BAWAG Group (BG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net profit reached EUR 175 million, EPS of EUR 2.22, and ROTCE of 24.3%; H1 2024 net profit was EUR 342 million, up 7% year-over-year, and ROTCE was 24.0%.

• Pre-provision profit for Q2 was EUR 263 million, flat year-over-year; cost-income ratio at 32.6%.

• Two strategic acquisitions signed: Knab Bank (Netherlands) and Barclays' German consumer lending business, expected to add over EUR 250 million pre-tax profit by 2027.

• Fortress balance sheet with EUR 770 million excess capital and CET1 ratio at 16.5% post-dividend accrual.

• Risk costs for Q2 were EUR 28 million (27bps risk cost ratio); NPL ratio at 1.1%.

Financial highlights

• Net profit of EUR 175 million, down 3% year-over-year; pre-provision profits of EUR 263 million, flat year-over-year.

• Net interest income for Q2 was EUR 309.7 million, flat year-over-year; net commission income EUR 81.7 million, up 7%.

• Operating expenses increased 5% to EUR 127.1 million in Q2 2024; cost-income ratio at 32.6%.

• CET1 ratio at 16.5%, up 90 bps from prior quarter, after EUR 188 million dividend accrual.

• Customer loans averaged EUR 33.5 billion, down 1% sequentially; customer deposits up 1% sequentially.

Outlook and guidance

• 2024 guidance: profit before tax target greater than EUR 920 million, ROTCE above 20%, cost-income ratio under 34%.

• Net interest income and core revenue growth of 1% expected in 2024; operating expenses to grow around 3%.

• Risk cost ratio expected between 25-30 bps for 2024; regulatory charges ~EUR 16 million.

• Muted customer loan growth expected for 2024, with normalization in mortgage volumes anticipated in 2025.

• Outlook excludes M&A contributions; Barclays Consumer Bank Europe acquisition expected to close Q4 2024/Q1 2025.