Erste Group Bank Ag S/Adr

Guten Tag und herzlich willkommen zur Pressekonferenz der Erste Group. Herzlichen Dank für Ihr Kommen und auch herzlichen Dank an alle, die sich online eingewählt haben. Sie sehen, wir haben heute einen etwas gemütlicheren Rahmen gewählt. Der Blick ist unschlagbar, aber wir hoffen auch, dass online Sie gut sehen können. Wir haben heute unsere Halbjahreszahlen angekündigt, aber wir nutzen immer gerne die Gelegenheit, um auch so mit Ihnen in den Austausch zu kommen, regelmäßig und vor allen Dingen Ihnen für Ihre Fragen zur Verfügung zu stehen. We start with a short presentation by Peter Bosek, CEO of the Erste Group, Alexandra Habeler-Drabek, the risk manager, and Stefan Dorfler, the financial manager. And I hand it over to you.

Good morning, ladies and gentlemen. It is quite warm, thank God, well air-conditioned here. Perhaps only worth mentioning at the beginning, we have the campus for 10 years now. and I think it is simply outstanding how modern and beautiful and pleasant it still seems after 10 years, as if it was actually built yesterday. Let me start with a step back to show in which region we operate. Why is it an interest for us to share this with you? Because we are deeply convinced that Central Europe has come to the next step of development in recent years. And I believe that this has been perceived far too little in many parts of Western Europe, also in Austria. Why is it a pity? Because I think it's a huge opportunity for countries like Austria to get closer to Central Europe. We all know the countries in which we operate from the past 25 years and it has always been an essential part of our history in this region that Central Europe is in a recovery situation compared to Western Europe. You can see here on this slide the average growth in terms of real GDP per head, the accumulated growth rates from 2007 Until 2025, so just before the beginning of the financial crisis, you can see very clearly how the region has developed excellently in the countries in which we operate. In our view, this is mainly due to three effects. Point number one, there has been a significant increase in productivity compared to the time before. Second, I think we should not underestimate the support that has been given through the European Union's cohesion fund. There are considerable funds, so to speak, in terms of funding for different or from different pots of funds, flowed into this region. And third, of course, an enormous desire to improve our own situation in this region, which has been incredibly positive, so to speak, on work ethics and everything that is connected to it. If you look ahead and not just look back, the growth that we see today in Central Europe is still above the European average. The only exception is Romania. I think the situation in Romania is generally known. The potential of this country is still huge and we are sure that Romania will soon be caught up again. and his budget deficit can manage accordingly. But the point we actually want to make is that the success story is not only so much dependent on how the countries have picked up in the past 25 years, but actually the view forward, because it is one of the very few regions in Europe that is growing. And that's actually what we want to transport, because Central Europe is developing for Europe. You see, if you look at the founding rates, In the European comparison, Central Europe has a strong founder boom that we see. We see many companies in our region doing business with other companies in other countries in our region. So to say, this growth that takes place in Central Europe is of course still dependent on countries like Germany, but the dependence is beginning to reduce. These countries have taken the right steps and will certainly continue to take them in view of creating an economic infrastructure and framework conditions that actually make us very, very future-proof for the next 20 to 30 years. Now we are, of course, as you can imagine, Manfred Neuwirth, Manfred Neuwirth These countries are oriented to the front and have understood that they are no longer the extended work bank of Western Europe, but there are companies that are now starting to grow in other countries in an organic way. In Poland, they had 45 company acquisitions abroad last year. Ingo Bleier, Magistrate Ingo Bleier In the next 20 to 30 years, we are also seeing a trend, of course, and the region will be very exciting, a trend that is present globally. We are seeing this nearshoring trend that we have all learned through things like Covid and problems with supply chains. I think a lot of companies have strengthened their supply chains since Covid. I think that is also one of the reasons why Thank you very much. You can hear something about artificial intelligence every day from early to late in the evening. There are few who talk about what energy demand is behind it. You know that all the big tech companies are starting to build small nuclear power plants. Europe will also have to find its own solutions in order to be part of these technological leaps at all. And to be able to do that, you don't just need alternative forms of energy production, you mainly need the energy lines that support it accordingly. We all come from a system in Europe, and this is by the way the same topic in the USA, we come from a system of central energy production that has a central energy infrastructure. In the meantime, we are confronted with a situation where we have a decentralized energy production that also requires a different infrastructure. Austria recently resolved this by feeding on self-generated energy, even what it costs, in order to be able to finance further energy infrastructure development. Only this is of course a very fundamental factor and a necessity in order to

...a necessity in order to prepare the infrastructure for the future development of our economy because I believe that different types of economies need different types of energy infrastructure, data centers, et cetera, in order to be able to take the next step in its economic development. And I think that for Europe this is extremely significant because a lot of the production in recent years Manfred Neuwirth And I think we still have a big benefit because I believe that the education and training here in Europe is still excellent and it's available to many people. So we are optimistic, especially optimistic for our own region. Now I'd like to hand over to Stefan who will focus on the other economic boundary conditions.

Thank you very much, Peter. A cordial welcome to you, ladies and gentlemen, here in the room and also online. Before continuing with the results, I'd like to come back to what Peter just said, namely the geopolitical situation around us, the technological transformation. Transformation in general is something that you also describe in your commentaries, and this requires financing instruments. And we need the environment that allows us to create the environment which allows us to take part in the race for transformation. And we have a very easy, a very simple slide that reflects reality. Let me start with the dark bar. This is financing investments. We are often talking about equity financing and loan financing if you compare Europe and the USA. The reality is that companies do finance investments internally. And the second part of this slide that you should remember is the high share of loans financed by banks. explain how Erste Group developed in this respect and also is positioned in this respect.

For many years, I think, Peter, 15 years, we prioritize customer financing,

In our activities also on the capital market, and we also think that this is important also for the economies in the regions where we are doing business. Just let me give you a few figures. In the first half years, we advised on more than 193 capital markets transactions. and this is a very high figure because we could only dream of these figures years ago and these transactions had a total volume of 146 billion euros and it's okay to earn money with that but we think it is important that capital market finances is on a broad basis As far as hybrid capital is concerned, equity financing and loan financing, and that we have to create a broader range for that in a broader basis. And if we can contribute to that, this is extremely important, and I think we are on the right track. Because we, at the moment, have the geographical footprint that allows us to act differently from some years ago. As a part of the advisory board of the Vienna Stock Exchange, allow me to comment that the Vienna Stock Exchange also developed positively, owing to the development of Erste Group and other financial groups. And I am convinced that the capital market of Austria will gain importance and has already gained some importance. But we have completely different dimensions, for example, in Poland. Also, as far as IPOs are concerned, Poland is the most active market in terms of IPOs, and this is why it is important for us to benefit from the experiences of our Polish colleagues and share these experiences with other countries, with our customers, and with our employees outside Poland. Mr. Porras has joined us in February, was a successful member of the board of Santander Poiska. It's Juan de Porras. I talked to him and also benefited from his experiences, from his visits in Central and Eastern Europe. He is enthused about the opportunities that he sees in terms of growth, and we are confident that we will grow in the next months and years. Let me continue with the results, which are closely linked to what I just said. As you know, our central positioning in this region is Very much marked by growth. We are on a growth path. We already confirmed that two years ago. We want to grow in loans, in loan volumes as well as all other parts of our business. And I think it is justified to say that we are on a good track. The loan volume in the first half of the year rose by 21%. Of course, this is not organic growth. This is massively influenced by the consolidation of Erste Bank Polska with 41.4 billion loan portfolio. And this is what I said before. It puts us into a completely different situation. It opens up a new dimension. In all countries, we are doing business, and with just one exception, namely Romania. We talk about strong loan growth. In euros, expressed in euros, we have an increase. We expect an increase for 2026 that exceeds our positive expectations that we had before Polska was consolidated. For 2026 we expect something that we didn't dream of in the years before. What you see here, higher than 100% in Poland, is of course self-evident. But 19.2%, if you exclude the currency effects in Hungary, is remarkable. Of course, this might be due to the political situation. In the first quarter, that is to say, before the election, we saw that Hungary showed a very positive momentum. and we hope in the interest of the Hungarian economy that this will be sustainable. This will be seen in the coming years and months. And of course, the counterpart of loans is deposits. And here, as the Group traditionally has a very strong position, The loan-to-deposit ratio of the Group is what we like it to be, that is to be a little bit lower than 90%. This is a very healthy rate. Of course, this is different in the individual countries, but this allows us Based upon our strong deposits to continue with our loan business in an excellent quality and Alexandra will tell us more about that in a minute. What might be interesting for you is what about the operating result in 2026? Here you see a graph. which will, on the one hand, show the enormous contribution of Erste Bank Polska with more than one billion operating result. This, of course, includes the Erste Bank Polska as such, 100 percent. We have 49 percent as a controlling stake. But, of course, if you consolidate, you show the result of 100 percent. So half of it belongs to Erste Bank. The other half belongs to other shareholders. But what we want to show here is the excellent development in the operating result in other countries, which is driven by net interest income and also by Net fee and commissioning income as well as our cost structure which we improved by technological progress and Peter already talked about AI and this will support us further in the future. As far as the development of the operating results in our countries is concerned, we are very satisfied and on top we have the dynamism that is taking place in Poland. So consequently, we have a very strong capitalization. For those of you who did not attend the annual conference of 2025, of course, we have the first time consolidation of Erste Bank Polska. We had a CT1 ratio of 19.2%, which went down to 14.5% owing to the transaction in Poland, but we built up the CT1 ratio to 15.2% in the meantime, and this already includes A deduction of 50% dividend payment. This is important for you to know because for a regulatory For these reasons, we have to make sure that we have the amount of money available for profit distribution, which will be approved in the Annual General Meeting for 2026 in 2025. So we have a very strong capitalization even after the consolidation of Erste Bank Polska. We are very happy about that. Our target is our loan volume and we have corporate customers as well as private customers and financial institutions and due to the good development of the loan volume we We have increased our loan volume target and we expect that we will have 290 billion euros in terms of a loan volume, maybe a little bit more. And we'll see how the rest of the year develops. So much for that. And I'd like to hand over to Alexandra and allow me to say that this is healthy growth. Of course, you can produce volumes, but what is important is the quality of our loan book. Alexandra, please. Thank you very much. Stefan already said that we are extremely satisfied with the operating results and we are also very proud as far as our risk profile and the risk costs are concerned. The risk costs are according to our expectations and in an environment that is characterized by volatility, geopolitical trends. So we have 20 basis points for the group as such. This includes Erste Bank Polska and Allow me to state, although this is theoretical, these 20 basis points exclude the effect of first-time consolidation of 300 million, because this was a one-off effect in the first quarter, which will not be repeated. So the picture in the individual countries is differentiated. Let me start with the countries that have a very good performance and continue to have a very good performance. This relates to Hungary. This is also due to risk costs. It's the only bank in our region with a net resolution of NPLs. and we have regions where we have a slight addition, the Czech Republic, Croatia. Poland also has a very good risk profile. I already told you earlier that risk costs in Poland are slightly higher than in the rest of the region, and this applies not only to our bank but for the whole market. published the results today and the expectations are very optimistic as the future is concerned and the first half year was better than expected. Romania, Peter already talked about that, has a negative economic growth. Of course, this has an effect on risk costs. In particular, as regards the FLI model where macroeconomic factors are included, and in June we had an addition in Romania, a slight dissolution in Austria. Coming back to Austria, here we see an improvement. You all know that the previous quarters in Austria were difficult ones, in particular as regards commercial real estates, in particular in Vienna and around Vienna. And we see a flattening of the negative curve. We see the number of NPLs rising not as they did in the past. And though it's also a slight recovery, We are still cautious, but I can say today that we are cautiously optimistic as far as the further development and further performance in Austria is concerned. Here you see the MPL ratio, which isn't only good, it's excellent. An MPL ratio at a level of 2.3 percent is extraordinary. I talked about Romania before, the situation is more difficult in Romania, but also in Romania the MPL ratio is below 3% owing to portfolio analysis and portfolio sales, so it's an excellent figure and we are confident that 2.3% or maybe 2.4% can be achieved by the end of the year. Growth has been mentioned several times today, and I'm as proud as everyone else that we could increase our loan volume to 290 billion. And if you have the time and want to go back and see what we had in the past, you see that we grew organically, and this is remarkable. and we also managed to retain a consistent risk profile and this is the result of consistent work of many colleagues. But it is also the result of what you see here. A major part of risk management is diversification of the portfolio. So if you invest privately, you also diversify. And this, of course, also relates to the bank. And here we also see the households that I diversified in itself. Households remain the biggest category and slightly grew with the integration of Erste Bank Polska and the industries where we had the largest concentration. And if you take the five major industries, So concentration is now 2.5%. And if you look at real estate in Austria, which has a low risk but has high volume on the other hand, This concentration went down to 15.9% by more than 2 percentage points because the Polish bank and also other banks outside Austria do not have a super proportional business in real estate. This doesn't mean that we don't like to do real estate business. It's also always a question of balance. Here you see that all other industries grew slightly. So we have a higher diversification. We haven't only become bigger, but also have a broader range of diversification, which will help us to have a healthy growth rate in the future as we had in the past. Stefan, please. No, Peter. It's your turn.

I would like to comment on the extremely positive risk situation. It is not only the diversification that has increased due to the acquisition in Poland, but for several years now we have seen an extremely stable risk situation also in Central and Eastern Europe. and this is due to the fact that we have the best risk team in the region, we have a lot of experience in those countries, we know our customers there, we know their risk appetite and our risk team has really done an excellent job and of course we have to say that All the corporate customers in the region have also done an excellent job in the past few years because the years after COVID were anything but easy. I think this was a steep learning curve, especially as far as liquidity control is concerned, and this was a wake-up call in terms of increasing the resiliency of supply chains. I think it is fair to say that the corporate landscape in our region is much more robust and much better positioned than it was before COVID, because people really went to great lengths in order to be better positioned. Now, what is the way forward in terms of Erste Bank Polska? We only had one weekend, as we agreed with our Spanish colleague, to do the rebranding. When I heard about this during negotiations, I thought, well, this is quite ambitious. So we have a large number of branch offices. It's not only about the branch offices. It's also about a lot of other assets that need to be rebranded, need to be considered for marketing. And of course, we want to create a positive impetus, also emotionally. Because this large customer stock that we have in Poland should not only be maintained but also made happy. So it is our goal to make our customers happy. and of course you need whenever there's any potential conversions on the IT side you need to be very careful to make sure that it all is successful and I'm very pleased to say that we did an excellent job both teams the local and the central team did wonderful jobs and you can imagine that this required a lot of preparation in order to be able to do this in just two days to change everything around and to to the rebranding with a positive outlook and a good mood. So before I start praising ourselves, let's listen to the video.

The Polish branch of Banco Santander is no more. Long live Erste Bank Poland.

Today is a very important day for us. From now on, we are Erste Bank Poland. After almost a year of preparations, we're operating under a new brand. and a new name.

It's the culmination of a process that started more than half a year ago when Erste acquired the Polish branch of Banco Santander for 7 billion euros. For Erste, this was a big thing. The bank serves over 16 million customers in seven countries with over 300 billion euros in assets. Swallowing the third biggest lender in Poland brings another 6 million clients and extra 70 billion euros into the fold.

We combine our reputation as a customer-centric, solid and stable bank with a 200-year tradition of the Erste Group, an experienced player in this part of Europe.

Now the bank wants to solidify its position in Poland and leverage its experience as a regional player.

Polish entrepreneurs invest mainly in Central and Eastern Europe, and now we're the biggest banking group in the region. That's why we're best positioned to help them expand.

The fight for Polish customers just got much more interesting.

As you all know, traditionally, we don't have any media investments, so that's the Polish BBC equivalent. They're really independent, so we're very pleased that we're getting such excellent feedback. If you take a look at the figures, we would never have expected that after two and a half months, we already have 68% unaided brand awareness and 78% for aided brand awareness. So the recommendation as an employer has improved, the churn rate has gone down, so it is very important that the employees are also satisfied with the new ownership and the overall satisfaction is increased by 2% and we have more than 300,000 new customers here to date. So the rebranding, of course, is never finished. To build up a brand takes many years. It's a long, drawn-out process, and we are not only ready to invest, but we also have experience in terms of how to transform a brand to make it more attractive. Now, in terms of the IT transformation, We also have two very strong teams, a local and a centralized team. They will continue to work on that for another two years. So our systems, our applications that were made available by Spain in the past will be either The Polish market is by far our biggest market, also in terms of the number of inhabitants, with 38 million is a huge market. In the corporate business, but also in the retail and asset management business, we see a huge potential going forward in the coming 20 to 30 years. Now, let me summarize, and then we'll be available for your questions. So the way we look at Central Europe is it is the growth engine in Europe, and this catch-up phase is, of course, always moving. This has turned into a dynamic of its own and the entire region is now being put in a completely different development situation. Of course it is important to use a well-considered approach to invest in the new business infrastructure. The reason this is important is that the flow of money from the European Union will not be there forever. So we know that a lot of funds in Europe are increasingly under pressure. In many countries, there is a need to invest more in defense. This is especially important for NATO countries. So the net contributors, their budgets are put under pressure. I'm also looking forward to the new round of budget negotiations for the next EU budget starting in 2028. So it is to be expected there will be less funding available and it is important to make the right investments now in order to be able to have everything it takes to continue to grow. I think it's also very interesting for Austria because Due to our geographic location, we can either decide to participate In the dynamic of Central Europe or opt for the standstill of Western Europe? I think it is up to us to decide for either. And I think there are many reasons why we should join this dynamic, this momentum in Eastern Europe. And our loan volume of 290 billion would have been absurd a couple of years ago. And now it is quite realistic to reach this goal. So we'd like to thank you for your attention. We're looking forward to your questions. So we're looking forward to your questions. If you'd like to ask a question, please get in touch with us. Use the microphone to make sure that our colleagues online can also hear you. So we'll start with Ms. Lingala from APA, Austrian Press Agency. I have a question on the customer structure in Poland. You said that real estate is not such a big business there, but what about the differentiation between corporate customers, retail customers, which industries? And the second question is on bank taxes. The spending has increased in terms of bank taxes. What's the situation going forward? Your long-term forecast until 2030 assumes that the spending will not increase. Are you hoping that there will be changes in Hungary due to the regime change there, or maybe other countries? Well, of course, there's always hope. And in Austria, we're in a situation where we thought that the banking levy will be limited in time. Now it's been extended again. And let me share another interesting figure with you. The total taxes that we paid at the group level, also in terms of corporate taxes, we paid $1 billion worth in taxes. So that's a significant amount. Do we think that this is continuing to go up? No, we don't think so. I believe that, on the whole, All stakeholders understand that we need to continue to develop the economy. It can't be done by just taxing profits because that will prevent companies from investing. So I think everybody will be aware that this is not the way forward. We've also seen in Austria that tax increases don't really help grow the economy. We do believe that People can add up one and one. Extremely balanced in terms of corporate customers, retail customers, and also the industries. What's interesting about Poland as such is that when compared to other countries, it is much more diversified. In Hungary, for example, A lot of the business is concentrated in Budapest. In Poland, it's distributed over many cities and regions. It's not only Warsaw. There's also other significant economic centers in Poland and also the share in the various industries. I'm talking about all of Poland, not just our bank. So this is very well balanced. There's a good equilibrium. There's no disproportionate concentration here or there. And this is how our portfolio is structured in Poland. It reflects this very diversified economy in Poland. Very balanced is whether we're talking about the volume or the profitability. I don't know. So if you want to ask a question online, then please do so by using the question tool. And I will read out your question. The next question comes from Martin from Bloomberg. In the analyst call, you also talked about The fact that you are preparing for increasing your share in Poland. So no decision has been taken yet, but you are preparing for it. So I'd like to ask, is Poland your top priority when it comes to further acquisitions? Or is there a possibility that other options may be more interesting? So maybe in Hungary there will be an opportunity where you have a lower market share. I think logic dictates that we should increase our share in Poland because we have 49% of something that we consider to be an excellent investment. We also combined investments with integration and would like to scale this up. So I think this is quite obvious that we want to grow there. But we have not taken a decision yet. I think everybody knows that we're interested in increasing our share there, but of course we need to see when it makes sense, when it's just right. As far as Hungary is concerned, well, I would not expect anything to go down in Hungary this year. I think it's a matter of ownership structure. So if you're thinking about the bank that I have in mind, which is a conglomerate of three existing banks, I think it is way too soon to see how this will play out. But you're interested? I think we already said that we're interested in growing in Hungary. We demonstrated this in the past. The portfolio of the Commerzbank, well, it's not so long ago that we took it over. Then before that, we took over the portfolio of Citibank. And of course, we believe that Hungary is a very interesting market. You should not underestimate the fact that As far as the entrepreneurial spirit is concerned, this is one of the most interesting countries. Hungary has a long-standing tradition of startups, going back in history for a long time. And I believe that in the past 12 months, Hungary has really evolved and developed very well, because for a long time, the country was in a deleveraging process. So they reduced loans, and now the situation has turned around. I believe that there is a positive outlook because people only invest when they have a positive outlook going forward. So we have a very strong team in Hungary and of course we are ready to support the country in its economic development. I think the situation is far from being easy because they still have a very high budget deficit and the belief that the readiness to reduce existing funding is limited. But I think that in August there will be a budget review for this year's budget. In September and October, a new budget can be expected. And we, of course, are looking forward to seeing where people are going to invest. And we are going to orient our strategy in Hungary accordingly, and we'll continue to support the country.

Next question by Mr. Lutz from Versiana. You talked about joining the momentum of CEE, and you also said that Poland is the country with the highest number of IPOs. So what can we benefit from that? We are a country with a much lower number of IPOs. What can we learn from the dynamism in Poland? I think it's also the willingness of entrepreneurs to make an IPO. And this can be promoted. The Vienna Stock Exchange does a good job. But you also need companies that want to be listed at the Stock Exchange. And we all know here that this requires a lot of work. In order to create reporting which is important for shareholders, you need investments in your accounting team so it doesn't happen overnight without any effort.

The public sector could support such a development and allow me to say that I

read an interview of a Telekom regulator, which was very interesting. And this regulator said that the digital infrastructure in Austria is not owned by Austria because our Delcos are owned by Germans, by Asian companies, or by Mexican companies. I think 61% investment of Mexicans in Austria. Maybe they are interested in selling off their investments. 60% of Telekom Austria cost 4.3, 4.4 billions plus a premium. ÖBAG pays a dividend of 1.2, 1.3. And I'd say, okay, Mr. Mattaba already reserved these means because he relies on this income. But why don't you sell 15% of ÖBAG via the stock exchange in order to buy telecom shares? And ÖBAG, after that, would be controlled by the Republic of Austria? And if we compare our pension systems, we are always looking with a certain degree of envy to Scandinavia. Scandinavia has second pillars, much more second pillars than, for example, other countries such as Austria. Talking about Norway, of course, they have oil reserves, and the state has a lot of income from oil. And this is, of course, one of the prerequisites for establishing a pension So we don't have oil, we don't have natural reserves that can bring us money. But I think GERBAK is a group of professional companies which are very important for Austria and also for Central Europe. So OMV, for example, does sensational things also as far as their business enlargement is concerned. So it would be interesting to invest in a portfolio of companies such as Oberkast and in individual companies.

Allow me to add that it must make sense for companies to go public.

and people think about various opportunities to further develop their business.

And if the best way is going public, and it is not done, this might be due to the frame conditions.

And you might know from various discussions that the Austrian states does not promote IPOs. But I'm optimistic that something could happen in the next two to three years. So we are not talking about a capital market union, but Europe. and on national basis, here things can change. And Poland is a country that can do something at local level, but not everything seen from an international point of view. And secondly, I'd like to turn your attention to technology.

I don't want to talk about AI, but maybe

The approach as far as reporting is concerned and settlement can be simplified and optimized so that there is no obstacle anymore for smaller and medium-sized companies to go public. And last but not least, we shouldn't forget There is something that is often underestimated. It's always about the long-term view if you go public. Those wanting to make quick profits will not invest in an IPO. But for the capital market as such, so if you take Astro Group as an example, and you also mentioned OMV, this is a perfect example. These are companies that create values over years, over decades. And I think this must be emphasized when talking about IPOs. And I think this is more important than the second or third pillar in the pension system. We think that without a capital market, Nothing goes in the medium term. Not only hope dies last, but I'm convinced that given the current environment and also the pressure that is exerted on Europe, maybe we see one or more positive reactions. We are fully taking part in this business and we want to do everything to help. And what Stefan showed in one of the slides also illustrates that we want to diversify our loan portfolio. Of course, we are happy about the loan volume of more than 290 billion euros, but it is also clear that we also promote bond issuance and also equity. If you look at the economic development of the past 20 years, Europe always concentrated on industry and trade, and this is something banks are experiencing. But many things happened in technology and software, and the European banking system with the means available to us can only help partially because Lending is based upon collaterals. And if you have IT, you don't have any collateral. And this is why it is no surprise that many IT applications were developed in the U.S. because there is a completely different equity structure in the U.S. Of course, Europe was able to catch up. So equity is a scarce means, of course, and there are Other sources, Speed Invest, for example, which are very successful, but there are also venture funds available that are willing to invest in such startups. So many developments took place that make me optimistic, and we will continue our path in Europe as a group. And as I said before, economic development in our group was characterized by innovation. It is Eastern Europe and Central and Eastern Europe is no longer the manufacturing entity of Europe. Let me read a question by Mr. Alexander Zenz from Österreichische Nachrichten, a question asked online. Is there any effect of the Ukrainian war on the business of Erste Group in the region? Erste Group is part of a consortium of banks which was responsible for a guarantee of Lenzing AG and new investments there. And what is the investment of Erste Gruppe in Lenzing? Let me start with the second question and I'll be brief. We don't comment on individual transactions or comment on names, but Erste Gruppe doesn't have any great experience with industrial holdings. That's the way it is. And of course, the war influences our business in many ways. Peter already talked about that. And of course, it is a challenge for our customers, which showed a steep learning curve after the Corona crisis, after the pandemic. They are more resilient, are aware of the supply chains. Of course, investment appetite is lower in the regions that are hit by the war. And let me turn the coin and look at the other side of the coin. But before that, a theoretical comment. Of course, we talked about Romania and the war has influences the macroeconomic environment in Romania and also has an influence on the risk-cost in the FLI model, but only in a moderate way. And in conclusion, let me see the other way around. The end of the war would have positive impact on the economic growth in our countries. And due to the geographical vicinity to Ukraine, we think that the companies in the region can make a great distribution to the reconstruction of the country.

Ms. Luminita Mitrilla from Wall Street, Germany How confident are you that operation in Romania will return to be stronger growth?

It's very clear that we are very convinced. I mean, we are in Romania since 2006, 2007. And I think the country is still in front of a lot of opportunities. You know it much better, more probably than us, but when you look, for example, technology development or IT development in Romania was always a very strong footprint. I think education is, when it comes to universities, on a very high level. The country has a size which is, so to say, opening up a lot of opportunities to do business in itself. It's a huge economy, a huge country. So, I mean, there are situations where countries are facing the situation that you have a high budget deficit. I think what is necessary that you have the potential new government has a calm hand to calm things down. I think what everybody should be trying to avoid is to have any kind of Extreme ways how to fix the situation. I think the country needs stability, so to say, forward-looking guidance in terms of stability, which is necessary for all international investors, and I'm sure that Romania will come back on track.

Istan Pablo from Portfolio Angry.

Thank you for the invitation. Could you please elaborate more on the Hungarian situation? Last week you met the central bank president and the leadership of the central bank and they published that you made commitments to each other. Could you please detail what kind of commitments are these and could you please a little bit detail your stance concretely on the MbH bank? To how much extent are you interested?

When it comes to commitment, the topic of discussion with the Hungarian finance minister but also with the head of the national bank was very clearly that we are here to support economic growth in the country. and we will use all our potential options to help the country for further development. This is not only how we can operate in Hungary by itself in terms of lending for companies and all this stuff. It's also an idea of our CEO, Radovan Ilasic, to support the country to bring foreign investors to Hungary. Because I think this is now the moment in time where when the country is able to give stability in terms of jurisdiction, tax regime, all these things which are necessary to attract foreign investors, then we are very much willing to support. Of course, this should be proved by the government, but I'm 100% sure The current government is going in this direction. You will see a money inflow of European Union funds of around 16 billion. 10 billion you will see already in August, so soon. And the 6 billion will follow, I think, in the second half of the year. There are some kind of prerequisites, but I think this is very clear in Hungary and everybody is working on that. So what we see is a very positive momentum in Hungary and we will do whatever we can do to further support this kind of development. When it comes to the bank, you mentioned again, maybe you are disappointed when I say this, but I think it's too early. Because it's a situation where I think there are still discussions about the ownership structure and we are standing on the side looking at the situation. But I don't expect anything to happen this year from my perspective.

We have an online question from the Salzburger Nachrichten. Mr. Bosek, am I getting this right? You are suggesting a partial privatization of ÖBAG. I think there should be a lot of interest to ensure that the digital infrastructure can be controlled nationally, because I believe it is also quite clear that we have critical infrastructure that is worth protecting. It's not only about banks. It's about the telcos and also about the entire field of health. And I believe that we have seen some cyberattacks here in Austria, and we know that this is a European trend. The geopolitical situation has increased the risk for Europe in terms of cybersecurity. And we know, based on our activities in various countries, what other countries are doing in terms of that. So I believe that Austria should be in the driving seat when it comes to owning our own digital infrastructure. Of course, you can also have a diverging opinion, but that's my take. Mr. Jaroslav Pavliga from Kosovo-Tarskoye. Romania.

So my question is, how do you appreciate the performance that BCR, the bank that you own in Romania, had until now? Are you going still with organic growth?

If I may, because I also wanted to compliment Peter's words on your question before. And I'm very thankful for the question, because it's out of any discussion that the performance of PHRA in the last, if you look at, say, five to seven years, has been extremely good. It was not only in terms of financials, but also in terms of, for example, asset quality, outstanding given, so to say, the market, the benchmark. So that's a matter of fact. What we are facing at the moment, you know this much better than me at least, is that we have, I would say, a mix of factors at the moment. In Romania, extremely high inflation on the back of a combination of factors. On the one hand, it's the I would say the general On the other hand, it has a lot to do with the austerity measures from the government in terms of VAT and so on. So we will see a certain consolidation in the rest of the year, but still compared to other countries in the region. So it's very high, which has a lot to do and both Alexandra and Peter were commenting on that in a different context has a lot to do with the investment appetite, so to say. Uncertainty is the biggest churn on investment appetite and that of course is also due to the political situation. We will not comment on the political situation in detail, but it's a matter of fact that the whole situation around the government and the confidence vote and right and left and now we have a pending situation for what? Two and a half months, three months, right, around the government is not helping. And that's the reality. So I think when it comes to, for example, there are many, many factors where our Romanian colleagues are the benchmark inside the group. For example, when it comes to digital sales activities, we have been showing much earlier than in other countries how successful you can be in distributing Manfred Neuwirth, Manfred Neuwirth And last but not least, from the perspective of the CFO, it's very clear that the performance of BHRA in the last couple years was extremely strong when it comes to net profit. You mentioned already NPL ratio. But you know, we should not ignore reality and the reality is that at the moment we have a difficult environment. You all know the discussion about the question of investment grade or non-investment grade of the country. This, in my humble opinion, requires that the decision makers, beyond their different views on certain political matters, stand together. for the country. And that is, so to say, the only call we can make that, you know, the decision makers are, be it on the political side, be it on the central bank side, are really acting in the interest of the country. Then I'm sure that, as we discussed before, as you discussed with Peter, we will see on the back of entrepreneurial spirit in Romania a very swift turnaround, but that is required. That's my take on the situation currently.

Sorry for the confusion. Now. Now.

Sorry to say so, but I didn't say a word about Slovakia today. So I'd like to ask what do you think about the future of our market and what are the interests of Verste Group in our country? Thanks.

It's easier to answer the second part of the question. So our interests are very clear. I mean, we are the biggest retail bank in Slovakia. I think our colleagues did very well also in corporate banking over the last year. So our market share has improved. We are very happy to be in Slovakia. Of course, it was one of the first countries where we are able to operate a bank. I think when you compare Slovakia and Czech Republic, of course, Slovakia is lagging a little bit behind in terms of economic growth. I think somehow, but this is not so easy to judge, somehow a little bit mood-driven. In a way that to say you need something to as a kind of signal project whatever that people are again starting to be very much forward looking. I think of course that the dependency on automotives is quite high but I think it's not a super critical situation for the country. But it's to be clear, in general, it's a very stable situation. So if I remember correctly, you have roughly 2% GDP growth in the forecast this year. So this country here is 0.7. So I could ask you, how do you look at Austria?

But maybe also to complement pretty much also in the line what has been said to Romania, We are very very proud of our bank, of Slovenskos Borytelna and also Slovenskos Borytelna as BCA is in specific areas, is also SLSB a frontrunner in specific areas. We are also very proud about the development of the brand. It was rather historically and it still is to some extent a brand for let's say the more mature clients and population and now it's gaining more and more traction also in Bratislava and for the younger clients. We are also proud how the bank is managing this transition from a very long year serving CEO to a new CEO coming in. Profit development very good, risk okayish, not super. I think the bank will do better, can do better and will do better again in the future, but strong corporate growth as Peter has mentioned. but equally as in Romania a stable environment and this includes also a political stable environment and a certain, I don't know the English term, maybe my colleagues can help me, entschlossenheit, what we feel very much in Poland, commitment to growth, very active moving forward, this of course would help everywhere but this is the same for Austria as well.

But if I may add, I see a very positive momentum when it comes to Visegrad. So I think that Visegrad is now somehow reactivated after the change in the government in Poland is from my perspective a very positive signal. And I would highly appreciate if Austria also makes up its mind if it could be Visegrad 4 plus 1.

I don't have any more online questions.

Anna Blazkowicz, please.

Thank you for the invitation.

I have two questions concerning Croatian market. One is Croatia. One is the outlook as Croatia has successfully entered the Eurozone, the Schengen area, now the OECD is in the finish line. Could you comment on where do you see sources of growth for Croatian market as we see the slowing down of GDP growth rate and also persistent inflation? And the second question would be, could you comment on the announcement by the government on new taxes targeting extra profits? We can assume that They will be targeting the banks also in this area. Thank you.

When we started in Hindu to Stefan, I mean, I think the Croatian government did a fantastic job over the last years. As you rightly mentioned, being part of Schengen, now being in front of becoming a member of OECD, financial stability in this country, I think everything is going in the right direction. Of course there is a high dependency on tourism. I think this is very clear and known to everyone. But having said that, three or four weeks ago I was last time in Zagreb and I was picked up at the airport by a robotaxi. Unbelievable. I was just driving once in such kind of self-driving car. This was in the Google headquarter in 2014. And now you have a relatively young entrepreneur who is doing a fantastic job. and I think he's already quite famous outside Croatia. So what I'm saying, I met some corporate clients there, we had also dinner together. So it's also a kind of momentum in the country where you have a very high entrepreneurial spirit. And I think everybody tries to diversify economic development. And this is going in the right direction. If somebody is coming up with additional profits for over profitability, win for profitability, this is definitely the wrong direction. I think this is very clear. Don't ask us. I think it's very clear that we have this view. And I think it's also not going in the same direction like becoming a member of OECD and then increasing profit taxes. It's counterintuitive. Let me put it this way. But I would fully rely on the prime minister and the government. I also talked to the mayor of Zagreb and I was deeply impressed. He was telling me his five upcoming investments within the city in a way and in a deep understanding of economy where I was deeply impressed. A very high level of respect what the country already achieved and I think you have shown that you have everything in place for further growth. And I think inflation after Euro of course was a topic, after the introduction of Euro, so the cost of living increased quite dramatically, but hopefully this has now come to an end as a kind of warm-off effect after implementation of Euro.

You talked about the wars.

One war relates one of the trading routes of the international energy markets. What are your expectations relating to the energy markets in the medium term and in the long term? And what influence will that have on your goals? Of course, it's a very important question that you asked. Our expectations in the medium run and in the long run, as far as our balance sheet is concerned, we are rather neutral. and of course you are right when talking about interest rates development and interest rates decisions because they influence us, our profitability, but also our customers. We started the year expecting that the prime rates will fall. And it was expected at the beginning of 2026 that the European Central Bank will lower the prime rates, then the war in the Far East broke out, and then We expected two, three, five interest rate increases of the top banks. And then there was a change in management of FED. The chairman of the FED was replaced. So whatever takes place around us, we see a flat development of the interest rate curve. Assume that if nothing dramatic happens over a summer, the ECB will not do anything. There is a 50-50 expectation that the DECB will increase the interest rate by 25 basis points, and 50% think not. But we are talking about incremental increases. Fed will not do anything from today's perspective, maybe also under political pressure. If nothing dramatic changes as far as inflation is concerned, we expect a flattish interest rate environment. Of course, this is a very important topic also for entrepreneurs. What people often overlook is that you have to look at the far end of the curve. What about five-year time interest rates or ten-year interest rates? And this is also important for investment decisions, and there is an up and down in the current interest rates development. Unfortunately, I don't have a crystal ball to tell you what will happen in the future.

Your ex-head of national bank is now vice president in European Central Bank. I'm serious because I think our region is still a little bit underrepresented in European institutions. Therefore, I think it was a very important move and we know him since quite some time. We always love the cooperation with the Croatian National Bank. And also your finance minister, your previous finance minister, who is now with European Investment Bank, was a strong person supporting capital markets development quite a lot. And I also had the chance to talk to his successor and he's still going in this direction. I think this is super.

I don't see any further questions, so let me thank you for having attended.

We still have some snacks outside to be able to mingle offline, so thank you very much and see you next time.