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Nonrecurrence of positive one-offs leads to YOY drop in Erste Group H1 result

Erste Group Bank AG reported second-quarter net result attributable to owners of the parent of €362.5 million, down from €567.0 million booked in the same period in 2016.

EPS for the period was 80 cents, down from €1.32 a year ago. The S&P Capital IQ consensus estimate for normalized EPS was 82 cents.

Return on equity fell year over year to 11.1% from 19.7%.

Net interest income was €1.09 billion in the second quarter, compared to the year-ago €1.10 billion. Net fee and commission income rose to €453.2 million from €441.8 million.

Erste Group booked net impairment losses on financial assets of €38.6 million, compared to a €30.6 million reversal on losses in the second quarter of 2016.

For the first half, the group reported net result attributable to owners of the parent of €624.7 million, down from the year-ago €841.7 million, primarily due to the nonrecurrence of positive one-offs.

EPS for the half was €1.41, compared to €1.96 a year ago.

Net impairment losses on financial assets rose on a yearly basis to €104.3 million from €25.8 million, mainly attributable to the rise in the balance of the allocation and release of provisions for the lending business along with the costs of direct loan write-offs offset by income received from the recovery of loans already written off.

Erste Group's nonperforming loans ratio improved to 4.7% at June-end from 5.8% a year earlier.

As of June 30, the group's phased-in common equity Tier 1 ratio under Basel III rules stood at 13.2%, compared to 13.0% at March-end and 13.4% at the end of 2016.

For the first half, return on tangible equity was 11.2%, above Erste Group's minimum target of 10%.