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- Revenue: Record growth in revenues across the board.
- Net Profit: Surpassed EUR 2.5 billion in the first nine months of 2024.
- Return on Tangible Equity: Almost 18% year-to-date.
- Net Interest Income: Record EUR 1.9 billion in Q3 2024.
- Cost Income Ratio: Expected to be around 48% or lower for 2024.
- Loan Growth: 1% quarter-on-quarter, annual run rate tracking at 3.5%.
- NPL Ratio: Unchanged at 2.4%.
- Assets Under Management: Reached an all-time high of EUR 83.9 billion.
- Risk Costs: 16 basis points in Q3 2024, year-to-date at 13 basis points.
- Capital Ratio: CET1 ratio at 15.66% as of September 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Erste Group Bank AG. (EBKDY) reported outstanding financial performance in Q3 2024, with revenues growing across the board and a return on tangible equity nearing 20%.
- Net interest income held up well, particularly in Central and Eastern European operations, contributing to a strong year-to-date performance.
- The bank surpassed EUR 2.5 billion in net profit for the first nine months of 2024, equating to a return on tangible equity of almost 18%.
- Erste Group Bank AG. (EBKDY) upgraded its 2024 financial guidance, expecting net interest income to grow by more than 2% and a cost-income ratio of about 48% or less.
- Asset management reached an all-time high with EUR 83.9 billion in assets under management, supported by strong sales in the Czech Republic.
- Risk costs were higher than in the second quarter, primarily due to new defaults in the Austrian real estate sector.
- Loan demand, particularly in Austria, was weaker than expected due to a slightly weaker economic performance.
- The economic forecast for Austria was revised downwards, projecting a shallow recession to continue into 2024.
- The shift from current accounts to term deposits has almost stopped, indicating potential challenges in deposit growth.
- The bank's capital position remained flat year-to-date, with the CET1 ratio hardly moving due to business growth and distributions.
A: Stefan Dorfler, CFO: I was referring to both 2023 and 2024. We expect 2024 NII to be more than 2% up from 2023, and for 2025, we anticipate a flattish development compared to these years.
Q: Can you quantify the tailwind from repricing fixed-rate loans and the securities book in 2025?
A: Stefan Dorfler, CFO: We expect the bond portfolio to trend higher by another 5-10% from the 2024 level, likely exceeding EUR 1.7 billion in 2025. Regarding fixed-rate loans, we have been repricing, and this will continue to contribute positively.
Q: What are your assumptions for central bank rate cuts in 2025?
A: Stefan Dorfler, CFO: We expect the ECB to cut rates by 25 basis points once more this year and continue cutting in 2025, reaching around 2.25%. For the Czech National Bank, we anticipate another cut to 4% this year and further to 3.5% in 2025.
Q: Are there any concerns about the automotive sector given its importance in Central and Eastern Europe?
A: Alexandra Habeler-Drabek, CRO: Automotive exposure is about 2% of our group exposure. We are monitoring it closely, but currently, we do not see signs of deterioration, even among smaller suppliers.
Q: What is your stance on potential M&A and capital distribution?
A: Stefan Dorfler, CFO: We are open to M&A opportunities that add value and do not increase complexity. If no suitable opportunities arise, we will consider other ways to utilize excess capital, aligning with our management target of around 14% CET1 ratio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.