BREAKING NEWS

BREAKING NEWS

Austrian bank Erste Group's 2018 profit jumps by a third

Austrian bank Erste Group's 2018 profit jumps by a third
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Heinz-Peter Bader(Reuters)
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VIENNA (Reuters) - Austrian bank Erste Group said on Friday the release of risk provisions and a low tax rate helped it increase full-year net profit by a third, lifting its shares as much as 3.6 percent.

The bank, which operates in six central and eastern European countries besides its Austrian home market, said it expected 2018 net profit to have increased to 1.8 billion euros (1.6 billion pounds) from 1.31 billion euros the year before.

Analysts had expected the figure to come in at 1.47 billion, Refinitiv Eikon data show.

The lender said the release of risk provisions worth about 59 million euros and a 2018 tax rate of below 15 percent boosted its earnings. The group also benefited from higher interest rates in the Czech Republic and in Romania, reaching an operating result of 2.73 billion euros.

Erste Group said it aimed to increase its dividend to 1.40 euros per share for 2018 from 1.20 euros the previous year.

Its shares were 3.4 percent higher at 30.06 euros at 1457 GMT. They are still around 2 euros cheaper than before an announcement of new taxes in Romania in December, which are set to apply from 2019.

Banks will be required to pay a quarterly tax on their financial assets as part of the Social Democrat government's plan to raise income to address a budget deficit.

Erste Group Bank has the biggest exposure of the main European banks in Romania, getting 8.4 percent of its revenues from the country's biggest bank Banca Comerciala Romana.

Raiffeisen Centrobank analysts estimate that Erste Group's Romanian unit's earnings could drop to 18 million euros in 2020 from an estimated 202 million euros in 2018 due to the bank tax.

The group will release its full set of preliminary earnings figures on Feb. 28.

(Reporting by Kirsti Knolle. Editing by Louise Heavens and Mark Potter)

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