Erste Group Bank Ag S/Adr

Guten Tag und herzlich willkommen. Good morning, Cordial. Welcome, ladies and gentlemen, to our press conference on the annual results 2025. The results will be presented by the CEO, Peter Bossek, Alexandra Havel-Adrave, RISCA manager and CFO, Stefan Dörfler. We will start with the presentations right now and afterwards the gentleman and the lady will be available for questions.

Good morning and hi everyone, thanks for coming. You are all running on a tight schedule so we really appreciate that you are here with us today. So now when we look back to 2025, there are two important dimensions to remember. So let's start with dimension number one, the acquisition in Poland. So that meant a lot of work for us, of course. And we've reached a fantastic result in the end. And the second dimension to remember and bear in mind, the strength of the existing group, which has actually enabled us to acquire the Santander Bank Poland. We have really been successful in the past 20 years to develop the business model. We did it step by step and so we've really grown strong especially when it's about creating capital because we have a balanced approach. We have a conservative business mix that our work is based on that provides us with stability and we've been successful and strong standing in all the markets we operate in. We also have an influence on the market so it's not just about meeting demands but also adapting demands. So now when we look at the details and when we get to the figures so the loans have really grown and of course also the interest income has grown. We'll hear more about that from Stefan later on. But when we take a look at the loans, we have grown by 6.4% as compared to the previous year. And in all other countries, we saw a higher growth as compared to Austria. That's also down to the fact that the business development there was better. But even in Austria, we have seen an increase by 3.3%. And I think that's quite a positive signal for the future. So we will see a comeback, a slight comeback also as regards the Austrian economy. And, of course, things will improve this year again. Another thing we have been successful with is the connection between the growth of our loans and the deposits. When it gets to the deposits, we have seen an overall growth of 6.7%. In Austria, we have seen a slight dip of deposits under 10% because when you're part of a savings bank, you know, that's quite weird. But generally speaking, when you look at the economy, that's something positive. That's a positive signal because when people save less, they will consume more. They invest in the economy more. And that provides us with a better forecast for the future. So when you see a slight dip in the deposit ratio, that's nothing bad in general, just to bear in mind. Another thing to mention, and that's not an aside, And this really means a huge success. So our colleagues in equity and deposit management, more than 300 transactions with a total volume of more than 200 billion. So this is something we are really proud of. So that provides us with a lot of opportunities in the future too. Now moving on to the individual countries we operate in. Because it's of high importance to us that you understand what's going on in our regional markets. So let me provide you with an overview and let's start with the Czech Republic. So the economic development in the Czech Republic has been quite sensational in the past two decades. So really going strong, highly stable, generally speaking. So we see an increase of 2-3% year on year, so it's really fantastic. field for doing business for us, has been the largest part within our group and will be an important player in the future too. And when you look back, so a decade ago we started with George in Austria, Innovation in Austria, and now we are In the beautiful situation that innovation has become an important factor in all the countries that we operate in, with new functionalities, with new updates. So in 2025 we've seen new rollouts. So AI George, for example, a digital assistant to increase the usability, to strengthen the functionality of the app. And we have actually received positive feedback and we're going to go for the rollout also in the other countries in 2026. And when it gets to the asset management, George Invest, we already started in the Czech Republic and moving on then to Austria. So, I think it's really great that each and everyone is involved. That's a strong push as regards AI. And when it gets to our net income, the Czech Republic has had the strongest impact so far. Now, moving on to Austria. It has already been communicated that we started cooperation with a startup as regards quantum computing and quantum security. In Austria, we have a Nobel Laureate. Let's not forget about that. So there's a strong impact from the Austrian field of science to become quantum secure with our transactions. And, of course, we're highly interested to closely cooperate with research in that regard because that will strengthen our infrastructure and our way of doing business. Otherwise, Erste Bank Austria has also seen a hike in housing, financing, So two years ago, you know, we saw a lot of discussions, but we've seen a pickup on the market in Austria, and so we've also been successful in this regard. So let me add to George Investor. I already mentioned it. Our target group, our audience, has grown younger. So 63% of the users are under the age of 35, and it's a really strong trend that we've been following here today. So the younger generation starts much earlier with regards to asset management, to take an interest in asset management and of course has an impact on our way of doing business. And of course we also provide consultation, we provide services, we provide advice. and in the future we need guidance to understand what to do depending on the developments of the market. This is how we can make a difference as compared to the new brokers on the market. Now moving on to Slovakia. As regards the opening of accounts, we have seen new regulations on the market which could especially for small-scale businesses. So we saw more than 75,000 new openings of accounts. So Peter Kotyl, the CEO, left us. He had been with us for more than three decades. Fantastic work. It is with great delight that Michaela Bauer will become the new CEO starting next week. And we're also highly delighted that Slavoj Zeman will become the new CFO. He's been closely cooperating with Stefan. We will miss him in our working context, but of course it is a great delight that he will become the new CFO for Now moving down south to Romania. Legally speaking a lot has been going on in Romania in recent years. So in 2025. They introduced George Junior, so reaching out to kids and teens. Of course, everything will be under the control of adults, of their parents, but this is how we can increase financial literacy as regards children and teens. Romania has also been highly successful. So for example, we have seen an emission and generally speaking, Romania has been highly successful. Now moving on to Croatia. Croatia seems to be quite small. But when it gets to doing banking business, really successful. We have a stable team at work there, closely connected to the business field there, and the corporate business has developed strong, also as regards housing, financing. And for the first time in 2025, the governor of the Croatian National Bank will also become a vice president of the European Union. And I think that's of importance to understand. That will also have an impact, a positive impact, and that's a positive signal. And so let me really congratulate Vujicic in that regard. Because, of course, the focus will change as regards this particular region. When it gets to digitalization, we've also been highly successful in Croatia, especially when it's about corporate business. Now, moving back north, Hungary has always been strong when it's about securities, so the last one and a half decades. So they've gained quite some experience in that regard and we've been successful to improve our security savings plans and increase them by 55% and we also see a pickup hike as regards the loans. we've seen an increasing demand as regards the loans and also the deposits have increased, so quite successful. Now moving on to Serbia, so that's the last country to mention here, the last country for the rollout of George, and an interesting thing to mention here as regards Serbia, actually the corporate business has grown stronger than the retail business you know in all other countries it's different so this is a particular situation that we've been facing in Serbia now moving up north to Poland on January 9th we have had the closings of the new acquisitions what I'm referring to really fantastic work of a small team highly skilled team so when we started with the negotiations and the complete transfer the closing you know down to earth keeping the ball low very focused and you know a lot of work had to be done before the closing so that's a big wow from my side so congrats great work so of course in the next two years there will be a lot of integration work to be done you know we will have to mainstream the IT systems we have to shut down IT systems that our colleagues in Poland have used in connection to Spain. That means a lot of work, so we have a clear understanding of where we are heading and a strong team that will also be able to manage this work. So the extraordinary general meeting also secured the name change, the new brand, so Erste Bank Polska will be the new name. We've seen a lot of preparatory work and during the second quarter of this year we'll see the rebranding, quite exciting work, because as it has not been known so far, it's an unknown brand and you only have one chance, so we have to stay focused in that regard. We have 485 branches to rebrand, we have a lot of advertising media, we have a lot of cash dispensers. That means a lot of work but also a huge opportunity to find our place in the Polish market and I'm looking forward to the campaigns that we're going to run and when we introduce you to them as the next steps. So during the first quarter We will have a first consultation that we're going to provide you with. And of course, we'll work on the integration of the new IT system. And now let me hand it over to Stefan. Thank you so much, Peter. Ladies and gentlemen, good morning. A warm welcome also from my side. Thanks for being here, for joining us. Before I'm going to tell you about the latest figures, the figures on 2025, let me put you in the picture and start with a frame. Peter already touched on it. So, we have seen constant growth, not only of Erste Bank, but also of the economies in the countries we operate in. And that's the pacemaker for the European economy. That sets the rhythm. And I know the things that you write, and we always discuss competition, and that provides for a strong competition in this context. So Central and Eastern Europe, Central Europe will play an important part, either to keep things stable, to be a stable competitor, or to regain competitiveness on the market. And Poland, you know, as a major player, will have an important word to say, of course. So now let's get to the results. Peter Buczek already touched on several dimensions in that regard. We work in close cooperation, not only with the people, but also with the economies of the countries we operate in. And profits and loss statement looks really good and was quite better than we expected. So, for example, the interest income has increased quite a lot. So the main driver in that regard is of course the hike in loans, in loan business, also the increase in our customer business, asset management and so on and so forth. And also the interest rate of course had an important part to play in that regard. We have had a stable business model that we developed in all these countries. How do we see the figures as regards 2025? The figures are slightly different from country to country, not only as regards growth, but also the interest income. So in Slovakia, the Czech Republic, the structure is quite different. For example, in Slovakia, the housing loans provide us with a positive structure. It's a Euro country. You might think, you know, there are a lot of challenges as we saw them in Austria in this interesting environment. But as regards to housing loans in Slovakia, they have fixed rates in Slovakia. And now we've seen a hike as regards interest. And in the Czech Republic, we saw a fantastic increase. growth on the market. So in the analyst call, we already shared that in combination with the published subsidiary, we will get to a higher level as regards the interest income, the earnings So we are referring to dimensions of more than 11 billion euros in the consolidated view. Not all of you will actually get to a net income, so we have nearly 50% of the published bank now, but of course that takes us to quite a higher level. as regards Europe and that will provide us with back wins for doing future business and to become more successful as regards the financing of our customers' businesses. Now moving on to the fees and commissions. We've also seen an increase here. That's our second driver to mention for us. Very important as regards our earnings, as regards our income. And we've been highly successful. So it is with great delight that we've been successful exactly in the areas. that we had put in strategic focus, starting with the payment services. Of course, inflation has helped a lot in that regard. I think you understand, because that's all based on indices. But we've also seen an increase in volume, then moving on to security transactions. So especially when you think of the security savings plans, Peter already mentioned it, we have seen it roll out in all markets we operate in. That's something classic. And that's the most important part for our customers, you know, because we've been highly successful and we really were able to participate our customers. And there's another thing still to mention. So a segment that you haven't been that successful with has seen a pick-up in in partnership with our insurance partner, BIT, because insurance brokerage has also picked up year on year quite a lot by 22 million. You know, highly diversified market in Central and Eastern Europe. Also, of course, in Austria we started on a small scale. But now really insurance brokerage has become also an important driver for us and we will see an increase in the future. I'm sure of that. So in synopsis, we have seen an increase in operational income of 4.3%, up to 11 billion, nearly 12 billion. without the polish ban which will only become part of the figures during the first quarter of 2026 now moving on to the expenditure to the costs so one first thought that i wanted to share with you and we've seen that in the last two or three years and I think you understand you have to spend money to earn money. That's a given. That's an adage. That's something to understand moving into the future. Technologically speaking, to increase our portfolio, but also as regards the development of our staff. So in order to be successful in the future, we need to invest in different dimensions. Technologically speaking, we have to invest into process optimization and other fields of work. And that will mean profit in the future. We'll become more efficient, of course, but also when it's about the service to our customers. But, of course, that costs something. And now let me provide you with concrete figures, something tangible. So our operational expenditure, our operational costs has increased by $304 million. That means an increase of 5.8%. So 304 million for 5.8%. Of course, that also includes the integration costs. We didn't have the closing in 2025, but a lot of preparatory work had to be done, and that's already part of the costs here. And we're really satisfied with our guidance. We have stayed in line with our guidance, and the market understood that. So we invest into the future. And when the costs rise, that will provide us with opportunities in the future for doing business. Now moving on to the outlook, we already communicated that to the capital market. and Peter Bostic already touched on it, integration of Azdebanka Polska will mean more expenditure, 200 up to 250 million. This is what we thought of and I think we stay in line with the guidance in that regard. So that means 180 million as regards our Polish subsidiary and also including the work in Vienna. But generally speaking, I think we will see a dip in inflation, even in Austria. You know, when you look into your faces, well, even in Austria, I think because we've been the outlier in that regard, we were the worst, reaching nearly 4%. Percentage points, well that really was crazy now in January, they announced 2%. So we've seen a change here, which takes us to the European average, and that will be of help as regards our costs. And Eastern Europe, of course, will be better in that regard. So think of it, better efficiency, lower costs based on a downturn in inflation rates, And 3%, I think, is quite realistic as our guidance as a cost increase. But there's one thing we need. We have to manage risk. Take it away, Alexandra. Thank you, Stefan.

Risk. There is nothing new as far as risk is concerned, and this is really good news. Maybe you listened to the analyst's call today. It was the 27th analysis call since I'm a chief risk officer, and this was the first one where there was no question relating to the risk profile of our group. This is good. What is risk all about? It's about stability and predictability. For our customers, we are a strong and predictable partner and want to remain so in future, and We also have a responsibility to our investors who want to have a reliable partner as well. Here you see that the risk costs in 2025 were approximately like 2024. So what do we show? We show basis points. One basis point, 21 basis points are 0.21% of our loan portfolio, and this is the risk costs that we have to book. So this is not a mere coincidence, especially in an environment that is constantly changing. It is the result of joint work, consistent work, and targeted work also as far as lending standards are concerned, and also an expression of our stable business, which was already mentioned by Peter and Stefan at the beginning of their presentations. So we have a solid risk result, and we expect it to remain solid. And this takes me to the outlook for 2026. In 2026, the Polish bank will have been integrated. The level of risk at the Polish market is slightly higher, but has been shown a stable reduction year on year. And Erste Bank Polska has lower than 40 basis points in 2025, and this is an excellent result. And including Poland, we expect risk costs of approximately 25 to 30 basis points. Without Poland, for the old Erste Group, we would expect 20 to 25 basis points. So, again, a very stable situation. This stability is also reflected in non-performing loans. The NPL ratio amounted to 2.4% in 2025. It slightly decreased. As far as the outlook for 2026 is concerned, we expect stable figures and NPL ratio of approximately 2.5%, including the Polish portfolio. So with and without the Polish portfolio, we expect approximately 2.4%. Let's have a look at the individual countries. You know the Austrian general situation, which is also reflected in the risk costs and the NPOs. The majority of NPO and risk cost is caused by Austria. This started in 2023. had its climax in 2024, and in the previous year, 2025, the situation slightly improved. We have hoped for a more radical turnaround but going forward we expect an improvement of the situation in Austria. We have a stable risk profile, we have a stable deposit portfolio and this shows one thing very clearly. We are open for business and we are looking forward to new business and to contribute to the growth of our region.