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Erste Bank und Sparkassen Increase Operating Earnings by 16 Percent to EUR 947 Mln

Published: March 6, 2015; 19:30 · (FriedlNews)

Erste Bank und Sparkassen have concluded the year 2014 with a successful result. Operating Earnings increase from EUR 817.2 million to EUR 947.2 million.

Erste Bank und Sparkassen Increase Operating Earnings by 16 Percent to EUR 947 Mln / Picture: © Erste Bank

Moreover, EUR 21.5 m. were invested in activities for the benefit of communities in 2014, in the regional districts of Sparkasse branches all over Austria. Culture and the arts, traditional customs and the infrastructure of municipalities were sponsored. In addition, charitable and socially active associations were supported, as well as projects for youth and sports. “This commitment is firmly imprinted in our DNA”, explains Gerhard Fabisch, president of the Austrian Sparkassen Association. “In order to pursue this social mandate, not only a good annual result is needed, but also framework conditions that don't endanger our business.”

Positive Credit Growth

Loans extended to customers have increased by 2.5% in 2014, from EUR 64 bn. to EUR 66 bn. Growth was especially evident in terms of corporate loans, which amounted to EUR 27,1 bn. (+4,1%) in 2014 compared to EUR 26 bn. in the previous year. Loans to private households remained approximately at the same level, with a credit volume of EUR 32.6 bn. Another increase was recorded in loans to the public sector, which rose from EUR 3.1 bn. to EUR 3.5 bn. (+11.5%).

With respect to the extension of new loans, 2014 exhibited a very positive trend as well. Erste Bank und Sparkassen have extended EUR 10.2 bn. in new loans last year, which amounts to a gain of +5% compared to 2013.

“There can be no talk of a credit crunch anymore”, says Thomas Uher, member of the management board. “Extension of credit is our core business, which we want to continue to grow in 2015 as well”.

Deposits increase slightly

Customer deposits have shown a slightly positive trend compared to the previous year: in 2014, they amounted to EUR 65.9 bn. (+1.3%). Currently more money is in demand deposits, the volume of which rose from EUR 32.6 bn. to EUR 34.1 bn., while savings deposits with a fixed term declined from EUR 32,5 bn. to EUR 31.7 bn. There have also been positive developments with respect to building savings deposits, which increased to EUR 7.07 bn. (+1.4%) in 2014. Funds for life insurance policies have increased from EUR 8.3 bn. to EUR 8.44 bn. (+1.8%). The volume of securities deposits has developed positively in 2014, rising from EUR 21.03 bn. to EUR 21.46 bn. (+2.1%).

Due to low interest rates, more and more customers are looking for alternatives to the savings book, in order to preserve the purchasing power of their wealth. The managed fund You Invest was able to book strong gains in 2014 and reached a volume of approx EUR 511 m. at the end of the year.

Commission and interest income increase

Interest income as the most important earnings component rose by 10% in 2014 from EUR 1,420.2 m. to EUR 1,575.7 m. Commission income could be increased by 7.7% from EUR 730.7 m. to EUR 786.6 m. The increase in commission income is mainly attributable to increases in the securities business, insurance policies and new loans. Administrative expenses have barely changed, thus costs of EUR 1,530.4 m. in the previous year remained nearly constant in 2014 at EUR 1,551.5 m. The operative result could be increased from EUR 817.2 m. to EUR 947.2 m. in 2014. “In a year in which the economy performed weaker than expected and geopolitical developments have created a lot of uncertainty in Europe, I'm especially pleased by such a good result”, Thomas Uher explains further.

The cost-to-income ratio has improved from 65.2% to 62.1% in 2014. Return on equity could be increased from 6.6% to 8%.

The number of full-time equivalent employees amounted to 12,471.8 at the end of 2014 compared to 12,740,2 in 2013 (-2,2%).

The number of branch offices in the Sparkassen Group remained largely constant, thus there were 1,154 branch offices (of which 192 are OMV banking service stations) compared to 1,160 branch offices (190 OMV service stations) in 2013.

The Sparkassen Group had 3.43 m. customers as of the end of 2014, which is a gain of 2% compared to 2013. Therefore, there was a net addition of 74,000 new customers.