* No change to guidance as Ukraine crisis unfolds
* Q1 net profit 103 mln eur vs Reuters poll avg 88 mln
* Shares unchanged
(Releads, adds executive comments, shares)
By Georgina Prodhan
VIENNA, April 30 Austria's Erste Group Bank
stuck to its forecast for flat operating profit this
year, saying the crisis engulfing Ukraine could still derail an
improving economic outlook in its main central and eastern
European (CEE) markets.
Erste sold its Ukrainian unit last year, but is concerned
that disruption to energy flows from Russia - which is accused
of destabilising Ukraine by the West and faces sanctions - would
hit economies in the region hard.
It said on Wednesday it would keep its forecast for 2014
operating profit of about 3.1 billion euros ($4.3 billion),
despite improving clarity about European Central Bank health
checks of the banking industry - which it cited in February as a
reason for a conservative outlook.
"As some things clear up, other things are unfolding so we
don't see a reason to change our guidance," Chief Risk Officer
Andreas Gottschling said on a conference call after the bank
posted a 4 percent drop in first-quarter operating profit.
Excluding the effects of the Ukraine crisis, Erste said its
view of the markets where it operates outside Austria - the
Czech Republic, Slovakia, Romania, Hungary and Croatia - was
"We anticipate slightly stronger growth in our region than
we had initially anticipated," Chief Executive Andreas Treichl
said on the call.
Erste shares were barely changed at 24.42 euros at 1010 GMT,
outperforming the European banking index, which was 0.6
Erste's bigger rivals in central and eastern Europe,
UniCredit's Bank Austria and Raiffeisen Bank
International, have said they would also like to sell
their Ukrainian units when the market allows.
RBI said last month its ability to meet previous targets for
lending and risk provisioning depended on how events in Russia
and Ukraine played out. Russia is its single most important
Erste's first-quarter operating profit fell 4 percent to 727
million euros, missing all the estimates in the Reuters poll of
analysts, which averaged 760 million euros.
It also posted a 42 percent drop in net profit to 103
million euros, blaming subdued loan demand, persistently low
interest rates and unfavourable currency exchange rates.
However, that was less steep than expected.
It was helped by a 2 percent fall in risk provisions to 364
million euros, versus expectations of a rise to 435 million,
which Gottschling said was mainly due to one major commercial
property in the Czech Republic.
"We expect a lower level of provisioning for commercial real
estate for this year. Whether it's going to stay as low as it
was in the first quarter, there's no way of telling," he said.
($1 = 0.7237 Euros)
(Editing by Michael Perry, David Holmes and Mark Potter)