Erste Group Bank AG: Erste Group posts net profit of EUR 1,665 million in the first six months of 2025

Vienna (pta007/01.08.2025/07:30 UTC+2)

Financial data

HIGHLIGHTS

P&L: 1-6 2025 compared with 1-6 2024

Balance sheet: 30 June 2025 compared with 31 December 2024

Net interest income increased to EUR 3,786 million (+2.7%; EUR 3,687 million), primarily in the Czech Republic, Romania and Slovakia, on the back of lower interest expenses on customer deposits. Net fee and commission income rose to EUR 1,542 million (+8.3%; EUR 1,423 million). Growth was registered across all core markets and income categories. Net trading result grew to EUR 141 million (EUR 137 million); the line item gains/losses from financial instruments measured at fair value through profit or loss decreased to EUR 59 million (EUR 111 million). The development of both line itemswas mostly attributable to valuation effects. Operating income rose to EUR 5,668 million (+2.7%; EUR 5,522 million). General administrative expenses were up at EUR 2,706 million (+6.2%; EUR 2,548 million). Personnel expenses increased to EUR 1,624 million (+5.9%; EUR 1,534 million) driven by collectively agreed salary increases. Other administrative expenses were higher at EUR 808 million (+8.5%; EUR 745 million). While contributions to deposit insurance schemes included in other administrative expenses – mostly already posted upfront for the full year of 2025 – declined to EUR 55 million (EUR 69 million), IT expenses increased to EUR 344 million (EUR 301 million). Amortisation and depreciation amounted to EUR 274 million (+1.5%; EUR 270 million). Overall, the operating result decreased moderately to EUR 2,963 million (-0.4%; EUR 2,974 million), the cost/income ratio stood at 47.7% (46.1%).

The impairment result from financial instruments amounted to EUR -182 million or 16 basis points of average gross customer loans (EUR -126 million or 12 basis points). Allocations to provisions for loans and advances were posted primarily in Austria. The NPL ratio based on gross customer loans improved to 2.5% (2.6%). The NPL coverage ratio (excluding collateral) increased to 73.6% (72.5%).

Other operating result amounted to EUR -183 million (EUR -254 million). Expenses for annual contributions to resolution funds included in this line item already for the full year of 2025 declined to EUR 15 million (EUR 28 million). Banking levies – currently payable in four core markets – went up, though. EUR 197 million (EUR 134 million) are reflected in other operating result: thereof, EUR 109 million (EUR 96 million) were charged in Hungary. In Austria, banking tax rose to EUR 68 million (EUR 20 million) on the back of a temporary tax increase, in Romania it amounted to EUR 20 million (EUR 18 million). The banking tax in Slovakia of EUR 32 million (EUR 46 million) is posted in the line item taxes on income.

Taxes on income amounted to EUR 529 million (EUR 531 million). The decline in the minority charge to EUR 389 million (EUR 431 million) was attributable to lower profitability at the savings banks. The net result attributable to owners of the parent rose to EUR 1,665 million (+ 2.2%; EUR 1,629 million).

Total equity not including AT1 instruments rose to EUR 28.9 billion (EUR 28.1 billion). After regulatory deductions and filtering in accordance with the Capital Requirements Regulation (CRR), common equity tier 1 capital (CET1, phased-in) increased to EUR 26.6 billion (EUR 24.0 billion), total own funds to EUR 34.5 billion (EUR 30.9 billion). Total risk (risk-weighted assets including credit, market and operational risk, phased-in) declined to EUR 152.6 billion (EUR 157.2 billion). The common equity tier 1 ratio (CET1, phased-in) stood at 17.4% (15.3%), the total capital ratio at 22.6% (19.7%).

Total assets increased to EUR 361.1 billion (+2.1%; EUR 353.7 billion). On the asset side, cash and cash balances rose to EUR 27.7 billion (EUR 25.1 billion); loans and advances to banks were lower at EUR 22.8 billion (EUR 27.0 billion). Year to date, loans and advances to customers rose to EUR 224.0 billion (+2.7%; EUR 218.1 billion), primarily in the CEE markets. On the liability side, deposits from banks declined to EUR 15.4 billion (EUR 21.3 billion). Customer deposits rose – most strongly in the Czech Republic, Hungary and Austria – to EUR 248.5 billion (+2.8%; EUR 241.7 billion). While core deposits (retail customers, SMEs and savings banks) were 1.8% higher, the public sector especially in the Czech Republic saw extraordinarily strong deposit growth. The loan-to-deposit ratio stood at 90.1% (90.2%)

OUTLOOK

Following the good business development in the first half of the year, Erste Group has raised the financial outlook for 2025. Erste Group now expects to achieve a return on tangible equity (ROTE) of more than 15% reflecting better loan volume and P&L dynamics. This ambition is built on the following key assumptions: Firstly, the macroeconomic environment, primarily as measured by real GDP growth, in Erste Group's seven core markets (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia and Serbia) remains robust and on average, improves moderately versus 2024. Based on good growth dynamics almost across the entire group in the first half of 2025, Erste Group now expects robust loan growth of more than 5% in 2025. Secondly, operating result is expected broadly unchanged to only slightly down versus 2024, as net interest income is now projected to actually increase somewhat in 2025 (versus remain flat), net fee and commission income is set to grow by more than 5% (upgraded already in the first quarter), net trading and fair value result stays flat versus 2024, and operating expenses likely rise in the order of 5%. The cost/income ratio is forecast at less than 50%. Given the good credit risk performance in the first half of 2025, the full-year risk costs guidance is tightened to about 20 basis points from previously about 25 basis points. In addition, regulatory costs, comprising deposit insurance and resolution fund contributions, banking levies such as banking and financial transaction taxes as well as sector-specific extra profit taxes, and, the cost of supervision, in aggregate, are expected to increase due to an announced increased banking tax in Austria.

While a forecast for the other operating result, which is primarily impacted by regulatory costs (excluding deposit insurance contributions as well as extra profit tax in Slovakia), and various categories of gains and losses from financial instruments not measured at fair value through P&L is challenging, this combined item is likely to improve versus 2024 in the absence of significant negative one-off effects. Assuming an effective group tax rate of about 21% and lower minority charges compared to 2024, all of the above should result in return on tangible equity of higher than 15% in 2025.

Based on the faster than expected capital build already in the first half of the year and the projected strong profit performance, the CET1 ratio is expected to further increase to above 18.25% prior to the first-time consolidation of Santander Bank Polska around year end of 2025.

Potential risks to the guidance include (geo)political and economic (including monetary and fiscal policy impacts) developments, regulatory measures as well as changes to the competitive environment. International (military) conflicts, such as the war in Ukraine and in the Middle East do not impact Erste Group directly, as it has no operating presence in the regions involved. Indirect effects, such as financial markets volatility, sanctions-related knock-on effects, supply chain disruptions or the emergence of deposit insurance or resolution cases cannot be ruled out, though. Erste Group is moreover exposed to non-financial and legal risks that may materialise regardless of the economic environment. Worse than expected economic development may put goodwill at risk.

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Emitter:	Erste Group Bank AG Am Belvedere 1 1100 Wien Austria
Contact Person:	Thomas Sommerauer/ Simone Pilz
Phone:	+43 (0)50100-17326
E-Mail:	investor.relations@erstegroup.com
Website:	www.erstegroup.com
ISIN(s):	AT0000652011 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Official Trade)
Other Stock Exchanges:	Bucharest Stock Exchange, Prague Stock Exchange