Erste Bank : 2Q Profits Sink as Provisions Jump

By Pietro Lombardi

Erste Group Bank AG on Friday said second-quarter net profit dropped sharply, hit by higher provisions, and it expects a sharp fall in profits for the year.

Net profit for the period was 58.5 million euros ($69 million) compared with EUR354.9 million a year earlier, the Austrian bank said.

Operating income of EUR1.81 billion was roughly stable compared with the EUR1.82 billion it had a year earlier.

Covid-related provisions were sharply up in the quarter, it said, hitting the bottom line.

The bank expects 2020 operating income to fall, with net interest income seen lower and fees and commissions also expected to take a hit from the weaker economic environment. It also expects lower operating expenses for the year.

The bank guided for a cost of risk of 65 to 80 basis points and this should be the main drag on net profit, which is expected to fall significantly.

Write to Pietro Lombardi at [e-mail]; @pietrolombard10