Erste Group Bank (EBS) H1 2024 earnings summary

Executive summary

• Upgraded 2024 financial outlook on robust top-line growth, strong operating performance, and improved cost/income and risk metrics.

• Strategic focus on organic and inorganic growth in CEE, digitalization, and capital return via dividends and share buybacks.

• Continued commitment to operating efficiency, fee income expansion, and disciplined M&A.

• Net profit for H1 2024 reached EUR 1,629 million, up 9.4% year-over-year, driven by strong operating results and improved other operating result.

• Net interest income rose 3.5% to EUR 3,687 million, with growth in all core markets except Austria.

Financial highlights

• Net profit for H1 2024 increased 9.4% year-on-year to EUR 1.63 billion, driven by revenue growth in NII, fees, and trading.

• Net interest income up 3.5% year-over-year; net fee income up 12.5% year-over-year, led by asset management and payment services.

• Operating expenses rose 3.1% year-over-year, mainly due to wage inflation and IT costs, but within 5% cost inflation guidance.

• Cost/income ratio improved to 46.1% in Q2 2024, below the upgraded guidance of <50%.

• NPL ratio at 2.4%, with coverage (excluding collateral) at about 80%.

Outlook and guidance

• 2024 guidance upgraded: NII expected to remain flat, fee income to grow by ~10%, CIR below 50%, risk costs below 20 bps, ROTE above 15%.

• Dividend payout ratio targeted at 40%-50%; EUR 3 per share planned for 2024, subject to AGM approval.

• Loan book growth target of about 5% for 2024, with stronger contribution expected from Austria in H2.

• CET1 ratio target >14.0% reaffirmed; CET1 at 15.5% after share buyback and dividend accrual.