Earnings call transcript: Erste Group Bank Q3 2025 sees record revenue

Erste Group Bank reported record-breaking revenue and net interest income for Q3 2025, with earnings per share reaching €2.2. The bank’s revenue exceeded €2.9 billion for the first time, leading to a 0.89% increase in its stock price, closing at €340.9. The strong financial performance was driven by robust fee income and strategic digital initiatives, despite broader economic challenges in Central and Eastern Europe.

Key Takeaways

• Record Q3 2025 revenue of over €2.9 billion.
• Net interest income approached €2 billion, marking a new high.
• Digital platform "George" reached 11.2 million users.
• Stock price increased by 0.89% following the earnings announcement.

Company Performance

Erste Group Bank’s Q3 2025 results underscore its strong market position, particularly in Central and Eastern Europe. The bank reported a net profit of €901 million, supported by a return on tangible equity of 18%. The digital transformation, highlighted by the success of the "George" platform, has been a key driver of growth, with a digital sales ratio in the retail business reaching 65.8%. The bank’s diversified portfolio and strategic focus on automation are expected to sustain its competitive edge.

Financial Highlights

• Revenue: €2.9 billion, surpassing previous records.
• Earnings per share: €2.2.
• Net interest income: Nearly €2 billion.
• Fees: Almost €800 million.

Outlook & Guidance

Erste Group Bank has upgraded its 2025 net interest income guidance to over 2% growth. The cost-income ratio is expected to stabilize around 48%. Looking ahead to 2026, the bank aims for a €4 billion profit and a 19% return on tangible equity post-Santander acquisition. An earnings per share uplift of over 20% is anticipated in 2026.

Executive Commentary

Peter Bosek, CEO, emphasized the bank’s leadership position in Central and Eastern Europe, stating, "Erste will become a real powerhouse in CE banking with an unrivaled profitability and growth profile." CFO Stefan Dörfler noted the bank’s cautious optimism, saying, "We are super optimistic, but we also should remain realistic and not expect that things go through the roof."

Risks and Challenges

• Potential impact of Polish bank tax on profitability.
• IFRS accounting effects from the Santander acquisition.
• Economic uncertainties in Central and Eastern Europe.
• Inflationary pressures and their impact on consumer spending.
• Operational risks associated with digital transformation and automation efforts.

Erste Group Bank’s Q3 2025 earnings call highlighted strong financial performance and strategic initiatives aimed at maintaining its competitive advantage. The bank’s focus on digital growth and market leadership positions it well for future success, despite potential challenges in the economic environment.

Full transcript - Erste Group Bank (EBS) Q3 2025:

Sandra, Conference Operator: Ladies and gentlemen, welcome to the Erste Group Bank third quarter 2025 results conference call. I am Sandra, the course co-operator. I would like to remind you that all participants have been listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it’s my pleasure to hand over to Thomas Sommerauer, Head, Group Investor Relations. Please go ahead, sir.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: Thank you very much, Sandra, for the kind introduction and also a warm welcome from my end to this third quarter conference call of Erste Group Bank. We follow our usual procedure, according to which Peter Bosek, our Chief Executive Officer, Stefan Dörfler, our Chief Financial Officer, and Alexandra Habeler-Drabek, our Chief Risk Officer, will lead you through a brief presentation highlighting the financial achievements of the third quarter and year to date. After which time, we will be ready to take your questions. Before I hand over to Peter Bosek, the usual highlighting of the disclaimer on page two in regard to forward-looking statements. With this, I hand over to Peter.

Peter Bosek, Chief Executive Officer, Erste Group Bank: Good morning, ladies and gentlemen. Welcome again to our third quarter 2025 conference call. Let me place two messages right at the start. First, we are progressing well towards first-time consolidation of Santander Bank Polska around year-end 2025. We received all competition authority approvals, and it’s our current expectation that we will get the nod of the Polish regulator KNF by year-end. The integration work streams with our future colleagues are also right on track, as is our capital build. Actually, it’s progressing even better than we have planned. This brings me right to my second message, and this is our existing business is doing exceptionally well. We benefit from strong volume growth. Dynamics across our region, which translates into healthy top-line performance and good bottom-line profitability.

If you add these two things up, the strengths of our existing business and the integration of a leading bank in the larger CE market, Erste will become a real powerhouse in CE banking with an unrivaled profitability and growth profile. While it’s unlikely that we hit the €4 billion profit mark in 2026 on a reported basis due to the booking of customary one-time items that have to be absorbed with first-time consolidation of such transactions, this doesn’t change anything in our ambition to get there on a clean basis already in 2026. Such one-time items include purely technical and over time P&L neutral IFRS effects, such as the measurement of acquired assets at fair value and the resulting immediate recognition of expected credit losses on the newly acquired portfolio, and certainly also one-off integration costs, which we still see around €200 million.

With this, let me highlight a couple of points of our third quarter performance. For the first time ever, we posted quarterly revenues north of €2.9 billion. This resulted from a record net interest income of close to €2 billion, supported by strong loan growth, a stable interest rate environment, and continued deposit pricing strengths. In addition, we printed fees of almost €800 million, also a quarterly record. On the cost side, we probably could have done a touch better, but this is definitely an area where we still have a potential going into the fourth quarter. Despite elevated costs, quarterly operating profit was also in record territory by a comfortable margin. Risk costs remained moderate, and we are fully in line with our guidance. We again benefited from a positive one-off in the other operating result despite higher banking taxes.

Altogether, we achieved an excellent return on tangible equity of 18% flat in the third quarter. Based on these numbers, we slightly tweaked our 2025 guidance. We now see net interest income growing by more than 2% instead of more than 0%. Consequently, we rather see the cost-income ratio at around 48% instead of below 50%. Furthermore, we are raising our year-end common equity tier 1 ratio projection to higher than 18.5% due to continued strong capital build in the case first-time consolidation has not happened by this time. All other 2025 guidance items, most of which we already upgraded a quarter ago, are hereby confirmed. When analyzing our P&L metrics, I’m on page five in the meantime, we see continued net interest margin recovery.

This was not necessarily driven by an expansion of product spreads, but rather by the factors I already mentioned, like higher net interest income on the back of loan growth and strong deposit pricing power, in addition to still muted interest-bearing asset inflation. The latter was supported by limited growth in financial assets and interbank assets in the past quarter. Operating efficiency also remained at a sound level, just shy of 47%, as did risk costs at somewhat above 20 basis points. Banking taxes went up in the past quarter due to a doubling of the tax rate in Romania starting in July. Quarterly earnings per share also rose despite reported net profit being down slightly quarter on quarter due to the non-deduction of 801 dividends in the third quarter. The same effects also explain the rise of the return on tangible equity to 18%.

I don’t want to sound repetitive, but clearly what had positive effects in our P&L is also reflected in the year-to-date balance sheet development. On page six, you can see the main driver of asset-side growth was higher customer loan volumes. In fact, since the start of the year, added almost €10 billion to our loan stock. Stefan will tell you more where it exactly came from later. For now, I will only say that the positive trends of the previous quarters, good growth across Central and Eastern Europe, and solid growth in Austria, and better growth in retail and corporate business continued in the third quarter. Total customer deposits grew by 2.5% year-to-date, while core retail and SME deposits, which includes deposits held in the savings banks, increased by 2.4% over the same time frame.

The retail segment on its own saw deposit growth by 3.5% since the start of the year. All in all, we are seeing healthy volume growth for the past couple of quarters now, and the third quarter was no exception. This increase looks like a sustainable trend. This makes us confident that we will comfortably deliver our full-year guidance of growing customer loans by more than 5%. Looking at the same key balance sheet metrics on slide seven, my key message to you is that all of them are pretty much in a sweet spot territory. The loan-to-deposit ratio stands at 92%. Here, we saw a little bit of an uptick since the start of the year due to strong loan growth dynamics and, compared to that, somewhat slower growth in deposits.

The asset quality backdrop remained excellent in the third quarter, with a stable non-performing loan ratio of 2.5% and unchanged coverage versus the previous quarter of about 74%. Importantly, the asset quality situation in Austria remained stable despite the weak economic backdrop. Asset quality across Central and Eastern Europe remained very strong, and the Czech Republic and Hungary are doing particularly well. As usual, Alexandra Habeler-Drabek will provide you further details on credit risk later. Our capital position continued to expand in the run-up for the first-time consolidation of our Polish position, expected for around year-end of 2025. On a pro forma basis, we added another 74 basis points to our common equity tier 1 ratio in the third quarter, which now stands at 18.2%. Quarterly profit inclusion, the lack of any dividend accrual, and the first positive impact from securitization were key drivers of this strong print.

The lower left-hand chart on the slide shows the reported common equity tier 1 number, where third-quarter profit is not included due to not being reviewed. With this, let’s now examine the macroeconomic environment and, in particular, the outlook for 2026. I’m on slide nine now. In the past quarter, we saw continuation of geopolitical and trade tensions, which prolonged the weakness of German industry. The fiscal spending plans announced in spring of this year didn’t yet show any noticeable positive effect to date other than a slight improvement in sentiment. Accordingly, the German economy is expected to flatline in 2025. Due to this and necessary fiscal consolidation measures, the Austrian economy also struggled to produce growth. The situation was different in Central and Eastern Europe, where moderate growth in the range of 1% to 3% is expected in 2025.

I would like to highlight the good economic performance of the Czech Republic in this context, which is still our most important CE market. A key pillar of strength was the healthy labor market across our region, and that includes Austria. Consumer price inflation remained relatively elevated in our region, impacted by high energy prices, but also good domestic demand. Fiscal and external balances were mixed, with once again the Czech Republic standing out in terms of fiscal prudence and a positive external balance. When looking forward to 2026, current forecasts project higher growth rates in most of our markets and at worst, a stable growth performance. Consumer price inflation should ease somewhat, and the labor markets are expected to remain in good shape. Fiscal deficits should improve, especially in Romania, and overall indebtedness should also remain at sustainable levels.

This is an environment that works well for us and should ensure that we will continue to grow profitably in 2026, despite all uncertainties that, unfortunately, more than ever are a feature of doing business. Despite the mixed macro backdrop, retail business continued to do very well in the third quarter. I’m on page 10 now, with our balanced growth in retail loans, with housing and consumer finance contributing to growth in equal measure, both rising in higher single digits year-on-year. Asset quality remained stable at low levels. When it comes to retail liabilities, deposits also grew by a significant 6.4% year-on-year, mainly due to the increase in current account and savings deposits, while term deposits were down year-on-year as well as quarter-on-quarter, in line with trends we have already observed for a couple of quarters now.

From the bank’s point of view, this trend is positive as the shift towards lower price deposits decreased funding costs and supports net interest income. The good news doesn’t stop here. We also saw continuous growth in our balance sheets, in off-balance sheet customer funds. Security savings plans that enabled customers to build long-term wealth in an easy-to-manage digital format topped 1.9 million at the end of the third quarter, and they have generated gross fund sales in excess of €1.1 billion year-to-date. George, our digital platform for retail clients, continued on its growth path. The number of onboarded users reached 11.2 million in the third quarter, and the digital sales ratio in the retail business equaled 65.8%. Going forward, our ambition is unchanged to develop George into a fully-fledged financial advisor in order to give even larger parts of our client population access to high-quality financial advice.

In the corporate segment, I’m on page 11 already. Loans were up 6.9% year-on-year and 1.3% quarter-on-quarter. Growth was well distributed among all four business lines in the third quarter, while year-on-year the large corporate business made the best contribution, expanding by 10.4%. In terms of products, there was definitely more demand for investment loans than in the third quarter, while year-on-year there was a good balance between investments and working capital loans. The market’s business built on its strong start in 2025 with our ECM and DCM teams successfully executing 236 transactions with an issuance volume of €173 billion year-to-date. In asset management business, we reached a historical milestone in the third quarter with assets under management topping €100 billion for the first time ever. This achievement will support future fee growth. With that, I hand over to Stefan for the presentation of the quarterly operating trends.

Thanks very much, Peter, and also a warm welcome to this call from my side. Please follow me to page 13. When analyzing the loan volume performance by country, I would also single out the Czech business in the same way as Peter did in the context of macro. Not only is it our largest and most profitable market in Central and Eastern Europe, but it is also the most consistent performer when it comes to loan growth. In the third quarter, we continued to see growth across the board there. Demand was strong across all product categories with good balance between investment loans and working capital facilities in the corporate business, while mortgages continued to lead the way in the retail space with annual growth in the mid-teens. Mortgages were also the key growth driver in Slovakia, increasing by almost 10% year-on-year.

Corporate loan demand was heavily tilted towards working capital facilities there. In Hungary, the retail business clearly outperformed the corporate business with both mortgages and consumer loans growing in the mid-teens year-on-year. Please bear in mind that euro growth rates are somewhat flattered by the strong appreciation of Hungarian forint over the past months, but even when adjusting for this, retail growth was really strong. In Croatia, the development was similar to that in Hungary, with growth being better in retail than in corporate business. Within retail, mortgages were ahead. When we said in July that mortgage lending in Central and Eastern Europe is back, third-quarter data provides further evidence that this trend is strong and has legs. In our Austrian retail and SME operations, Erste Bank Österreich and the savings banks, volume growth is slowly but surely approaching the mid-single digits. Actually, not bad given the lackluster economic backdrop.

Interestingly, growth was somewhat better in the corporate business than in retail, with especially good demand for investment loans. Given the strong loan growth year-to-date, we feel very comfortable with our greater than 5% guidance for 2025. On the liability side, see page 14, the trends we have observed for the past couple of quarters also continued in the third quarter of 2025. Importantly, the favorable structural shift in our vast retail deposit base of almost €170 billion from term deposits back to current account deposits and savings accounts, or put differently, from the most expensive to cheaper retail deposits, showed no signs of slowing. A similar trend was visible in the corporate business with overnight deposits increasing, while term deposits declined year-on-year.

Consequently, the cost of deposits has declined to the lowest level in almost three years, with corresponding positive read across to net interest income, as we will see shortly. In terms of total deposit volumes, we are up 3.4% year-on-year and flat compared to the second quarter. Growth was driven by core retail, SME, and savings banks deposits, up 5.2% over the past 12 months. While deposits in the corporate segment flatlined over the same period, due in particular to offsetting volatility in the large corporate and public sector subsegments. In terms of geographic segment highlights, annual growth was satisfactory across the retail and SME businesses in Austria and Central and Eastern Europe, while the year-on-year decline in the other Austria segment was entirely attributable to lower non-core financial institution deposits. Let me now move to net interest income on page 15.

We have already talked about many NII drivers, be it strong loan growth, lower cost of deposits, or a stabilization in the interest rate environment. Add to that a steepening of yield curves allowing for better reinvestment opportunities and tighter funding spreads. You have all ingredients for posting record quarterly net interest income. Record NII of close to €2 billion, in fact, up 3.7% year-on-year and also up 3.1% quarter-on-quarter. Net interest margin also edged up quarter-on-quarter thanks to a muted increase in interest-bearing assets on the back of lower interbank business volumes. In terms of geographic highlights, net interest income at the Austrian retail and SME business continued to stabilize on the back of significant downward repricing of deposits, while downward repricing of variable-rate loans came almost to a standstill.

In Czech Republic and Slovakia, continued deposit repricing also had a positive impact year-on-year, compounded by the continued upward repricing of mortgage loans due to refixations at higher levels. The other segment, which includes holding asset liability management operations, benefited from higher income, mainly from government bond investments. A final comment on NII: our sensitivity to rate cuts is more or less unchanged at about, or even slightly below, €200 million for a 100 basis point instant downward rate shock, with the bulk of the impact expected at the minority-owned savings banks, so no big deal for shareholders. As a result of all of this, we are upgrading again our 2025 outlook for net interest income from previously growth of higher than 0% to growth of higher than 2%. Flipping to fees on page 16 and then onto a blockbuster, sorry, fee quarter.

Net fee income rose by a massive 8.6% year-on-year and increased by 4.8% quarter-on-quarter. With this, we set a new quarterly record of almost €800 million. In terms of growth drivers, the story is by and large unchanged. Year-on-year, fees generated by payment services and securities business led the way, even though the increase in payment fees is understated by the shift of loan account fees from payment to lending as of first quarter 2025. I would not like to highlight individual countries in this context, as we saw encouraging trends across the board, but rather add a comment to the Other Austria segment. In addition to good asset management sales, the year-on-year jump there is also explained by the integration of new asset management companies, so bolt-on acquisitions have worked very well there.

Quarter-on-quarter, the drivers were pretty much the same as year-on-year, with excellent performances registered in payment services as well as securities business. Based on the strong year-to-date performance, we confirm our full-year guidance of growth comfortably exceeding 5% in 2025. Let me turn to operating expenses on slide 17. Quarter-on-quarter costs were unchanged, both in terms of absolute amount and structure. Somewhat higher IT expenses were offset by lower personnel costs. Other than that, there were no major developments. Year-on-year cost inflation remained elevated compared to third quarters of 2024 and 2025, and at 6.8% looking at the first three quarters, respectively. The reasons are well known, ranging from higher staff costs to higher IT consulting expenses. Very importantly, we do believe that with this, we have seen the peak of cost inflation, and in the fourth quarter of 2025, the year-on-year cost updraft will decline significantly.

Consequently, it is still our ambition to get as close to the 5% guidance in 2025 as possible. Actually, the only moving target in this context is the size and timing of the booking of integration costs related to the Santander Bank Polska acquisition. Looking further out and limiting my comments to existing ST operations, we do believe that cost growth will decline materially from 2025 levels in 2026, which bodes well for positive operating leverage, given that we also have a strong top-line momentum. Talking about operating performance, we move to page 18 and can conclude that the top-line performance is the story of the third quarter. We posted record quarterly revenues, which fully offset elevated costs, resulting in record operating profit. The cost-income ratio also improved to 46.7% for the quarter.

Based on the strong year-to-date operating performance, we are upgrading the full-year cost-income ratio guidance for 2025 to about 48%. As I mentioned before, we have a constructive stance when it comes to the 2026 operating result outlook of our existing ST operations due to strong top-line momentum and moderating cost inflation in 2026. We hand this over to you, Alexandra, for more details on credit risk. Thank you, Stefan, and good morning and welcome to this call also from my end. I am on page 19. In the third quarter of 2025, we booked risk costs of €136 million, or 24 basis points. A year ago, risk costs were lower, but back then, we benefited from FLI and overlay releases in the amount of €101 million as opposed to only €19 million this quarter. Net-net, we actually saw an improvement year-on-year.

As is visible on the left-hand chart, we continue to book risk costs in our Austrian retail and SME operations, but the asset quality situation in Austria has definitely stabilized, thanks to lower NPL inflows year-to-date. The third-quarter bookings in Romania and Slovakia were mostly attributable to the retail business. Like Stefan and Peter, I also would like to explicitly mention the Czech Republic, which continued to excel also in terms of risk performance. As far as FLI and industry overlay provisions are concerned, we now hold a stock of about €460 million, slightly down compared to the second quarter, on the back of the already mentioned only minor FLI releases. Accordingly, we are again adjusting our forecast of such provision release in the remainder of 2025 to about €70 million.

Let me also come back to a point that Peter mentioned in his comments on one-time effects related to the first-time consolidation of Santander Bank Polska. According to IFRS 3 and IFRS 9, we are required to measure all acquired assets at fair value on the date of acquisition and immediately provide for performing ECL of the acquired portfolio on parent company level. These are purely technical IFRS bookings that will make our risk cost line look worse by up to €300 million in 2026, but are P&L neutral over time. Importantly, this is not a reflection of any underlying portfolio deterioration of the acquired assets. Moving back to 2025, and given our strong year-to-date credit risk performance, which asset benefited much less from FLI and overlay releases than in previous years, we confirm our full-year risk cost outlook of about 20 basis points.

Let’s now turn to asset quality on page 20. With a consolidated NPL ratio of 2.5% and an NPL coverage ratio, excluding collateral as always, of 74%, asset quality metrics remain strong, and this across our footprint. Overall, the NPL ratio benefited from somewhat lower NPL inflows and significantly higher recoveries year-to-date. Central and Eastern Europe, and again, especially the Czech Republic, continued to do very well, with only Romania and Slovakia showing a small deterioration. In Romania, NPL inflows were registered in the third quarter in retail as well as in the corporate business, while in Slovakia, this was due to some inflows in the retail space. In Austria, the situation was broadly stable, with most of the NPL inflows being tied to the real estate segment, as we have already observed over the past couple of quarters.

Nonetheless, let me stress this once again, the asset quality situation in this segment has definitely not deteriorated, but rather continues to consolidate at somewhat elevated levels. I still maintain my comments from the second quarter that we have seen the peak in defaults in Austria, but at the same time, you should not overestimate the speed of recovery given the still challenging economic environment. In terms of projections for year-end 2025, we expect the group NPL ratio to stay more or less at current levels. Similarly, coverage is expected to remain broadly unchanged, subject to the structure of new defaults and the magnitude of further FLI and overlay releases. With this, I already hand back to Stefan. Thanks, Alexandra. Let’s briefly look at how the other result performed this quarter on page 21. In short, other result once again benefited from a positive one-off.

After posting a positive one-off of €88 million in the second quarter, the third quarter saw a positive one-off in the form of a provision release related to a legal case in Romania in the amount of €77 million, which also explains the quarter-on-quarter deterioration to which the increased banking tax in Romania from July also contributed. Year-on-year, the comparison looks more favorable, even though the tripling of the Austrian banking tax since the start of 2025 did not help in this context. In terms of guidance for the fourth quarter of 2025, we would definitely expect to come in significantly better than for the last quarter a year ago.

On page 22, and summing up the P&L for third quarter of 2025, the record operating performance, combined with moderate, however, year-on-year and quarter-on-quarter slightly higher risk costs, resulted in a quarterly net profit of €901 million, earnings per share of €2.2, and a return on tangible equity of 18%. As Peter mentioned already, the reason why earnings per share and return on tangible equity both improved quarter-on-quarter despite reported net profit trailing the second quarter figure has exclusively to do with the timing of AT1 dividend payments. In the second quarter, we had some deductions due to this, while in the third quarter, there were no such payments. Overall, we are fully on track to deliver a return on tangible equity of greater than 15% in 2025. With this, let’s spend a few minutes on wholesale funding and capital.

Page 24 shows that our highly granular and well-diversified retail and SME deposit base, of course, remains the key source of long-term funding. Wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits, mainly repos. The stock of debt securities was pushed up primarily by issuance of covered bonds and senior preferred bonds, characterizing a very successful issuance here for Erste Group Bank, resulting in the updated maturity profile on page 25. My very short summary would be that we successfully completed our 2025 funding plan well ahead of time. Third-quarter issuance highlights included a €750 million tier two note on holding level, as well as senior non-preferred paper and covered bond in the amount of €500 million each, issued by our Czech and Slovak subsidiaries, respectively. Finally, for my part, let’s look at capital, starting on page 26.

Our first half 2025 performance, when it comes to regulatory capital and risk-weighted assets, was exceptional, and the third quarter was no different. While this is not visible in reported CET1 capital, which is almost entirely attributable to the non-inclusion of third-quarter profit, it is all the more visible in risk-weighted assets on the right-hand chart on this slide. The increase in risk-weighted assets from strong business growth was more than offset by asset-quality-related portfolio effects, as well as the successful execution of optimization measures such as securitizations. The former cover such factors as rating upgrades and downgrades, migrations to default, and parameter updates. Later, thanks to small securitization transactions in Slovakia and Hungary, also reduced risk-weighted assets by almost €1 billion. Consequently, risk-weighted assets overall declined by another €1.5 billion in the third quarter.

Let’s now turn to the important pro forma view of our CET1 ratio on page 27. If we focus on pro forma, we can see that we are pretty much where we targeted to be at year-end already now after the third quarter. At 18.2%, we could have closed the policy transaction already in September without falling below our minimum threshold of 13.5% announced at the time of acquisition or signing of the SBA in May. The fourth-quarter profit and most of the balance sheet optimization are still to come. So far, securitizations contributed only 12 basis points and asset sales another 11 basis points, roundabout. All the rest came from organic capital generation, obviously supported by the temporarily reduced shareholder distributions.

Consequently, we now project the year-end 2025 common equity tier 1 ratio of higher than 18.5% should the Santander Bank Polska acquisition close in early 2026, or alternatively, of higher than 14% should the transaction be completed inside this year. With the assumption of our drawdown unchanged at about 460 basis points as a result of first-time consolidation of Santander Bank Polska, we should be well on our way to exceed our post-consolidation common equity tier 1 ratio target of 14.25% during the course of 2026, and at the same time, return to our dividend payout policy of 40% to 50%. With this, over to you, Peter, for the outlook. Thank you, Stefan. Thank you, Alexandra. I’m concluding the presentation with our detailed financial outlook for 2025 on page 29. In addition, I will sketch out how I see 2026 shaping up, but let’s start with 2025.

As is evident from the numbers presented today, 2025 is already a strong year, and we have no reason to believe that the fourth quarter will be any different. We have healthy customer volume growth. We have a reasonably favorable interest rate environment, and as market leader, we have pricing power, all of which supported upgrading our net interest income outlook for 2025. We now expect growth of more than 2%. Fees continue to do very well for us, so the guidance of greater than 5% is probably on the conservative end. With this, our top line should grow nicely in 2025. On the cost side, we stick to our guidance of roughly 5% increase in 2025, even though we do realize that the year-end to-date performance and the possible front-loading of some integration costs related to Poland might push this figure slightly higher.

Even factoring some cost volatility in, we believe that we have a good shot of printing a 48 handle when it comes to the 2025 cost-income ratio supported by a strong top line. Risk costs should be in line with our existing guidance of about 20 basis points, and return on tangible equity should be comfortably above 15%, also fully in line with guidance. Let’s now to the more interesting part of this 2026. First of all, we enter 2026 from the position of strengths. Erste, as we know it today, enjoys strong growth dynamics. Add to that that 2026 economic outlook for our region is somewhat better than it was for 2025, so volume growth should continue to be healthy.

If we don’t see big shifts in the interest rate environment, which is the current expectation, then our top line in 2026 should grow faster than it did in 2025. At the same time, cost inflation should definitely come down next year, so positive operating leverage is not unrealistic for 2026. With a continued solid credit risk backdrop, we would expect to print a return on tangible equity north of 15%. That’s the existing Erste business. We are talking about a business that, even prior to the acquisition of Santander Bank Polska, is in excellent shape in terms of growth and profitability. If we now add Poland to the 2026 equation and leave one off the side, our profit and capital generation capacity will only improve from here.

In terms of level 2026 guidance for the combined entity, we therefore feel comfortable with confirming our targets made at the time of transaction announcement, and that’s a return on tangible equity of about 19% and EPS uplift of higher than 20% based on current market consensus expectations for 2025. To be absolutely clear about it, the guidance relates to reported figures rather than figures adjusted for one-time items. This, ladies and gentlemen, concludes our presentation remarks. Thank you for your attention. We are now ready to take your questions. We will now begin question and answer session. Anyone who wishes to ask a question may press Star and 1 on the telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press Star and 2.

Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press Star and 1 at this time. Our first question comes from Gulnara Saitkulova from Morgan Stanley. Please go ahead. Hi, good morning, and thank you for taking my questions. With the question on costs, you noted that the cost growth is expected to decline materially in 2026. Could you provide additional color on the cost outlook for the coming year and the key factors influencing the cost dynamics across your various markets? Where do you see and expect the most significant cost savings to come from, maybe potential areas of pressure, and how are you planning to manage these developments? Thank you. All right, that’s it. Okay, very good. Thank you very much for the question. Now, look, let’s start with the environment.

I think what we have seen was, and that’s of course the flip side of the coin of a stable rate environment, we have seen that the inflation, while coming down from the super elevated levels over the cycle, has still been at quite elevated levels. That’s true for Austria. If you compare Austria to most of the other, if not all of the other EuroLend countries, to name Hungary or Romania, this, combined with the very tight labor markets, definitely has been keeping the pressure on wage inflation up. On the flip side of that is, of course, a very, very strong retail business, strong fee business, very good asset quality. That all, of course, is connected to each other. That much to the overall backdrop.

On the internal, so to say, view, we have always been pointing out that the investments that we started in the second half of 2024 and have been ramping up throughout 2025 in order to improve our process efficiency are clearly seen in our cost line. We always have been flagging that as around 1.5 percentage points. That is, of course, now also part of the slightly elevated cost numbers in 2025. What of this will come down in 2026? First of all, we see significantly reducing wage inflation pressure all across countries. Actually, I don’t need to be specific anywhere. Of course, the absolute levels are different, but all of them have been coming down by, let’s say, 1% to 3% from what we saw in 2024 and 2025. That’s point number one.

Point number two, the index adjustments of, let’s say, the broad IT spending and so on are hopefully mostly finalized, and that definitely is an easing effect. Thirdly, and that’s, of course, most important for you to see how we work on the matters, we will already, and we see already, significant achievements in the process efficiency and the automation. That means that especially in the operations area and the typical mid-to-back office areas, you will see reduction of staff here and there, not a huge reduction, but a significant one in order to bring down the cost. Inflation substantially. I.e., as Peter, Alexandra, and myself described, we see a very good chance to come up with a positive operating choice in 2026 altogether. Thank you. Thank you. The next question comes from Amit Ranjan from JP Morgan. Please go ahead.

Yes, hi, good morning, and thank you for taking my questions. The first one is on capital. Can you please talk about how much of the 40 basis points optimization measures are now in the numbers? I think, Stefan, you mentioned around 12 basis points. If you could confirm that, please. What’s the outlook for these benefits in the fourth quarter, please? The second one is on capital return outlook from 2026 onwards, the 40% to 50% dividend payout range. Could there be upside to this range given the pace of capital build so far? Would it be dividends, more share? Could there be share buybacks part of the equation as well, please? The payout, would it be based on stated net income, or would it exclude the one-offs? Please, thank you. Thanks, Patrick. All right, one after the other. First question, how much is in?

Less than half of the 40 basis points. However, given the very successful progress all across the measures we are taking, let’s not forget the market was quite supportive, very tight spreads, so we could do a little bit more of asset sales. Securitizations are on a very good track, as you saw also in one or the other, let me say, statement reported around it. We believe it’s going to be above 40 basis points at the end of the year, and some of the measures might still happen in Q1. In other words, so far, only roundabout half of the 30 basis points of particular measures are in, but towards the end of the year, it will be more than 40 basis points. That’s why we are overall, in general, on a better track with the one ratio. That’s point number one.

I think you were asking about dividend 25. So 25, very simply put, we will not change anything here. It’s going to be 10% of the net profit. Obviously, with the net profit, there is certain fluctuation. If you put the numbers together, a best guess is somewhere between €0.50 and €0.75 to the euro, but that’s just, so to say, simply calculated. Nothing to be changed there because our clear commitment and goal is that in 2026. Shareholder. Returns on dividend payouts should be very much in the focus. I said it in the presentation that 40% to 50% net profit after AT1 deduction is our dividend policy. I think if we get back to that, given good profitability expectations for 2026, a very interesting and attractive dividend for 2026 should be expected. Thank you. The next question comes from Mate Nemes from UBS. Please go ahead.

Yes, good morning. Thanks for taking my questions. I have three of them. The first one would be on the Czech Republic. You’re showing really strong 5% sequential NII growth. It seems like you are outperforming the sector both in retail lending and in corporate lending. Could you talk a little bit about the drivers of that? What’s behind this, and how sustainable do you see this double-digit retail loan growth in the country? How long this could continue? The second question would be on the NII guidance. North of 2% for this year. If I look at the quarterly developments and only assume a flattish sequential development in Q4, you already are at 2.8% up year on year. Again, you’re showing really good growth in a number of markets. NII or net interest margin showing a trough, perhaps in Austria and clear expansion in a number of other markets.

What prevents you actually to become more positive? What are the potential one-offs or other risks to that guidance? The last question would be on Q4 costs. In the first nine months, you are 6.8% up year on year. Can you comment on what exactly in Q4 will help you to get to a roundabout 5% or 5%-ish level on a full-year basis? Any specific one-offs that you booked in the second half of 2024 or any potential reliefs you’re getting specifically this quarter? Thank you. Let me start to answer your first question about Czech Republic and our mortgage lending, consumer lending, and corporate lending. Point number one, this trend is going on since more than 18 months. There was a kind of hangover from COVID times in terms of demand.

Now it seems to us that this demand looks quite sustainable, and we are just taking advantage of being market leaders there. We are very well positioned in mortgage lending. It’s also true for consumer lending, but demand in mortgage lending is bigger than in consumer lending. On the other hand, I think it’s fair to say that we have a very balanced loan growth in the Czech Republic. It’s not only about retail, it’s also about corporate banking. We are doing very well in SME lending and corporate banking in the Czech Republic. We are quite happy with what we have achieved so far, and we are deeply convinced that the demand in corporate and retail lending is a sustainable one. On NII guidance, look, I can keep it very short. We don’t have any whatsoever one-offs or so in mind.

Greater than 2% can also be greater than 3%, right? We simply wanted to leave a certain room of, so to say, caution in. That’s all I can say. We are super confident to beat the two. We are reasonably confident to beat the three, but that’s pretty much it. Nothing more to say here. Q4 cost, very interesting point. Please, if you look at the quarterly cost chart in the presentation, you will very clearly see that the 2024 Q4 was elevated even more than usually the Q4 bookings are elevated. There were various reasons for that. Some of these effects will repeat. I have to be very honest with you. For example, we have a component for our employees and managers in the bonus payments, which is tied to the share performance, and that obviously has to be provisioned in the cost. That’s one element which repeats.

I was already mentioning in my presentation that there is a small, but not completely immaterial part of the Polish integration cost that we will book. We will see some effects in Q4, but certainly not such a jump up like in 2024. That’s why the year-on-year quarter four, quarter four comparison will come down quite substantially, and that helps us to come much closer to the 5% than we are in so far in the first three quarters. I think that’s the explanation for Q4, but allow me, please, also to make a statement for 2026, as I already answered in the former question. That’s really critical that we bring down the cost inflation in 2026.

Even if we have fantastic top line, it’s important for us to come to, let me say, at or even below inflation levels in order to support the overall operating performance, and that we definitely have in the cards for 2026. Thank you. Thank you. The next question comes from Benoit Petrarque from Kepler Cheuvreux. Please go ahead. Yes, good morning. The first question on my side is on the earnings power for Poland. Just wondering what you see operationally in Poland and also looking at several factors like rate outlook and bank tax. If you could refresh us on your guidance for Poland for 2026. The second question is, again, on NII. Yeah, what can stop NII to further increase in the coming quarters, basically? I mean, you have name stabilization, very strong loan growth across the board, positive mix effect.

I think in your slide, you mentioned potentially flattening of the curve or ECB rate cuts, but it sounds like NII momentum will remain strong in the coming quarters. I just wanted to confirm again that with name stabilization, it’s going to be a function of loan growth as far as NII is concerned. Last one, just on the loan-to-deposit ratio, which is deteriorating a bit for several quarters. Do you plan any specific steering actions to rebalance deposit growth versus loan growth? Loan growth will probably stay strong next year. Any planned actions there? Thank you very much. If you may start to answer questions. The first part about Poland, I think yesterday or the day before yesterday, hopefully future colleagues in Poland announced their third-quarter results. You can see they are still going very, very strong.

The forecast for next year when it comes to economic development is the highest in the whole region and will be definitely above 3%. When it comes to NII in general, before I hand over to Stefan, this is exactly what we tried to explain, that when we assume that interest rates will more or less stay at the same level as they are today, where this is also our forecast, there should be much more correlation between volume growth and NII growth compared to this year. We are quite happy that we succeeded to increase NII this year, and we should not forget that this year we have seen a decrease in interest rate environment. It is just given the demand in our region. This is the only region in Europe which is still growing.

The demand in loan growth and our capability to fulfill this demand led to a situation that our NII is growing, although interest rates are coming down. If you put this in perspective for next year, and let’s assume again that interest rate level will stay where it is, then our loan growth should be even better. The NII growth should be even better. I completely agree. That’s exactly how we explain the situation. I have absolutely no disagreement with your statement that further on in the upcoming quarters, we could also see a further growth in NII. There is nothing in our statements that would contradict that. It was only the discussion around Q4, and you know exactly that there can always be a couple of effects that drive it a little bit more up and down.

I think our guidance for Q4 is also open on the upper side, so no problem with that. One reminder, just not to get too overly excited, of course, certain measures that we took very successfully also have a certain limit. In other words, deposit repricing doesn’t go on forever, and we have been very successful in that across the markets, as we explained. Also, let’s not forget that the funding, for example, wholesale funding levels, which we were perfectly making use of in 2025, there is no guarantee that those funding spreads remain at tight levels. I mean, we are super optimistic, but we also should remain realistic and not expect that things go through the roof. On your loan-to-deposit statement, I have a completely different opinion here. Very simply put, I think we are in a perfect sweet spot. We are in a perfect sweet spot.

Anything around this 90% loan-to-deposit ratio across the group, I feel super comfortable with. Of course, there are big differences between the markets. I’m happy to go in a different session into the details market by market. Overall, the loan-to-deposit ratio is exactly where we like it to be in this rate environment. We will, of course, very closely watch all the indicators on the liquidity and deposit front, but so far could hardly be better. Thank you. All right. Thank you. The next question comes from Gabor Kemeny from Bernstein Autonomous LLP. Please go ahead. Good morning. One question on Poland, please, and the bank tax in particular, the bank tax proposal. I believe this is still a proposal. If this gets implemented, how would that impact the operations of Santander Bank Polska? I believe you are expecting to create significant goodwill with the deal.

Could the bank tax impact the valuation and with that the capital impact from this acquisition? That’s the first question. Secondly, on the NII outlook, thank you for all the clarifications. Just numbers-wise, I believe you are annualizing close to the €8 billion mark in Q3 or perhaps H2. I believe you guided around €3 billion from Santander Bank Polska, which together gets us to €11 billion before considering growth. Are there any trends, any deviations you would like to highlight for our modeling? The 2026 NII outlook, please? The final one would be Czechia is about to. Gain a new government, form a new government. Do you have any views on the likelihood of the new government introducing another bank tax? Thank you. Thank you, Gabor. Let me start with the last part of your question about Czech Republic.

So far, and also not during the election campaigns, there was anything mentioned when it comes to banking tax. Of course, we know that all over Europe, banking taxes are an issue because a lot of countries have an issue with their public debt levels, which is not so much the case for the Czech Republic. I think therefore this is not such a hot topic in Czech Republic. From today’s perspective, we don’t expect a banking tax in the Czech Republic. Of course, I need a political disclaimer. You never know when it comes to politics. Yeah. On NII, Gabor, very briefly. I mean, I think your statement on the existing perimeter of Erste Group can only be signed off. That’s correct. That’s all fine. I’m not in the position to comment yet on detailed outlook for our future Polish subsidiaries.

First of all, we don’t know the detailed internal drivers, the hedges, all of that. Please ask you for understanding that we can only talk about that really after closing. Certainly, you can read a lot out of this from the reporting of our future Polish colleagues. On the banking tax, look, I completely agree. It’s still in the political decision process. There are all kinds of discussions around that. I don’t want to, and I cannot comment on that in more detail. What is very important to understand, even if the government proposal goes through one-to-one, we are talking about a one-time lift up to 31% in 2026, then 26%, and then 23% as, so to say, the new level, which of course eases substantially your assumption in terms of the terminal value and stuff like impairment tests and goodwill assumptions.

We have been doing the numbers, obviously, and we don’t see any whatsoever reason to adjust them now. Of course, we will do this ongoingly. We are in constant contact, of course, already today with our auditors in assessing the situation. So far, we don’t see any changes on that. Adding to this, of course, and Peter said it in a couple of statements also publicly, the strategic rationale, as well as the overall, so to say, profitability, long-term outlook doesn’t change at all. We are used to those kinds of measures. Do we like them? Obviously not. Do we have to live with them? Certainly, yes. Thank you. Yeah, you are indeed. Thank you for all the comments. Thank you. The next question comes from Ben Meyer from KBW. Please go ahead. Thanks for taking my question. It’s not two quick ones.

The first one is just on the cost growth we’re seeing in Czechia. That’s obviously accelerated a fair bit in the quarter, but inflation has been quite low there for a while, so I’m just interested to see what the main driver of that is. My second question is just on the overlay releases. I think you did mention it before that you’re guiding to fewer releases than what you were guiding to last quarter. I was wondering if you could give any color on the potential releases for next year. Do you have a view on the terminal stock that you’re targeting, or is it something that you don’t really target? Thank you. I start with a question on the releases of FLI and overlays.

I said for this year, for the remainder of this year, it’s roughly €70 million, which we expect, and going forward with even somewhat lower levels. Maybe around €50 million releases next year, and then we would rather expect to have come to a certain stock of FLI, which we would also then carry forward. This is the current expectation. No huge releases, but some this year. I think your question, we had a bad line at this moment, but I think your question was around Czech costs, right? Yeah. Just the acceleration in the cost growth in Czechia during the quarter. No, I think, I mean, look, I just looked up a couple of numbers with my colleagues. I don’t see any specifics. The wage inflation level roundabout is in the mid-single digits. We had adjustments of salaries around 5%.

We had a couple of very good and forward-looking initiatives on IT side, AI, and so on in Czech Republic, which also played to it. Maybe if you can be more specific, I don’t see any outlier whatsoever in Czech Republic, by no means. On the cost side, it’s business as usual, I would say. Comparing to the market, I think we are at average. Maybe you spotted something, then let us know. Okay. Thank you. The next question comes from Kishendra Dubey from Barclays. Please go ahead. Thanks for taking my question. Thanks for the color on the NII. I just wanted to check on the fee guidance, actually. As of till nine months, you’re trading at 8%. I know you say more than 5%, so it could be 5, 6, 7, consensus 6.5. How do you see that trend developing?

The second question was on the 2026 net profit guidance. When you talk about adjusted $4 billion, is it pre-AT1 or is it post-AT1? Lastly, you talked about $200 million of one-offs. Are those tax deductible or are those not tax deductible? Thank you. The second one is easy. Everything that we talk about is pre-AT1. If you do, so to say, your math around, for example, dividend calculation or the like, we can provide you with the AT1 payments, absolutely no problem. All the numbers that Peter and myself were using are pre-AT1, dividend or, so to say, AT1 costs. On the fee trends, yes, you are perfectly right that we had this discussion, as you can imagine. Given the Q3 or year-to-date numbers, the greater and %,

Sandra, Conference Operator: Looks thick, conservative. On the other hand, we all know that on fees, 1 percentage point is something around $25 million, $30 million, $30 million, $30 million. That can easily jump up and down. What value is there if you go to mid single upper digit, peep up? In that sense, there is no breaking whatsoever. Q4 usually is very strong, always subject to, for example, capital markets and so on in terms of asset management fees and so on. There is no whatsoever slowdown, as I said in the presentation already, visible. What will be interesting, of course, to see, on the back of here we have again the similar effect in the other direction.

If inflation constantly comes down and slows down, then obviously some of the fee drivers might slow, but nonetheless, with our strategic focus, we are super optimistic, by the way, also for Poland that we can improve some of the fee generating activities substantially.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: Maybe if I may add some kind of sentiment from a business point of view, as Stefan absolutely rightly mentioned, inflation was already coming down this year. What we have expected for this year was a little bit more decrease in the fee related payments, which didn’t happen so far. I think our capability to generate new clients is supporting us there to compensate the decrease in inflation and the potential impact on the payment fees. When it comes to asset management, it’s clear that the volatility can increase, of course, in the upcoming months, which will be mainly reflected in the volume of our assets under management in asset management.

When it comes to fee income generation, the way how we have built up or succeeded to build up our asset management proposition in most of our countries is this monthly, regularly investments in asset management products, which makes us not so much dependent on volatility in the market, because it’s kind of cost average principle, which is supporting our clients to build up wealth in a very stable way. Last but not least, also coming back to Stefan’s remark, we see a huge potential in terms of fee income and asset management in Poland, because we believe that this market is somehow under-penetrated when it comes to asset management, which is not a surprise because there was a different history in interest rates compared to other countries we are operating in. If I remember correctly, we’ve never seen negative interest rates in Poland.

To say, the engagement or the love to term deposits is a little bit higher compared to other countries. When you look at the volumes of asset management, and given the size of the market and given the proposition of our bank, we see a lot of opportunities.

Sandra, Conference Operator: Thank you, Peter. We were speculating, I think you asked about the tax deductibility of the integration costs and so on. This is very important information. The lion’s share of it certainly is tax deductible. That’s absolutely clear. Details can be given once we are more specific and have the detailed costs and everything on the table. The general answer is yes.

Peter Bosek, Chief Executive Officer, Erste Group Bank: Thank you. Thanks a lot.

Sandra, Conference Operator: The next question comes from Riccardo Rovere from Mediobanca. Please go ahead.

Thanks a lot for taking my questions. First of all, is on the, if I’m not mistaken, $300 million credit losses that may burden your profit and loss in 2026. Just to be clear, this is the purchase price allocation when you’re measuring all the assets and all the liabilities of Santander Bank Polska at market prices. This eventually should lower the goodwill that you will book out of the transaction. It should be kind of capital neutral, if I understand it correctly. Completely irrelevant from that standpoint. The second question is just a clarification from Alexandra. If I’m not mistaken, I understand that in 2026 you expect to use only $50 million of SLIs, just a confirmation of this number.

If possible, I’d love to hear your thoughts if the SRTs that you have done and that you plan to do, as far as I understand, will have a revenue impact at some point. In case, how much it should be. I have a question on Poland and on the Advocate General, a month ago or whenever it was, talked about, said that the, let’s say, the Polish courts have the right to look into the VIBOR. Using VIBOR as a benchmark. Is it something that you’re looking at? Is it something that worries you? Is it a matter of concern for you? I have another question on deposits, if I may. Wage growth in all the countries where you operate is running above GDP growth. I guess this is the reason why the deposit growth, I’ve seen it at least in some countries, exceeds loan growth.

Is that supposed to continue, you think? If that continues, do you see reason or ways to move some of these deposits, considering 90% loan to deposit ratio or something like that, into the asset management, which, if I’m not mistaken, hit $100 billion? Those have been growing pretty fast. Are you happy with the amount of asset management fees, wealth management fees within your revenue base? Or is it something that you would consider expanding? Thanks.

Alexandra Habeler-Drabek, Chief Risk Officer, Erste Group Bank: Okay. Let me start. Yes, I can confirm, we expect currently €50 million release for 2026, but not only from FLI, this also includes some releases from the current overlays that we have for the cyclicals. The second one, this I cannot confirm. This up to maximum €300 million that I was mentioning, day one is sale recognition, is not the PPA effect. Under IFRS, there are two topics. One is IFRS 3, where we are obliged to measure the financial assets at fair value on the acquisition date. On top comes IFRS 9, subsequent measurement, where we are forced to book the performing ECL of the acquired portfolio on the level of the mother company immediately. It is not the PPA effect. It is a combination of IFRS 3 fair valuation and additionally IFRS 9 requirements.

We also have, if you’re interested, the paragraphs for you to look it up. I’m sure Thomas will be happy to take this up afterwards.

Sandra, Conference Operator: All right. Onto SRTs. Thanks for the question because it gives me opportunity to answer a few points. Of course, the ones you were asking about, but also some you have not been asking for. First, what costs are associated with the SRTs? Obviously, there is no free lunch anywhere. Therefore, very clearly, if we conclude all the SRTs currently foreseen for the rest of the year or latest in Q1, then you have around about for the next two, three years, a fee expense of €50 million. Yeah. So that’s exactly the cost. It’s booked in the fee expenses since they are kind of considered as insurance payments, if you want to have a comparison, and you know that anyway.

What is very important to mention is that we have an extremely well-diversified portfolio of SRTs in planning, both in terms of geographies as well as in terms of areas, so to say, of business. Going forward, Alexandra and myself have discussed this in very much detail with our teams. We want to use SRTs not only as a capital optimization measure, but also as a kind of portfolio optimization tool. I think it’s both in terms of segment risks as well as optimization on here, on pockets right and left. We learned a lot in the last two years again. We are super happy to have this tool at hand. In terms of cost and capital relief, I think it’s a fantastic tool for our current tasks and for our current goals. Maybe last comment to put these things in perspective.

If you look at the overall European landscape of banks and comparable players in the market, we have been way below the utilization of SRTs so far. With all the executions that we are aiming for, we should land somewhere at the average of European banks, comparable to ourselves. That’s also where we feel very comfortable. Thank you.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: If I may answer or go on with the law lecture here, when it comes to VIBOR, not too much news since we talked last time. There is this preparation of the decision of the European Court, which is saying that the usage of VIBOR in a contract is compliant in loan contracts. There are also some decisions in Poland from local courts, which are in favor of banks. I don’t want to downplay it too much because it’s drilling down that this seems to be not a systemic problem, like the Swiss franc topic was several years ago. It seems to be a topic which is drilling down to the concrete advice which was given to clients, you know, if advisors have made clients aware that they have floating rates, right? I think this is a completely different situation.

To sum it up, we are fully aware that consumer protection is here to stay. This is something we are dealing with in all our markets. Just to remember, everyone, this started in Austria roughly 20 years ago. It’s not only about kind of countries like Hungary or Poland. This is a topic where we are dealing with it all the time. The easiest way to be compliant is to come up with compliant products.

Sandra, Conference Operator: Yes. Peter, do you want to, I think I take the first part of the deposit question.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: yeah.

Sandra, Conference Operator: With regard to growth, yes, well spotted. Of course, short term, there are deviations from GDP growth, deposit growth, both on individual level for us, but also in the respective markets. That stems from various matters, as you perfectly know. It’s a liquidity, central bank liquidity, as well as money supply overall. I think that in general, we are an extremely attractive bank to our depositors. The trust that we have been gaining and we are working on every single day is a factor. We are a big player in all the markets. All of that plays into this. On your other question, I think that’s obvious, we want to have a very good balance between keeping a strong deposit base, but of course, advising our clients for a right balance of asset management products, long-term savings, and better yielding products. I think it’s all about the balance.

It’s all about good advice. If you look at also the feedback of the market and all these measures like MPS, CXI, I think our colleagues are doing an outstanding job there. That’s also the goal for the future. Money which is available for a longer-term saving, of course, should not be kept necessarily on the lowest dealing levels. That’s the way we are advising our clients. That’s how we want to help them build their wealth for their long-term future.

Thanks. Thanks, Stefan. If I may follow up one second on this topic. At the moment, with the current pricing at the moment of the deposit, is it better to have the deposits on balance sheet, so feeding an NII, or off balance sheet in asset management? Where is the margin better now?

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: I think there’s no clear answer to it. It’s very much depending on client situation, of course. On the other hand, it’s also fair to say that I think we have proven over the last, let’s say, 24, even longer period of time, that our capability to manage interest rates on deposits in both kinds of environments, increasing interest rates and decreasing interest rates, we are doing very well. Point number one. Point number two is, Stefan rightly mentioned, for long-term investments, we are very much in favor of our clients to invest in asset management products because we still believe that this is an area not only in countries like Poland where we see room for improvement. This is true for all over Europe.

You know, look at the Draghi report, look at the later report, look at every kind of speech politicians are giving typically on Sunday, not always having impact, of course. This is very obvious that there will be a strong tendency over the upcoming 20 to 30 years that people in Europe will invest much more in asset management products. There is no clear guidance between technically P&L measures. We are doing very well in managing interest rate levels, and of course giving advice, the right proper advice to our clients when it comes to asset management.

Yeah. Thanks.

Sandra, Conference Operator: The next question comes from Seamus Murphy from Cargill. Please go ahead.

Hi. Yeah, two questions, please. Just one, I suppose one of the major positives for Erste when we look across Europe is that, relative to most of your peers who are also growing, is that you’ve kept your FTEs or your employee numbers pretty constant since 2022 despite the balance sheet growth. I suppose my question is, how long can this be sustained? Should we consider that the employee numbers will grow into 2027? How are you thinking about the growth in employee numbers? Secondly, just very briefly on NII, I suppose when I think about NII, there are two components to it. Obviously, we have the structural element to it, which is the potential yield uplift, sales come from your current account, reinvestment of your maturing fixed rate products.

In this quarter, I think you mentioned Slovakia in particular for this, in terms of the uplift that came this quarter. Assuming that this is happening across the group, I suppose it would be great to know the size of the fixed rate mortgage pool back in your current accounts and also what the current backbook yield is on those products versus the front book, so we can have some estimate of how this component of NII evolves in the next three to four years. The last component of that question is, obviously, we’ve seen this move into current accounts.

As the curve steepens from here and the base that you do believe the curve to steepen, how quickly do you, or how do you decide between the reinvestment rate where you put it at cash at central bank or whether you again reinvest in your own fixed rate mortgage products? Thank you.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: If I may start, let me answer your question related to FTE development. Of course, we try to keep the numbers of FTEs flat in a way that we, the way how we look at our business is it should be a scalable business, which is anyhow not an easy task because we are in the same situation like all other European banks when it comes to IT legacy. It’s a lot of work to further improve efficiency in terms of technology. This is a clear part of our strategy that we, and you’ve seen some investments this year already, really what we always called investments related to our strategy, that we want to achieve a level of end-to-end processes which should help us to keep FTE development stable in the future, even adding additional business on our balance sheet. This is a very clear goal.

Of course, putting aside that we will have roughly 10,000 employees more after the acquisition of Poland.

Sandra, Conference Operator: Let me take up your question, which is a very interesting one. Let me say at the start that some of the details I would kindly ask you to take offline with Thomas because of course we could talk about overall interest rate strategy for at least an hour or so. Let me state a few of the most important matters. I think what is helping us at this very point in time, and that’s why, for example, Slovakia is outperforming so much, Czech Republic to a part as well, is that we have refixations in durations which are now upward pricing. Mortgages in Slovakia, for example, have a typical fixation period of five years, right? We are now still fixing substantially upwards, and in the same moment, deposits are coming down.

That’s why a country, a Euro country like Slovakia, is so well performing apart from their excellent new production. That’s one effect. The other one, if you look at the details of the NII results of the last couple of quarters, you see that Austria, typically where we have the LM investments, where we have been booking, of course, also kind of investments going against the extensivities of the Austrian/Euro sensitivity for downward pressure, have been gaining substantially. These are big bond investments, which are in amortized costs, but of course are benefiting from the high investment yields, which leads me to your third point, and that’s the steeper curve. Now look, I mean, this is on the trading book.

Having been a trader myself in the past, it’s not a trading book where we are reacting on a day or a weekly basis, but of course we are very closely looking into the shapes of the yield curves. Of course, sometimes you get it better, sometimes not as good. I think the last 18, 24 months we were anticipating the shape of the yield curve and the spots in the curve where we thought the duration is the best, very well. Currently we have a duration on the overall investment book for roundabout four and a half years, a little bit different from country to country, but overall the yield has of course been shifting upwards. For those who know us for a long time, the investment book has been coming down substantially for many, many years and now has been going further up.

For Thomas, I think five years, right? Five years upward trending. On page 43 of the presentation, you find a very good description of how the allocation looks like in terms of geographies as well as, so to say, accounting logics.

Can I just, just a very brief follow-up if you don’t mind? I suppose that what I’m just trying to figure out is that still a couple of hundred basis points or more in terms of the refixations that we will see over the next few years, or I mean, some quantum would be super beneficial.

What I can say from top of my head, in Slovakia, for example, since I was talking about Slovakia, we have another two years to go roughly in terms of positive refixations. Austria is different, as you know, because there is a different mix between variable and fixed loans on the Austrian EBU. It’s more fixed on the Sparkassen. It’s more variable. That’s why we always have a bigger sensitivity there. In terms of absolute numbers, I kindly ask Thomas to follow up with you to give you the breakdown of volumes, country by country. It’s no problem. We have all of that.

Okay, thank you so much.

Welcome.

The next question comes from Robert Brzoza from PKO Securities. Please go ahead.

Okay. Hello everyone. Thanks for taking up my question. I want to revisit the adjusted profit guidance for 2026 to understand, to see if I got it correctly. Am I right that you see this in adjusted terms at around €4 billion level? If you could provide sort of a rough bridge between the adjusted and reported, should we assume that the potential IFRS 9, €300 million, would be included in that bridge plus the potential €100 to €200 million additional reorganization and post-acquisition costs? That’s on adjusted versus reported 2026 outlook. Related to that, can you reiterate what’s your post-acquisition return on tangible equity guidance? Is this guidance based on the adjusted or reported figure? Thank you.

Okay. Thanks very much. Again, clarifying what Peter and myself said, and also Alexandra was perfectly explaining the IFRS 3 and IFRS 9 effects and so on. First of all, we don’t talk about a guidance here, to be very precise. We talk about our ambition levels. Once we have finalized the closing successfully, certainly when we talk to the market, to you again, end of February, we will translate everything into a real guidance. Just to be precise here, we are always talking about the difference between adjusted and reported. You are perfectly right in your description when we talk about the ballpark $200 million integration costs and the estimated $300 million of the effects, which are long-term, long P&L neutral that Alexandra and Peter explained. We are looking at a reported matter for 2026.

Again, guidance and more detailed insights, we will then be providing with the hopefully end of February reporting for the full year 2025.

Right. The post-acquisition ROI, I assume that would also be highlighted in February, correct?

19% unchanged. Absolutely correct.

Unreported.

Unreported, unreported basis.

Thank you.

We have a follow-up question from Riccardo Rovere from Mediobanca. Please go ahead.

Yeah. Thanks. Thanks. Thanks for that. When it comes to the €462 million of overlays and FLIs, Alexandra, is it possible to have a split between the two, how much is the overlays? And could the overlays be used against the €300 million in the two spectrum performing loans in Poland? The other question I have is, how do you think about the fiscal boost from the debt-to-break relaxation in Germany? Do you see any potential positives to lower in Austria and in C? Do you have any idea how this could eventually play out? Thanks.

Speaker 0: Okay. The breakdown is of Q3. We are talking about 462 of stock. There are 323 FLI, 122 overlays, cyclicals, and some minor other overlays. This is the breakdown. We expect, but this is really only an expectation, in case we can release, or can and have to, it’s both, €70 million released until end of 2025. This would be a split of the €70 million between FLI and cyclical overlays. To your question, if we can use going forward for 2026, this year, this against this ECL day one booking, we cannot, yeah? These are two completely different concepts. Of course, a release is always a release. If you add provisions, we cannot net it in the sense of a methodological netting. This is not possible.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: If I may take the question about Germany, to be clear, we expected a positive impact even a little bit earlier, but it’s taking longer due to different reasons. Let me share with you, I had a discussion with the CEO of a construction company, one of our bigger clients, and he’s doing roughly 50% of his turnover in Germany. They are building a street in Romania at the moment in Bucharest, and they are able to build a street for 30 kilometers in one shot. In Germany, it’s a different frame and a different scheme how things are operated. There you have to tender every 5 kilometers. I don’t want to judge it. It could make very much sense how they do it in Germany, but it just takes longer.

On the other hand, it should be much more sustainable because to spend this €500 billion, it will take some time. There should be a positive support for economic development. Yes, of course, we’re expecting positive impact in countries like Poland, but also Czech Republic, maybe Slovakia. This is something we expect for 2026. I personally expected it already the second half of 2025. You see a slight increase in the sentiment, in the economic sentiment in Germany, but it’s so far not the super bazooka booster as it was announced at the beginning.

Peter, if I understand you correctly, you expect to see something in 2026 on the back of that.

Yes, exactly.

Okay.

Sandra, Conference Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peter Bosek for any closing remarks.

Thomas Sommerauer, Head of Group Investor Relations, Erste Group Bank: Thank you to all of you. Thank you for listening to us. Thank you for your questions. Stefan and I are very much looking forward to see some of you, at least in person, next week during our roadshow. Let me tell you that we will come up with full year results 2025 on the 26th of February 2026. Very much looking forward to it. Thank you.

Sandra, Conference Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscal, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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