During the Capital Markets Day held in Bucharest, Erste Bank der oesterreichischen Sparkassen AG confirmed its earnings targets for 2006 (increase of the Groups annual net profit of at least 20% compared to 2005). The later than anticipated closing of the acquisition of Banca Comercială Română means that the new Romanian operation is not expected to make a material contribution to the Group results this year. By rejecting the complaints against the law relating to the privatisation of BCR the Romanian Constitutional Court has cleared the way to the promulgation and publication of the law. Closing of the acquisition of BCR can be expected to take place within the next days.
During the session that took place on October 9th 2006, the Constitutional Court resumed the debates regarding the notification for unconstitutionality, referring to the provisions of the Law for approving Government’s Ordinance no.33/2006 regarding certain measures for the closing of the Banca Comerciala Romana’s privatisation, notification that was signed by 39 senators.
Following the debates, the Constitutional Court ruled with a majority of votes (5 to 4), that the provisions contested through the notification based on art. 146 let. a) of the Constitution are constitutional.
Due to ongoing positive economic developments in Central and Eastern Europe and base rate changes in recent weeks, and notwithstanding turbulent political developments in some countries, the Groups annual net profit for the financial year 2007 (including Banca Comercială Română) is expected to increase by at least 25 per cent compared to 2006.
The management also confirmed the medium term growth targets. For the three years to 2009, an annual average increase of more than 20 per cent is expected in the Groups profit after taxes and minority interests. The cost/income ratio target for 2009 will remain below 55 per cent; and in the same year, 2009, the return on equity (taking account of the capital increase) should reach between 18 per cent and 20 per cent.
The business plan as well as a 2006 outlook for Banca Comercială Română was also presented at the Capital Markets Day. For 2006 a net profit of about EUR 250 million is expected for BCR, based on a cost/income ratio of maximum 53 per cent. The return on equity should be above 23 per cent. Based on this earnings expectation, net profit of BCR is forecast to increase by more than 40 per cent CAGR until 2009. Taking account of integration and expansion projects, the return on equity (based on a Tier 1 ratio of 9 per cent) will increase to above 35 per cent in 2009. By then, the cost/income ratio should have decreased to around 40 per cent. This amounts to a return on Erste Bank’s investment in BCR for 2009 of more than the 10 per cent previously announced.
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