A wonderful good morning, ladies and gentlemen. I'd like to welcome you to the presentation of the annual results of the Erste Group. The press conference will be broadcast in German and in English on the Internet. If you are connected online, if you want to ask questions, you can do so anytime, even during the press conference and in the Q&A session, we will read out how this is done. If you have any questions for the executive board, and if you're here in the room, please wait for the roving microphone so that the ladies and gentlemen of the live stream can understand your question as well as the answers. Now I'd like to hand over to Willi Cernko, the CEO of the Erste Group. Thank you.
Welcome. Cordula Gursch, also from our side. It has been a turbulent year, 2022. One year ago, when the board of the Erste Group, MKG, presented the results of 2021, there was this terrible war in Ukraine that had only started a couple of days ago. I still remember I had a lot of talks with clients, and the general opinion was quite unanimous. People believed that this would be a matter of a couple of days, a couple of weeks, and then a new era will dawn. History will be rewritten. Actually, things turned out quite differently.
We're in the midst of a war that has arrived now in the midst of Europe, in light of all of our forecasts for the future, we have to assume that this conflict will be around for some time to come. It is hard to predict in which direction it will be going. It remains to...
Well, we still have the hope that peace will get a chance. Looking back at the past year, we can say quite clearly that in the Q1, we had something that wasn't quite a depression. I wouldn't call it a depression, but all the forecasts for the remainder of the year were clearly corrected downwards. If we remember this step by step, we worked our way out of the situation. I still remember when I took over as the CEO here, and I had the first talks with investors, and there was always the question, "And what if we will no longer get any gas from Russia?" On and so forth. We calculated all kinds of scenarios, and we learned one thing relatively quickly, fortunately, namely that Europe is capable of reacting, of reacting very efficiently.
I'm not saying that we have found solutions that will provide us with a sense of orientation for the long term. But two months later, the gas storages were full. Two months later, the scenario of no gas coming from Russia wasn't a scenario anymore. We said, "Well, we saved the coming winter, but next winter, 2023, 2024, what about that?" If we take a look at today's storage levels, we can assume that the winter 2023, 2024 will also be somewhat manageable. We still have not found a long-term solution. We live in a day and age that is challenging and where we need to also address and solve issues on a day-to-day basis. It is a fact that in the past year, we've seen an economic growth of 4% in the regions where we're active.
That is a bit higher than the economic growth of the Eurozone. That is also reflected in our results, as we will report shortly. Going forward, looking ahead to the year 2023, yes, we would consider the year as a year of transition. The first forecast had clearly assumed that we cannot completely exclude a recession. There's a high likeliness of it occurring. Today, we can assume that the recession is not a scenario that has a high probability. We can assume that we will probably see a soft landing. In our economic area where we are active, we expect an economic growth of about 1%, and that is significantly supported by several factors that I will briefly refer to in the following.
On the one hand, what we are seeing is that the states in Central and Eastern Europe, as you can see on the right-hand side, characterized by public debt that is comparatively low when compared with Western or Southern Europe. There's also some fiscal leeway that can be utilized. What we are seeing is that there's a trend that seems to be improving. Also, when we look at the budget deficits and the Maastricht criteria, by the way, who's talking about Maastricht these days? Well, Maastricht has been more important in the past. Going forward, and this takes me to my favorite subject, which is, to take a look at the situation from different perspectives. Whenever we're faced with a challenge, and even if we believe it is almost impossible to solve, there are always some aspects that give us cause for optimism.
One thing that makes me and us optimistic, and that should make us optimistic, is that at the European level, there are substantial financial means that are available, funding available to promote the transformation of economy. The Cohesion and Reconstruction Fund will provide around EUR 150 billion in support of the countries in the region. To put this in perspective, for Croatia alone, for this year, funding will be available in an amount that is about 7.4% of the GDP. Those are substantial amounts that are made available to the economy in order to move the economy forward, and this is an impetus that cannot be underestimated in times like these. There's another topic that will constitute a challenge, but of course, there are also some positive signals.
Yes, we have seen a rate of inflation that reminds us of the 1970s. I still remember the 1970s. We have seen all of that. What's positive is that today we're going to see an improvement, and in Austria, we believe that the full year rate of inflation will be approximately 6%. Of course, these are the current forecasts as far as we can make such forecasts. If we remember back, a rate of inflation of 2% that we wanted to achieve, well, it is gonna take until 2024 or 2025 to reach that level. The positive news is that we are on the right path. Now, I will come back to this later, what kind of things will have an influence on the rate of inflation.
As far as the key interest rates are concerned, we should not go overboard. In the past 10 years, we have not only seen downward trends in the key interest rates and the negative interest scenario even. We've been spoiled, and today we are faced with key interest rates that are taking us further back into the past, maybe 10, 15, or even 20 years into the past. At the end of the day, and that is the positive news, is we are seeing that levels are being reached in terms of these key interest rates that are the levels that are more realistic. Going forward, there will maybe be some reductions in the key interest rates again.
We believe that by the end of the year, we're going to have a reference value of 3.75% for the EUR key interest rate. Today it's 3%. Maybe it'll be 4% at the end of the year. We don't know. It's going to be more or less around that. Whether that is the end of the road will depend on how inflation can be combated by these moves. The ECB always needs to find the right balance between the key interest rates and, of course, they shouldn't fuel a recession. If we take other markets like the Czech Republic, for example, today the reference value is 7%, and at the end of the year, we can expect a first downward step, maybe. It cannot be completely excluded.
In Hungary, we're currently at 13%, towards the end of the year, we expect to be maybe below 10%, and 9% is our assumption. In Romania, well, it should remain at a level of 7% at the end of 2023. There's another topic that is very positive indeed, is the labor market. That contributes very positively, even if you look at the quality of the loan portfolio, or especially loans to private households. Alexandra, my colleague, is going to refer to that later. On the other hand, there's also a disadvantage. If companies are going to invest in growing their business and expanding capacities, well, they need to hire a lot of new staff and employees.
Well, that is actually a limiting factor, is unemployment rates, and we need to think about how to deal with that. That is, of course, also something we're discussing here in Austria in terms of, full-time, part-time. We should not underestimate this. A lot of companies are confronted with that. They want to invest in capacity, growing their capacity, but there are some limiting factors. There are two sides to this coin, a positive and also a negative side. Namely, that there's a limited access to qualified human resources. Now, Alexandra, I would like to hand over to you.
Thank you very much, Willi. A cordial welcome to you, ladies and gentlemen. If my voice is a little bit shaky today, this is not due to our risk costs and risk situation, which is excellent, but it is due to a cold. Please, I apologize for my voice. We have already heard that the employment market is very strong, and together with the resilience of our corporate customers, it is one of the driving factors why our risk result is so good. On the left-hand side of the presentation, you see the graph. You know that we present our risks costs as in basis points of our credit volume, 0.15%, namely 15 basis points of our credit volume, approximately EUR 300 million. Allow me a short look back.
You see very well that before the COVID crisis, our crisis costs were very low. In 2018, we even reversed our risk costs. Then in 2020, we saw a sharp swing in risk costs. Why was that so? You might remember that this was not due to defaults in our portfolio, but it was due to the fact that we were forward-looking and anticipative and proactive in order to take care of an expected de-deterioration of our portfolio. The wave of defaults that we feared did not materialize, and these lump sum provisions that were formed for COVID were released in 2020. What else did we do?
COVID is over. Due to other macroeconomic factors and the war in Ukraine, we also took a proactive approach. You see our credit-related risk provisioning on the right-hand side. Starting in 2020 and continued in 2021 and 2022, we have a proactive approach. We have lump sum provisions of more than EUR 930 million. Macro relates to our risk provisions, resulting from our models taking into account high inflation and rising interest rates and GDP development. In turquoise, you see a portfolio provisioning relating to the war in Ukraine. That are hit by most deteriorations of our credit portfolio. We also had specific provisioning, tailored to industries that were extremely hit by the crisis.
On the other hand, since these industry-specific provisions do not apply anymore, we have lump sum provisions for other factors. We are well-positioned for the future, we confirmed our expectations for 2023, a maximum of 35 basis points. That is to say a double of our level of 2022 can be expected in a worst case scenario for 2023, so 35 basis points. We haven't seen any defaults in our portfolio, neither in industry customers nor in private customers, no deterioration of the portfolio quality, but we did a proactive approach as far as provisioning is concerned, and this makes us very positive for the future. The NPL ratio also is positive.
We didn't show you the years before 2021, but you might remember that we almost had 10% in terms of an NPL ratio. We have a historically low NPL ratio in 2022 since we went public, namely 2%. Also in the European comparison, this is very good, and the NPL coverage ratio, which means the proportion of the volume of non-performing loans covered by provisions is also very good. This doesn't include any coverage by securities, and if we include that we have an NPL coverage ratio of more than 100%. We have a very good portfolio quality, a very strong portfolio as far as the resilience of our customers is concerned, industrial customers as well as private customers.
We have sufficient provisioning taking into account rising interest rates and the crisis environment, and we also have a very strong NPL coverage ratio. Thank you very much.
Thank you, Alexandra. I can assure you your voice has been strong and loud and clear, just like risk management has always been in those difficult times. Let me take you to the next page where we talk about the operating income. I think that you are familiar with the fact that the year 2022 has been characterized by strong growth, I'll come back to that in more detail in a minute, and also rising interest rates, initially in Central and Eastern Europe, and then as of the middle of 2022, also in the Euro region. That has given us a tailwind that you can see here in the net interest income. There's an increase of almost EUR 1 billion.
Also in terms of the net commission income, in spite of the difficult market environment, we have managed to perform even better than last year. This is due to the net commission income mix and also the excellent work of many of our colleagues. We have about an increase of 6% year-on-year. The mix is a bit different, like I said. This was driven by net commission income from payment transactions and also from commissions due to growth. We're very confident that in the current year, depending on how the markets will evolve, our asset management is also going to pick up some dynamics. The loan demand remains very strong. In 2022, especially in the second half of the year, we had a stronger growth dynamic in terms of corporate customers.
In the first half of the year, it was driven by short-term demand for liquidity for our corporate customers. In the second half of the year, in a more sustainable way, we had a lot of investment loans, and we are confident that in 2023, due to the fortunately somewhat better economic outlook, we will see a good dynamic there. In the area of housing loans, well, we have a lot of guests that will be interested in that. We have seen a very strong dynamic until the middle of the year, and then there's been a mix of rise of interest rates and regulatory measures, and I think that you're familiar with that from many discussions with Mr. Cernko. There's been a significant downturn, and we'll see how it plays out in the medium to long term in 2023.
For the entire portfolio of the Erste Group, we expect about a 5% net loan growth. Of course, a precise forecast is not quite easy to make at the end of February. There's been a solid deposit growth. You will remember during the pandemic, this growth of deposits has been enormous due to completely logical reasons. Now we have a healthier, more robust balance between deposits and loans. For the first time since some time, we have more than a loan deposit ratio of above 90. Sometimes it was clearly about above 100, sometimes it was in the low 80s. We feel at ease between 90 and 100. Of course, these things differ from market to market.
People need liquidity for their day-to-day lives, but also due to higher interest rates, they are investing in term deposits, but also in other types of investments on the bond side. The dynamic will change due to the changing interest rate environment. Now let's talk about costs. Operating expenses. For three years, we had a relatively flat cost curve. The rate of inflation was always between 1% and 2%, and there was a very good efficiency control and management. In 2022, of course, we increased operating expenses by 6.2%, and you can imagine that in 2023, when compared to 2022, the operating expenses are going to rise by more than 6%, significantly more. By how much? Well, it's hard to predict from today's perspective because the expectations of the rate of inflation are quite diverse.
We believe that inflation will start to reduce in the Q2, but the big question is, how far are these rates of inflation going to go down? You know, the forecasts of economists, they tend to change very quickly, and also the bandwidths are quite diverse. We expect that it will be maybe in the 7% or 8% range. That's the current expectations, and we'll see how it plays out for the rest of the year. What's important to say is that our profitability and our costs, of course, need to be kept in balance and, of course, in the best possible scenario, we want to keep up our profitability. This is not always gonna be easy in line of the volatile interest rates.
I will try to show you this waterfall diagram in order to summarize the most important factors. The operating income, well, the slightly lower risk costs and the higher operating expenses were compensated by this operating income so that the operating result grew in double-digit terms, and the net result at EUR 2.5 billion is also very successful. This makes it possible for us to not only announce a dividend of EUR 1.9 per share, and to suggest this to the annual general meeting. A share buyback scheme on a small but relevant amount will be considered, and of course we'll have to discuss this with the regulators, and we're going to do that in the coming weeks and months. This brings me to our capital position, our capitalization.
What is always the top priority is investing in our business model. We need to invest in innovations and especially innovations for the future. In the past few years, we have seen very challenging circumstances. A growth of customers growing in the digital customer business, and last but not least, and this is of the highest importance to us, the indicators about customer satisfaction have developed satisfactorily, and that's always our top priority. I mentioned the dividend, and I believe that other than that, the capitalization that you see here constitutes a solid foundation for future growth. I would like to hand over to Mr. Bleier for his presentation on the business situation.
Ladies and gentlemen, I'd also like to welcome you, also for our guests behind the computer screens. I would like to briefly talk about the corporate business and the capital market business.
You see that due to the strong capitalization that Stefan has referred to, we see an excellent growth in the corporate business in the past year. In all the countries, we grew in terms of our corporate loan business. We also gained market share. This growth is based on all important corporate customers, SMEs, major customers, good for large corporate customers, and also commercial real estate. You see more than EUR 2 billion worth of green investments or green loans. That's the funding of projects in terms of renewable energy sources, ecological buildings and decarbonization projects of corporate customers. Apart from the strong growth in the corporate segment, we are also very proud that on the capital markets and on the investment side, we've also improved. More than EUR 100 billion of issuances have been supported by our company.
A large number of transactions have been handled, and thus our vision of becoming a leading investment company in investment banking business. Apart from the global investment banking companies, we are actually the preferred partner for issuances in Central and Eastern Europe. Of course, it is the states and financial institutions that are strongest in this segment. This is also reflected in our balance sheet. It is the capital market issuances that drive the business here, and that also stands for the growth that we had in the area of markets across the different interest rates and currencies, while we managed to earn a record result also in the area of markets in 2022. What do we do based on this growth in the corporate and capital market business?
We invest in innovation and in growing our possibilities on the customer side. I think you've been familiar with George for many years, in terms of the retail business, and already announced that we also want to let George work at the business level. Now, we have started with the rollout in Austria. We have already migrated the first 1,000 customers to George Business, as we call it. Our objective is to ensure that corporate customers can be working with us in a simplified way, so customers can open accounts or the daily way of working with us will become much easier the way our customers already know it in the retail business.
We'll start in Austria. This year all our customers that are still using Telebanking will be converted to the new platform. We'll roll this out over the coming years. This does not only refer to the current business. There will also be some new developments. Our corporate customers will also be able to see their rating, their key financial indicators. Our strategy, we build financial health for our customers where we start with transparency. It will be possible to see the most important rating indicators on this platform. We are also going to make sure that the awarding of loans can be standardized online. There's some successful pilot projects in our group. This is going to be set up on this platform.
In the course of the year, we're going to report more about this, but I can already tell you at this point that we are very happy with the results so far. Okay. That's it. I'd like to hand over to Willi Cernko .
Let's stay with George. We are quite proud of this success story. We are now present with George in six markets. In the Q4, we managed to win 300,000 new George users. We currently have 9 million customers. What's so nice, in order to put it briefly, one out of three banking products is actually already sold through George. That is a digital offer, and that is also in line with our strategic orientation.
On the one hand, we want to continue to invest in our ability to understand data, to read, to interpret data for the benefit of our customers so that we can find the right answers to the needs of our customers. This will have to be done to a large extent through the digital pathway. We are convinced that we can come up with an intelligent, smart digital offer that will allow us to address much more customers. That is the journey that we have embarked upon, this doesn't mean that we are going to do without our branch offices and our personal care. We are still committed to this hybrid business model, as we call it.
We believe that there are some moments, there are some events where in spite of all the information that you can obtain from the World Wide Web, but still there's a need for personal talk in order to put things in perspective, to sort them, to be able to assess things and get complementary and additional information, and this is where our colleagues come in. Ingo Bleier has already said it, and Stefan Dörfler has referred to it. We are convinced, if we look at the interest rates, that we can assume that the real interest rates will remain negative, very negative. Even if we are seeing that step by step, the there will be some interest rates paid for savings accounts. Anyway, the real time, the real interest rates will remain negative.
In order to be able to participate in the recovery, you need to discover the capital market, and this can best be achieved by savings plans, security savings plans in order to keep the risk manageable for the individual investors. What we are seeing is a value that is close to 1 million savings plans. What's behind this? In Austria, we are talking about monthly amounts to the tune of EUR 200. In Central and Eastern Europe, it is about EUR 100 per month that people save in such security savings plans. People are investing in for their own retirement, and people are constituting provisions, and that way people try to avoid being exposed to this negative real interest rate situation. Let me talk about housing loans, and that completes the picture. You see the full picture.
In the recent weeks and months, there's been this KIM regulation, a terrible acronym, but we all got used to it. We have focused very much on whether this regulatory environment that has been created, namely 20% own funds, maybe a maximum of 35 years of maturity, and the affordability should not exceed 40% of the household income. These rules have significantly contributed to the results in the second half of the year of having gone down so dramatically. That is one of the reasons, but let's not go overboard. The interest rates have also gone up. The economic environment is also very unpredictable. There's a large number of aspects and arguments that can be put forward to explain this downturn. I would warn against blaming everything on the lending rule regulations.
Is this going to continue like that? We assume that the growth rates of, well, the past three years will probably not be achieved in the medium term, but there will be some normalization of the situation. That has something to do with the people getting used to this interest rate level, which over the past 10 years, well, wasn't available like that. You see the total of the housing loans, well, the portfolio, the entire portfolio has gone up because there are basically no early repayments because nobody is interested in renouncing their favorable interest rates.
For our company, we always insisted over the past few years that we want to have a high number of fixed interest loans, up to 90% are fixed interest loans, and that really helps our customers, and that has something to do with building financial health as an aside. Affordable housing is a relevant issue for us. Of course, we also need to focus on building up assets and property. That is part of the public debate, and I believe that that is quite understandable. To give you an inkling, in Central and Eastern Europe, in the countries such as Slovakia and Romania, and I would say, well, about 90% of people have their own houses or apartments. In the Czech Republic, it's maybe 78%, and in Austria, it's only 57% who own a house or apartment.
I'm fairly convinced that residential property is very important when it comes to provision for retirement, where you will need these assets. Let me come to the conclusion before we answer your questions. A few comments without really repeating everything that's already been said. Yes, it has been a challenging year, and yes, we are now in a year where we are returning to a new normal. Anyway, we're convinced that there will be a lot of positive aspects that should serve as a sense of orientation. We would be well advised to also focus on the long-term issues. One topic that I would like to mention in particular is the middle class. I think it is important to be very clear about who we are talking about.
We are talking about the middle class in terms of companies or people. We are saying that the household income, we'll take the median and everything that's between 70% and 200% of this median household income is considered to be the middle class, just to give you an idea. The economic area where we are active, statistically speaking, about maybe 65%-70% of people are part of the middle class. What's interesting, in Austria, more than 80% of people think they are middle class. This is very important to us because we are talking about growing the middle class, and it's about self-determination. That brings us back to we build financial health. We should do everything we can in order to give people the possibility of building financial health.
One possibility of doing so is the capital market for people who want to grow their wealth and their prosperity, but also for companies, as Ingo Bleier has said. I believe that most companies go for loans from banks. Is this healthy? Well, maybe we should also have more alternatives. Maybe also focus more on the capital market. Now I'd like to talk about affordable housing. We have set ourselves the task to carry this forward, to pursue this pathway, and we know that this is a long journey that we embarked upon, that we need to go down because we need to create the boundary conditions that are necessary for us here in Austria. We believe that this is a successful model that is well worth also carrying to Central and Eastern Europe.
We are seeing some initial success in the Czech Republic, where we're also discussing things with the government. I myself have also spoken to the Czech government. Maybe in the course of the year, we will be able to set up some boundary conditions, framework conditions. Some initial projects have already been launched in Slovakia. We've already come very far. We know that in the other markets, some efforts will still be needed in order to create the boundary conditions. By way of conclusion, when can we talk about affordable housing? Well, there are three areas. One area is the free market. There's affordable housing. Well, when two people work, they should be able to afford a decent apartment or home. There's social living, social housing. Well, that's not what we are talking about. We're talking about affordable housing.
That is an initiative that we will continue to focus on in future. I'd like to close on that. Thank you for your attention, and we are available for your questions. Thank you.
Thank you very much. Are there any questions? Ms. Lingbar, please.
I have a question relating to the loan business. You are very confident as far as the new year is concerned. In spite of that, your forecast is a little bit lower than expected. What is the reason for that? Is it due to the economic development, or are there other reasons for that? Another question relates to housing loans. For the Financial Market Stability Board untightened some of the provisions, but you'd expected more. Is this okay for you, or do you think that there will be further releases of the strict measures?
Let me start with the second question. In my functions as the head of, the industry, we negotiated with the regulator.
Also with the representatives of the Financial Market Stability Board. We are not very satisfied with the outcome of the negotiations so far. The new rules apply from April 1st. Of course, we will comply with the rules, but we are convinced, and I think all of the people involved think it is necessary to evaluate the situation anew in fall because the frame conditions and environment changed. We started in August 2022 with the rules, and in fall we should evaluate the situation, and we will find that the environment, so the business environment has changed, that interest rates environment changed, the inflation scenario changed. Many of influential factors changed substantially. As a consequence, the regulator thought that the market would overheat, but I don't think this will materialize.
We should negotiate again in fall, evaluate the situation, and maybe newly evaluate the rules and start our nitty-gritty discussions. Willi Cernko already answered the two-thirds of your questions relating to loans. Of course, we have desired and undesired effects caused by interest rate, the interest rate hike, and also we see effects of regulator measures. When talking about percentage rates, we expect a growth in loans. We had years when we had flat growth rates. We also talked about the macroeconomic factors. GDP, what is expectation is 1.1% for the first region, for the Euro region even less. In such macroeconomic environments, 5% would be good growth rate.
If we have a small deviation at the end of the year, I would be very satisfied because this would mean that our customers are very active and that we caught up with deteriorating developments in housing loans, and I hope that the companies will also remain very active. One of the drivers in the loan sector was the large customer business, basically in the energy sector. We saw a stabilization of prices recently. We don't expect large volumes of loans in this segment. We see a certain normalization in growth rates of 5% for the group, starting from EUR 200 billion means EUR 10 billion. As far as investment and investment demand of companies, this depends on the economic environment, if outlook is unsafe, investments might not be taken.
We have the first question online. What are the current terms for loans for companies relating to decarbonization measures or Green Deal investments? A question by Reinhard Krémer, chief editor of medianet financenet. This depends on the rating of the company. We do not have uniform interest rates for all these loans. It depends on the individual projects, and the interest rates offered depend on the project and also on the credit rating. As far as equity is concerned, there are no different allocation regulations for green projects, so we have normal conditions and terms, and of course try to offer most favorable terms to our customers. Mr. Cernko, in connection with affordable housing, you said that you will focus on ownership.
What do you think about the proposal of the People's Party in putting a cap on rises in, on rents, and what is your intention here? Do you think that this is positive for your projects? The second question, what is the situation in your group? Do most of the people work part-time or full-time, and do you have to convince people to work full-time? This is not a new topic. The topics that you raised are not new, and I can only confirm what the Minister of Finance said, because the topic has been pending for months.
If you buy a house, transfer taxes are of course high, and we are welcoming all the measures of the politicians, but this is a political decision, and we welcome the trend in this respect. As far as home office or physical presence is concerned, we are not different here than other companies. It's not a question do we have to do something, want to do something. If we want to recruit good workers, we have to offer a great amount of flexibility. It's not the salary as such, but it is the opportunity to be flexible as far as working hours are concerned. We do not have a strict top-down regulation. We don't say everybody must be in the office on Thursdays or Tuesdays. It's a responsibility of the team leaders to organize everything.
Our business is a people's business. It's important to create a situation, the campus is a location that massively supports us and invites us to work in a creative way, this is appreciated by our colleagues. In a nutshell, we do everything to provide an environment that attracts people. We have a kindergarten here for our employees, we do a lot to allow them to work for us. I think it's a good solution to work autonomously, of course, after having organized everything in the team, this allows us to attract people that otherwise could not be attracted. If we have commuters who must drive two hours per day, it will be very positive for them to work at home. You asked a question relating to part-time work.
Let me summarize the situation with two sentences as far as the situation of course in Austria is concerned. I don't know the details in all the other countries. It is one of the advantages of a large company to offer several working models. Of course, depending on the demands of the business segments, not all jobs can be fulfilled by working part-time. But in principle, and, Alexander, I think you know that, we have several models of part-time work. I don't think you can generalize the situation. Of course, you reflect, you are reacting to the current political situation about full-time. We know the Austrian labor market with a relatively flat development as far as full-time work is concerned and a sharp increase as far as part-time work is concerned.
In the distribution of labor situation that we are currently living in, everything is well manageable by us. Let me add that for members of the board, part-time work is not possible. One of the colleagues that reports directly to one of the members of the board does a part-time job, and she does the part-time job very excellently. We are trying to push the limits. What about the staff development in 2022? You'll find it in our annual report. Of course, we are talking about the number of people and FTEs of course is different. We have approximately 900 employees more in 2021 than in 2022.
If you look at the details in our annual report, of course, we have insourcing and outsourcing, but it's approximately an increase of 1.5%. There were several specific reasons for that. Ingo Bleier knows that. In Croatia, we increased headcount also, owing to the introduction of the euro. In Serbia, we had investments and projects where we increased human resources. These are the two countries where the most increase. In Austria, we are relatively flat. Savings bank, a slight increase, and also a slight increase in the IT segment. In Austria, we had a flat development over the past two years. Please look at the situations in the individual country because the situation is different in the markets. Another online question by Marko Andrejić, editor-in-chief of Business in Belgrade.
Economist of the European Investment Bank presented yesterday banker's assessment that the quality of loans will decline and that non-performing loans will increase significantly in this next 6 months. What is your assessment for this period? We heard the demand for loans remains strong, but it will be greatly tested due to somewhat stricter conditions on the supply side that the banks have already announced. Is Erste planning some change in credit policy, and what can your clients expect?
Let me answer the question. I think it's okay now to answer the question in German. We also expect an increase in the NPL ratio, but we shouldn't forget that we are starting from a very low level. Even at group level, we have 2% in the... We don't see any peaks in other countries. I also think Serbia has arrived at a very good level. In Austria, Erste Bank Österreich, here the NPL ratio is 1%, so a very excellent situation. We expect an increase, and we can digest an increase in the NPL ratio. We expect an increase, but not a dramatic increase for 2023. 2.5%-3% at group level. An increase from 2% to 2.5% in the course of 2023.
We are sharing this opinion, but our starting level is a very comfortable one. As far as underwriting standards and credit rules are concerned, we are continuing what we did during the Corona crisis. We did not, and we do not plan to change our underwriting standards. When you are in a crisis, you normally adapt your underwriting criteria. We did not do that, and we don't plan to do that. What we are doing is to pursue a target oriented way to look at the standards, to evaluate the standards, and to change the standards if necessary. Our customers can rely upon us to provide loans when they need them.
I have three questions.
I have three questions. Maybe you could explain why, interest for savings do not go up in banks. If the European Central Bank has a higher rate, why can't the Austrian banks increase the interest rates in Austria? As far as risk costs are concerned, I also have a question. In how far inflation takes a role? You told us the risk costs for this year. If the risk is higher, do you expect higher risk costs? Can you give us information about that? You also said it will be a challenging year. Why is it that the year will be challenging and the situation wasn't much different last year? Why is the current year more challenging?
I'll start by answering the first question. We're not living in a planned economy after all, since there is not an automatic order of events in terms of how things should develop, well, those are the laws of the market, right? Yeah. We are reacting. There are various stages of development in the markets in terms of the different interest rates. Of course, it is up to every individual customer to what they think is best and to maybe consciously bet on other solutions in order to maybe be able to react better to a changing situation. We are also offering this opportunity actively, so we are available for advice. We're also seeing that customers are often going for fixed interest rates. Anyway, our take is that where does the customer have the opportunity of best benefiting from a recovery?
Of course, they should maybe invest where the recovery is most noticeable. Those, the security savings plans that are referred to, and of course, there is a staggered, step-by-step process, and people are changing their portfolios as they need to. Of course, the same goes for the credit or the loan side. Depending on the rating, of course, individual customers will react to increases or decreases of the interest rates. That needs to be looked at on a case-by-case basis.
As far as interest rates and inflation is concerned, I assume the portfolio provisions that we have in our books, they include forward-looking indicators that you can summarize by the term macro. This includes expectations in terms of interest rates and inflation rates. All the factors that we also base on our normal plannings worked out by economists. This is included in our provisioning. As far as your question is concerned, will the situation deteriorate? We don't only have a model, we also have a downward scenario. This refers to the probability that things will happen as they are expected. We weighted the downside scenario more than 50%, almost 60%.
This doesn't necessarily mean that we believe that things will deteriorate, but the impact of a down-downward scenario would be stronger on our risk costs than in the other direction. This is why we weighted the downward scenario in order to make sure that we have sufficient provisioning. If inflation develops other than expected, we would be on the safe side due to the fact that we used the downward scenario. Why do we expect a challenging year? We see rising interest rates, and I come back to what you said. The question is, will interest rates rise further? We still have high energy costs. Energy costs went down, but they are still at a higher level than in the past years.
Of course, this is a challenge for companies as well as for private customers. The stable labor market is an important factor, and we also see salary agreements, collectively bargained agreements start to take into account the high inflation rates. We also see very flexible companies that did well during the corona crisis, and this was not an easy thing to achieve. Thank you very much. Another online question, and then with Mr. Eder, then Mr. Stottmeyer.
Are there plans to expand the market by buying a bank, or opening new branches?
Darf ich hier beantworten? Yes. I would like to answer that. In Serbia, we are currently in the process of setting up a core banking system, a new core banking system. This constitutes a basic prerequisite for further growth considerations that may also go through organic growth and beyond that. We don't exclude that, but for the coming months, we will focus on the new core banking system. Marton Eder from Bloomberg.
Yep.
Danke. I have a short question on acquisitions. In January, we read that there may be a sale of the Erste Bank in Romania. Are you aware of that, and are you interested in that?
Of course, as a long-term strategic investor in Central and Eastern Europe, and as an investor that is among the top three players in this market, we are of course always interested in any potential M&A transaction. We are screening the market, we have no results so far, I think, well, I would say this is still open and undecided.
There's an online question coming from Alexander Zins from the Oberösterreichische Nachrichten newspaper. Greetings from Linz. Is the Erste Group also directly affected by the war and the policy of sanctions?
Second question, what do you think about the economic and fiscal policy of Hungary? The third question, what do you think about the demands of the trade unions, to work only 36-hour weeks with full wage compensation?
Well, let me start with the sanctions. Just like all other banks, we are following the requirements of the U.S. sanctions and the EU sanctions. We are affected by this because we need to make sure that these sanctions are actually complied with throughout. Are we affected as a bank? Are there any investigations or any letters from the authorities? No, that is not the case. As to the question of what we think about the fiscal measures of Hungary, well, I hope that you will understand that we cannot comment this. This is not within our remit. This is within the remit of the Hungarian sovereign.
The third question was, what do you think about the demand of the trade union to have 36 hour weeks with full wage compensation? Well, I don't really want to comment on that. We have to ask ourselves the question, as Stefan did previously, even though we are ready to show flexibility, to enable and facilitate flexibility, but at the end of the day, we need to make sure that we increase our productivity as well. Thank you. Madlen Stottmeyer from Die Presse.
I have a question in terms of risk provisioning. The war in Ukraine has doubled the weight of the corona crisis. Can you comment on that? For me, it's surprising that in your markets that are not hit by the war in Ukraine, that the war in Ukraine has such a great effect on risk provisioning. Also re-relating to macro. The macro provision is also higher than in the times of the corona crisis.
Let me start with macro and the macro indicators. As I said before, we weigh the downward scenario higher. The downward scenario means that the situation is worse than expected. Of course, we used all rooms to maneuver as far as our balance sheet is concerned in order to be prepared for the future, for any possible development in the future.
As far as the COVID pandemic is concerned, we had risk provisioning in the, for the industries that were hit by the lockdown. This was tourism, urban tourism, also the shopping centers, et cetera. After the measures discontinued, we saw that the situation recovered in as far as the shopping centers, for example, is concerned. It was not such a great effect. We have cyclical industries which suffer most as far as changes in GDP growth or shrinking GDP are concerned. It's the construction industry, it's the automotive industry. These are the industries not only we, but also other banks that are doing business in our region. Furthermore, another industry is the energy industry.
We have stage 2 overlays and the chemical industry and the metal industry also belong to the industries that suffer from a volatile energy situation. This doesn't mean that the companies are not well managed. If you look at our investors presentation, we see that we have provisions for stage 2 industries and the coverage is going down, which is due to the fact that all these customers have a good credit rating. Everything must be done to cover uncertainties and also we use all kinds of rooms to maneuver in the balance sheet in order to be prepared for the future. Karl Leban from Wiener Zeitung also sent a question. I just read the question. You maybe won't comment the question.
Mr. Cernko, you are also the chairman of the banking industry. What would you recommend as far as Raiffeisen Bank International is concerned, withdrawal from the Russian business, yes or no?
The Raiffeisen Bank. Please understand that we're not going to comment on anything that refers to Raiffeisen Bank International. Okay. Manfred Neuper from Kleine Zeitung wrote: Are you planning to make any acquisitions, currently or in the medium term, in Southeastern Europe maybe, or are you only betting on organic growth? In our investor call, we quite clearly addressed the subject of mergers and acquisitions. We want to use our equity for organic growth, first and foremost. In the markets where we have a presence, we want to grow faster than our competition. That's the first point. The second point is, we are obliged to make sure that our investors, our shareholders who provide us with their capital are offered a reasonable return. We said that the payout ratio should be 40%-50%. Thirdly, we call it bolt-on acquisition.
Whenever there are opportunities out there in the markets where we have a presence to maybe acquire one or the other portfolio, but always provided that the local bank is capable of digesting the integration and to generate a value added within two or three years, and not to get bogged down in long years of looking at the past. Of course, we are an important stakeholder in many of the markets. Of course, we expect in the medium term, in the years to come, that there will be further steps of consolidation. Of course, we will be asked, and of course, we would be bad merchants if we didn't do that.
There are no online questions anymore. Ms. Cernko has a question.
I'd like to come back to interest rates for savings. After the question of Ingrid, you said that alternatives should be found. In the past, banks reacted to interest rates of the European Central Bank immediately. Why are you not doing this this time?
Well, we are reacting to the situation. I told you previously that it's not, the regulators, that are going to, ask us to raise the interest rates or not. That's up to us. When it comes to, interest rates paid for savings accounts or alternative forms of investment, well, we are available for such a discussion. There's no doubt about that. We are firmly convinced that when it comes to the reality, that, the real interest rates will remain clearly negative. This is not an alternative how to build assets or grow your assets. We need to talk about alternatives that provides people with an opportunity to participate in the recovery and to maybe achieve a better return. That is the free market. I have a question on the dividend.
Do you need the approval of the ECB for the dividend? The dividend as a planned dividend, well, it's at a half year due date that we communicate this, and we also align this with the ECB so that this proposed dividend can be approved by them. If there are no changes at year-end, which is the case now, so the EUR 1.9 still stand, then there is no need for further approval. The way the procedure goes is that the ECB has okayed it, and of course, then there's the AGM, the annual general meeting, that needs to adopt the dividend. For the dividend, we need no further approval of the regulators at this point.
Okay. If there are no further questions, thank you for your participation, and have a nice day. Thank you.