EBKDY Ersta Group Bank AG (PK)

By Ed Frankl

Erste Group Bank AG said Tuesday that its fourth-quarter profit beat expectations as net interest income surged on the back of rate hikes and loan growth.

The Austrian lender's quarterly net profit was 517.7 million euros ($549.3 million), up from the EUR472.0 million in the same period last year.

The result beat a company-compiled consensus of EUR480.0 million.

The bank's net interest income jumped 20% on year to EUR1.57 billion, particularly due to rate hikes in Austria and Romania, offset partly by adverse tiering effects in Austria and Slovakia and the effects of legislation on retail and small-and-medium businesses in Hungary, it said.

Its net fee and commission income rose 1.5% to EUR622.5 million, boosted by increased income in its lending business, Erste said.

The lender, which focuses on central and eastern Europe, kept its key 2023 target of return on tangible equity--a profitability measure--of 13%-15%, adding that it expects its core markets to avoid recession in 2023 and post real GDP growth of up to 3% in 2023 as inflationary pressures subside.

Erste expects net loan growth in the mid-single digits, net interest income growth of around 10% and sees net fee and commission income rising in the mid-single digits in 2023.

The outlook puts it on a path to achieve a cost-to-income ratio of around 52% by 2024, from 53.4% in 2022, it said.

The Vienna-based company declared a dividend of EUR1.90 a share for 2022.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

February 28, 2023 02:15 ET (07:15 GMT)

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