Erste 1Q24 Preview: Rates And The Revenue Outlook

Erste (ERSTBK: A1/A+/A) results are 30-Apr; the revenue outlook was weaker at last results but the rates backdrop has improved since then. Improved guidance here appears likely the key but credit and equity have both performed well already.

• Erste’s results last time saw the equity drop as much as 8% on the day simply on a smaller buyback than expected. There was a small uptick in non-performers but, otherwise, credit metrics appeared relatively solid. The “higher for longer” rate outlook will likely be key here as revenue expectations are, broadly, for zero growth. This makes the operating profit delta very sensitive to small moves here, we feel.
• The new CEO doesn’t start until Jul-24, so expect few major changes of direction on strategy or deals.
• ERSTBK spreads are a c.46 tighter YTD, around 8bp better than €IG bank peers and its equity has been beaten the index marginally (+19% YTD, SX7P +16%).
• Results last time around (29-Feb) were broadly in line with consensus and, since then, EPS estimates are up 1-2% and revenue figures have barely moved at all.

Results are due pre-market with conf call at 0800 (London time) at https://www.erstegroup.com/en/investors/events/irevents