Erste Hungary's net loss shrinks 88% y/y in Jan-Sep on lower risk provisions.

By bne IntelliNews October 31, 2012
The Hungarian unit of Austrian Erste Bank posted a net loss of EUR 64.1mn in January to September 2012, down 87.9% from a net loss of EUR 531.7mn recorded a year earlier, the parent bank said in a statement. This significant improvement was mainly due to a higher base effect on account of risk provisions. The bank booked EUR 147.1mn in risk provisions in Jan-Sep 2012, down from EUR 701.3mn in the same period of 2011, when it allocated additional provisions related to the early repayment of foreign currency-denominated mortgages at below market rates coupled with challenging economic environment. Erstes net interest income dropped 15% y/y to EUR 257.6mn and its income from net fee and commission was also down 8.1% y/y to EUR 67.8mn in Jan-Sep 2012. Losses under other result soared 87.4% y/y to EUR 107.4mn which was again mainly due to changes in Hungarys legal framework. The NPL ratio deteriorated to 25.3% at end-September 2012, from 16.5% at end- September 2011 and 21.1% at end-2011. On the positive side, the lender managed to cut administrative spending by 20.9% y/y as the bank reduced the headcount by 11.3% y/y to a total of 2,614 employees at end-September 2012. Erste Hungary has earlier announced a number restructuring measures in response to the deteriorating revenue outlook along with lower lending activity, higher provision-requirements, higher expenses resulting from the bank levy and the early loan repayment scheme and rising risks due to the adverse external environment.
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