Ad hoc announcement Half Year Results/Half Year Results Erste Group Bank AG:Thanks to solid business model Erste Group posts net profit of EUR 492.1 million in H1 09, despite higher risk costs Ad hoc announcement transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------ Thanks to solid business model Erste Group posts net profit of EUR 492.1 million in H1 09, despite higher risk costs - Erste Group posted record operating profit of EUR 1,776.4 million in H1 09. This is an improvement of 19.1% on H1 08, which was not yet impacted by the economic downturn. Operating income grew by 7.0% to EUR 3,736.6 million while operating expenses were down by 2.1% to EUR 1,960.2 million compared to H1 08. - Net interest income and net trading result were the major operating income drivers in H1 09. Despite limited loan growth - customer loans advanced to EUR 128.1 billion in H1 09 from EUR 126.2 billion at year-end 2008. Thanks to stable net interest margins across all geographies, net interest income remained strong at EUR 2,505.3 million (up 8.6% on H1 08), supported by a robust performance of the Retail & SME segment. The excellent net trading result was mainly due to a strong performance of the fixed income and money markets businesses. - Risk costs rose to EUR 892.1 million (up 132.3% on H1 09) or 141 bps of average customer loans. The NPL ratio (based on total exposure) increased from 2.9% in Q4 08 to 3.6% in H1 09, mainly driven by the CEE retail business, the Haftungsverbund savings banks in Austria and portfolio provisions in the Group Corporate and Investment Banking business. - Erste Group has not taken advantage of reclassifying assets as a result of the easing of accounting rules. Results from all categories of financial assets were primarily impacted by revaluation requirements in the ABS/CDO portfolio: the negative P&L effect in Q2 09 equalled EUR 11.3 million (pre-tax) after EUR 54.8 million in Q1 09, while the negative impact on shareholders' equity declined to EUR 43.0 million in Q2 09, compared to EUR 88 million in Q1 09. - Net profit amounted to EUR 492.1 million in H1 09, down 22.7% on EUR 636.6 million in H1 08. All countries, except for Ukraine, where Erste Group has only a small presence, operated profitably in H1 09. - The reported tier 1 ratio improved to 8.4% at H1 09 (2008: 7.2%) following the issuance of participation capital (EUR 1.224 billion subscribed by the Republic of Austria and EUR 540 million by private investors). Risk-weighted assets grew by 4.0% to EUR 108 billion in H1 09. - The loan-to-deposit ratio improved from 115.4% at year-end 2008 to 112.9% at H1 09. Earnings performance in brief During the first half of 2009, the operating result reached a new record value of EUR 1,776.4 million (+19.1% compared with EUR 1,491.0 million in the first half of 2008). This development was particularly due to the strong rise in net interest income (+8.6% to EUR 2,505.3 million), which more than compensated for the decline in net commission income (-11.4% to EUR 888.2 million). The excellent trading result (+86.1% to EUR 343.1 million) also contributed to the 7.0% improvement in operating income from EUR 3,492.6 million to EUR 3,736.6 million. Operating expenses were reduced by 2.1% from EUR 2,001.6 million to EUR 1,960.2 million. The cost/income ratio therefore improved significantly to 52.5% (half-year 2008: 57.3%). Net profit after minority interests fell, in particular due to higher risk costs (costs for risk provisions more than doubled in the first half-year to EUR 892.1 million), by 22.7% to EUR 492.1 million. Return on equity (cash, i.e. eliminating linear depreciation for the customer base) fell from 15.2% (stated value 14.7%) in the half-year 2008 to the current 11.6% (stated value: 11.2%). Cash earnings per share were EUR 1.41 during the first half of 2009 (stated value EUR 1.35), compared with EUR 2.10 (stated value EUR 2.03) in the comparative period of the previous year. Compared with year-end 2008, total assets increased by 1.4% to EUR 204.2 billion. By April 2009, Erste Group placed participation capital in the total nominal amount of EUR 1.76 billion. Of this, EUR 1.224 billion was subscribed to by the Republic of Austria and EUR 540 million by private parties. In spite of a rise in risk-weighted assets, the credit-risk-related solvency ratio improved due to the issuance of participation capital of EUR 1.76 billion, from 10.1% at year-end 2008, to 11.1% as of 30 June 2009. It was therefore still comfortably above the legal minimum requirement of 8.0%. The tier 1 ratio in relation to the credit risk equalled 8.4% as at 30 June 2009 (after 7.2% at the end of 2008). Outlook While the deterioration in economic indicators has led to higher risk costs, we are convinced that we will continue to execute our business model profitably. This development will be supported by our regional focus, the ideal mix between retail, SME and large corporate customers, as well as the long-term orientation of our business model and our well balanced loan-to-deposit ratio. Erste Group, Investor Relations, Graben 21, 1010 Vienna, Austria, Fax: +43 (0) 5 0100 9 13112 Gabriele Werzer, Tel. +43 (0) 5 0100 Ext. 11286, E-mail: gabriele.werzer@erstegroup.com Thomas Sommerauer, Tel. +43 (0) 5 0100 Ext. 17326, E-mail: thomas.sommerauer@erstegroup.com Peter Makray, Tel. +43 (0) 5 0100 Ext. 16878, E-mail: peter.makray@erstegroup.com (c)DGAP 30.07.2009 --------------------------------------------------------------------------- Language: English Issuer: Erste Group Bank AG Graben 21 1010 Wien Österreich Phone: +43(0)5 0100 - 10100 Fax: +43(0)5 0100 9 - 10100 E-mail: info@erstegroup.com Internet: www.erstegroup.com ISIN: AT0000652011 WKN: 909943 Listed: Freiverkehr in Berlin, München, Stuttgart, Hamburg; Open Market in Frankfurt; Foreign Exchange(s) Wien End of News DGAP News-Service ---------------------------------------------------------------------------