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Erste First-Quarter Profit May Drop on Higher Bad-Debt Charges

Erste Group Bank AG, eastern Europe’s second-biggest lender, will probably report first-quarter profit fell by 6 percent compared with a year earlier as provisions for bad loans rose by more than a fifth.

Erste probably swung to net income of 302 million euros ($401 million) in the three months ended March 31, down from 321 million euros a year earlier, according to the average estimate of 13 analysts surveyed by Bloomberg. The bank is due to report results April 30 at 7:30 a.m.

Net interest income, Vienna-based Erste’s biggest revenue source, may have risen by 4 percent from a year earlier to 1.36 billion euros, the average estimate showed. Provisions for bad loans probably climbed to 562 million euros from 460 million euros.

Erste has said it expects to have a profit in 2012 after writedowns and loan-loss charges at its Hungarian and Romanian units and losses on credit-default swaps contributed to a 718.9 million-euro loss last year. It has narrowed a capital shortfall determined by the European Banking Authority to 166 million euros and has pledged to exceed EBA’s requirements by the June 30 deadline.

The following is a table of analysts’ estimates and results from the previous and year-earlier quarters. The figures are in millions of euros.

                      Q1/12  Q4/11  Q1/11   Q/Q   Y/Y  No. of
                      Mean   Prev.  Prev.   Chg   Chg  Ests.
                      Est.   Qtr    Year
Net interest income   1,358  1,435  1,302   -5%    +4%  13
Loan-loss provisions    562    408    460  +38%   +22%  12
Commission income       438    435    455   +1%    -4%  13
Trading result           91     85    237   +8%   -61%  13
Operating result        955    996  1,031   -4%    -7%  10
Pretax Profit           458    453    471   +1%    -3%  13
Net Income              302    254    321  +19%    -6%  13

The following banks participated in the survey: Barclays Capital, Berenberg Bank, Citigroup, Concorde Securities, ING, J&T Banka, JPMorgan, Keefe Bruyette & Woods, Kepler Capital Markets, Mediobanca, Nomura, Raiffeisen Centrobank, UBS.

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