The bank posted a solid half-year result while the ‘extraordinarily strong’ net trading and fair value result was attributable primarily to the development of interest rates and the performance of financial markets in recent months, according to chief executive officer Andreas Treichl (pictured).

Erste Group posted a net profit of €731.9m in half-year 2019. Net interest income increased to €2.3 billion compared to €2.2 billion in the prior-year period and although the net trading result improved significantly to €310.1m (1H2018: €11.9m), the line item gains/losses from financial instruments measured at fair value through profit or loss declined to €-140.1m (1H2018: 66.6m), with the development of both line items driven by valuation effects.

Erste Group Bank launched 83 structured products worth an estimated US$342m between January 1 and June 30 2019 (1H2018: US$320m from 93 products), according to SRP data. The structures were distributed across five different jurisdictions: Austria, Croatia, Germany, Hungary and Romania.

Forty-one of the products issued during the semester were targeted at retail investors in Austria including 26 linked to a single stock, of which OMV (four products), Andritz, BMW and SAP (three each) were the most popular. There were also six products, worth an estimated €54m, tied to the proprietary Solactive Erste Multi Asset Index 35 VC, which tracks the price movements of eight exchange-traded funds (ETFs) with a focus on different asset classes.

Erste’s products for the German market, 18 in total, included four credit-linked notes, which were tied to the credit risk of a single entity, and a further four products linked to the Stoxx Global Select Dividend 100 Index.

In Hungary, there were 21 products available in 1H2019, 11 linked to a basket of shares and 10 linked to a single index. Hungary was the sole market were the bank launched products that were issued on the paper of manufacturers other than Erste: eleven products were issued via Credit Suisse and three via Vontobel.

Erste Group was highly active in the capital market, placing a total of four benchmark bonds with different seniorities, most recently it issued a 15-year mortgage covered bond which attracted orders of €3 billion. The €500m transaction priced at MS+7 bps. Erste Group also came with an inaugural seven-year non-preferred senior issue, which priced at MS+80 bps and for which the order book peaked at €2.3 billion. Including retained earnings for the first six months, the common tier 1 ratio stood at 13.5% as of the end of June.

As of June 30 2019, debt securities issued increased to €30.8 billion (December 31 2018: €29.7 billion).

Click the link to view the full Erste Bank Group 1H2019 results, presentation and interim report.