Erste Group Reports EUR 1.63bn H1 2024 Net Profit, Raises Full-Year Guidance

Erste Group Bank reported a net profit of EUR 1.629 billion for the first half of 2024, a rise of 9.3% compared with the same period a year earlier, the Austrian lender disclosed on 2 August 2024. The results were published on the group's investor relations website.

Net interest income, the core measure of earnings from lending activity, climbed 3.5% to EUR 3.687 billion in the period. Fee and commission income rose 11.6%. The group's operating result rose 10.6% compared with the first half of 2023.

COSTS, RISK AND CAPITAL

Erste Group's cost-to-income ratio improved on a year-on-year basis, settling at 46.1% for the first half of the year.

Risk costs rose to EUR 126 million, or 12 basis points of average gross customer loans, from a net release a year earlier, and the NPL ratio edged up to 2.4% from 2.3% at the end of 2023. Erste Group operates across several Central and Eastern European markets including Austria, Czech Republic, Slovakia, Hungary, Croatia, Serbia, and Romania.

The bank's Common Equity Tier 1 ratio — the primary measure of regulatory capital strength — stood at 15.5% at the end of June. Return on tangible equity was about 17% in the first half.

FULL-YEAR GUIDANCE RAISED

Erste Group upgraded its 2024 outlook, now targeting a return on tangible equity of more than 15% (previously about 15%). It now expects net interest income to remain broadly stable versus 2023 (instead of declining by about 3%), net fee and commission income to rise by about 10% (previously about 5%) and risk costs to stay below 20 basis points of average gross customer loans.

Erste said its CET1 ratio was expected to remain strong, providing enhanced capital return and/or M&A flexibility, as it executes a EUR 500 million share buyback.