PODGORICA Dec 2 (Reuters) - Erste Bank, the third-largest lender in emerging Europe, expects its Montenegrin unit to at least triple its profit this year thanks to cost cuts and new products, the bank's local CEO said on Thursday.
Aleksa Lukic said he expected the bank's profit in the European Union applicant country to range from 2 million to 2.2 million euros this year, up from $654,000 in 2009.
"It's because we reduced the costs, it's because we are risk orientated," he said, adding a new range of products helped increase their market share.
Erste (ERST.VI) entered the small Balkan market in 2009 by buying Opportunity Bank Montenegro, a microfinance organisation with a selective portfolio that spared Erste some of the problems many larger banks later encountered after aggressive lending during Montenegro's 2005-2008 boom.
In 2008, Erste made a net profit of 4.2 million euros in Montenegro.
A sharp fall in foreign investment and property prices, lower exports and poor liquidity have badly hurt Montenegro's small economy since then, pushing the banking industry's non-performing loans rate to more than 17 percent in the first half of this year.
The Erste CEO said his bank had a bad loans rate of 6.2 percent as of the end of August.
Erste, the sixth-largest bank in a Montenegrin market dominated by foreign firms -- as is the case across the Balkans -- has nearly 8 percent of the market, putting it neck and neck with Societe Generale's [SOGNNY.UL] Podgoricka Banka.
Both Erste and Societe Generale, seen as more conservative lenders during the country's boom years, are anxious to increase their market share after high non-performing loans hurt local market leaders, including Hungary's OTP OTPB.BU and nationalised Austrian bank Hypo Group Alpe Adria.
In an interview on Wednesday, Podgoricka Banka CEO Branka Pavlovic said her bank would likely see a 2010 profit of more than 1 million euros after a 1.9 million euro loss last year. The executive added that their non-performing loans rate was 5 percent. (Editing by Will Waterman)