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Erste Bank Results: Better Capital But Weaker NPLs; Likely Credit Neutral

FINANCIALS

Erste Bank (EBS AV) results are broadly in line with consensus. Capital is stronger but non-performers are rising so two offsetting factors likely to mean these results are credit neutral.


  • Key credit metrics: loan losses were minimal with some write-backs offsetting some CRE deterioration and non-performers are up 24bp from Sep-23 (to 226bp). CET1 is 15.7% (up 1.1pp since Sep-23), well ahead of expectations of 15.0%.
  • Revenues are 1% ahead of consensus (+17% y/y) and costs were 1% worse than expectations (but only up 13%, so positive “jaws”). Loan losses were basically zero in 4Q23 (consensus c.15bp) but some windfall taxes (Hungary) and non-cash write-offs meant pre-tax profit was a 7% miss. Lower minorities and tax meant net profit beat expectations very marginally.
  • Outlook: mgmt sees credit losses <25bp in FY24 (from c.6bp in FY23) with stable income and c.50% cost-income ratio. This indicates net income falling, consensus has -16% y/y which appears broadly fair.
Conf call is 0800 London time at: https://live.virtual-events.at/erstegroup/fy_2023_cc/index.html
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