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Erste's shares tumble on central and eastern Europe profit warning


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Erste's shares tumble on central and eastern Europe profit warning

Shares in Austria’s Erste Group Bank have slumped, following a profit warning.

By the end of the session on Friday they had lost 16 percent of their value.

Erste, which is emerging Europe’s third-biggest lender, warned that fresh hits from Romania and Hungary would mean a record 1.6 billion euro loss this year, and no dividend for shareholders.

Erste spoke of rising risk provisions, the impact of a new Hungarian law soaking banks for foreign-currency mortgages that went sour when the forint fell, and stepped-up tackling of problem loans in Romania under pressure from the central bank there.

The warning was a fresh reminder of the perils of operating in central and eastern Europe.

The region did generate fat profits for banks for years after the Iron Curtain fell, but now is causing plenty of headaches as the economy there struggles.

with Reuters

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