Vienna - Austria's Erste Bank on Wednesday reported a 12.5 per cent increase in net profits to 636.6 million euros (993.1 million dollars) for the first half of 2008.

Strong performances of subsidiaries in Central and Eastern Europe as well as record operating income in the second quarter contributed to the growth, the retail bank said.

Operating income rose 17.2 per cent to 3.51 billion euros in the first six months of 2008, from 2.99 million euros last year.

Net interest income growth of 24.1 per cent to 2.31 billion euros offset the less positive net trading result, which decreased by 16 per cent to 184.4 million euros.

"The first half of 2008 was certainly one of the most turbulent in the history of the financial markets," Erste Bank CEO Andreas Treichl said.

The balance of financial assets deteriorated to minus 86.3 million dollars in the first half of this year, from a positive result of 31.9 million euros last year.

Losses from securities sales, as well as revaluation of structured products and shares were mainly responsible for this decline, the bank said.

Continued strong economic growth and a favourable interest rate environment across Central and Eastern Europe were the key contributors to the overall positive results, Treichl said.

Net profit grew markedly in most of the bank's Central and Eastern European subsidiaries, with Romania, the Czech Republic and Hungary reporting growth rates of 50.7, 42 and 51 per cent, respectively. (dpa)