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1. Company Snapshot

1.a. Company Description

BAWAG Group AG operates as a holding company for BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft that provides various banking products and services in Austria, Western Europe, North America, and internationally.The company's Retail & SME segment offers savings, payments, cards, lending, investment, and insurance products and services; small business lending; factoring and leasing business; social housing activities; and real estate leasing platforms.Its Corporates & Public segment provides lending products to international corporates; international real estate financing; corporate, mid-cap, and public lending; and other financial services.


The company's Treasury segment offers trading and investment services, such as asset-liability management transactions, including secured and unsecured funding.The company is headquartered in Vienna, Austria.

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1.b. Last Insights on BG

Bawag Group AG's recent performance was driven by strong Q1 2025 earnings, with a net profit of EUR201 million, primarily due to significant operating income growth and strategic acquisitions. The company's robust financial performance was also supported by a full quarter of Knab and two months of Barclays Consumer Bank Europe, acquired in February 2025. Additionally, the European market's positive upswing, with the STOXX Europe 600 Index rising by 3.44%, has created opportunities for undervalued stocks, including Bawag Group AG.

1.c. Company Highlights

2. BAWAG Group's Q3 2025 Earnings: A Strong Performance

BAWAG Group reported a robust Q3 2025, with a net profit of EUR 219 million, translating to an EPS of EUR 2.77, and a return on tangible common equity of 28%. The company's operating income was EUR 555 million, with a cost-to-income ratio of 36%, indicating efficient cost management. Risk costs were EUR 52 million, resulting in a risk cost ratio of 37 basis points. Notably, the actual EPS came in slightly lower than estimates at EUR 2.65 versus EUR 2.73. The company's retail and SME business was a significant contributor, delivering a net profit of EUR 188 million, with a return on tangible common equity of 37%.

Publication Date: Oct -27

📋 Highlights
  • Q3 2025 Net Profit & ROE:: Net profit of EUR 219 million (EPS EUR 2.77) with ROE of 28%, driven by EUR 555 million operating income and 36% cost-to-income ratio.
  • Retail & SME Segment Outperformance:: Delivered EUR 188 million profit (37% ROE) with 35% cost-income ratio, outperforming corporate/real estate segment (EUR 39 million, 31% ROE).
  • Capital Allocation Framework:: Completed EUR 175 million share buyback (1.6M shares canceled), CET1 ratio of 14.1%, and 55% dividend accrual priority for 2025.
  • Strategic Lending Focus:: Prioritizing risk-adjusted returns in consumer/SME lending (credit cards, secured loans) while exercising caution in public sector and securities portfolios.
  • NII & Capital Guidance:: NII growth expected from asset-driven uplift (2/3) and deposit stability, with net interest margin target of 3.25–3.30% and SRT leverage for risk mitigation.

Segmental Performance

The retail and SME business drove profitability, with a cost-income ratio of 35%. The corporate, real estate, and public sector business also reported a net profit of EUR 39 million, with a return on tangible common equity of 31% and a cost-income ratio of 25%. As Enver Sirucic mentioned, the net interest margin guideline is 3.25% to 3.30%, indicating a stable outlook for the company's NIM.

Capital Management and Outlook

BAWAG Group completed a EUR 175 million share buyback, canceling 1.6 million shares, and ended the quarter with a CET1 ratio of 14.1%. The company expects to exceed its 2025 targets, with a net profit of EUR 800 million and earnings per share of more than EUR 10. Analysts estimate next year's revenue growth at 6.2%, indicating a positive outlook for the company.

Valuation and Dividend Yield

BAWAG Group's current P/TBV ratio is 2.06, and the dividend yield is 5.06%. Given the company's strong profitability and capital position, the dividend yield appears attractive. With a ROE of 17.52%, the company is generating strong returns for its shareholders. The P/E ratio is 11.72, indicating a reasonable valuation multiple.

Growth Opportunities and Risk Management

BAWAG Group sees opportunities in consumer and SME lending, particularly in the credit card business and secured lending. The company's approach to corporate lending prioritizes risk-adjusted returns over volume growth. Risk management is also a focus, with the company working on a smaller consumer SRT to mitigate potential risks.

3. NewsRoom

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European Dividend Stocks Spotlight Featuring Three Top Picks

Nov -04

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BAWAG Group publishes Q3 2025 results: Net profit €219 million and RoTCE 27.8%; on track to exceed 2025 targets

Oct -22

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Top European Dividend Stocks To Consider In September 2025

Sep -24

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Jul -31

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BAWAG Group publishes Q2 2025 results: Net profit € 210 million and RoTCE 27.6%, full year outlook reconfirmed

Jul -23

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Top European Dividend Stocks To Consider In May 2025

May -27

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BAWAG Group: Moody’s affirms ratings and changes outlook from stable to positive

May -21

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3 European Stocks Estimated To Be Undervalued By Up To 48.6%

May -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.86%)

6. Segments

Retail & SME

Expected Growth: 4.77%

The 4.77% growth in Retail & SME segment of BAWAG Group AG is driven by increasing demand for consumer loans, mortgages, and credit cards. Strong brand recognition, expanded digital channels, and competitive pricing also contribute to growth. Additionally, the segment benefits from a stable Austrian economy, low unemployment, and rising consumer confidence.

Corporates, Real Estate & Public Sector

Expected Growth: 4.85%

BAWAG Group AG's 4.85% growth is driven by Corporates' increased lending to Austrian SMEs, Real Estate's robust mortgage business, and Public Sector's strong demand for infrastructure financing. Additionally, the group's digitalization efforts, cost discipline, and solid asset quality contribute to its growth momentum.

Treasury

Expected Growth: 6.47%

BAWAG Group AG's Treasury segment growth of 6.47% is driven by a strong liquidity position, effective asset liability management, and a favorable interest rate environment. Additionally, the segment benefits from a diversified funding base, a solid risk management framework, and a focus on cost efficiency, enabling the bank to optimize its balance sheet and generate sustainable earnings.

Corporate Center

Expected Growth: 5.83%

BAWAG Group AG's Corporate Center segment growth of 5.83% is driven by strategic cost management, efficient capital allocation, and a strong focus on digitalization. Additionally, the segment benefits from a solid risk management framework, enabling the company to navigate market volatility. Furthermore, the center's efforts to optimize processes and streamline operations have contributed to the growth.

7. Detailed Products

Retail Banking

BAWAG Group AG offers a range of retail banking services, including current and savings accounts, credit cards, personal loans, and mortgages.

Corporate Banking

BAWAG Group AG provides corporate banking services, including cash management, trade finance, and lending solutions, to support businesses of all sizes.

Investment and Markets

BAWAG Group AG provides investment and market-related services, including asset management, brokerage, and research, to help clients achieve their investment goals.

Leasing

BAWAG Group AG offers leasing services for vehicles, equipment, and real estate, providing flexible financing solutions for businesses and individuals.

Factoring

BAWAG Group AG provides factoring services, allowing businesses to optimize their working capital and improve cash flow.

8. BAWAG Group AG's Porter Forces

Forces Ranking

Threat Of Substitutes

BAWAG Group AG operates in a highly competitive market, and customers have various alternatives to choose from. However, the company's strong brand reputation and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

BAWAG Group AG's customers have significant bargaining power due to the availability of alternative banking services. The company needs to maintain competitive pricing and services to retain customers.

Bargaining Power Of Suppliers

BAWAG Group AG has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's strong financial position also gives it negotiating power in supplier relationships.

Threat Of New Entrants

While there are barriers to entry in the banking industry, new entrants can still disrupt the market. BAWAG Group AG needs to maintain its competitive edge through innovation and customer-centric services.

Intensity Of Rivalry

The Austrian banking industry is highly competitive, with several major players vying for market share. BAWAG Group AG needs to differentiate itself through its services and customer experience to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 79.29%
Debt Cost 4.42%
Equity Weight 20.71%
Equity Cost 9.43%
WACC 5.46%
Leverage 382.79%

11. Quality Control: BAWAG Group AG passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

119.5$

Current Price

119.5$

Potential

-0.00%

Expected Cash-Flows