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Erste Group Bank AG (EBKDY)
OTHER OTC:EBKDY
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Erste Group Bank AG
(OTC:EBKDY)
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Rating:62Neutral
Price Target:
$55.00
▼(-9.94% Downside)
Action:DowngradedDate:03/23/26
The score is supported primarily by strong underlying profitability and a positive forward outlook/capital position from the earnings call, but it is held back by weak technical momentum (below key moving averages with negative MACD) and some fundamental risk from higher leverage and historically volatile cash-flow generation; valuation is also on the expensive side for the group despite the dividend yield.
Positive Factors
Strong profitability
Sustained high margins and rising ROE indicate a profitable core banking franchise that generates internal capital. Durable profitability supports loan growth, dividend capacity and capital buffers over economic cycles, reducing reliance on external financing for strategic initiatives.
Very strong capital position
A CET1 ratio well above regulatory minima provides durable loss-absorption capacity, enabling the bank to pursue organic growth, absorb integration costs and higher levies, and preserve lending capacity across cycles without immediate capital raises, enhancing strategic optionality.
High-quality retail franchise & deposits
Strong retail lending, a large, sticky deposit base and rapid digital adoption underpin stable, low-cost funding and cross-sell potential. This diversified, customer-centric model supports resilient NII and fee income and reduces funding volatility over the medium term.
Negative Factors
Higher leverage
Rising leverage constrains balance-sheet flexibility and increases sensitivity to funding-cost shocks and credit deterioration. Higher debt-to-equity reduces room to maneuver for M&A or buybacks and elevates refinancing and liquidity risk during adverse macro conditions.
Volatile cash generation
Inconsistent operating cash flow across years undermines predictability of free cash flow and capital returns. Even with a recent rebound, past negative periods indicate earnings quality and working-capital dynamics that could disrupt funding for growth or distributions under stress.
Integration & one-off charges
Material provisioning, integration costs and non-cash amortization related to the Polish consolidation will depress reported earnings, weaken near-term cost/income improvements and delay capital deployment. These items create multi-quarter uncertainty for reported profitability and payout timing.
Erste Group Bank AG (EBKDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$41.30B
Dividend Yield2.84%
Average Volume (3M)1.61K
Price to Earnings (P/E)24.9
Beta (1Y)0.72
Revenue Growth-7.11%
EPS Growth2.78%
CountryUS
Employees45,856
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)1.22
Shares Outstanding821,028,750
10 Day Avg. Volume0
30 Day Avg. Volume1,612
Financial Highlights & Ratios
PEG Ratio-0.38
Price to Book (P/B)2.01
Price to Sales (P/S)2.06
P/FCF Ratio-4.75
Enterprise Value/Market Cap2.01
Enterprise Value/Revenue5.16
Enterprise Value/Gross Profit7.07
Enterprise Value/Ebitda19.30
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)5.75
Revenue Forecast (FY)$18.44B
Erste Group Bank AG Business Overview & Revenue Model
Company DescriptionErste Group Bank AG provides a range of banking and other financial services to retail, corporate, real estate, and public sector customers in Austria, Central and Eastern Europe, and internationally. The company operates through Retail, Corporates, Group Markets, Asset/Liability Management & Local Corporate Center, Savings Banks, and Group Corporate Center segments. It provides mortgage and consumer loans, investment products, current accounts, savings products, and credit cards, as well as cross selling products, such as leasing, insurance, and building society products. The company also offers factoring and accounts receivable purchasing; investment, acquisition and leveraged, project, and commercial real estate finance; interest rate and currency hedging, letters of credit, documentary collections, and guarantees; account management, payments, digital-banking, and cash logistics services; equity interests and investments, revolving export credits lines, customer financing, and export guarantee; and loan syndication, and debt and equity capital market services. In addition, it provides cash management, trade finance, customer referral, markets execution, and custody and brokerage services. Further, the company offers corporate finance; portfolio management; trading and market; trade execution, market making, and short-term liquidity management; and asset/liability management services, as well as working capital and bridge loans. As of December 31, 2021, it operated 2,091 branches. The company was founded in 1819 and is headquartered in Vienna, Austria.
How the Company Makes MoneyErste Group Bank AG generates earnings mainly from core banking activities. A primary revenue stream is net interest income: the bank earns interest on loans and other interest-bearing assets (such as consumer, mortgage, and corporate lending) and pays interest on customer deposits and other funding; the spread between the two contributes to income. A second major stream is net fee and commission income from services such as payment services (card and account fees), asset management and investment/savings product distribution, securities brokerage/custody and related capital-market services, and other account- or transaction-based banking fees. The group may also earn trading and fair-value results from treasury and capital markets activities (e.g., market-making, hedging, and management of liquidity and interest-rate risk), as well as other operating income. Credit risk costs (loan-loss provisions) and operating expenses reduce profitability, so underwriting quality, funding mix, interest-rate levels, and economic conditions in its core markets are significant factors influencing earnings. Significant partnerships or specific commercial arrangements contributing to earnings: null.
Erste Group Bank AG Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive operating and capital performance in 2025: record NII and fee income, robust loan and deposit growth, materially higher CET1 (19.3%), improved asset quality (NPL ratio 2.4%) and clear 2026 targets including elevated NII and ROTE ambitions for the enlarged group. However, several notable caveats temper the outlook: 2025 profits were boosted by one-off items, there are material integration costs and IFRS provisioning tied to the Polish consolidation, expected higher banking levies, and some regional/line-item uncertainties (fee classification from Poland, pricing competition in select markets). On balance the highlights materially outweigh the lowlights because core franchise momentum, capital strength, and clear 2026 targets dominate the narrative.Q4-2025 Updates
Positive Updates
Record Revenues and Strong Core Income
Erste posted record revenues in 2025 driven by core lines: net interest income (NII) of almost EUR 7.8 billion (up ~3.5% year-on-year) and net fee income of nearly EUR 3.2 billion (up 8.6% y/y). Quarterly NII topped EUR 2.0 billion for the first time (Q4 NII +4.6% y/y, +2.7% q/q) and Q4 fees reached EUR 850 million (+9.1% y/y, +6.5% q/q).
Robust Profitability and Capital Generation
Reported net profit was EUR 3.5 billion in 2025 (underlying/net-of-onetime adjustments ~EUR 3.3 billion). Earnings per share reported EUR 8.24 (adjusted ~EUR 7.72). Return on tangible equity rose to 16.6% (from 16.3% a year earlier). CET1 ratio surged by over 400 basis points to 19.3% at year-end 2025.
Strong Balance-Sheet Growth
Customer loans increased by about EUR 14 billion (+6.4% in 2025) and customer deposits rose by more than EUR 11 billion (+4.7%). Loan-to-deposit ratio remained healthy at 91.7%.
High-Quality Retail Momentum
Retail loans grew 8.1% to EUR 115.4 billion in 2025; retail deposits climbed to EUR 173 billion (retail current account and savings deposits +7%–8% y/y; term deposits down ~6%). Digital platform George onboarded 11.4 million users and retail digital sales ratio reached 67%.
Asset Management and Markets Performance
Assets under management reached EUR 104 billion (passed EUR 100bn milestone in Q3). ECM/DCM teams executed 360 transactions with issuance volume of EUR 211 billion in 2025, supporting fee growth and franchise momentum.
Strong Asset Quality
Group NPL ratio improved to 2.4% (Q/Q and Y/Y improvement) supported by lower NPL inflows and higher recoveries; NPL coverage expected to remain close to ~70%.
Clear 2026 Financial Targets (ex-Poland and for Enlarged Group)
Guidance: for Erste excluding Poland: organic loan growth >5%, mid-single-digit NII growth, fee growth >5%, cost inflation target ~3% and improved cost/income ratio ~47%. For the enlarged group including Erste Bank Polska: NII north of EUR 11 billion, fees ~EUR 4 billion, costs ~EUR 7 billion, combined loan stock >EUR 285 billion by end-2026, and targeted ROTE around 19% with EPS uplift >20%.
Successful Funding and Capital Actions
Wholesale funding plan executed; January 2026 group-level issuances included EUR 750 million Tier 2 and EUR 750 million senior preferred. Strong profitability and retained earnings drove a CET1 capital increase of about EUR 4.5 billion in 2025.
Negative Updates
One-off Items Inflated Reported Profit
Other result benefitted from net positive one-offs of ~EUR 270 million pretax (~EUR 250 million post-tax), inflating reported net profit and capital generation; management emphasized these are unlikely to repeat in 2026.
Integration-Related Charges and Noncash Amortization
Acquisition of 49% stake in Polish bank closed and will be consolidated in Q1 2026. Remaining integration costs are estimated at EUR 180 million. Intangibles amortization (customer relationships) based on customer stock value of EUR 2.1 billion implies ~EUR 210 million gross (≈EUR 70 million net) annual noncash charge.
IFRS 9 First-time Consolidation Provision
A one-off ECL provisioning related to first-time consolidation of Erste Bank Polska of EUR 300 million gross (net impact EUR ~120 million) was flagged and included in 2026 projections.
Cost Inflation and Timing of Efficiency Gains
Operating expenses ran above the 5% target in the first three quarters of 2025; Q4 improvement partly reflects delayed effects. Management expects to limit organic cost inflation to ~3% in 2026 but integration and intangible amortization will weigh on reported costs for the enlarged group (target costs ≈ EUR 7 billion).
Higher Banking Levies and 'Other' Charges Expected
Management expects regulatory/banking levies to be around EUR 450 million in 2026 (higher levies in Hungary and Romania), and cautioned that other result in 2026 should be more in line with regulatory charges rather than 2025’s one-off positive print.
Geographic and Product Headwinds
Austria accounted for most of the risk cost allocations in Q4; some markets (e.g., Romania earlier in 2025) experienced NPL inflows that required portfolio actions. In Hungary and Romania, NII was relatively flat in some quarters despite loan growth due to pricing competition and a slowdown in investment-book tailwinds.
Uncertainty on Fee Classification from Poland
Treatment of certain Polish local FX income (fee vs. trading line) could shift roughly EUR 200 million between fee income and trading, creating temporary uncertainty for line-item comparability and guidance.
Deferred Capital Deployment Activities
Share buybacks were suspended earlier and while management says capacity exists to return to prior payout levels (40%–50%) and potentially resume buybacks, final decisions will depend on integration execution and evolving opportunities, creating short-term shareholder-distribution uncertainty.
Company Guidance
Guidance summary: for 2026 Erste targets organic loan growth of >5% (for Erste ex‑Poland and similar including Poland) driving a combined loan stock >€285bn by year‑end; net interest income north of €11bn (mid‑single‑digit NII growth ex‑Poland), fee income about €4bn, and operating expenses around €7bn for the enlarged group (organic OpEx inflation target ~3%); cost/income expected to improve toward ~47% (Erste ex‑Poland) and ~45% for the combined group; risk costs forecast 25–30bp including Poland (20–25bp ex‑Poland), with a one‑off IFRS9 ECL on consolidation of ~€300m gross (~€120m net) and remaining integration costs ~€180m plus intangibles amortization ~€210m gross (~€70m net); management expects adjusted (clean) net profit somewhat above €4bn in 2026 (vs. adjusted €3.3bn in 2025), implying ROTE ~19% and EPS uplift >20%; capital: CET1 was 19.3% YE‑2025 and management aims to remain >13.5% and reach a new target CET1 of 14.25% during 2026; asset quality should stay stable (group NPL ~2.4%, coverage ~70%); other result in 2026 is expected to more closely mirror regulatory charges (~€450m), and NII sensitivity to a 100bp instant cut is ~€170m.Erste Group Bank AG Financial Statement Overview
Summary
Profitability is strong with improving TTM net margin (~18.8%) and higher ROE (~15%), but the balance sheet shows higher leverage (debt-to-equity ~3.33) and cash flow has been volatile (OCF negative in 2024, then sharply positive in TTM), which raises durability and cycle-sensitivity risk.Income Statement
Profitability is strong and improving, with TTM (Trailing-Twelve-Months) net margin at ~18.8% versus ~13.9% in 2024, alongside healthy operating profitability (TTM EBIT margin ~28.8%). Revenue growth in TTM is robust (~18.0%), but the growth profile is somewhat uneven historically (flat in 2024 after modest growth in 2023), and revenue is lower in TTM versus 2024, indicating potential volatility in the top line across periods.79
Positive
Balance Sheet
Returns are solid for a regional bank, with return on equity rising to ~15.0% in TTM (from ~13.5% in 2024). The main constraint is leverage: debt-to-equity has moved higher to ~3.33 in TTM from ~2.27 in 2024 (and ~1.80–2.05 in 2020–2023), which reduces balance-sheet flexibility if credit conditions or funding costs worsen, even as equity remains sizable (~$22.8B TTM).62
Positive
Cash Flow
Cash generation is inconsistent year-to-year: operating cash flow swung from strongly positive (2020, 2021, 2023) to negative (2022, 2024), then rebounded sharply in TTM to ~$16.9B with free cash flow of ~$16.2B. Free cash flow is broadly supported by earnings over time (TTM free cash flow is ~0.96x net income), but the prior negative periods and volatility temper confidence in durability.55
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 16.12B | 22.48B | 22.58B | 13.69B | 9.21B | 8.96B |
| Gross Profit | 11.75B | 10.89B | 10.32B | 8.40B | 7.60B | 7.17B |
| EBITDA | 4.31B | 5.55B | 5.43B | 3.82B | 3.54B | 1.98B |
| Net Income | 3.51B | 3.13B | 3.00B | 2.17B | 1.92B | 783.10M |
Balance Sheet | ||||||
| Total Assets | 368.42B | 353.74B | 337.15B | 323.87B | 307.43B | 277.39B |
| Cash, Cash Equivalents and Short-Term Investments | 36.93B | 42.75B | 51.43B | 35.68B | 61.92B | 52.60B |
| Total Debt | 55.59B | 52.58B | 44.43B | 36.57B | 32.72B | 31.24B |
| Total Liabilities | 333.91B | 322.97B | 308.65B | 298.56B | 283.91B | 254.98B |
| Stockholders Equity | 22.81B | 23.14B | 21.65B | 19.35B | 18.00B | 17.34B |
Cash Flow | ||||||
| Free Cash Flow | 16.18B | -9.78B | 2.06B | -9.29B | 10.86B | 23.94B |
| Operating Cash Flow | 16.93B | -9.03B | 2.59B | -8.81B | 11.40B | 24.49B |
| Investing Cash Flow | -4.76B | -850.00M | -599.00M | -233.00M | -483.40M | -351.60M |
| Financing Cash Flow | -9.58B | -1.55B | -1.02B | -756.00M | -1.31B | 1.13B |
Erste Group Bank AG Technical Analysis
Negative
61.07
Price Trends
60.26
Negative
57.77
Negative
52.16
Negative
Market Momentum
-2.42
Positive
32.82
Neutral
13.77
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EBKDY, the sentiment is Negative. The current price of 61.07 is above the 20-day moving average (MA) of 56.27, above the 50-day MA of 60.26, and above the 200-day MA of 52.16, indicating a bearish trend. The MACD of -2.42 indicates Positive momentum. The RSI at 32.82 is Neutral, neither overbought nor oversold. The STOCH value of 13.77 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EBKDY.
Erste Group Bank AG Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $84.76B | 9.08 | 21.64% | 9.77% | 11.82% | 3.41% | |
74 Outperform | $29.52B | 11.54 | 9.88% | 2.76% | -0.81% | 20.34% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $79.63B | 10.95 | 12.12% | 3.77% | 2.91% | 33.77% | |
64 Neutral | $71.00B | 12.62 | 9.93% | 3.19% | -20.94% | -18.71% | |
62 Neutral | $41.30B | 24.90 | 15.03% | 2.84% | -7.11% | 2.78% | |
62 Neutral | $55.16B | 11.75 | 8.15% | 4.12% | 22.02% | ― |
* Financial Sector Average
EBKDY
Erste Group Bank AG
51.58
15.66
43.61%
TFC
Truist Financial
44.16
3.95
9.81%
ITUB
Itau Unibanco
7.84
2.77
54.64%
LYG
Lloyds Banking
4.88
1.24
34.14%
MTB
M&T Bank
198.15
21.13
11.94%
USB
US Bancorp
51.25
8.94
21.12%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.