February 28, 2019 / 7:50 AM / 6 months ago

UPDATE 1-Erste Group sees 2019 profit growth, helped by demand for loans

(Adds details)

VIENNA, Feb 28 (Reuters) - Austrian bank Erste Group expects its operating profit to rise this year, helped by growing demand for loans in its Eastern European markets and low taxes.

The bank, which operates in six central and eastern European countries besides its Austrian home market, forecast on Wednesday mid-single digit percentage growth in net loans this year after an increase of 7.4 percent in 2018.

Based on a solid economic market environment in countries including the Czech Republic, Slovakia and Austria, net interest income is expected to rise in 2019 after growing 5.3 percent to 4.58 billion euros ($5.21 billion) last year.

Erste Group said it aimed for a return on tangible equity (ROTE) of above 11 percent this year after 15.2 percent in 2018.

A new Romanian banking tax will have a negative impact on the operating result in 2019, but the magnitude remains unclear, the bank said.

From 2019, Romania requires banks to pay a quarterly tax on financial assets as part of the government’s plan to raise income to address a budget deficit.

Erste Group Bank has the biggest exposure of the main European banks in Romania, getting 8.4 percent of its revenues from the country’s biggest bank Banca Comerciala Romana .

Erste Group shares were seen slightly up in pre-market trade.

$1 = 0.8789 euros Reporting by Kirsti Knolle; Editing by Shri Navaratnam and Mark Potter

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