Austria's Erste Group Bank has reported that its net profit declined by 26.8 percent to 860 million Euro in 2008, as it wrote down premiums on asset values in three Central and Eastern European daughter companies. Hit by the financial crisis, Erste made a net loss of 603 million Euro in the fourth quarter ending in December, compared with a profit of 337 million Euro in the same period of the previous year. The bank also confirmed that it had concluded a previously announced agreement with the Austrian government to raise 2.7 billion Euro of capital, of which up to 1.89 billion Euro will be provided by the state.

All of Erste's Central and Eastern European daughter banks remained profitable in 2008, with the exception of Erste Bank Ukraine, which made a 29 million Euro net loss. However, taking into account the effects of the global economic conditions, Erste wrote down premiums worth a total of 567 million Euro on the value of assets at its Bulgarian, Serbian and Ukrainian banks and risk provisions were more than doubled to 1.07 billion Euro for the entire banking group.

Owing to a 24.5 percent rise in net interest income, operating income increased by 13.7 percent to seven billion Euro. "Even if, as a result of the rapidly deteriorating environment, we expect an increase in risk costs," Erste Chief Executive Andreas Treichl said, "the earnings strength of a broad-based retail bank should not be underestimated." Erste Bank has shed 300 jobs in the Ukraine, the company announced on February 26. Officials said the cuts to its 2,120 workforce in the East European country were part of an "adjustment" in its business plan.