Erste Group Bank (EBS) Q1 2025 earnings summary

Executive summary

• Net profit for Q1 2025 was EUR 743 million, down 5.1% year-over-year but up 22% sequentially, with strong fee and commission income and robust top-line growth driven by net interest income and fees.

• Management highlighted strong profitability, improved revenue quality, and robust capital, with a focus on potential M&A, specifically a 49% stake in Santander Bank Polska, subject to strict value creation criteria.

• If no M&A is executed by year-end, capital return to shareholders will be prioritized, as the CET1 ratio will not be maintained above 16%.

• Operating efficiency improved, with cost/income ratio at 45.1% in Q1 25, well below the 50% target.

• Asset quality remained robust, with the NPL ratio stable at 2.5% and coverage at 74.6%.

Financial highlights

• Net interest income was EUR 1,872 million, up 1.1% year-over-year, with CEE operations offsetting declines in Austria.

• Net fee and commission income rose 9.5% year-over-year to EUR 780 million, driven by payments, securities, and insurance brokerage.

• Operating expenses increased 4.8% year-over-year, mainly due to higher personnel costs, in line with guidance.

• Cost/income ratio at 48%, up two points year-on-year but still below 50% target.

• Risk costs at EUR 85 million (15–16 bps), better than previous periods and within guidance.

• CET1 ratio improved to 15.9%, pro forma 16.2% including Q1 profits and CRR3/Basel IV implementation.

Outlook and guidance

• Fee income growth guidance upgraded to over 5% for 2025.

• NII expected to remain flat for 2025, with offsetting tailwinds and headwinds.

• Operating expenses to rise about 5% in 2025, mainly due to strategic investments.

• Cost/income ratio to stay comfortably below 50%.

• Risk costs guidance unchanged at about 25 bps.

• Return on tangible equity guidance confirmed at about 15%.

• CET1 ratio expected to remain above 14%, supporting enhanced capital return and/or M&A flexibility.

• Dividend for 2024 confirmed at EUR 3, with a EUR 700 million share buyback proposed, subject to approval.

• Risks to guidance include political, regulatory, geopolitical, economic, and competition factors, as well as indirect effects from international conflicts.