Erste Group creates provisions for severance payments in Romania, Hungary

Erste Group, the parent company of Romanian lender BCR, has put aside money for severance payments in Romania and Hungary, according to its most recent financial report. “Personnel expenses were up 2.6 percent to EUR 2.3 billion. This increase was partly due to severance payments in the Czech Republic, provisions for severance payments in Hungary and Romania,” reads the report. The group added more employees to Romania last year, reaching 9,200, from 9,100 at the end of 2010. The increase was a consequence of the permanent employment of formerly temporary personnel, the group explains.

Erste Group reduced losses last year, to EUR 719 million, and returned to profitability in the fourth quarter of the year. “By returning to profitability in the fourth quarter we have proven that our business model – being the bank for retail and corporate clients in the eastern part of the European Union – works even as economic conditions remain challenging. In the financial year 2011, net profit was up in almost all countries. In Hungary and Romania we have strengthened the top management and taken action to return to a successful development,” said Andreas Treichl, Chief Executive Officer of Erste Group Bank (in picture). The group saw its total assets up 2.1 percent, to some EUR 210 billion. Customer deposits, at EUR 119 billion, were up almost 1.6 percent year-on-year, while lending volume rose by 1.8 percent, to EUR 134.8 billion. Erste improved its income from net interest, which went up by 2.4 percent, to some EUR 5.5 billion. Income from fees and commissions was however down to EUR 1.7 billion, a 3 percent drop. The group's risk costs increases, mainly due to additional risk provisions in Hungary. The cost of risk stood at EUR 2.2 billion for Erste Group. Erste expects a growth in its 2012 results on all its core markets. The full 2011 report here. Erste Group was founded in 1819 and became one of the largest financial services providers in Central and Eastern Europe. It runs subsidiaries in Austria, Romania, the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Ukraine. editor@romania-insider.com (photo source: Erste Group)