In This Article:
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Revenue: Record growth in revenues across the board.
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Net Profit: Surpassed EUR 2.5 billion in the first nine months of 2024.
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Return on Tangible Equity: Almost 18% year-to-date.
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Net Interest Income: Record EUR 1.9 billion in Q3 2024.
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Cost Income Ratio: Expected to be around 48% or lower for 2024.
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Loan Growth: 1% quarter-on-quarter, annual run rate tracking at 3.5%.
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NPL Ratio: Unchanged at 2.4%.
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Assets Under Management: Reached an all-time high of EUR 83.9 billion.
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Risk Costs: 16 basis points in Q3 2024, year-to-date at 13 basis points.
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Capital Ratio: CET1 ratio at 15.66% as of September 2024.
Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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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%.
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Net interest income held up well, particularly in Central and Eastern European operations, contributing to a strong year-to-date performance.
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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%.
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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.
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Asset management reached an all-time high with EUR 83.9 billion in assets under management, supported by strong sales in the Czech Republic.
Negative Points
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Risk costs were higher than in the second quarter, primarily due to new defaults in the Austrian real estate sector.
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Loan demand, particularly in Austria, was weaker than expected due to a slightly weaker economic performance.
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The economic forecast for Austria was revised downwards, projecting a shallow recession to continue into 2024.
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The shift from current accounts to term deposits has almost stopped, indicating potential challenges in deposit growth.
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The bank's capital position remained flat year-to-date, with the CET1 ratio hardly moving due to business growth and distributions.
Q & A Highlights
Q: When you say flat 2025 NII, are you referring to 2023 or 2024? 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.