“EBC Group's* financial results in H1 2017 were significantly impacted by increased risk provisions resulting from the situation in the Agrokor conglomerate. Operating results have remained stable, thereby additionally strengthening our position on the Croatian banking and financial market. We are especially pleased with the rising trend in new loans, especially in the retail housing loans and corporate loans segments. We will continue to strive to provide quality support to our clients in the realisation of their financial needs and business plans, also giving an adequate impetus towards the development of the Croatian economy as a whole“, said Christoph Schoefboeck, Chairman of the Management Board of Erste Bank Croatia, commenting on the business results for the first half of the year.

IN BRIEF

According to the non-consolidated financial report for Erste Bank Croatia (the bank), without subsidiaries, net profit in H1 2017 was HRK 330.4 million, down 22,2% compared to HRK 425.0 million in the same period of 2016. The reduction of the bank's net profit is partly the result of the fact that H1 2016 was impacted by one-off effects of the sale of a share in the company VISA Europe Limited in the amount of HRK 74.9 million. Additionally, lower profit from trading, as a consequence of a generally lower intensity of market activity in this segment in H1 2017, have also impacted the results. The bank's net interest income is up 3.2% from HRK 787.4 million in H1 2016 to HRK 812.7 million in the same period of this year. Net fee and commission income, at the same time, has achieved an 8.7% growth from HRK 191.6 million in H1 2016 to HRK 208.3 million in H1 2017.

The bank's total assets at the end of June 2017 amounted to HRK 57.3 billion, up 2.1% compared to the end of 2016, when they had amounted to HRK 56.1 billion. Total loans as of 30/06/2017 amounted to HRK 35.4 billion, up 1.3% compared to HRK 34.9 billion as of 31 December 2016. Total deposits as of 30/06/2017 amounted to HRK 43.1 billion and were 2.6% higher compared to the end of last year, when they amounted to HRK 42.0 billion.

In H1 2017, the bank has recorded stable trends in the segment of new loans. In the retail segment, which includes micro-companies, an increase in new loans of around 9% was achieved, from around HRK 1.6 billion in H1 2016 to around HRK 1.7 billion in the same period this year. In the home loans and home improvement loans retail segment, a growth of about 30% was achieved, from about HRK 213.2 million in H1 2016 to around HRK 276.3 million in the same period this year. Positive trends have also been recorded in the corporate segment, where an increase in new loans of a little over 13% was achieved in H1 2017, from about HRK 3.7 billion in H1 2016 to about HRK 4.2 billion in the same period this year.

EBC Group’s net profit after minorities in H1 2017 amounted to HRK 98.1 million. The strongest impact on its reduction, compared to the same period 2016 when it amounted to HRK 585.4 million, came from increased risk provisions related to the situation in the Agrokor conglomerate and its associated companies. EBC group's net interest income has remained stable and stood at HRK 1.03 billion in H1 2017, compared to HRK 1.04 billion in the same period the year before. Net fee and commission income grew from HRK 307.7 million in H1 2016 to HRK 330.8 million in the same period this year.

EBC Group's total assets at the end of June 2017 amounted to HRK 66.2 billion and were up by 0.9% compared to the end of December 2016, when they had amounted to HRK 65.6 billion. Total loans as of 30/06/2017 amounted to HRK 42.3 billion, 1.1% less compared to HRK 42.8 billion as of 31/12/2016. Total deposits of EBC Group at the end of June 2017 amounted to HRK 44.6 billion and were 1.6% higher compared to 31/12/2016, when they amounted to HRK 43.9 billion.

OUTLOOK

Political and legal stability, the need for further consolidation of public finance and ensuring an adequate framework for continued recovery of economic performance, primarily through a more active implementation of structural reforms, constitute the basic requirements for maintaining positive economic trends of the Croatian economy. Success on these paths paves the way towards further macroeconomic stabilisation and generates potential for positive credit rating changes and further reduction of risk premiums.

In the next period, Erste Bank Croatia will continue to follow the financial needs of the retail segment, while maintaining a strong focus on the SME segment, supporting quality projects that drive the development of the real economy and employment. Simultaneously, the bank will continue to develop its digital business, following modern trends and its clients' needs. By maintaining partnership relations with its clients, fostering open communication and understanding each-other's needs, the bank will continue to build a successful business in the future, thereby making an adequate contribution towards the development of the Croatian economy, with the goal of realising all of its potential. The bank’s goal is sustainable development and long-term success on the Croatian market, where the bank's positive business results ultimately benefit the Croatian society as a whole.

Detailed balance sheets, as well as profit and loss statements, are available as a single downloadable document: