01.08.2025
Erste Group’s half-year results: good operating performance, strong capital ratio
- Net interest income up 2.7% year-on-year thanks to growth in lending (+2.7% YTD)
- Net fee and commission income up significantly by +8.3%, supported by growth in all markets
- Common Equity Tier 1 (CET1) ratio at a strong 17.4%
- ROTE guidance raised to over 15%
Erste Group Bank AG (“Erste Group”) continued its good operating performance in the first half of 2025. Net interest income rose by 2.7% compared with the first six months of the previous year to 3.79 billion euros (H1 2024: 3.69 billion euros). This increase was primarily driven by strong growth in customer business and compensated for a declining interest rate environment: fueled by the strong performance of the CEE region, loan volume rose by 2.7% since the beginning of the year and reached 224.0 billion euros. Deposit volume grew by 2.8% to 248.5 billion euros, with core deposits in Czechia, Hungary and Austria showing the strongest growth. Net fee and commission income rose 8.3% year-on-year to 1.54 billion euros (H1 2024: 1.42 billion euros) thanks to growth in all core markets. Overall, operating income rose by 2.7% to 5.67 billion euros (H1 2024: 5.52 billion euros).
The operating result, on the other hand, remained stable at 2.96 billion euros (H1 2024: 2.97 billion euros). This was due to higher costs, which, however, developed in line with expectations (+6.2%). Risk costs rose from 126 million to 182 million euros year-on-year due to higher risk provisions in Austria. However, they remained at a low level overall at 16 basis points of average gross customer loans The total burden from bank taxes in the first half of the year amounted to 197 million euros (+46.7%). Overall, the net result for the first half of 2025 was 1.66 billion euros (H1 2024: 1.63 billion euros). The common equity tier 1 capital ratio (CET1) rose significantly to 17.4% on the back of strong growth in the core business and other measures to finance the planned acquisition in Poland. Thanks to its good operating performance, Erste Group has raised its outlook for the return on tangible equity (ROTE) to over 15 percent.
“Our strong results confirm that we are on the right strategic path. With the planned acquisition in Poland, we are investing in one of Europe's most dynamic growth markets – because we believe in the innovative strength, self-efficacy, and entrepreneurial potential of Central and Eastern Europe. Our continent needs to focus less on what’s happening across the Atlantic and show more confidence in its own ability to shape the future. That is exactly what we stand for,” says Peter Bosek, CEO of Erste Group.
“Our strong capital position is the result of clear priorities: we have deliberately refrained from share buybacks, temporarily reduced dividends, and are benefiting from our high profitability. This enables us to finance the acquisition in Poland from our own resources – a strong signal of our financial stability and strategic flexibility,” says Stefan Dörfler, CFO of Erste Group.
On 5 May 2025, Erste Group announced the acquisition of a controlling 49% stake in Santander Bank Polska Group S.A. (“Santander Bank Polska”) and a 50% stake in the asset manager Santander Towarzystwo Funduszy Inwestycyjnych S.A. (“Santander TFI”) for a total price of 7.0 billion euros. Santander Bank Polska is the third-largest bank in Poland in terms of assets and offers a comprehensive range of financial products for private customers, small and medium-sized enterprises, and larger corporate customers. As a result of the transaction, Erste Group's earnings per share (EPS) are expected to increase by more than 20% in 2026 and the return on tangible equity (ROTE) to around 19%.
Financial results from January to June 2025 are compared with those from January to June 2024 and balance sheet positions as of 30 June 2025 with those as of 31 December 2024.
Core revenues higher in all core markets
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 items was mostly attributable to valuation effects. Operating income rose to EUR 5,668 million (+2.7%; EUR 5,522 million).
Operating result stable at EUR 2.96 bn, cost/income ratio at 47.7%
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%).
Risk costs at low level of 16 basis points, NPL ratio at 2.5%
The impairment result from financial instruments (“risk costs”) 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%).
Net profit up 2.2%, despite higher banking levies
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).
Both loan and deposit volumes higher, CET1 ratio at 17.4%
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 2025: broad-based guidance upgrade
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 profit-and-loss (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 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.
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.