Erste Bank a.d. Novi Sad: Net profit in 2017 went up by a quarter to RSD 2.6 billion; large investment in state-of-the-art operating system (OS) forthcoming

• Loans to individuals and micro customers went up by 34.9% relative to the end of 2016 and amounted to 50.8 billion dinars; deposits of individuals and micro customers rose by 10.9% to 56.5 billion dinars.
• Corporate loans decreased by 4.6% relative to the end of 2016 to 56.6 billion dinars; corporate deposits rose by 52.8% to 36.5 billion dinars.
• Net interest income rose by 6.8% relative to the same period of 2016 to 6,218 million dinars, while net fee and commission income rose by 2.1% to 1,488 million dinars.
• Net profit amounted to 2,632 million dinars at the end of Q4 2017, which is a 27.5% better result relative to the same period of 2016.
• Total assets rose by 13.3%, from 142.9 billion dinars at the end of 2016 to 161.9 billion dinars at the end of Q4 2017.
• Capital adequacy ratio is 17.97%.
• NPL ratio at the end of Q4 2017 was 3.2%.

"During 2017 we again received a confirmation of the appropriateness of our business policy that it is possible to operate responsibly and achieve excellent results in all areas“, stated Slavko Carić, CEO of Erste Bank a.d. Novi Sad. "This year was extraordinarily successful, particularly in the retail and entrepreneur segment. We supported over 2,000 customers in buying homes for themselves and their families. Through our “Step by Step” social banking programme, the growth and development of 50 start-up companies and social enterprises was supported, and we also approved the first loan to a civil society organisation that will use it to multiply its positive impact on the community. In working with corporates, we generated an increase in SME operations through loans, letters of credit and guarantees, while registering somewhat lower lending activity to large corporates“, Carić added.
Carić placed special emphasis on the fact that years of successful operation also enabled the taking of an important decision regarding a large investment in the new IT system and all-encompassing transformation of the bank. "In order for our customers to be able to benefit to an even greater extent from all the advantages of digitalisation and personalised approach, we have initiated large investments in a modern and flexible operating system, a cutting-edge technology in the area of global banking software“, emphasised Carić.

At the end of Q4 2017, total loans to individuals and micro customers went up by 34.9% relative to the end of previous year to 50.8 billion dinars. In comparison with the end of 2016, total deposits of individuals and micro customers also increased, by 10.9% to 56.5 billion dinars.

At the end of Q4 2017, total corporate loans amounted to 56.6 billion dinars, which is a 4.6% decrease relative to the end of 2016, of which the effect of the exchange rate decline is 3.7%, so the real decrease is 1.0%. On the other hand, corporate deposits went up by 52.8% relative to the end of 2016 to 36.5 billion dinars at the end of Q4 2017.
Regarding operating results, in Q4 2017 the Bank posted 6.9% more operating income relative to the same period of last year, while operating expenses went up by 9.4%. Relative to the same period of 2016, the Bank's operating profit was 1.7% higher and amounted to 2,572 million dinars, while at the end of Q4 2016 the Bank recorded an operating result of 2,529 million dinars.

During Q4 2017, net interest income amounted to 6,218 million dinars, which is 6.8% more than in the previous year, when it was 5,822 million dinars. Net fee and commission income was 2.1% higher and amounted to 1,488 million dinars.
After Q4 2017 total net profit amounted to 2.632 million dinars, which is as much as 27.5% better result than in the same period of 2016, when net profit reached 2,064 million dinars. In addition to the increase in volume, the main reasons for the increased result is a higher-quality portfolio reflected in NPL reduction from 6.7% at the end of 2016 to 3.2% at the end of 2017. The reduction was mostly a result of writing off receivables fully provisioned in line with a decision of the National Bank of Serbia. A positive net profit was also realised from the impairment of financial assets and credit risk-weighted off-balance sheet items up to the end of fourth quarter of 2017.

At the end of Q4 2017 the number of digital distribution channel users was 11.5% higher than in December 2016, so now more than 235 thousand Erste Bank clients use internet and mobile banking. Erste Banka continued with the expansion of its network, which at the end of December 2017 had 85 units, while the total number of active clients was 391 thousand in December.

OUTLOOK
Erste Bank a.d. Novi Sad continues to provide comprehensive support to Serbian citizens and businesses in realising their financial needs and goals. Business principles involving a focus on continuous improvement of its customer service, as well as constant enhancement of its internal organisation and efficiency will continue to be the basis of the Bank’s operation in the future.

NOTE 1: The published results are in line with the Law on Accounting and the adopted Decision on Chart of Accounts and Contents of Accounts in Bank Chart of Accounts (Official Gazette of RS, no. 71/2014) and the Decision on Forms and Content of Items in Bank Financial Statements (Official Gazette of RS, no. 71/2014) which came into force on 31 December 2014.
NOTE 2: The published results of individual members of Erste Group are not directly comparable with published Erste Group results by segment. Due to consolidation effects at the Erste Group level, because of which certain Erste Bank a.d. Novi Sad transactions with the members of Erste Group are eliminated, and due to the distribution of certain allocated capital costs, the consolidated results of Erste Bank a.d. Novi Sad at the Erste Group level differ from the results the Bank achieved and reported at the local level.
INCOME STATEMENT