Erste Bank recorded an uptrend in operating result in 2014, with an increase in net profit

Key financial highlights for the Bank:

• Total assets as of 31.12.2014 amounted to HRK 60.2 billion, 0.1% up compared to 31.12.2013, when they had reached HRK 60.1 billion
• Total loans on 31.12.2014 reached HRK 39.6 billion, 3.5% less versus HRK 41.0 billion as of 31.12.2013
• Total deposits amounted to HRK 37.2 billion at 2014 YE and were up by 0.4% compared to HRK 37.0 billion at 2013 YE
• Operating result was improved by 5.4% to HRK 1.4 billion, versus HRK 1.3 billion in 2013
• Net profit in 2014 was 232.2 million, up from HRK 68.4 million at 2013 YE
• Performance indicators: Return on Assets was 0.4%, Return on Equity 3.3%, while Cost/Income ratio was 38.3% as of 31.12.2014

Zagreb/Rijeka, 23 March  2015. – In 2014, which was an extremely challenging year for the entire economy, including the banking sector, Erste&Steiermärkische Bank d.d. (Bank) achieved optimal financial results in line with the business plan and the targets for the current year. By implementing an adequate business policy and adjusting its operations to the general market conditions, the bank continued the upward trend of posting solid operating results, accompanied by an increase of the total assets and net profit.

Total assets of the Bank at 2014 YE amounted to HRK 60.2 billion, which was a 0.1% increase on HRK 60.1 billion in 2013. The bank’s total loans as of 31 December 2014 amounted to HRK 39.6 billion, and were decreased by 3.5% compared to the end of 2013, when they had amounted to HRK 41.0 billion. Total deposits at 2014 YE rose to HRK 37.2 billion, up by 0.4 % compared to the end of 2013, when they stood at HRK 37.0 billion.

The operating result amounted to HRK 1.4 billion, up by 5.4 % from 2013 when it had amounted to HRK 1.3 billion, thus confirming the bank’s stable position. The net profit in 2014 amounted to HRK 232.2 million, compared to HRK 68.4 million in 2013. Net profit continues to be impacted by expected and planned increased risk costs as a consequence of the general economic situation in Croatia, enforcement of pre-bankruptcy settlements, and regulatory requirements. The 2014 ROA was 0.4 %, ROE was 3.3 %, and the cost/income ratio was 38.3 % as of 31 December 2014.

“Although the entire year 2014 was marked by highly demanding market conditions, which was also reflected on the operation of the banking sector, we are satisfied with the fact that we recorded an uptrend in our operating result, as well as increase in net profit, thus confirming the soundness and long-term sustainability of our business policies,” stressed Erste Bank Chairman Petar Radakovic. “In 2015 we want to keep supporting all healthy, sustainable and profitable projects that encourage the development of real economy and strengthen its competitiveness, as a precondition for economic growth, opening new jobs and creating new value. We are convinced this year we will continue to be a reliable partner to our clients and achieve solid business results,” Radakovic concluded.

According to Erste Group’s consolidated financial statement for 2014, which includes the Bank and the following subsidiaries: Erste DMD d.o.o^[1]., Erste Nekretnine d.o.o., Erste & Steiermärkische S-Leasing d.o.o, Erste Delta d.o.o., Erste Bank a.d., Podgorica, Erste Card Club Group^[2] and Erste Factoring d.o.o., the total assets amounted to HRK 69.8 billion, up by 2.8 % compared to the end of 2013, when they had amounted to HRK 67.9 billion. The Group’s operating result amounted to HRK 1.7 billion, up by 8.4 % compared to HRK 1.6 billion the year before. The Group’s net profit in 2014 reached HRK 412.1 million compared to HRK 201.5 million in 2013. The Group’s Return on Assets was 0.5 %, Return on Equity 5.0 %, and Cost/Income Ratio 45.4 %.

Outlook for 2015

The year 2015 will also be marked by a highly demanding market environment that will affect bank’s operating result. In addition, the Swiss Central Bank’s decision as of 15 January 2015 to stop maintaining the minimum CHF/EUR rate, as well as amendments to the Consumer Credit Act concerning the fixed FX rate for repayment of loans tied to CHF, adopted late in January 2015, will have a partial impact on the Bank’s operation and results in 2015. In line with the IFRS rules, the Bank will include the effects in Q1 2015 results.

The Bank will continue to adhere to its basic strategic guidelines, which include supporting the financial needs of Croatian citizens, focusing intensively on the SME segment, and supporting quality projects that drive the development of the real economy and employment. We continue to see new lending perspectives in renewable energy sources and energy efficiency, agriculture and EU fund-related infrastructure projects, tourism and export-oriented production.

The Bank's long-term business policies are focused on growth above the market average, increased internal efficiency, and rational cost management. The Bank’s ambition is to close this year with another increase in its market share, and it will continue to lay a special emphasis on improving the quality of service and communication with its clients and on understanding their specific needs in the current market conditions.

Income statement

[1] On 1 December 2014 Erste DMD was merged with Erste d.o.o. and was deconsolidated from Erste Group

[1] On 1 November Diners BH was deconsolidated from Erste Card Club Group due to immateriality