the first six months of this year was more than 46% higher than a year earlier, with the revaluation of subsidized loans playing a big role. The change in the interest rate environment reduced operating income by nearly HUF 14 billion last year, while it increased it by nearly HUF 20 billion this year.

Overall, the bank's operating profit rose to HUF 93.6 billion from HUF 44 billion a year earlier and HUF 49.4 billion in the first half of 2021.

Customer loans and bonds rose by more than 10% year-on-year to HUF 2,346 billion, while customer deposits fell by a healthy 6% to HUF 3,250 billion. Accordingly, the loan-to-deposit ratio rose to 68% from 57.3% a year earlier, he explained.

The CEO also pointed out that the non-performing loan (NPL) ratio fell to 2.8% in the first half of this year, compared to 3.3% in the same period last year.

According to the financial institution's statement, total retail lending grew by 2% year-on-year, but the value of new lending in the first half of this year was 34% lower than a year earlier, mainly due to a drop in demand for mortgage loans. New home loan disbursements fell 57% compared to the 2022 outturn.

For consumer-type loans, overall disbursements declined by 16%. Within this, demand for personal loans fell by 10%, while demand for the Baby Loan declined by 43% compared to a year earlier.

New disbursements to small entrepreneurs increased by 20% year-on-year, mainly due to government-subsidized schemes.

László Harmati, the bank's deputy CEO for retail, said at the press conference that the housing loan market is not expected to see a big rebound in the second half of the year, while a major boom in the Baby loan is expected towards the end of the year due to the changes announced earlier.

He also pointed out that a large part of the money withdrawn from deposits went into securities accounts; the financial institution actively encourages customers to regularly buy shares with even a few tens of thousands of forints.

The deputy CEO also indicated that the bank's application George is being used by more and more people, with 70% of retail customers digitally active with the financial institution, two thirds of them would only use mobile banking.