...Improved Risk/Return Profile: Erste Group Bank AG's Issuer Default Ratings (IDRs) and Viability Rating (VR) reflect the bank's strong and diversified franchise in its core Austrian, Czech, Romanian and Slovakian markets. They also reflect its much improved asset quality, solid funding and liquidity, and adequate capitalisation driven by reduced loan impairments and one-off charges. The ratings reflect weaker operating environments in Erste's central and eastern European (CEE) markets than in Austria, and margin pressure in the Austrian business. Improved Asset Quality: Erste has more than halved its non-performing loan (NPL) ratio since 2013 to a robust 4.3% at end-3Q17 as a result of intensive NPL sales and workout amid low NPL inflows helped by benign economic conditions and tightened underwriting. Loan quality remains much stronger in Austria, the Czech Republic and Slovakia than in Croatia and Romania, but is converging. NPL reserve coverage is adequate across all markets and the reduced...
