30/04/2024 08:54, BAAERBAG
Erste Group presented its 1Q financial results. Net profit came in above expectations, driven by a 12% year-on-year rise in operating income. A conference call with management will follow at 9:00 a.m. We rate the results as slightly positive.
| Erste Group’s financial results for 1Q 2024 | ||||
|---|---|---|---|---|
| in millions of EUR | 1Q 2024 | Consensus* 1Q 2024 | 1Q 2023 | |
| Net interest income | 1 852 | 1 833 | 1,769 | |
| Net of fees and commissions | 712 | 699 | 643 | |
| Other operating income | 223 | 164 | 87 | |
| Operating income | 2,788 | 2,696 | 2,499 | |
| Operating costs | (1,283) | (1,283) | (1,242) | |
| Operating profit | 1,505 | 1,414 | 1,257 | |
| Cost of risk | (95) | (65) | 21 | |
| The net profit | 783 | 731 | 594 | |
*Median estimate of 18 analysts polled by Erste Group Bank
Net interest income reached EUR 1,852 million, slightly above the consensus. The 5% year-on-year growth was driven by increased interest rates and a larger loan portfolio.
Thanks to growth in payment services, asset management and insurance, Erste achieved record highs revenues from fees and commissions in the amount of EUR 712 million. Year-on-year, they were thus 11% higher and 2% above market expectations. Other operating income increased to EUR 223 million mainly due to the revaluation of financial instruments. Overall operating income reached EUR 2,788 million, a year-on-year increase of 12% and 3% above the consensus level.
Operating costs increased by 3% year-on-year due to higher labor costs.
Erste Group operating expenses for 1Q 2024, source: Erste Group
On operational level Erste reported a profit of EUR 1,505 million, up 20% year-on-year.
During 1Q, Erste created correction items in the amount of EUR 95 million, EUR 65 million was expected.
Level net profit thus Erste reported EUR 783 million, a year-on-year increase of 32% and 7% above market expectations.
Erste Group net profit for 1Q 2024, source: Erste Group
Erste also reported for 1Q capital adequacy 19.2%year-on-year growth loan portfolio by 2.7% and drop in deposits by 1.2%.
Management also confirmed outlook for 2024, which has already announced the results for 4Q 2023. It expects year-on-year growth in the loan portfolio of around 5%. Net interest income should decline by around 3%, while fee and commission income should grow by around 5%. The cost of risk should be less than 25 basis points and the cost-to-earnings ratio should be around 50%. The management further targets a return on tangible capital of around 15% and a CET1 capital adequacy of over 14%.
Erste Group outlook for 2024, source: Erste Group
We rate the results as slightly positive.
Erste Group (BAAERBAG) shares closed yesterday at CZK 1,107.50 on the Prague Stock Exchange and CZK 1,106 on the RM-SYSTÉM exchange.
Karel Nedvěd, Fio banka, as
Tags: Erste reported results net profit exceeded expectations
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