William Malcolm

Ceska Sporitelna Sees Net Profit Rise 43% In First Half

In the first half of this year, Česká spořitelna’s net profit rose by 43.4 percent year on year to 6.6 billion crowns. The growth in profit is due to lower provisioning and better operating performance, the bank said in a press release today. Operating profit increased by 1.4 percent to 10.3 billion crowns, deposits and loans grew.

“Česká spořitelna’s business and financial results for the second quarter reflect the positive sentiment of households and companies in connection with the improving pandemic situation. We still register a cautious approach to spending with private clients, which is reflected in deposit growth. They recorded a record volume of sales in June, and the very good news is that the companies did not get into major financial problems with the repayment of their liabilities, which is reflected in a reduction in the bank’s risk costs, “said Tomáš Salomon, Chairman of the Board of Directors of Česká spořitelna.

A comparison with the first half of 2020 shows that the reserves created last year were sufficient, an analyst from the Trhy.cz portal, Jan Rohrbacher , told ČTK . Last year, the large creation of reserves reduced profits in an extraordinary way. Due to the reduction in the creation of reserves, according to the analyst, the growth of net profit by tens of percent cannot be expected in the coming years. Mortgage loans also contributed to the profit, and their market is growing significantly, he added.

Operating revenues were 1.7 percent higher than last year, amounting to almost 20.3 billion crowns. Net interest income, the most important component of operating income, decreased by 1.1 percent year-on-year to CZK 14.5 billion. According to the bank, the development was influenced by the environment with a lower interest rate, on the other hand, the growth of client loans and deposits had a positive impact on net interest income. Net fee and commission income increased by 14.2 percent year-on-year to CZK 4.5 billion and net profit from trading operations increased by 41.7 percent to CZK 1.1 billion.

Total operating expenses increased by 1.9 percent year-on-year to ten billion crowns, and according to the bank, they were affected by the acquisition of the Czech branch of Waldviertel Sparkasse. The ratio of operating costs and revenues increased slightly year-on-year to 49.2 percent.

The consolidated balance sheet total reached CZK 1.6767 trillion at the end of June and increased by nine percent compared to the volume of the balance sheet total as at 31 December 2020.

The volume of loans provided increased by more than five percent year-on-year to CZK 812.5 billion in the first half of the year. Mortgages grew mainly for households, the volume of loans to business entities stagnated at CZK 266.4 billion. Liabilities to clients rose by 6.8 percent year on year to 1.2237 trillion crowns. Deposits from companies and households were higher, while deposits from public sector clients fell by almost a third.

Česká spořitelna is the largest bank in the Czech Republic in terms of the number of clients, with 4.5 million at the end of June. The Austrian financial group Erste Group Bank, which owns Česká spořitelna, is a key player in the banking market of Central and Eastern Europe. In the first half of the year, Erste more than tripled its net profit to 918 million euros (CZK 23.4 billion).

Austria’s Erste tripled its quarterly profit

The Austrian banking group Erste Group, which owns Česká spořitelna, more than tripled its net profit to 918 million euros (CZK 23.4 billion) in the first half of the year from 294 million euros a year ago. She announced this in her press release today. Erste Group benefited from good operating results and lower risk costs. However, she noted that further developments will largely depend on the progress of the covid-19 pandemic.

“As a bank closely linked to the real economy, the current macroeconomic upturn is directly reflected in our balance sheet. The solid income situation, stable costs and significantly lower risk reserves compared to coronavirus 2020 have contributed to a clear improvement in our half-yearly results, “said CFO Stefan Dörfler.

Operating profit increased by 24 percent year on year to 1.69 billion euros, due in part to growth in interest and fee income. On the other hand, the cost of risk fell by almost 90 percent to 83 million euros.

“It’s a good start to the year, but it’s still too early to celebrate. We remain cautious optimists for 2021, even though we are aware that much depends on the further course of the pandemic – especially the covid mutation of the delta,” said Dörfler.

The positive news is the group’s net profit, which ended quite significantly above analytical estimates, Cyrrus analyst Tomáš Pfeiler told ČTK. The bank’s total revenues also performed better than forecast. Overall, according to him, the management set an optimistic tone.

Erste shares rose after the start of trading on the Prague Stock Exchange and gained more than one percent before noon. “Given that the broader European banking index is depreciating by half a percent today, we can also consider the slight growth of shares to be good news,” added Pfeiler. During the year, Erste Group shares strengthened by more than 50 percent, but last year at this time they only began to recover from the decline caused by the pandemic.