(Adds detail, company comment)
VIENNA May 5 Erste Group Bank's
first-quarter net profit came in slightly below expectations as
IT projects led to an increase in personnel and other expenses,
the Austrian lender said on Friday.
The bank, which operates across central and eastern Europe,
said low interest rates had pressured its net interest income,
which fell 3.7 percent in the first three months of the year
compared with the same period a year earlier.
Net profit after minorities fell 4.6 percent to 262.2
million euros ($288 million). Analysts had on average expected
net profit of 270 million euros, according to a Reuters poll.
Regulatory reporting requirements and a push into digital
services had raised the company's IT costs and they were set to
remain a challenge, it said. Personnel expenses also rose 1
percent to 571.7 million euros.
"Rising IT costs -- 91.6 million euros in just the first
three months of the financial year 2017 -- are currently an
obstacle to an improvement in the operating result and hence in
the cost/income ratio," Chief Executive Andreas Treichl said in
Erste said it expected solid growth in the region this year
and kept its outlook of a return on tangible equity of more than
10 percent, having reached 9.8 percent in the first quarter.
Its fully loaded common equity tier 1 ratio -- a measure of
balance sheet strength -- fell to 12.5 percent of risk-weighted
assets at the end of March from 12.8 percent at the end of 2016.
($1 = 0.9104 euros)
(Reporting by Francois Murphy and Alexandra Schwarz-Goerlich;
Editing by Michael Shields)