Solid results despite higher cost of risk

• Erste reported a net income figure of EUR 820 mln, beating market estimate of EUR 757 mln and even our top forecast of EUR 807 mln. Better than exp. results came from the higher operating results while risk provisioning was higher than forecasted (in line though with our estimates).
• NII was still growing 20% y-o-y and 4% q-o-q. In the previous quarter, there was a negative one-off in HU to the tune of EUR 40 mln, adjusting for that the increase was 1.6% on a quarterly comparison. NIM also improved 10 bps q-o-q and 32 bps y-o-y driven by more optimal balance sheet and euro area margins. Net F&C was again robust thanks to all fee trends which seem very satisfactory considering an economic slowdown. The key positive is the cost development which was actually down by 2% q-o-q thanks to lower PEREX in the quarter.
• Risk cost hiked to 30bps as a result of macro forecast and parameter updates i.e. at Savings Banks while level of new defaults continued to remain low. NPL ratio stayed stable at 2% and overlays still amounted to EUR 900 mln.
• Loan portfolio was up by 0.6% from which there was a negative impact of EUR 1.3 bln q-o-q due to adverse FX. Deposits in retail was stable but business volatility and corporates led to an overall decline of 2.2% q-o-q.
• Capital ratio was at 14.5% without Q3 profit, including interim figure would result in a level close to 15%.