Sberbank Collapse Sent Erste Hungary into the Red

Erste Bank Hungary posted a negative result after tax in the first quarter. One of the main reasons for this is that the National Deposit Insurance Fund ordered an extra payment of HUF 7.9 billion due to the liquidation of Sberbank.

Erste closed the first quarter with a minus of HUF 908 million, the bank's management said at a press conference. Revenue fell only marginally from HUF 46.4 billion at the beginning of 2021 to HUF 46.1 billion, but operating expenses increased one and a half times from HUF 21.1 billion last year to HUF 31.9 billion.

The main reason for this is that the National Deposit Insurance Fund (OBA) ordered an extra payment of HUF 7.9 billion due to the liquidation of Sberbank.

This is money that the OBA is collecting from financial service providers so that if there were a collapse like the one Sberbank has just experienced, they could compensate those who have been stuck with their money. In total, the amount that Erste paid into the OBA at the beginning of the year has increased by HUF 9.4 billion.

Overall, the bank disbursed 1.9% fewer new retail loans at the beginning of the year than in the first three months of 2021. The decline is explained by a 21.9% drop in demand for the government’s Baby Loan scheme. There was an increase of 15% for home loans and 33.9% for personal loans.

Meanwhile, the corporate business saw a 7.5% increase in bonds and loans.