- Record Net Profit: 2025 reported net profit reached EUR 3.5 billion (underlying EUR 3.3 billion), outperforming guidance with net positive one-offs of EUR 250 million post-tax.
- CET1 Ratio Strength: Closed 2025 with CET1 ratio of 19.3%, positioning the group to consolidate Erste Bank Polska in Q1 2026 while targeting a 15.5–16% CET1 ratio post-integration.
- Loan Growth Momentum: Achieved 6.4% loan growth in 2025, with 2026 targets exceeding 5% organically (group-wide) and EUR 285 billion total loans including Erste Bank Polska.
- Fee Income Expansion: 2025 annual fee income hit EUR 3.2 billion (+8.6 YoY), with 2026 guidance of EUR 4 billion (5%+ growth) from organic growth and Polish acquisition.
- ROTE Target: Aiming for 19% return on tangible equity in 2026, alongside >20% year-on-year earnings per share growth and a cost/income ratio target of ~45%.
Revenue Growth and Margin Analysis
The bank's revenue growth was driven by a strong performance in net interest income and net fee income. Net interest income grew by 3.5% year-on-year, while net fee income increased by 8.6%. The bank's cost/income ratio was slightly weaker in 2025 but is expected to improve in 2026, with a target ratio of around 45%. The bank's net interest margin (NIM) is a key metric to watch, given the interest rate environment and the bank's sensitivity to rate cuts.
Valuation and Dividend Yield
Erste Group's valuation metrics are attractive, with a Price-to-Tangible Book Value (P/TBV) ratio that can be derived from the given 'P/B Ratio' of 1.84, indicating the bank is trading at a reasonable multiple. The Dividend Yield is 2.9%, providing a relatively stable source of return for investors. With a Return on Tangible Equity (ROTE) target of 19% in 2026, the bank is expected to continue delivering strong profitability.
Outlook and Guidance
The bank's guidance for 2026 is positive, with expected organic loan growth of higher than 5%, net interest income of over EUR 11 billion, and fee income of around EUR 4 billion. The bank is targeting a return on tangible equity of around 19% and an earnings per share uplift of over 20%. With the acquisition of Erste Bank Polska, the bank expects significant growth opportunities and is well-positioned to deliver on its targets.
Integration and Growth Opportunities
The integration of Erste Bank Polska is expected to be completed within 24 months, with rebranding taking place in the second quarter. The bank is focused on integration but will also evaluate growth opportunities, including M&A, as they arise. The bank's strong capital position, with a CET1 ratio of 19.3%, provides flexibility to pursue these opportunities while maintaining a robust capital buffer.