Erste Group Bank AG (EBS) of Austria will take a 300 million euro ($400 million) goodwill impairment, mainly associated with its struggling Romanian unit.
The writedown, along with losses from the sale of a Ukrainian subsidiary, means Erste will post net profit of about 450 million euros last year, the Vienna-based bank said in an e- mailed statement today. It reported 597.3 million euros net income in the first nine months.
Erste will “fully service participation capital as well as pay a dividend on ordinary shares for the 2012 business year,” it said. “As goodwill is excluded from the regulatory capital calculation, Erste Group will report significantly improved capital ratios as at year-end 2012.”
Goodwill typically reflects the value of intangible assets and may arise when one company is purchased by another.
The firm fell 1.5 percent to 26.19 euros at 12:42 p.m. in Vienna. That reduced its 14-day relative strength index to 68.9, below the level of 70 suggested in technical analysis that the stock may be overbought. The benchmark Euro Stoxx Banks Index (SX7P) declined 0.3 percent.
Erste has been struggling to contain a rise in bad loans at its subsidiary in Romania, Banca Comerciala Romana SA. The lender sold Erste Bank Ukraine for $83 million in December, booking a 151 million-euro loss.
The company reiterated its guidance for full-year operating performance provided in October, when it forecast operating profit “slightly behind” the 3.63 billion euros reported the previous year.
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