Erste Group Bank Aktie

Ladies and gentlemen, welcome to the Erste Group First Quarter 2026 Results Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it is my pleasure to hand over to Thomas Sommerauer, our Head of Group Investor Relations. Please go ahead, sir.

Thank you very much, Sandra, for this kind introduction and also a very warm welcome to everybody who's listening in from my end. We follow today our usual conference call procedure that is that management, Peter Bosek, CEO of Erste Group; Stefan Dorfler, CFO of Erste Group; and Alexandra Habeler-Drabek, CRO of Erste Group, will lead you through a brief presentation, highlighting the financial achievements of the past quarter. During this call, they will make forward-looking statements and accordingly, the disclaimer on Page 2 fully applies to those statements.

With this, I would hand over to Peter for the presentation.

Good morning, ladies and gentlemen. Welcome again to our first quarter 2026 conference call. I'm on Page 4 now. Today is the first time we present to you financials, including the contribution of Erste Bank Polska. Financials that will show the business momentum in Erste's business, excluding Erste Bank Polska, remains good, and that the consolidation of our new Polish unit has only added to the financial attractiveness of our franchise.

To allow for better insight into how our business is actually doing and for the simple reason that we have no comparable segment data for Erste Bank Polska, we will mainly talk about the performance, excluding Erste Bank Polska throughout this presentation. In addition, we will highlight the special effects related to first-time consolidation and where relevant focus on reported figures that already include Erste Bank Polska.

With this housekeeping note out of the way, let's now move to the actual financials. We made a good start to the year. Year-on-year net interest income and net fee income, excluding Erste Bank Polska, increased by 6.5% and 7.3%, respectively. Cost inflation was driven by staff and IT costs and included Polish integration costs in the amount of EUR 30 million. Operating result, excluding Erste Bank Polska, hit a new quarterly record at north of EUR 1.6 billion.

Just for reference, operating profit, including Erste Bank Polska now sits comfortably above EUR 2 billion. Risk costs ex Polska a mere 16 basis points were pretty much on par with the level we saw a year ago. Other result improved somewhat year-on-year as higher banking levels, mainly in Hungary were more than offset by one-off income from the sale of our card business in Croatia as already guided a quarter ago.

All in all, we posted a net profit, including Polska of almost EUR 900 million in the first quarter of 2026. With this, we have a good foundation to achieve our financial goals for 2026, most importantly, a return on tangible equity of around 19% and earnings per share growth north of 20% on net profit adjusted for extraordinary items related to the consolidation of Erste Bank Polska.

Let's now move on to some key P&L financial indicators on Page 5. Net interest margin ex Polska increased to 237 basis points compared to a year ago, but was down vis-a-vis the fourth quarter of 2025 on slightly weaker net interest income and somewhat higher interest-bearing assets. The margin figure of 264 basis points you see in the upper left-hand chart represents the best estimate of where margin stand including Erste Bank Polska.

It's a similar story for the cost/income ratio, irrespective of whether one looks at the efficiency ratio ex Polska of 46.5% or the reported figure shown on the slide of 45%, both are already fully in line with the guidance we have given. And just a minute ago, I mentioned just the risk cost ex Polska only 16 basis points in the first quarter. And on this slide, we showed 68 basis points based on our reported figures. This includes a smaller contribution from Erste Bank Polska, which lifts risk costs to 21 basis points, but also the one-off ECL provision we already flagged of EUR 302 million.

With the latter now out of the way, the provisioning ratio will converge towards our guidance range of 25 to 30 basis points already from the next quarter onwards. Banking taxes spiked this quarter, not only due to the inclusion of Erste Bank Polska, but also due to the increased extra profit tax in Hungary. And finally, reported earnings per share and return on tangible equity were in line with our expectations and as already mentioned, put us on a good track to deliver our full year guidance.

When we analyze the development of the balance sheet on Page 6, the impact of consolidating Erste Bank Polska is immediately evident. We are now a bank with a balance sheet total of EUR 450 billion and the focus on customer business has been further reinforced. Our loan book exceeds EUR 275 billion, while customer deposits amount to more than EUR 314 billion. Business trends, excluding Erste Bank Polska, have also been healthy in the first quarter. Customer loan growth amounted to 1.5%, while customer deposits grew by 3.2% year-to-date. In both, the main growth driver was the Corporates & Markets business, while retail had some softer start to the year.

The latter is mostly explained by the exceptional strong print in the previous quarter. The increase in intangibles by more than EUR 4 billion is a direct result of the acquisition of Erste Bank Polska. Roughly half of this amount is allocated to goodwill, the other half to customer stock. The latter will be amortized over the next 10 years as already guided. Another noteworthy effect on the asset side is the significant increase in financial assets, which simply reflects the deposit overhang in the Polish business.

On the liability side, we saw an outsized increase in equity, which is attributable mainly to the inclusion of Erste Bank Polska related noncontrolling interests. As far as the loan growth outlook is concerned, based on our continuous robust volume momentum, we confirm all the targets we set a quarter ago. It's more than 5% growth ex Polska and in total, a loan stock in excess of EUR 285 million by year-end.

Balance sheet metrics were also impacted by the consolidation of Erste Bank Polska. I'm on Slide 7 now. The loan-to-deposit ratio of about 88% came down by a couple of points as a result. Year-on-year, loan and deposit growth was lifted. More importantly, growth excluding Erste Bank Polska was absolutely satisfactory, too, with customer loans advancing by 7% and customer deposits growing by 6% year-on-year. Asset quality remained rock solid. Despite the higher locally reported NPL ratio on group level, the inclusion of Erste Bank Polska actually had a positive effect as the Polish assets were consolidated at fair value.

The latter had the opposite effect on the NPL coverage ratio. The impact on regulatory capital ratios is also clearly visible. The consolidation of Erste Bank Polska led to a drawdown in CET1 ratio of 450 basis points, which explains the quarter-on-quarter decline. But mind you, the figures you see on this slide represent reported figures that include interim profit. Including the first quarter profit, we would already stand above 14.8%. This figure includes a dividend accrued assuming a 45% payout ratio.

Nonetheless, we will retain flexibility as far as distributions are concerned in order to be able to take advantage of opportunities that may benefit shareholders more. And to conclude on the slide, liquidity and leverage ratios were strong before and remain strong following consolidation of Erste Bank Polska.

Let's now briefly examine the macroeconomic environment in our region on Slide 9. Since we last reported at the end of February, quite a few things happened, most notably a crisis unfolding in the Middle East that once again put energy security and energy prices in the spotlight. Unsurprisingly, our economists have slightly trimmed their growth forecasts, but they still do predict better economic growth for 5 quarters ago, these figures will be 6 out of our 8 core markets than we saw in 2025.

Healthy growth is expected in Poland, Czech Republic, Croatia and Serbia, while Romania, Austria, Hungary and Slovakia are expected to grow more modestly. Nonetheless, the environment for doing profitable banking business is fully intact even in those markets. Another macro parameter that saw some revision since the end of February is inflation. Across the board, our economists raised their inflation expectations for 2026 by some 20 basis points. But even with this, we are still talking about low to mid-single-digit inflation rates, so levels that will not impede growth.

When it comes to external fiscal balances, the picture is as mixed as it was 2 months ago. Neutral or positive current account balances are projected for Austria, Czech Republic, Poland and Hungary, while the other countries have to contend with deficits. In terms of fiscal stability, the Czech Republic continues to excel. Interest rate expectations also changed in light of global energy dislocations. Our economists now expect no further rate cuts in Eurozone, Poland, Hungary, Austria in 2026, while the expected rate cut path was reduced significantly for Romania.

On the long end, rates also have moved up in most markets, notably expectations being Hungary and Romania. This has slightly changed interest rate backdrop which further support bank profitability. Talking about profitable banking business, let me share with you a couple of performance highlights of the retail business in the first quarter of 2026. In short, retail loan growth continued but at a lower level than we saw last year, while retail deposits were broadly stable. Here again, we are talking about figures, excluding Erste Bank Polska.

Retail loans were up 7.7% to EUR 116.5 billion year-on-year. Growth was somewhat better in housing loans and consumer business and particularly strong in CEE. The 1.2% increase quarter-on-quarter was well balanced between housing and consumer loans with most geographies doing better in housing loans, but Czech Republic, Erste Bank Austria and Serbia enjoying better traction in consumer business.

The quality of the retail book remained good. Retail deposits consolidated in the first quarter at a level of EUR 171.7 billion, not a big surprise after the exceptionally strong growth performance in the fourth quarter of 2025. Both overnight and term deposits slipped slightly, while saving deposits saw incremental inflows. At 6%, Hungary posted the best deposit growth in the first quarter. The slight decline in Austria was mainly due to the strong print a quarter ago.

Security savings plans that enable customers to build long-term wealth in an easy to manage digital format surpassed the 2 million mark in the first quarter, resulting in steady inflows of customer assets. George, our digital platform for retail clients, continued on its growth path. The number of onboarded users climbed to 11.7 million by the end of the year and the digital sales ratio in the retail business moved up towards 72%.

Going forward, we will develop George further into a fully integrated financial adviser in order to facilitate broader advisory coverage of our client population. In the corporate segment, excluding Erste Bank Polska, and I'm on Page 11 already, loans were up by 6.1% year-on-year and 1.8% quarter-on-quarter. Growth was registered across all business lines, even though this is not visible in the upper right-hand chart as some exposures were resegmented from the SME to other corporate business lines in Erste Bank Austria.

In terms of loan types, investment loans were in higher demand in the first quarter of 2026 than working capital facilities and overdrafts. Corporate deposits grew by 14.1% quarter-on-quarter, mainly in the Czech Republic on higher inflows from public sector clients. Overnight deposits outgrew term deposits year-on-year, while it was the other way around quarter-on-quarter. The market business again contributed to our fee performance. The ECM and DCM teams successfully executed 107 transactions with a co-arranged issuance volume of EUR 82 billion. In Asset Management, net sales of EUR 1.4 billion contributed to assets under management, which overall slipped slightly this quarter on market volatility.

On the digital front, we are continuing to roll out George business across the geographies. With this, 80,000 corporate clients across our region are now using George business. At the same time, we expand our product offering, making George business even more useful for our corporate customers.

And with this, I hand over to Stefan for the presentation of the operating trends and the reporting segments.

Thanks very much, Peter, and also a warm welcome to this call from my side. We move to Page 13 now, please. I will keep my remarks short in respect of loan volumes today, as you already heard quite a few details about it. Excluding Erste Bank Polska, we grew net loans by EUR 3.5 billion to EUR 235.5 billion in the first quarter of 2026. Add to this, Poland, that's another EUR 40.1 billion, and you get to the grand total of EUR 275.6 billion shown on the slide.

In terms of geographic highlights, Hungary enjoyed the best growth momentum among all countries quarter-on-quarter as well as year-on-year. In both relations, growth was driven by housing loans as the outgoing government launched a subsidized mortgage program last September. In the Czech Republic, year-on-year growth was well balanced between retail and corporate loans. The former housing loans were growing fast -- growing fastest. While in the latter, there was good demand for investment as well as working capital loans. Quarter-on-quarter growth slowed somewhat, but demand was intact across all products.

And finally, in Romania, the quarter-on-quarter decline was exclusively attributable to the repayment of the government loan, while retail and corporate loan demand was quite solid. Thanks to the continued healthy growth momentum in the first quarter of 2026 and a still robust macro outlook, we confirm our 2026 organic loan growth target of more than 5% both for the Erste with and without Erste Bank Polska, resulting in a net loan stock of higher than EUR 285 billion for the enlarged Erste Group by year-end 2026.

Let's now move to the highlights of our deposit franchise on Page 14. Our deposit base, excluding Erste Bank Polska, grew by almost EUR 8 billion to EUR 261 billion in the first quarter of 2026. Including Erste Bank Polska, we now have a deposit base of EUR 314 billion. Customer deposits growth ex Polska was attributable to 3 factors.

First, we saw strong public sector inflows in the Czech Republic. Secondly, in our usually volatile markets business or in segment terms in the other Austria segment, we also had significant inflows. And thirdly, our core deposits in the retail SME and Savings Bank segments trended sideways after a very strong previous quarter. As on the asset side, we saw strong growth momentum in Hungary, which was spread across all business lines. And finally, in the Austrian retail and SME segments, we experienced a slight quarter-on-quarter decline, which was mainly attributable to the strong performance in the previous quarter.

Having discussed volumes, let's now see how net interest income developed in the first quarter of 2026. And with this, I'm on Page 15. Year-on-year NII was up 6.5% for all the reasons you are well aware of, good volume momentum, successful deposit repricing, continued income tailwind from the replication book and generally speaking, let's call it, an interest rate environment that is supportive of bank profitability.

Quarter-on-quarter, net interest income slipped quite slightly, not an unexpected development due to the lower day count in the first quarter. The start of amortization of positive fair value adjustments related to the consolidation of Erste Bank Polska and due to missing income from the last quarter, we still earned on the purchase price of Erste Bank Polska, EUR 7 billion, just as a reminder. The latter explains the decline in the other segment. I would also like to highlight the good performance of the Austrian retail and SME segments, which confirms the good performance of the previous quarter.

Taking all of this into account, I guess this is a very strong print and bodes well for the rest of the year. Net interest margin, NIM, very much mirrors the NII development. If we exclude Erste Bank Polska, net interest margin was up by a couple of basis points year-on-year, but down quarter-on-quarter to lower NII and higher interest-bearing assets. Including Erste Bank Polska, the picture, of course, looks different. The Polish business is generally operating at higher margins. And consequently, this also pushes up net interest margin to north of 260 basis points.

As this level for the first quarter reporting was calculated only on end first quarter interest-bearing assets, I believe the NIM will oscillate around 270 basis points rather during the remainder of the year.

When it comes to our NII sensitivity, very important these days, of course, the consolidation of Erste Bank Polska actually made little difference. You may remember that we were pretty neutrally positioned versus 100 basis points instant rate shock, and this remains the case, including Erste Bank Polska.

Now for the outlook. A quarter ago, respectively, reported end of February, we told you that we target net interest income north of EUR 11 billion 2026. This incorporated an organic growth assumption of about 5% for Erste excluding Erste Bank Polska, and NII contribution of around EUR 3 billion or even better from Erste Bank Polska. Obviously, on segment level, this figure needs to be adjusted for the fair value amortization of about EUR 170 million gross, about EUR 60 million net and the nonrecurrence of interest earned on the purchase price of Erste Bank Polska, as mentioned before. All of this is fully valid today. So we are confirming the guidance of above EUR 11 billion net interest income for 2026.

Talking about guidance confirmation. Net fee income comes to our mind, and I'm with this on Page 16. Including Erste Bank Polska, we almost posted quarterly net fee income of EUR 1 billion. This is all the more remarkable as FX transaction fees that Erste Bank Polska locally reports under fees have to be reallocated to group or group level to the trading result. I'll get back to this in a couple of minutes. If that were not the case, we would have already surpassed the EUR 1 billion mark in the first quarter, which usually is seasonally the weakest or one of the weakest. Even without Erste Bank Polska, fees performed very well.

We saw an increase of 7.3% year-on-year with the usual drivers again delivering the goods. Payment service fees benefited from more transaction and repricing, while securities -- security business fees grew on higher asset volumes. Insurance brokerage also did very well.

A small decline quarter-on-quarter from an all-time record fee print was attributable to performance bonus payments from our insurance and payment service partners, which usually lead to a fee bump in the final quarter of any year. Last time around, we have guided to organic fee growth in excess of 5% in 2026. We fully confirm this outlook. We also said that including Erste Bank Polska, combined fee income should be around EUR 4 billion in 2026. This remains our ambition, even though we know today that around about 1/3 of Polish fees, we will actually show up in net trading results.

Over to operating expenses now, Page 17. In the first quarter of 2026, we experienced the usual twofold seasonality. First, quarter-on-quarter, costs including Erste Bank Polska came down by 6.7% -- sorry, excluding Erste Bank Polska, came down by 6.7% as the final quarter of any year tends to be heavy on costs.

Secondly, upfront regulatory payments such as deposit insurance contribution always burden first quarter cost disproportionately. In addition, this was also the first quarter when we started to amortize Erste Bank Polska-related intangibles, that is customer stock and the residual brand value, this will expire with the second quarter already. This amounted to EUR 66 million. And finally, we continue to book integration costs in the amount of EUR 30 million in the first quarter, 70% of which booked locally, while the remainder was booked on parent company level.

All of the above explains the year-on-year cost increase of just above 5%. This tracks somewhat above our guidance of 3%, but with Polish integration costs being well anchored at up to EUR 180 million, we are still optimistic that we can achieve this goal.

Consequently, we confirm our absolute cost guidance of around EUR 7 billion for 2026. The consequence of operating revenues growing faster than costs is record operating profit and improved operating efficiency. With this, we are on Slide 18 in the meantime. Excluding Erste Bank Polska, operating income again exceeded EUR 3 billion, helped not only by good momentum in net interest income and fees, but also by a strong contribution of net trading and fair value result. Costs ex Polish business were just above EUR 1.4 billion. So that quarterly operating result for the first time surpassed EUR 1.6 billion and the cost/income ratio came in at an excellent 46.5%.

Including Erste Bank Polska, operating income reached almost EUR 4 billion in the first quarter of 2026 with a sustainably higher contribution from net trading and fair value result as the Polish FX fees of about EUR 200 million or so a year are on group level allocated to net trading. Therefore, the quarterly run rate of net trading and fair value result is lifted to, I would definitely guide for north of EUR 150 million, somewhere EUR 150 million to EUR 200 million is realistic to be expected in contrast to about EUR 100 million previously.

In aggregate, quarterly operating result, including Erste Bank Polska hit almost EUR 2.2 billion. In light of all this, our cost-to-income ratio guidance of 45% and with it significant positive operating leverage looks eminently achievable in 2026.

And with this, over to Alexandra for details on credit risk.

Thanks, Stefan, and also good morning, and welcome to this call. I'm now on Page 19. As far as risk costs in the first quarter of 2026 are concerned, I have 3 key messages for you. Firstly, the underlying risk performance in our franchise continues to be good. This is evidenced by a risk cost trend of 16 basis points, excluding Erste Bank Polska and 21 basis points, including Erste Bank Polska. This vis-a-vis the respective full year guidance ranges of 20 to 25 basis points and 25 to 30 basis points.

Secondly, this quarter, we did not release any additional overlay or FLI provisions. Instead, we added some EUR 32 million, EUR 10 million of which came from the consolidation of Erste Bank Polska. In the remainder of 2026, we do not expect any further releases from FLI or portfolio overlays. This is a result of the already mentioned volatility in global geopolitics and its downstream effects on energy markets as well as growth and inflation expectations.

Message number three, the one and only reason why you see a huge increase in reported risk costs and the corresponding spike in the provisioning ratio, this is the one-off ECL provision in the amount of EUR 302 million. That is a requirement under IFRS 9 upon first-time consolidation of Erste Bank Polska. This topic we had already flagged before. In terms of country highlights, the Czech Republic, Hungary and Croatia continued to do very well. We actually posted net releases there.

Erste Bank Oesterreich improved both year-on-year as well as quarter-on-quarter on fewer defaults. In Romania, we increased provisioning for both the retail and corporate portfolios, while in Slovakia, higher provisions were required in the retail business.

When it comes to the outlook, based on the solid first quarter performance, we confirm our full year guidance of 25 to 30 basis points including Erste Bank Polska and excluding the already mentioned one-off effect of EUR 302 million.

Let's now turn to asset quality on Page 20. If I had to characterize asset quality in the first quarter of 2026 in one phrase, it would be all around stability. The group NPL ratio was stable quarter-on-quarter at 2.4%. Year-on-year, it even improved a touch. Both statements are true irrespective of whether we include or exclude Erste Bank Polska. They are also true for our Austrian operations, which have been in the focus of attention over the past couple of quarters. Group NPL coverage, including Polska, declined slightly to 67.9% year-on-year and quarter-on-quarter.

While year-on-year, this was mainly due to the release of overlay to light provisions, quarter-on-quarter, it was exclusively a result of consolidating Erste Bank Polska. I will talk about it in a minute in a little bit more details. If we look at individual geographic segments, the Czech Republic, Hungary and Croatia were leading the way as did the other Austria segment, which comprises our large corporate business, as you know, including also a part of commercial real estate across all regions.

In Slovakia and Romania, we saw an incremental deterioration in asset quality in the former mainly driven by the retail business, while in the latter, it was more broad-based and aligned with the more challenging economic backdrop. Nonetheless, even in these countries, asset quality metrics were satisfactory.

Coming back to how the inclusion of Erste Bank Polska impacted group asset quality metrics. On the one hand, it contributed to lowering the group coverage ratio. On the other, it led to a visible divergence between the locally reported NPL ratio and the one shown in our Poland segment.

Both effects result from fair valuation of the entire portfolio, including also nonperforming loans, which pushed down the NPL stock and dampened segment as well as group coverage. Over time, these effects will fade, meaning the NPL and NPL coverage ratio will converge towards locally reported levels also in the segment view and consequently, will have an incremental positive effect on coverage, while the opposite is the case for the NPL ratio.

All in all, and this is very important, impacts will be negligible. Based on first quarter performance, we see no reason to change our asset quality outlook for 2026. We expect that the group NPL ratio will stay more or less at the current very satisfying levels, while the NPL coverage is projected somewhere around 70%.

And with this, I hand back again to Stefan.

Thanks, Alexandra. After some exceptionally strong quarters and other results, the first quarter performance was more in line with what we and you are used to. We are on Page 21. We had the usual seasonality in regulatory payments, most notably upfront payments of all kind of banking taxes in Hungary, no less than EUR 120 million to be concrete, but also upfront regulatory resolution fund contribution, which these days are less significant at EUR 13 million, but still.

To offset some of this pain, we had a positive one one-off in Croatia from the sale of our local card business that I already told you about a quarter ago in the amount of EUR 116 million. On top of that, we consolidated Erste Bank Polska, where the other result in Q1 mostly comes from the local balance sheet, banking tax and the expected local Swiss franc bookings. And if we add to all of these effects up, we pretty much came out at the same level as a year ago for other results.

Deterioration quarter-on-quarter was mainly driven by the significant positive one-offs we had a quarter ago. When it comes to the outlook for this line item, I've been clear at the year-end call, and I already confirmed the statement. 2026 won't be a repeat of 2025, where all the one-offs we had were more or less one way positive. All the more, because we hear noises, and this was already a topic on Bloomberg as well, that in Romania, there is ongoing investigation into the fixing of interbank rates Euribor, which may result in fines for local banks. So this may or may not have an impact already in the second quarter. Let's see the outcome of the respective hearings.

How all of this -- all of the reported developments translate to our bottom line result, we show on Page 22. Based on what we presented to you about operating performance, risk costs, other results and the various impacts of first-time consolidation of Erste Bank Polska, we believe that a quarterly net profit of almost EUR 900 million is quite a strong achievement. It means that already after the first quarter, we are right on course to deliver all financial targets we committed to, and that's a higher than 20% uplift in earnings per share based on net profit adjusted for extraordinary items in 2025 and a return on tangible equity of about 19%, 18.1% for the first quarter and 2.15% is the number for earnings per share for the first quarter.

With this, let's turn our attention to wholesale funding and capital. Page 24, the respective slides. I will focus here on how the consolidation of Erste Bank Polska changed the liability structure of our balance sheet. As all of you know that prior to entering the Polish market, we always had very strong deposit franchise across all markets and that highly granular and well-diversified retail deposit constituted our main funding source. This profile is now further accentuated with the inclusion of Erste Bank Polska. We are now even more deposit heavy and less wholesale dependent. That's only one of the reasons why Erste Bank Polska was such a perfect fit for us. And the charts on this page perfectly reflect this.

We continue with looking at our long-term wholesale funding activities on Page 25. As usual, we started the year very actively. And in hindsight, that was a very good decision. In January 2026, we issued Tier 2 paper in the amount of EUR 750 million, which was followed by a senior preferred issuance in the same amount. In March, we proved that despite geopolitical dislocations, we have competitive access to capital markets when we issued a EUR 1 billion mortgage covered bond. Parallel to those activities on group level, several subsidiaries executed successful transactions in the first quarter. A breakdown of the updated MREL issuance plan and activities you can find on Page 40.

Now we move to regulatory capital and risk-weighted assets on Page 26. Once again, I will split my comments into 2 parts. First, I will focus on the overriding impact coming from first-time consolidation of Erste Bank Polska. And second, I will share a couple of highlights how the business, excluding the Polish business was doing. In CET1 capital, there were 4 main effects. The first one, as in any first or third quarter, we did not include interim profit in the calculation. The remaining 3 drivers were all tied to the consolidation of Erste Bank Polska.

We had additional intangible deductions for goodwill and customer relationships as well as a negative OCI impact, which were only partly compensated by the inclusion of capital belonging to noncontrolling interest. This explains the quarter-on-quarter net decline in CET1 capital of EUR 2 billion, exactly as we expected it.

In risk-weighted assets, the lion's share of the increase also came from Erste Bank Polska as 100% of their RWAs were added, impacting primarily credit risk and operational risk. Over and above that, excluding Polska, we also saw growth in credit RWAs north of EUR 3 billion as both customer loans and exposure grew. Now let's tie capital and risk-weighted assets together on Page 27. The reported CET1 ratio, which you see on the right-hand chart excludes first quarter profit. It amounted to 14.5% at the end of the first quarter. Even at this level, it is already above our management commitment towards the regulator of 14.25%.

If we include first quarter profit, the picture is even brighter. We are already at 14.83%, and this includes a full quarterly dividend accrual, assuming a 45% payout ratio.

As Peter already said earlier, accruing dividends at the midpoint of our payout ratio that we employed prior to the Erste Bank Polska acquisition demonstrates our full capacity to return to such a payout ratio or even more. However, very clearly, should other options promise higher shareholder returns, such options will be preferred. Any final distribution decision will therefore be made in the full context of all available capital allocation opportunities at the time.

And this -- with this, over to you, Peter, for concluding remarks.

Thank you, Stefan. Let me now summarize our first quarter performance and the outlook for the remainder of 2026. I'm on Page 29. There were many positive data points in the first quarter. Excluding Erste Bank Polska, we had a strong NII and fee growth. We had solid loan and deposit growth. We produced record operating profit. We had low risk costs and posted an other result where positive and negative extraordinary items mostly compensated each other.

With the consolidation of Erste Bank Polska, we incurred some extraordinary items, which sooner or later will fade away, some already next quarter. And as far as regulatory capital ratios are concerned, we have already far outperformed what we promised to our regulators. Finally, we produced a quarterly consolidated profit that is already right on target for an annual print that starts with a big 4, and we can then discuss whether this is on adjusted or potentially even on a reported basis. Let's see.

So what does all of this mean for the 2026 outlook? It simply means that the start of 2026 was encouraging, but that it would be probably not be smart in the current geopolitical environment to do anything other than fully confirm our guidance, not because there are developments in the current environment that would benefit banks such as higher interest rates. But clearly, there are also developments which can be detrimental to banks such as weaker macroeconomic growth and higher inflation, resulting in lower volume growth and potentially higher risk costs down the line.

Consequently, if the global environment relaxes in the next weeks and months and the effects from current energy market dislocations prove manageable, we will certainly review our outlook in the second quarter. Until then, we will grow further, bring good profits and accumulate capital, all of which should enable us to take the best decisions in the interest of our shareholders.

And this, ladies and gentlemen, concludes our presentation remarks. Thanks for your attention, and we are now ready to take your questions.

[Operator Instructions] Our first question comes from Mate Nemes from UBS.

I have 2 questions, please. The first one would be on NII. We've been seeing really good volume growth, but clearly, there is some erosion in the net interest margins in a number of countries. Could you give us a bit of color to what extent this erosion is coming from asset spread compression, perhaps, for example, in Czech Republic or in Romania? And what extent this is the result of competition on the liability side, i.e., somewhat of an upward pressure on deposit margins.

The second question would be on Poland and generally capital allocation. I was wondering if you could perhaps share your updated thoughts on what extent you see and have made to stepping up your stake in Poland in the next couple of quarters. I think you've been assessing the options to do this economically in a clearly shareholder efficient way as well. Any thoughts on that? Any updated thoughts would be appreciated.

Yes, it's an interesting development overall on the NII front and the interest rate front, and we have to look at it country by country. Let me start with the big picture. As I said in the presentation, we are very optimistic. Of course, you can never be 100% sure, but we are quite confident that the overall NIM on the group level consolidated will rather slightly drift upwards from this 2.63% we reported this time has to do with all the effects, so to say, factored in step by step and over time.

So this is a relatively safe forecast. On the other hand, volumes, you mentioned, volumes were very good in the first quarter. We see a good development also in April. However, it's very clear that the geopolitical environment is a certain threat for all the players in the market when it comes to growth. But assuming that the growth holds up well, the overall NII guidance looks very robust to us. Yes, there are pressures in some of the markets. It's a mix of deposit and asset pricing. So namely Romania saw a drift downwards in both the NII and the NIM in the first quarter compared to year-on-year level. We are very closely looking at also the developments of other players. It seems to be a trend there, tough pricing conditions, tough competition around certain products.

In Czech Republic, it's a little bit different. Here, we saw a fantastic result on the one hand, but there is a certain slowdown on the deposit side. Hence, let me say, the Czech NII and the Czech performance is expected to be very strong, but maybe not with such an outstanding momentum as we saw it in 2025. And the other countries have performed very well, even above our expectations here, they're namely also Austria, Oesterreich quite satisfactory. And the discussions with our Polish colleagues show that there is even more potential from Poland to be expected. Concrete, I think, learnings we will have in the second and third quarter.

So if I may answer your second question about capital distribution. I think for us, the most important part is that we are going strong and building up capital. And I think our numbers really are a big proof to the robustness of our business model. And therefore, it's a little bit too early to be very clear how to distribute. But I think we have proven last year that we are able to find a decision, which is really adding value to our shareholders.

I think a follow-up, the gist of the question, Peter, was a bit like where do we stand with Poland.

Yes. But I think this is very much depending on what kind of decision we will take. Because we are now in a situation where we have all capabilities in our hands.

The next question comes from Gabor Kemeny from Autonomous Research.

A few follow-ups and another question on M&A, please. On Polish NII, you mentioned you see more potential later this year. Can you elaborate a little bit on this, please? Because I think the Q1 performance hasn't yet reflected the potential of this business. There was negative seasonality, the later consolidation. Also there's a recurring fair value adjustment, I believe. So any thoughts on how we should expect your Polish NII to evolve would be helpful.

The other question I had was on the provisions. I mean, I understand that you don't expect overlay releases this year, which is a helpful guide. But can you perhaps give us some sensitivities where your provisions may have to increase if the oil price remains around the current elevated levels, $120 or so? That's the second one.

And finally, on your thoughts on inorganic growth. Now in light of the Hungarian election outcome, to what extent do you see the chance increasing -- the chances increasing of Erste scaling up its presence in Hungary?

All right, Gabor. Look, Polish NII, I keep it super short. We know exactly how the read-through is to the group. So the difference in the first quarter, and this is due to all the filters that you are very well aware of, is a little bit north of 30 basis points. So the local NIM is about 33, 34 basis points higher than what we report in the segment. That's just the technical explanation that you anyway can follow very closely.

Second thing is we think that about 2/3 to 3/4 of the drive for NII comes -- should come from a very good growth momentum. I would say balance between retail and corporate, but maybe leaning a little bit more towards corporate growth as our colleagues are telling us on the ground. So definitely volume drive. And certainly, a certain element, but let's see how this goes on, could also come from a little bit higher-than-expected rates. Colleagues are quite neutrally positioned, but naturally, there is a little bit of, let me say, cream on the cake possible from rates drifting a little bit higher than originally expected. So this combination. But the major part is simply the strong business model on the ground and the growth, which should be driving NII.

Yes, Gabor, on your question, let me answer in a more general way. We are -- since beginning of this war, again, in very close constant contact with our clients. And of course, we are closely monitoring the portfolio on a daily basis, especially cyclical industries, including chemicals, metals, transportation, automotive, so everything which is more depending on energy price development.

So far, we have not observed a deterioration in the risk profile given the higher energy prices nor have we seen, but we also monitor on a daily basis, noticeable drawdowns of lines. So you can also see this, and I repeat our very good risk cost print in the first quarter of 16 basis points and 21, including Poland, respectively.

As of today, there was also no trigger for building industry-specific stage overlays. However, as you rightly mentioned, we do realistically no longer expect releases from FLI updates or overlays as we had anticipated previous to the Iran crisis. Any sensitivities is a theoretical exercise, which I do not deem very meaningful. We stick to the 25 to 30 basis points guidance despite we do no longer expect the releases. And you can -- if you add the EUR 30 million that we even added in the first quarter on FLI and also overlays, this should show you that we are sufficiently confident that even with this deterioration compared to our previous expectation, we stick to our guidance, yes, take it as a sign of a strong portfolio quality, but still, of course, we all know how volatile the environment is.

When it comes to Hungary and the question about potential in-country consolidations, I think we have proven in the past that we are able to manage this kind of situation. We have a very strong and experienced management team at Bank Hungary, and our view has not changed. We'll always look at in-country opportunities in our existing countries.

And this holds true -- sorry, just to add, this holds true for all the countries. I got this question on Bloomberg already. So Gabor can kick it off for the other countries. We have, as Peter said, we have experienced and very well educated top management teams on the ground. And we have a couple of opportunities. Some we let go, some we look at closer. That's what it is. But in terms of cross-border is also to mention that, and Peter said it a couple of times. Now the focus is 100% on a good integration of Poland. So you cannot expect or you should not expect some crazy advantages from us.

The next question comes from Gulnara Saitkulova from Morgan Stanley.

So my first question on capital target. So you're targeting more than 14.25%, which implies a buffer of 1.3% above the requirement pro forma Pillar 2 guidance. Can you elaborate on why this is considered the appropriate level for Erste, particularly given that some of the upstream peers operate with a lower CET1 target levels? And looking ahead, do you expect any changes to regulatory requirements? And maybe related to that, following the announcement of Santander Polska acquisition, you lowered the target to 13.5%. Should we take and consider 13.5% as a floor? Or is there a scope to play below this level on a temporary basis? That's my first question.

Okay. Thank you for this interesting question. I split it in 2. First, the target is 14.25% for our CET1 ratio, and we feel absolutely comfortable with that. If you compare us to peers, it's for various reasons and the buffer regimes as it adds up is our requirements are a little bit higher, which we, to be honest, only find appropriate in parts. Therefore, we are adding, let me say, an ADM level, which is, as you described it, and we are completely happy with this level. And you saw that we have been delivering our commitments to the regulator in full.

I want to just make a small correction to your statement in the question. We did not lower the capital target as such to 13.5%. We just flagged in the course of the acquisition that there is room, and this is always in a dialogue with our regulators very clear. There is always room for, let me say, corporate development, typically M&A to make use of the management buffer for certain activities. Therefore, we were flagging that in case there would have been -- which that was not the case, you saw, we had a great development in '25. If there would have been need to need a couple of basis points between 13.5% and 14%, that would have been our way forward.

We never needed it. So the actual CET1 target was 14%, is now in the course of 2026 lifted up to 14.25% due to the changes in the buffer regime. And the 13.5% was the level that we never wanted to go below. As you know, from all our reported numbers, we were way above at every single point in time. So just to be precise on that. Way forward, I think Peter said everything with regards to potential growth opportunities. We will keep a very, very strong capital ratio at any point in time. But in the same moment, we will seek opportunities for good capital returning growth opportunities.

And another question I wanted to ask on the Polish banking market because it's widely seen as quite competitive. Could you outline your plans to grow and develop your business there? And what are your market share ambitions? And which levers can you pull to defend market shares and address competitive pressures across both the retail and the corporate segments?

Yes. Point number one, when it comes to competition in the Polish banking market, I think this is a very similar situation compared to other markets. I know there are a lot of discussion about competitiveness in Poland. But when you look at NII margins, I think the competition is more on the same level compared to other countries we are operating in. Point number two, I think where we definitely can add value is in terms of asset management. We see a lot of potential in asset management. The whole country is still underpenetrated in asset management, and this is something where we believe there is a trend for the upcoming 20 to 30 years.

The next question comes from Ben Maher from KBW.

Just coming back to Czechia and some of your peers have flagged worsening deposit competition. I think you mentioned earlier you were seeing similar trends. I'm just interested in what you believe is driving this competition in Czechia.

And then my second question is just coming back to overlays, and apologies if I missed this earlier, but I'm just interested in how you see the stock evolving this year? And also just a separate question on which countries you think are particularly exposed to the current situation in the Middle East or at least ones you're maybe slightly more worried about relative to your wider footprint?

Yes. Thanks, Ben, for giving me the opportunity to be a little bit more specific on the Czech situation. There have been developments around the deposit base, but that's not so much due to elevated competition on deposit pricing. It's rather that the whole market and not only our very successful local bank Czech, but also other market players have, I would say, late, but now very strongly identified the attractiveness of investments, asset management business and you can allocate the lion's share of, let me say, some shifts in the market out of the typical deposit base of the traditional banks, mostly to this trend and also the sales activities of Czech Bank.

So it's not a competition on the deposit side as you would see it in comparable, let me say, situations. It's more a drift into, I would say, future-oriented asset management allocation that explains some of the volumes there.

And coming back to your question on which countries we do see the most exposed from the current Iran conflict. So apart from the analysis that we're doing on a constant basis, which I've commented just previously before, we, of course, also do stress testing in various frequency. And all our internal analyses and stress tests have not shown any specifically exposed country in our region. Just to name one which seems to be especially resilient is Poland, but no one standing out in a negative sense.

I think Ben had the question on overlays developing in the rest of the year.

I can only come back to what I already commented to Gabor's question. As of today, we do not expect any releases. If additional overlays will be necessary. So the FLI update, as you know, we do on a regular basis will be done in Q2. We will see and it will depend on the macroeconomic environment.

The next question comes from Amit Ranjan from JPMorgan.

The first one is on -- coming back to capital institution flexibility, please. Last quarter, you talked about potential share buybacks being part of the toolkit. Is that still the case, please? And the second one is on costs. You have talked about efficiency gains. Are you starting to see some of the benefits of the investments made in prior years come through already? Or is that more back-end loaded in the year? And lastly, on -- can I ask on George, please? Do you have any early thoughts on any potential to roll out George to Poland? What are the opportunities that you see there?

So thanks for the question on the capital was more -- I don't remember exactly what wording we were using, but we have not been adding or taking out anything of the potential, so to say, capital distribution tools in the last call, certainly. But we have to see also where we stand.

That's why I was making the comment on the dividend in my presentation. So we are accruing for the ordinary dividend, right? And the capacity is there comfortably. I'm absolutely convinced to get back to at least the former dividend policy. What will then happen in the course of the year in terms of, a, market situation around us and pricing and opportunities and what is the best use of an excess capital that we are about to be building up is the second question.

So we don't take any of the tools off the table. We're not adding any. It's the clear always reiterated order of events. First, we are investing into the growth. This is something I just have to really emphasize once more. Look at all the comparables. We are here to grow and we are even under difficult environment -- under difficult circumstances growing. And this is, of course, absolutely necessary to have the necessary capital. And then as we are producing good profits, we will decide later on how to distribute. That's -- nothing has changed. And share buyback are maybe an option or maybe not later in this year, not being discussed these days in the boardroom.

Yes. If I may answer your George question. So our priority #1 at the moment is very clearly to have a smooth integration for our clients. So we don't want to have any kind of impact and change too much of the client services because this is extremely important for us in terms of client satisfaction. And we have absolutely no time pressure to jump on a new online banking solution in Poland because the existing online solution is being impacted.

And then I was jumping over the cost question in my getting excited about the capital, as I'm always. And I think there's a good reason if you look at the last 2 years, I guess. Okay. On cost, look, 2 things. I split the answer in 2 questions -- into 2 parts. First, we have been confirming all the lines today, and that's -- there's nothing to add to this one. And yes, we are already harvesting quite some efficiencies in some countries, there were really impressive achievements in terms of automation, use of customer journeys and optimizing there. So we are progressing very well on that track.

But one cannot ignore, and that's the second part of the answer, with an environment that could become more inflationary around us, the item line cost itself might be under a certain stress. However, if this should develop, so this will certainly also have an element of tailwinds on our top line. So if you look at the last 2, 3 years, whenever inflation was elevated a little bit more, and we had a little bit higher cost than expected, then usually in the overall operative performance, this was rather positive for us. That's the way I look at it.

Would I make any forecast on how inflation in this very, very shaky environment nowadays will develop throughout the year? No. Maybe last comment on that, not to get too long, but this is very important for you. On wages, I can tell you that in all the countries except for Austria, where there are still negotiations going on, the respective agreements for this year have already been done, and they are at or slightly below our expectations. Austria collective bargaining is still ongoing.

The next question comes from Robert Brzoza from PKO BP Securities.

I have one on asset quality. And namely, there was a substantial rise in the management attention exposures, plus 20% in Austria, 15% in Czech Republic, almost 30% in Romania. And there was also a jump in substandard exposures. I'm talking about quarter-to-quarter change, obviously, again, almost 90% in Austria, 90% in Romania. So I'm just wondering, has there been any change in the modeling approach or other issues that have been driving these reported figures and how these numbers are being allocated per sector? Is there any specific sector that stands out or they are broadly based?

Yes. I can answer this very quickly. No change in the underlying credit quality. This was influenced by the group-wide PD methodology update, which led to a reallocation of exposures from low risk to management attention and some substandard categories, which reflects a refined risk differentiation. So no change in the underlying credit risk quality.

But then the question still remains, why did you decide to change those perceived risks or risk weights? Was it simply due to the overall macro situation or there was something else?

It was simply an overhaul of an old methodology, which was put in a more refined risk differentiation. So there was no trigger from any deterioration, be it an industry or be it a country. It was an overhaul of an old methodology.

Right. And just last one. So then why wasn't all categories more or less proportionally affected, but there are differences between the countries and the 2 splits between the attention at substandard has also sort of yielded different results?

So I cannot give enough details on the methodology itself. But as usual, when you overhaul the methodology, it affects the parts differently. So -- but maybe we can do this in a catch-up session as it's really -- and let me stress this again, a technical topic and nothing of an underlying worsening of the portfolio quality.

The next question comes from Jovan Sikimic from ODDO BHF.

I have 2 questions, please. One is rather macro related or interest rate related. In which markets would you see, let's say, the highest chance of rate hikes in the current environment and how this would change, let's say, the NII outlook going forward? And maybe if you can elaborate a bit on the situation in Austria in general performance given still weak macro and some fiscal tightening, weak Germany data coming and also kind of weak domestic demand, how this should kind of drive especially the volume growth going forward? And maybe the one short on Poland. Maybe it's too early, but have you experienced any client moves, especially in the corporate business, like be it attrition or even new clients, if you maybe can add a couple of words on that.

All right. This is, of course, the multimillion or when it comes to banks overall, the multibillion dollar question around where rates will go. So thanks very much for that one. Look, we are discussing it very intensively. And Peter made a couple of comments on that at this point in time, rate cuts have become much more unlikely, if not completely unlikely for the rest of the year.

And there are many, many discussions, as you saw from today's discussions also on Bloomberg and CNBC around how the ECB votings will go today and so on and so forth. Look, our position is very clear as we stand in terms of 2026 effects. We are positioned very neutral adjusted for the savings bank sector in Austria, which would certainly benefit -- and it's -- this is in the area of EUR 100 million per 100 basis points, which as you know, is very limited given the overall exposure.

Mid- to long term, a certain up drift in the rate environment, but also not to be considered the shape of the curve is net positive for us. This is quite clear, and I made this comment also in the light of the Polish business. But it's not so that we are sitting here and hoping for rate hikes. And the probabilities in terms of hikes for each and every central bank, we can now discuss for the rest of the day. We will not be too much smarter at the end. The likelihood of rate hikes, as we would both agree, has significantly increased.

If I may take your question related to Austria. I mean you are absolutely right, Austria is not in a fantastic situation. We are far away from being in a fantastic situation. But having said that, at least there is some kind of positive momentum when it comes to our government now seeing a huge opportunity when it comes to Hungary and the cooperation with Hungary. So there will be a delegation going to Hungary over the next weeks to come.

Our Polish acquisition changed the sentiment when it comes to Poland. So there's a lot of interest of Austrian companies going to Poland, which so -- but in general, we also put some efforts when it comes to costs in the Austrian budget for this year. So the budget for 2026 for Erste Bank Austria is quite an ambitious one, and we have no reason to not expect our Austrian colleagues to deliver on that. When it comes to Polish clients, especially in the corporate area, there is a very positive momentum because we have a lot of clients within our group who are reaching now out to us being happy to do their banking in Poland with us and vice versa. So we have about 2,000 clients in our group, which are also operating in Poland, which is for us a huge business opportunity.

The next question comes from Riccardo Rovere from Mediobanca.

Just a few clarifications from my side. The guidance on NII that was constructed a few months ago when the rate environment was different than today. Can you just confirm to us that this is based on the EUR 11 billion, I'm talking more than EUR 11 billion, is based on a rate outlook that was compatible with the times when you issued this guidance because even if ECB doesn't do nothing today or next time, if rates stay where they are, probably is not exactly what you had in mind when you put out the EUR 11 billion guidance. This is the first question.

The second question I have for Alexandra. Alexandra, if I understand correctly, your words, when you say we stick to 25, 30 basis points despite the fact that the start of 2026, we're running a bit less than that. Is it somehow a way of saying that one way or the other, some asset quality deterioration due to high energy prices is somehow embedded in keeping the guidance unchanged despite the start of the year being a bit better. Is that the right way of reading your words?

Then I have a couple of questions on Poland, if I may. The NII this quarter, correct me if I'm wrong, is this affected by a knock-off effect on debt securities, I read some EUR 54 million, maybe EUR 55 million. So is the EUR 680 million the run rate going forward? Or is it affected by some one-offs? And then Stefan, I completely honestly didn't understand at the beginning of the call, maybe you gave a sort of indication. I'm not sure it's a guidance, but an indication of what the trading revenues could be? What I understood was EUR 100 million or maybe EUR 200 million, but honestly, I completely missed it.

And then last -- another question on -- you mentioned something on other results with some investigation in Romania. If you can clarify a little bit. And finally, sorry, there are some headlines I see here from Bloomberg. This is we just received from Bloomberg. Erste ready for bolt-on M&A deals. So is growth the main way you want to use your capital rather than returning capital to shareholders. So there was another statement maybe like Erste ready anytime, anywhere for domestic M&A, comma, CFO success, this is the headlines that I have just received from Bloomberg. So if you can clarify a little bit on this.

So then I will start, Riccardo, because I can be reasonably short as you almost perfectly phrased it. So the simple and short answer is yes. And to recall again, when we set up our budget as the guidance, we expected some EUR 60 million releases. This we do no longer expect the EUR 25 million to EUR 30 million, including Poland without the one effect was not overly prudent. I think very realistic. It now -- and in this environment, don't take it as overly prudent. But overall, yes, you can take my words exactly as you explained.

I will now run through the list of your questions, but we will manage. If you help me together, we will cover all the stuff. And let me start with -- and I combine the first and the third one. I think what you're referring to very rightly is what we discussed with the market 6, 9 months ago. EUR 2 billion realistic run rate quarterly former asset. EUR 750 million or so quarterly run rate to be expected at that time, we had not too much visibility, but this was our expectation quarterly run rate from Poland.

And if you look at our NII in the first quarter, we are very close to all of that in all components. So that brought us to this EUR 11 billion. However, let's not forget, and this has been part of your #3 question already, there is about EUR 300 million, which is to be deducted from this normal run rate for the reasons that I presented already. And one of them is this PPA debt securities effect, which was amounting to exactly EUR 47 million in the first quarter. The other one is that we don't have the EUR 7 billion anymore to create interest and then a couple of other filters which add to that. So that's point number one, how we explain the NII.

And I believe that the clean run rate, if you look at the core of the business is more than satisfactory and very actually promising. Net trading fair value, thanks for getting back to this. Look, we have now clarity in terms of accounting rules. For various reasons of IFRS rules here and there, we have to account for around 1/3 of the fee income in the Polish business on group level with net trading fair value. This is, I would say, entirely due to FX business related.

The amount of this lifts our expected and net trading fair value having a run rate is a little bit tricky given the volatility, but our expected average run rate from formerly around about EUR 100 million to EUR 150 million plus, I would be even a little bit more optimistic around about EUR 200 million. That's what I said about net trading fair value, if this hopefully clarifies this point for you. Now if you look at it in the light of fee income, it's actually a very good news of our fee earnings capacity. Are we good on this? Then I go on to Romanian question and the acquisition questions.

Yes. Just a quick follow-up, Stefan. The PPA on the debt securities, that is something that is going to stay for a while. It's not going to go away next quarter. They're going to continue and continue and continue.

Not for ages. So I give you the duration of all the effects. First thing, what goes away immediately is the ECL booking that Alexandra was explaining. This is a one-off, EUR 2 million gone off forever. Second, which was very quickly naturally because we are, as of today, already Erste Bank in Poland. That's why the effects from writing down the brand, the former brand utilization of Santander is over with, I think, May. That's over and out as well.

What remains the longest is the write-down and the amortization of the customer list in depreciation. The amortization, this is 10.4 years, and this stays with the same amount linearly -- more or less linearly over all this period in depreciation. It's about EUR 200 million per year. And in between, we have the amortization effects on the NII. They are slowing down step by step. So honestly speaking, the way I look at it, we have to talk about it in '26. I will personally not talk about the NII effects starting from '27 again because every small move in the market, interest rates, volume is much more material going forward. But in '26, we have to talk about it and explain it. But going forward, frankly, you will not hear me explaining this on that matter anymore.

Okay. Romania, I can keep super short. You can look at the public communication of many banks in Romania. There is -- yes, I don't want to comment qualitatively. There is an investigation by the Competition Council around setting of ROBOR. This is the local index where there are investigations, which now will be discussed with banks in a hearing in May, and we have to flag it because we don't know what the outcome could be. It is a market effect. It has nothing to do individually with our bank and the outcome is still completely open.

And last but not least, I think Peter and myself have been very clear. And yes, Bloomberg produced a nice headline. I'm happy with it because what I said there on the question, do you look at M&A in Central Eastern Europe? My answer was bolt-on local consolidation, domestic consolidation, we are looking anywhere and any time with our excellent local management teams. That was the answer. It creates a nice headline, but it's not more, not less than this.

Very clear. And just to get back one second on NII. The guidance was the EUR 11 billion is built with the rates of few months ago whenever you disclosed that guidance?

Yes, yes. But it has not materially changed so far. There was a period where the market was a little bit more on the rate cut direction. Now we are more a little bit on the rate hike direction. We have discussed the sensitivities. So, so far, I would say, to the original assumptions, there are very, very small deviations. Obviously, if the rate environment is more supportive, but let's never forget, Riccardo, for '26, we have been building our NII, so to say, momentum and dynamics mainly on growth of the volumes. And that's positive so far for Erste. But in the market overall, I think it's fair to say it's questionable. So I'm completely happy with what we've been guiding for. Let's deliver on this.

The next question is from Simon Nellis from Citi.

I do have 2 last final questions. Romania, I see that risk cost was a bit elevated. You mentioned new defaults. Just wondering if certain sectors are idiosyncratic? Or is there trouble brewing in Romania? And then on Serbia, I see that the margin fell quite a lot in the quarter. Just wondering if that's a one-off or if there's something else going on there?

Yes, I'll start with your question on risk costs, as I said, slightly elevated. We do not expect that this elevated level will continue over the year. The reasons other than in the previous year, where when you recall, we had a handful, even less than a handful of bigger defaults. This is not the case this year. It's rather -- it's an increase in risk cost for the unsecured consumer loan business. There we had, as you remember, some campaigns in the last year, which boosted the overall volume, which also results in higher risk costs, but we have already -- and colleagues in Romania already tuned the underwriting standards. So we do not expect this elevated level for unsecured to continue over the year. And some cases have been downgraded also given early warning, but no specific industry.

Yes. And on the other point, you heard me talking about countries where we have a little bit of pressure either on competition on the asset side in Serbia, it is a little bit of competition on the deposit side. There was in March, a little bit of stress in the local currency, what I heard. I didn't mention it before. So thanks for checking because it's not so material for Erste. But yes, there was a slight decrease of both NII and NIM due to the competition on deposit side locally there.

The last question comes from Krishnendra Dubey from Barclays.

I just have a couple, actually. Just first one, confirming, I guess, you talked about NIM with an upward drift into the last 9 months of the year from 2.63%. Does that apply even to the ex Polish business? And your guidance of 5% NII growth implies that -- implies that growth in it, growth as well as the slight margin expansion? And second is just a modeling question on the levies. Have we seen most of the levies booked in now? Or should I expect a bit more further coming into the next -- like in the next 9 months?

Okay. Krishnendra, here, on the first one, thanks for giving me the opportunity to explain this. I said there's only one observation point simply because we build an average there on the NIM. And that's why we are very confident that from here, it should rather on the group overall drift slightly upwards towards our expected level of, say, 2.70-ish area. That was what I was explaining more -- we anyway look at it, as you see from the discussion in the call, everyone looks at it country by country and then sums it up in the respective models. But it's simply the fact that we only have one observation point yet on the Polish segment in the consolidation. So 2.63%, I would see it as a starting point and from there, slightly upwards. And I think the second question was around the Hungarian financial transaction tax or something like that, right? Thomas, did you understand?

I think.

No, no, I was just asking about the levies actually. So you have -- I see a lot of levies being Q1. So is that like most of it or there will be follow-up and...

I take it technically and if Peter wants to add something, please follow up. Yes, I also see a lot of levies, I agree with you. That's very unfortunately the case. We have a prolongation in the Austrian banking levy, so nothing that changes the '26 numbers, but the government decided to prolong the currently existing ones, so not a deterioration, but also not an improvement.

In Poland, just to remind everyone, we have to distinguish. On the one hand, we have a balance sheet banking tax, which was there for ages. This hasn't changed, but the corporate income tax is up to 30%. Nothing new. This was decided in the summer last year and it is due, of course, for all the banks. And that is the major element of lifting our tax rate from last year 20.5% to currently expected 24.5%. I think no changes in Hungary, by the way, also neither to the better nor to the worse so far. Let's see whether the new government will change something. And I will cut it off here because in all the other countries, it is unchanged. So no improvement, but also no deterioration so far. I don't know, Peter, that's basically it, right?

That would be politically correct.

Rather not add something.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peter Bosek for any closing remarks.

Thank you so much for listening in. Let me just share with you that we will tell you the results of the second quarter of 2026 on the 3rd of July. Thank you.

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Good morning, Cordel. Welcome, ladies and gentlemen, to our press conference on the annual results 2025. The results will be presented by the CEO, Peter Bosek; Alexandra Habeler-Drabek, Risk Manager; and CFO, Stefan Dorfler. We will start with the presentations right now. And afterwards, the gentlemen and the lady will be available for questions. Mr. Bosek, please.

Good morning and hi, everyone. Thanks for coming. You're all running on a tight schedule. So we really appreciate it that you are here with us today. So now when we look back to 2025, there are 2 important dimensions to remember. So let's start with dimension #1, 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 have really grown strong, especially when creating -- 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 a 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, 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 higher growth as compared to Austria. That's also down to the fact that the business development was better. But even in Austria, we have seen an increase by 3.3%. So -- and I think that's quite a positive signal for the future. So we will see a comeback -- a slight comeback also as regards to 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, 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. 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 EUR 200 billion. So -- this is something we are really proud of. So -- and 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 2 decades. So really going strong, highly stable, generally speaking. So we see an increase of 2% to 3% year-on-year. So it's really a fantastic field for doing business for us, has been the largest part within our group and will be an important player in the future. to. 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 have seen new rollouts. So AI [Technical Difficulty], 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 all each and everyone is here 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 start-up as regards quantum computing and quantum security in Austria, we have a Nobel Laureate. Let's 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 2 years ago, we saw a lot of discussions, but we have seen a pickup in the market in Austria. And so we've also been successful in this regard. So let me add to George Invest, 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 really a strong trend that we've been following here. 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 so to understand what to do depending on the developments of the market. And this is how we can make a difference as compared to the new brokers on the market.

Now moving on to Slovakia. So as regards to the opening of accounts, we have seen new regulations on the market, which could be automatized, especially for small-scale businesses. So we saw more than 75,000 new openings of accounts. So Peter Kutil, the CEO left us. He had been with us for more than 3 decades, fantastic work, but it is with great delight that Michael Bauer will become the new CEO starting next week. And we're also highly delighted that Slavo Simen will become the new CFO. has 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 Paste Bank Slovakia.

Now moving down south to Romania. Digitally speaking, a lot has been going on in Romania in recent years. So in 2025, -- they introduced George Jr., -- 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 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 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 V in that regard because, of course, the focus will change as regards to this particular region. When it gets to digitalization, we have also been highly successful in Croatia, especially when it's about corporate business

. Now moving back north. So Hungary has always been strong when it's about securities. So the last 1.5 decades, -- so they have 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 to the loans. So 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 and the last country for the rollout of George. And an interesting thing to mention here as regards to Serbia. Actually, the corporate business has grown stronger than the retail business. 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 9, we have had the closings of the new acquisitions, what I'm referring to, really fantastic work of a small team, a highly skilled team. So when we started with the negotiations and the complete transfer, the closing down to earth, keeping the ball low, very focused. And 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 2 years, there will be a lot of integration work to be done. 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. There is -- 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 Erste 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 consolidation that we are going to provide you with. And of course, we'll work on the integration of the new IT system. And now let me hand 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 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. So -- 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, as a major player will have an important word to say, of course. So now let's get to the results. Peter Bosek 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.

So we have had a stable business model that we developed in all these countries. So how do we see the figures as regards to 2025? The figures are slightly different from country to country, not only as regards growth, but also the interest income. So in Slovakia and the Czech Republic, the structure is quite different. For example, in Slovakia, the housing loans provide us with a positive structure. It's a Europe country. You might think there are a lot of challenges as we saw them in Austria in this interest environment, but -- as regards to the housing loans in Slovakia, they have fixed rate in Slovakia. And now we've seen a hike as regards to interest. And in the Czech Republic, we saw a fantastic growth on the market.

So in the analyst call, we already shared that in combination with the Polish subsidiary, we will get to a higher level as regards to the interest income, the earnings on interest. So we are referring to dimensions of more than EUR 0.5 billion in the consolidated view. Not all of you will actually get to our net income. So we have nearly 50% of the Polish 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. 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 we've seen the rollout in all markets we operate in. That's something classic. And that's the most important part for our customers because we've been highly successful and they 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 pickup in partnership with our insurance partner, BIG, because insurance brokerage has also picked up year-on-year quite a lot by EUR 22 million, a 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 Synopsys, we have seen an increase in operational income of 4.3% up to EUR 11 billion, nearly EUR 12 billion. And that without the Polish bank, 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 2, 3 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 very -- in different dimensions, technologically speaking, we have to invest into process optimization and other fields of work. So -- and that will mean profit in the future. We will 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, operational costs has increased by EUR 304 million. That means an increase of 5.8%. So EUR 304 million, 5.8%. Of course, that also includes the integration costs. So we haven't had -- 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 are 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 Bosk already touched on it. The integration of Erste Bank Polska will mean more expenditure, EUR 200 million up to EUR 250 million. This is what we thought of. And I think we stay in line with the guidance in that regard. So that needs EUR 180 million as regards to 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. When you look into phases, 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 to our costs. So -- 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 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 call today. It was the 27th analyst 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 the future. And -- we also have a responsibility to our investors who wants 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. 1 basis point -- 21 basis points are 0.21% of our loan portfolio, and this is the risk cost 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 showing 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 nonperforming loans. NPLs amounted to -- 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 NPLs. The majority of NPL and risk cost is caused by Austria. This started in 2023, had its climates in 2024. And in the previous year 2025, the situation slightly improved. We hope -- had 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.

Thank you. Thank you so much. Now we've touched on all dimensions that provide for an explanation why we have reached the result that we have reached. So it has never been as true as in recent years, and that's our strategic approach. That's our focus. Our core business is what makes us successful. It's our core business, and we have a strong dialogue also with our Polish colleagues. They have the same vibes. That's an important aspect. And Peter, you already mentioned it. So our Polish colleagues, that means a perfect fit, their philosophy, their vibes, their reporting, the way how they have been operating. That's a customer bank, closely connected to their customers, closely connected to corporate business. That wouldn't have been the case as regards all the options that we looked into. So our profile has really been strengthened, and it's not just about earnings, but also the image on the market. So that will have a strong impact. And we will be able to be successful in the future as well. So allow me to add something. So to the other business, apart from the core business. So that has been highly successful because actually, we have seen losses in recent years up to EUR 500 million based on banking levies. So -- in 2025, we only had EUR 160 million in that regard because we've seen special effects. For example, the sale of the current headquarters. Our Czech colleagues will move to a new headquarters. They are currently constructing a similar campus as we have here in Vienna. -- that will still take 2 more years, but the current headquarters have already been sold off. So that's a special effect on our profit and loss statement. And we've also seen resolutions of provisions of reserves that depended on legal issues, and that has a positive effect also on our capital.

Now the 50 that you see here, that's the difference from the year before to 2025. You'll be provided with detailed figures in that regard. In 2025, in total, now there are different names for that, but there are banking levels, new banking levels. So EUR 372 million. That means a huge increase by 52% year-on-year increase by 52%. There's nothing to add here. What did I mention here. Now when you look at the net profit, of course, that has an impact. That comes on top of everyday life. It's not just the corporate income tax, but when you see of these special banking level is. And before the Polish acquisition, we had to pay EUR 1.1 billion. So we are talking about huge figures. aren't we? And of course, that also had an impact on our net results. We have seen an increase and reached a level of EUR 3.5 billion.

So I think it's important to mention without the special effects, without the one-off effects. So our core performance would take us to EUR 3.3 billion. That's something to understand, not EUR 3.5 billion, but EUR 3.3 billion would be a realistic figure without the one-off effects. Another important issue to mention here, and we already heard about it in your introduction, Peter. So in 2025, and that's not a word that I often use, I'm really proud of that. We have had the full support of our customer business, and this is what you can see as regards to the loans, the increase of loans and -- we've seen an efficient substantial buildup of capital, and this allowed us for the entry into the Polish market. You won't find that many examples. So it was not to the detriment of our loan business. acquisition on the one hand and increasing our loan business on the other hand. So a big shout out to all our colleagues in all countries, in all fields of business. I really want to give it up for you. This wouldn't be possible if we wouldn't be able to act in concert.

And what's the result now? The result is a CET1 ratio, which we've never seen before and perhaps we won't see in the future again because that's the ratio before consolidating the Polish acquisition. So that takes us to roughly 4 percentage points of consolidation, which will happen during the first quarter. And we'll meet again after the second quarter, and then we'll see the realistic figure. But still, what a high figure, what a wonderful figure in this regard, our CET1 ratio. So in 2025, of course, we had to reduce the dividend. We will produce a dividend per share of EUR 0.75 per so per share. This is what we're going to propose to the Board and the Supervisory and Executive Board. But of course, the acquisition will make us profitable in the future. And in 2026, the dividends will rise again. That's a given, and that will be communicated after the second quarter. Of course, for 2025, we cannot distribute or we have to distribute lower dividends. That's understood.

Now moving on to the forecast for 2026. There's no need to go into detail, but let me touch upon the most important thing. Line #1, we will increase our loan business. And in the right column, you have been provided with our figures inclusive the Polish acquisition, which will take us to roughly -- so we started with EUR 230 billion EUR 30 billion in Poland and then our increase will take us to EUR 285 billion. So from EUR 230 million plus EUR 30 million in Poland and then the increase will take us to EUR 285 million. So here, we see a momentum. There doesn't need to go into detail here. I've already mentioned it. But the most important thing to bear in mind here is that including the Polish bank in Poland, we have a slightly increased risk level that has to do with the margins that has to do with the loan mix that we see there, but you have to put it into perspective. So the risks on the one hand, and when you talk about 25 or 30 basis points, of course, that will take us to profit. So these risk costs that will help us to increase our capital.

And let me close it out by telling you that 2025 meant a huge success. So we are really glad about that. So let's be glad for 10 to 15 minutes and then move on to 2026 and start business again from scratch. So thank you so much. Just to close it out, I think you understand in Central and Eastern Europe, we are operating in an environment which is quite different as compared to the rest of Europe as regards to growth rates. So of course, that provides us with really a fantastic environment for doing business. But this positive development is not a given, and we want to transfer it also to Austria that should also have a positive impact on Austria, and we want to reach beyond. And we already communicated that in our analyst call. So when we see the first impact of the new German infrastructure, package. Just to remember, the decisions were taken in autumn 2024, the new budgeting. So the impact will come soon. But then we said, well, you have to wait. Let's be patient. And now we actually took it out of our plans of our guidance, but because there's nothing that you can see. So growth starts in your head and then you will have to act. And as long as there are no actions, you have to be patient.

Now getting back to Austria. Austria will be able to grow. We have seen small plants sprouting. We have to become more ambitious. So Chancellor Docker already mentioned it. So our economic growth should be actually bigger as has been forecast. So 1% of growth won't be enough in that regard. And of course, Austria runs on a tight budget. That has to be done quickly because we have to look ahead. It can't happen year after year to run on tight budgets. That has to come quickly. So including our Polish acquisition, we have EUR 285 billion of loans. We have a strong capital base, our own equity. And the things that we experience in Central and Eastern Europe, the wipes that we see, we want to also transport them to the rest of Europe. Geopolitically speaking and also the way how people, politicians communicate that could have a negative impact. Things have changed. We see a new world, but that also meant that Europe actually has woken up, and we have to be more self-insured in that regard. Growth starts in you have and then you have to act.

So I'm really proud that I have the best team, and that's the sentence I want to close it out with. Now let's continue with your questions.

[Operator Instructions]. So first question. As regards Hungary and the elections, Hungary is going to the country. They will have elections. Will it become more difficult for foreign banks?

I think that's a classic situation. They're going to the country. It's the elections. Let's wait for what happens after the elections. Of course, there's a lot going on. Things seem critical, but we have to keep the ball open.

Next question, M I have a question relating to CET1. Is there any outlook including Poland?

Yes, we have a forecast for Poland. So at the end of the year, you have seen that we have reached a level of 19.34%. And today's call acknowledged that the framework for the first consolidation, and we already set the frame in May 2025 as regards the base points. So during the first quarter, we won't have the final balance, but we will be able to give precise figures where we are. So I think all of you know, we communicated that for 2026, we want to reach a level of 14.26%. So a bit higher than the 14%, which were based on the regulations that we have to adhere to, but we will reach much higher. That's understood. So 15%, I'm not sure whether we will reach 15 percentage points as a ratio.

I also have a question relating to the NPL ratio. How many banks or savings banks have an NPL above 5%

Leaving aside the savings banks, no bank in our group has an NPL ratio of more than 5%. In the third quarter, Romania was slightly higher, and we went down to lower than 3% in Romania as well. And there are -- there is only a small number of savings banks that have an NPL ratio of 5%, but all of them are trying to get down the NPL ratio and to reduce nonperforming loans. And we are very successful in doing that. Recoveries of previously written off loans amounted to EUR 1.5 billion last year. This is 5% more than the previous year. And a lot of it is coming from Austria, and this means that the nonperforming loan portfolio is actively directed.

So next question, European Central Bank. What about the test? Is it a test that is carried out by the bank and not demanded by the ECB? And I'd like to know about the risk that you see. You mean geopolitical stress test. There is a high number of stress tests, and we are talking about the geopolitical stress test.

When it comes to liquidity, we have a high frequency, then we have a comprehensive stress test, a holistic stress test, a reverse stress test. And then we have the ECB stress test every other year and specific stress test. ESG, we had a specific stress test, and now we have geopolitical risk stress tests. We are asked to develop a scenario that creates hard impact on capital. And people expect us to include our risk factors and to pass the test, so to speak. The result is not so interesting because there is a target value that you're trying to achieve. And this is less interesting as the EVA stress test, but we focus on how we will be able to react to risks. We have several teams that are involved in stress tests, and we have a very high quality of stress test. So is the ECB too lazy to demand such tests? So we use stress tests internally and for risk management. I would not be happy of having ECB doing that because stress tests help us in our risks.

So that's positive. And I'm not forced to answer like that. Two quick questions from my side. As regards to the granting of loans, Mr. Bosek, you mentioned the deposits decreased in Austria. Do you also have a figure as regards to the loans and the increase? I'm not sure. 3.3%. So on the third slide, you have given it per country. So in Austria, the loans have increased by 3.3%. Can you tell us what fields of doing business we see the increase of loans?

So a thing that we can see in all countries, something that we have seen in all countries. So starting in 2024, the demand has been increasing. As regards financing, as regards loans, that has also to do with the decrease in interest. And moving to Austria. So sometimes it takes quite long to establish something to do business when it's about permits, when it's about grants. And in Austria, we see that the market has been slightly improving. It takes some time. So as regards to consumers and housing financing, we have seen a real increase. And as regards corporate business, it's the large corporations where we see a rise in demand for loans. small and medium-scale business.

For example, in the Czech Republic, we've seen an increase, not in Austria. And in Austria, we've seen high inflation rates. We still have expectations as regards red tape doing away with red tape. I already mentioned, sometimes it takes quite long to get the permit, construction permit, for example. So here, we really need a push. The Australian government will have to take action in that regard to reduce bureaucracy when they discuss the next budgets. It should also be possible to quicker depreciate assets that will improve things. And of course, that means hiring more people, the labor market and so on and so forth will improve as well. So there would be room for maneuver within the next 2 years. Is this what you're saying? I hope it will happen earlier, yes. But of course, I can't tell the government what to do. So it's just something I'm thinking of, a piece of advice. -- so the Austrian regulatory body for financing sees the retail market quite critical and the exposure in that regard. Alexandra already mentioned. So the market is really in a difficult situation. But let's take a look at the big picture.

Let me put you in the big picture. So actually, we've been quite successful because the interest rates were very, very low, which meant a lot of people invested into the retail market. And well, that has a long-standing tradition in Austria. And that even happened before we saw low interest rates. But then we saw a real boost -- and 3, 4 years ago, actually based on their plans, corporate business was able to sell, and that was not in line with the demands of the consumers. So we have a long tradition as regards to social housing. So 60% actually were covered by social housing before we saw the change of interest rates. Now that has changed. And not each and everyone can buy a flat with 40 square meters, an apartment with 40 square meters, costing EUR 700,000, especially when you think of the generation. So we see a change in the market, but the things that have been built with high costs. So that's something that has to be sold off. And these are the nonperforming loans. Some of them could be recovered. The banks have been quite patient in that regard, waiting, waiting for that sale, sell-off. And sometimes you have to accept it's not possible. And you have to write it off or manage it away this kind of issue. And the market will take 2 more years because it needs a lot of planning in that regard. So each and everyone is aware of it. All Austrian banks try to handle that quite well. And of course, the regulatory body in Austria has to see things critical. That's their job.

This is what I told you before. It started at the end of 2023. So commercial developers of housing concentrated in the Vietnamese region contributed to the increase of the NPL ratio. We had a recovery in 2024, '25, and we expect it for 2026. Mr. Vince, please.

Mr. Bosek, you mentioned that there's a positive forecast for Austria, but you also mentioned that the new German budget plans won't have an immediate impact and also the Austrian government announced a lot, but we haven't seen action. So why do you see things positive for the near future in Austria? And the 9.1% for the dividend ratio. So will we see a hike in 2026? What can you tell us about that?

So I'm quite optimistic. And that's based on the fact that Austria has everything to grow. We have strong education and training in Austria. So all the prerequisites. We have intelligent people in Austria, skilled labor and banking is a good example. We are in the vanguard, research, the university in Innsbrook or in Vienna, Antonella, Nobel Laureate research, we are very strong in that regard. So let's not forget about the good things that we have. So we can't look back and just look into errors. And let me also say something positive about our government. Well, they could have moved quicker and the budget deficit should go away quickly. But it's the economy, it's the people, the shakers and movers in the business world to change things. It's not just the government. And let's not be pessimistic. And 1% can't be enough of growth? No. So we have to be more ambitious. We don't tell you that a CET1 ratio of 12% would be great. No, you have to reach higher. And of course, we will provide strong support in that regard to move into the right direction. Well, on the other hand, of course, the regulations are also something to adhere to. But apart from that, still, we are very ambitious.

Yes, that's a good point and question. And let me respond by saying, and it should really make sense. There are 3 things that I want to share with you. Item #1, of course, I could hide and say, well, at the moment, there's nothing we can tell you about the next dividend. And there are no concrete figures that I could provide you with. But -- and that's true. And we at Erste Bank, that's something we stand for a lot of the topics that have been touched upon by the regulatory bodies. They make sense as regards liquidity, the equity ratio, risk and so on and so forth. It all makes sense. But to put that into practice, that's something else to put it into action. And it also fits your question as regards to the dividend. Yes, that was a one-off for 2025 based on originating with the acquisition of the new Polish player in order to strengthen our CET 1 ratio. And I already used these words in the analyst call. Let me repeat. Let me quote myself in that regard because that tells a lot, I guess. We will have the capacity to return to the level that we had before 2025. We will be able to return, okay? That's a clear and straightforward policy. We will be attractive in that regard. We will return to the same level. And there will be a share buyback that will depend on the rate of the shares on the market. That's no fixture. But this answer also provides you with something. There's no need for a must, but -- and that's the third thought that I wanted to share with you. If there are other extremely attractive opportunities for making use of our capital because we don't know what will happen in the near future. But if there's something attractive coming up, of course, we will have to be able to respond. And this is what makes us strong.

Peter Bosek, Alexandra and myself, we are deeply convinced. And this is something we share with a lot of our colleagues. We've become more self-assured. We have grown strong when it gets to controlling and when it gets to risk, when it gets to finance, we have a lot of intelligent people with us. in order to think about new acquisitions, in order to think about our developments in the future. We will keep the ball low. We will keep -- we will be focused. But still, we are a strong player on the market, and we think ahead. So what could we do to strengthen our path of growth within Central and Eastern Europe. On the one hand, of course, we have our main driver, customer business, our core business on the one hand, -- and of course, we have to manage risks. We have to be clever with our investments. And then let me move on to the third opportunity and organic growth, okay? That's something we have to bear in mind. So what's the message now? Will we be able to pay the same dividends as we had it before 2025? Yes. Is it our plan? Yes. But if something attractive will happen on the market, extremely attractive, something that can be explained to the market.

So let's keep that option on the table, too. Let me continue with an online question. Mr. from Telix in Hungary. Manager of Erste Bank Hungary became one of the leaders of the position of the party. Since then, the Hungarian ruling party has launched a media campaign against Erste Bank. What do you think about this case? Have you ever met anything like this in other countries?

I mean I think it's very obvious that we don't like it. We should also not [Technical Difficulty].

You have the next question. So system buffers for commercial property increased. What effect does that have?

I don't know it by heart. So it is limited to Austria. Nonprofit housing is excluded. It's not dramatically high. I don't have the figure here with me, but roughly, so in Austria has been -- was something significant, something of importance. So -- and with respect to Austria and this business segment when we analyze it, -- so that will mean a reduction will make it more difficult for the market in this segment to increase your business because it won't be in line with the expected returns. But with reference to our group won't have a major impact. But of course, we can provide you with the figures in detail, okay? It won't be difficult for us. We calculated that. It's there in our actual sheets. So we understand that the regulatory bodies and the capital buffers as well. That's actually a look to the past. When the crisis has already ended telling us that we will have to increase our equity well. This is what happens. And when you think of European banking, so the European Central Bank does its business and their framework should be enough. And the buffers that we need, the reserves that we need as regards to our equity, our capital, we shouldn't increase that after each crisis that much.

I have 2 questions relating to Poland. You said we have integration costs in the amount of EUR 280 million. And we also like to hear something about the synergy potentials.

The integration costs were a bit lower. What about synergies? EUR 180 million, and we already booked part of it in the first quarter. So that takes us roughly to EUR 250 million and EUR 180 million for 2026. Integration costs, of course, there are other costs. There will be other expenditure in Poland, including the rebranding. Peter already touched upon it. So cost synergies, the classic potential. There's nothing in Poland because we don't have anything in Poland. When you think of mergers, there will be something different. When you have a revenue synergy that happens, if you want to call it, something like that. But the existing entities with the new Polish entity and the new cooperation with our colleagues at Santander, of course, that will have an impact. That will have synergetic impact -- an impact on the revenue side. But a classic synergetic effect, no, that won't happen because we don't merge anything in Poland.

And another question is you said growth is created in the head. Do we also have maybe some growth opportunities due to the vicinity of Ukraine?

Well, in Ukraine, there's something under development. So 34 countries actually meet in Vienna today as far as I'm informed. The coordinators of the restructuring fund for Ukraine, Austria will also have a say there and provide an input. Perhaps that's a bit early to think about what we can do here. That's under development. We can't see the end of the war. We can't see peace coming at this particular moment. We have a situation where the United States still dominate negotiations, and it wouldn't come as a surprise if the United States would cover a huge part of the reconstruction in Ukraine. Now when you think about raw materials, and we've seen negotiations in that regard, there would be business and also as regards infrastructure, Austrian construction companies or Polish or Czech construction companies could reach out with a helping hand. The Austrian coordinator, Mr. Grupp tries to find out about financial instruments that could be used in the future. And Austria should send a signal in that regard, but that would happen at the level of politics doing politics and the Austrian National Bank, but it's a bit early to have great hope in that regard. Unfortunately, I have to say.

Next question is an online question also relating to Reiner. Question to Mr. Bosek you expect further attacks of Mr. Orban in the course of the election campaigns? And did they have an effect on your business?

No, we haven't seen any kind of impact. I've already mentioned that Hungary is going to the country. They will have elections. We are not a political party. We care about our customers. We have a strong standing in the market. There hasn't been an impact.

Next question is to you, Stefan. What do you think which country could be interested for a further acquisition?

Well, now, we are skating away on the thin eyes. When you open the door in that regard, there will be concrete questions. I thought so. Well, we have growth opportunities in existing countries, the countries we already operate in, organically speaking, but also inorganically speaking. So perhaps in Poland, perhaps in the Czech Republic, perhaps in other countries that we operate in. So there are opportunities. I'm looking to PC. So actually, we hold a lot of meetings. I think there's no other country beyond that. That's something I can say. But strategically speaking, and that would also be a response to offer an answer to offer. We also have a strong focus on Central and Eastern Europe. Strategically speaking, we have discussed that a lot. So 1.5, 2 years ago, our focus will be on Central and Eastern Europe. And I'd also like to add the effect of the Austrian regulatory body decision. So in June 2026, from 1%, we will see an increase, but nobody knows what will happen in 2027. So there will have to be taken decisions in the future, but it will be a 1-digit basis point increase. And we discussed that with the Austrian regulatory body of the financial market, how that could be applied to Austria. So if everything remains the same and everything will happen as has been communicated on the market, that will take us to 7, 8 basis points.

I don't see any further questions here in the room or any further online questions. If there are no further questions, I would like to excuse to my -- to the online listeners for having carved. And otherwise, I and my team will be available to you if there is anything that hasn't been said so far.

Thank you so much. Thanks to you all.

Ladies and gentlemen, welcome to the Erste Group Full Year 2025 Results Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Sommerauer, Head of Group Investor Relations. Please go ahead, sir.

Thank you, Sergen, and also a very warm welcome to everybody who is listening in to our full year conference call 2025. We follow our usual procedure. That means that Peter Bosek, our Chief Executive Officer; Stefan Dorfler, our Chief Financial Officer; and Alexandra Habeler-Drabek, Chief Risk Officer of Erste Group, will lead you through a brief presentation, highlighting the main achievements, especially the financial achievements of 2025 and in particular, also of the fourth quarter of 2025.

And before handing over to Peter, my usual reminder on the disclaimer of forward-looking statements, of which there will be quite a few as usual. And with this, I hand over to Peter for the presentation. Thank you.

Good morning, ladies and gentlemen. Welcome again to our full year 2025 results and at the same time, fourth quarter 2025 conference call. I'm on Page 4 now. 2025 was an exceptionally successful year for Erste Group. A lot of good things happen to the bank and a lot of good things happen to shareholders of Erste Group. But allow me to briefly dive back to a year ago, the discussion back then and to a certain extent still today were all about share buybacks and dividends and somewhat subdued business outlook for 2025 on the back of rate cuts in the Euro zone and a mixed macro-outlook for Europe. What a difference the year makes. We at Erste found a better way to solve the excess capital challenge. We invested in growth, in Polish growth. And with this, we have substantially expanded our growth footprint in the fastest-growing region of Europe.

In the meantime, the acquisition of a 49% controlling stake in what soon will become Erste Bank Polska has closed on time and from the first quarter of 2026 will be fully consolidated in our accounts. But this is just half of the story. The other half is about our strong performance in 2025. Quarter-by-quarter, growth momentum improved. This enabled us to repeatedly upgrade our financial outlook and, in the end, even outperformed our upgraded guidance. We are particularly pleased with revenue momentum, not only in terms of quantity, but more importantly, in terms of quality because quality brings it with sustainability. Translated into numbers, this means we posted record revenues in 2025, driven by our core income lines, net interest income and net fee income, and we closed the year in style with another set of quarterly records for these items.

We are also on track in terms of costs. We were running somewhat above our 5% target in the first 3 quarters, but thanks to the cooling of cost inflation and adjusted for the booking of some integration costs for our Polish acquisition in the final quarter of the year, we managed to deliver on our guidance. Risk costs were only marginally higher in 2025 than in the previous year, but fully in line with our upgraded guidance with CEE shining again in terms of asset quality. Clearly, other result was special in 2025 as well as in the fourth quarter, flattering our reported net profit despite hefty banking taxes included in this line item. To be concrete, other result in 2025 benefited from net positive one-offs in the amount of about EUR 270 million pretax and some EUR 250 million post-tax. Stefan will give you the details later.

Accordingly, underlying net profit would have been more in the order of EUR 3.3 billion rather than reported EUR 3.5 billion. Other way, no bad figures and comfortably historical records. And clearly very helpful in delivering capital gen beyond anybody's expectation, including our own. With a CET1 of 19.3% at year-end 2025, we are well positioned for first-time consolidation of Erste Bank Polska and arguably beyond. I therefore think it's not over to say that we got most of the decisions right last year and at the same time, set a clear ambition for 2026. It's our firm intention to stay focused and do the same in 2026.

Ladies and gentlemen, throughout this presentation, we will make reference to our expectations for the business of Erste Group, including Erste Bank Polska in order to give you the best possible idea of our new Erste will look like. We will also detail already on the extraordinary items that come with first-time consolidation to almost all of which tax and minority fits fully. And in order to allow for a better like-for-like comparison, we will provide an outlook for Erste excluding Erste Bank Polska profit guidance for 2026 that we already repeatedly communicated, we hereby confirm that's a return on tangible equity of about 19% and a year-on-year increase in earnings per share more than 20%, taking our adjusted 2025 net profit of EUR 3.3 billion as a starting base and adjusting expected 2026 net profit for extraordinary items. This should translate into a net profit of somewhat above EUR 4 billion on a clean basis in 2026 as opposed to somewhat below EUR 4 billion on a reported basis.

With this, let's now move to Page 5 of our key P&L performance benchmarks. Obviously, this very much reflects what I just talked about with a stable margin backdrop contributed quarterly NII record would have been difficult to achieve. And without improving cost dynamics, it would not have been possible to report a cost-income ratio of below 48%. We delivered on both fronts. Strong margins were not only supported by good balance in loan growth and healthy competitive environment, but importantly, by strong deposit pricing power, particularly in Austria and improving deposit mix overall. Risk costs at 21 basis points were in line with our improved full year guidance, as already mentioned.

Trends very pretty much unchanged in this respect with continued low risk cost in the CEE region, while Austria saw most of the allocations in the final quarter of the year at a slightly lower level than a year ago. If one adds banking level reported under other operating result as shown in the lower left-hand chart with those reported under taxes, then the banking reached a new all-time high of almost EUR 440 million in 2025. Irrespective of this earnings per share adjusted for the AT1 dividend climbed to a record level of EUR 8.24 per share. And finally, return on tangible equity increased to 16.6% from 16.3% a year ago, quite a good achievement, bearing in mind the strong capital build through the year.

When we look at the development of balance sheet on Page 6, we see a picture that is evidence of the strength of the business model. The business model is geared to our superior organic growth in customer business, a perfect case in point is the performance in 2025. Both on the asset and liability side, balance sheet growth can be explained by the expansion in customer business. Customer loans grew by almost EUR 14 billion or 6.4% in 2025, while customer deposits were up by more than EUR 11 billion or 4.7%. And in context of both, we can without exaggeration talk about high-quality growth. Loan growth was driven by the retail business in CEE on the back of a solid demand for housing finance, while deposit growth was also better than average in the retail and SME business.

Austria, and in particular, the savings banks made a solid contribution to loan growth, while deposit growth was solid in both Austrian retail and SME segments. With volume momentum being good across the franchise in 2025, we see no reason why 2026 should turn out any worse in 2025. Consequently, we target organic loan growth of higher than 5% in 2026. That is for the business of Erste excluding Erste Bank Polska. Including Erste Bank Polska, we also expect an underlying growth rate in a similar ballpark. So, by the end of 2026, loan stock for the combined entity should be higher than EUR 285 billion.

The key highlight when looking at our balance sheet metrics on Slide 7 are our regulatory capital ratios. Having said this, the other parameters are also excellent. We can again report an ideal loan-to-deposit ratio of 91.7. The growth of customer loans and customer deposits show good momentum. And finally, asset quality also reported an improvement with the NPL ratio improving both quarter-on-quarter as well as year-on-year. Generally, the asset quality situation remained very good across the CEE region and importantly stable in our Austrian. As usual, Alexandra will provide further detail on credit risk later. Liquidity and leverage ratios were as usual.

But now to our capital ratios. Year-on-year, we recorded a massive rise in CET1 ratio of more than 400 basis points to 19.3%. Stefan will lead us later. But what is important to me as a CEO is that this puts us in a perfect position for first-time consolidation of Erste Bank Polska. A year ago, when we promised to the regulator that despite the 460 basis point CET1 ratio drawdown resulting from the Polish acquisition, we will always maintain a CET1 ratio of higher than 13.5%, and we aim to reach our new target CET1 ratio of 14.25% during the course of 2026, well above 13.5% and 14.5% Tier 1 ratio will certainly be the first consolidated Erste Bank Polska in the first quarter of 2026.

Let's now briefly take the macroeconomic environment and particularly the outlook for 2026 on Slide 9. Our economies predict better economic growth for 6 out of our 8 core markets than we saw in 2025. And in the 2 markets for which they project consolidation, this is expected to happen at very healthy levels of between 2.5% to 3%. I'm specifically talking about the Czech Republic and Croatia. The new country in our portfolio, Poland will provide further growth in with real GDP growth estimated at 4% for 2026. Good news are also coming out of Austria, where the past 3 years, economic growth was almost nonexistent. For 2026, a modest recovery is predicted. In this forecast, we have not modeled any material tailwind from Germany fiscal expansion as this seems to take longer than initially hoped for. All in all, this is a very good starting point for the banking business and with further ground for profitable loan growth.

The other macro forecasts are equally encouraging. Inflation is forecasted to retreat in most of our markets, while labor markets are expected to stay strong. When it comes to external fiscal balance, the picture is mixed as in many other places around the world. I'm tempted to say Austria, Czech Republic, Poland and Hungary usually enjoy neutral or positive current account balances while the Czech Republic is preventing a poster child of fiscal prudence. As far as the interest rate outlook is concerned, we assume only minor cuts in countries like Poland, Hungary, Romania and Serbia, while rates in the Eurozone are expected to stay flat. This as well will support profitable banking business in 2026.

Talking about profitable banking business, let me share with you a couple of performance highlights of the business in 2025. To cut the long story short, retail business was a clear growth driver in the past year. I'm on Page 10 now. Retail loans were up by 8.1% to EUR 115.4 billion. Growth was reasonably balanced between housing and consumer loans and the quality of the retail book remained very good. Retail deposits also showed good growth dynamics with retail deposits climbing by almost EUR 5 billion to EUR 173 billion in the final quarter of 2025. Retail current account deposits grew the fastest quarter-on-quarter. Year-on-year, current account and saving deposits were up by 7% to 8% each, while term deposits declined by almost 6%.

We also saw continued growth in off-balance sheet customer funds, security savings plans that enable customers to build long-term rates in an easy to manage digital format approached the EUR 2 million mark at the end of the year and generated gross sales in excess of EUR 1.5 billion in 2025. George, our digital platform for retail clients continued on its growth path. The number of onboarded users reached 11.4 million by the end of the year and the digital sales ratio in the retail business inched up 67%. Going forward, our ambition is unchanged to develop George into a fully-fledged financial adviser in order to give even larger parts of our client operation access to high-quality financial advice.

In the corporate segment, I'm on Page 11 already loans were up 5% year-on-year and 0.8% quarter-on-quarter. The slight growth slowdown in the final quarter of the year was to weaker demand in large corporate business after a strong performance earlier in the year, while the SME and commercial real estate business lines continue to exhibit solid growth. In terms of products, demand for investment loans continued to be more pronounced in the fourth quarter, while year-on-year, there was a good balance between investment and working capital. On the liability side, corporate deposits enjoyed good growth. And here as well, current account deposits grew faster than term deposits year-on-year. The market business also delivered strong performance in 2025 with our ECM and DCM teams successfully executing 360 transactions with an issuance volume of EUR 211 billion.

In Asset Management business, after passing the historic EUR 100 billion milestone in the third quarter, dynamic growth continued. Assets under management reached EUR 104 billion at the end of 2025. This bodes well for the future fee growth. On the digital front, the corporate business also progressed well. Client migration to George business has been completed in Austria, Romania and is progressing well in the Czech Republic. With this, by the end of 2025, some 76,000 corporate clients across our region are using George business.

And with this, I hand over to Stefan for the presentation of the quarterly operating trends in the reporting segments.

Thanks very much, Peter, and good morning also from my side. Please follow me to Page 13, and let me start by saying that for 2025, I'm particularly pleased with our loan growth performance. We achieved an acceleration in loan growth to 6.4%, up from 4.9% a year ago at the same time when we needed to speed up our capital build. To accomplish these 2 competing goals concurrently is testament to the strength of this organization. As far as loan volumes by country are concerned, the Czech Republic was the standout performer, producing consistent double-digit growth throughout the year.

As highlighted already in previous quarters, Czech growth was well balanced between retail and corporate business, but within retail, mortgages led the way. Of the more than EUR 5 billion worth of net loans we added there, mortgages contributed roughly 50%. Growth in Hungary was equally driven by a massive increase in housing loans, admittedly from low levels, but still due to the introduction of a government-subsidized mortgage scheme as of September 2025. Having said this, demand for consumer loans was also quite robust, while corporate lending momentum trailed. Growth in Slovakia and Romania was more or less in line with the group average and in the former driven almost exclusively by strong momentum in the mortgage business, while in the latter, growth was mostly registered in consumer loans.

In Austria, as Peter already mentioned, we saw mixed trends. At the savings banks, growth momentum improved noticeably towards end of the year. Interestingly, growth was better in the corporate than the retail business and within retail, clearly attributable to housing loans. In Erste Bank Austria, however, growth was generally subdued. On an aggregated level, in the corporate business, we saw a good growth balance between investment loans and working capital facilities, while in the retail business, housing loans in absolute terms made a better growth contributions -- better growth contributions, especially in the final quarter of the year. Thanks to this growth momentum in 2025 and the constructive macro-outlook, we target organic growth in 2026 of more than 5%, both for Erste with and without Erste Bank Polska, resulting in a net loan stock of higher than EUR 285 billion for the enlarged group by year-end 2026.

On the liability side, the favorable mix towards cheaper deposits continued in the fourth quarter of 2025, as you can see on Page 14. This we observed in our core retail SME and savings bank's deposit base, which rose 5.5% over the past 12 months to EUR 209 billion, but also in our corporate business line. In both, overnight deposits increased, while term deposits declined year-on-year. Consequently, the cost of deposits fell again in the fourth quarter of 2025 with corresponding positive read across to net interest income. In terms of total deposit volumes, we are up 4.7% and 2.1% year-on-year and quarter-on-quarter, respectively.

As far as geographic segment highlights are concerned, we saw strong retail inflows in both Austria retail and SME segments in the final quarter of 2025, while the quarter-on-quarter decline in the Czech segment was attributable to volatility in noncore deposits. In conclusion, we benefited from strong volume momentum, and that's true for both assets and liabilities, not just in the fourth quarter, but throughout the year 2025.

Let me now move to net interest income on Page 15. As those of you who follow us for some time will remember well, ever since the end of the rate hike cycle in September 2023, we talked about NII plateauing even when rates were cut in half between mid-2024 and mid-2025. Now is the time to officially start talking about the next leg up because we are right in the middle of it. Most of the moving parts that are relevant for NII performance point in the right direction. Macro is somewhat supportive. Volume momentum is strong. Deposit mix is improving. Pricing power of Erste Group is intact. And last but certainly not least, we have an interest rate environment that bar any dramatic changes is at least not unsupportive of bank profitability. Consequently, we produced the second consecutive record quarterly NII print with NII first time topping EUR 2 billion. That's a year-on-year increase of 4.6% or a plus of 2.7% quarter-on-quarter.

If we look at the annual performance, we started this year, let's say, the year 2025, of course, with a flat outlook and closed it with an increase of 3.5%, resulting in NII of almost EUR 7.8 billion. A key development in this context was the stabilization of NII in Austria as the year went on, followed by a trend reversal towards the positive in the final quarter of the year, essentially driven by a better deposit mix and continued deposit repricing. One could say that we have turned the NII tide in Austria. This is not insignificant as the Austrian retail and SME segment will still contribute more than 1/4 to NII even going forward. And it bodes well for the outlook for 2026 to which I will come in a minute.

We also saw continued good performance in the Czech Republic and Slovakia, where a combination of deposit repricing, upwards fixations of mortgage loans and, of course, good volume dynamics all helped. The other segment principally benefited from higher allocations of income earned on local access capital, mainly from money market and government bond investments. And a final comment on NII 2025 and also at this point in time, our sensitivity to rate cuts has declined further to about EUR 170 million for a 100-basis point instant downward rate shock with the full impact expected at the minority-owned savings bank. So actually, no big deal for you as our shareholders.

Now for the outlook for 2026. We target net interest income north of EUR 11 billion for this year. This incorporates an organic growth assumption of about 5% for the -- excluding Erste Bank Polska, strong contribution from Erste Bank Polska. The nonrecurrence of interest earned on the purchase price of Erste Bank Polska, around about EUR 7 billion, as you know, and the amortization of about EUR 170 million gross, that's about only EUR 60 million net of positive fair value adjustments recognized on debt securities and derivatives on first-time consolidation.

Let's now turn to another success story of 2025 and frankly speaking, the past couple of years, and that's fee income on Page 16. At EUR 850 million, we posted another record in the final quarter of the year, up 9.1% year-on-year and 6.5% quarter-on-quarter. The drivers are in the meantime well known. Securities business, which includes asset management, continued to perform exceptionally well amid a helpful market environment and customers' increased propensity to invest in capital markets. Payment fees also made a good contribution when adjusting for the shift of loan account fees from payments to lending fees as of the first quarter of 2025. And insurance brokerage fees benefited from the usual end of year performance bonus payments.

If we look at fees from the annual perspective, the story is very similar to what I've just said about the quarter. Net fee income reached nearly EUR 3.2 billion, again, a new record. This means that fees grew by 8.6% in 2025, comfortably above the target we set for the year. As for the growth drivers, we again talk about securities business, payment services and insurance brokerage. Honestly, it's hard to highlight individual country segments in the context of fee performance because as you see from the chart of the slide, Page 16, all of them made great contributions in 2025. Therefore, the main task for us is now to maintain the momentum going into 2026 as the bar is clearly moving even higher. But with an organic growth target of higher than 5%, you see that this is also clearly our goal.

The inclusion of Erste Bank Polska should result in a combined fee income of about EUR 4 billion in 2026, whereas where we have to look at the final print that will also depend on the allocation of local FX income from Poland, either to the fee or the trading line.

Over to operating expenses now. I'm on Page 17 already. Let me start with a quick summary on 2025. We were clearly running above our 2025 cost inflation guidance of about 25%. You all remember our discussions in the quarterly calls until the third quarter as we invested in efficiency projects, but in the end, still managed to come in right on target when adjusting for booking Polish integration costs in the amount of EUR 38 million to be fully transparent. This was only possible because of a significant year-on-year slowdown in cost growth in the fourth quarter, mainly driven by a stabilization in personnel costs and a moderation in depreciation and amortization charges as well as office expenses. Quarter-on-quarter, we saw the usual seasonality, so no surprises there.

For 2026, it is our target to build on the solid performance of the fourth quarter and limit organic growth inflation to 3% as we should now benefit from efficiency gains and the downward inflationary trend in our countries, even Austrian inflation numbers came down recently. But 2026 is not only about better efficiency in Erste's pre-Poland business, but all about consolidating Erste Bank Polska. And in this respect, there will be 2 absolutely very relevant topics. First, and we have been talking about this in the past already, we can be more specific today, integration costs. Secondly, is intangibles amortization. While the former will mainly impact 2026, the latter will stay with us for the next decade. Our refined estimate of remaining integration costs now stands at EUR 180 million. The net impact will be dependent on the final split between Genna and Warsaw, but a good portion can be assumed to be booked locally based on the recent announcements of our colleagues from Erste Bank Polska in relation of rebranding costs.

The amortization of intangibles, essentially, it's about customer relationships, will be based on the value of customer stock for 100% of Erste Bank Polska of EUR 2.1 billion and consequently have an outsized impact on the cost line of EUR 210 million annually. As opposed to this gross amount, the bottom-line impact at about EUR 70 million will be significantly lower as tax and minority shields fully apply. This is a noncash charge and irrelevant to regulatory capital as already fully deducted. Taking all of these items into account, we target operating expenses of about EUR 7 billion in 2026 for the enlarged Erste Group.

Next up is operating results, and I'm already on Page 18. At almost EUR 11.7 billion, we posted record operating income in 2025 and at almost EUR 3.1 billion, we also posted record operating income for the quarter. The reasons we have discussed already in detail. We saw high-quality revenue growth driven by our core income lines, net interest income and net fee income. Or put differently, we enjoyed strong core business momentum. And with cost performance being in line with expectations, we saw records for both annual and quarterly operating results. As cost growth was a touch higher than revenue growth in 2025, the cost/income ratio was slightly weaker in 2025. However, much better than anticipated at the beginning of the year.

When it comes to the outlook for 2026, and we just look at the Erste business, excluding Erste Bank Polska, then based on what we already said about macro, interest rates and business momentum, there's only one conclusion, and that's positive operating jaws or translating this into concrete numbers, a further improvement of the cost/income ratio towards 47%. Well, obviously, this is a somewhat theoretical statement as our 2026 financials will fully include the financials of Erste Bank Polska as well as the special effects in NII and operating expenses. But given the industry-leading efficiency level that Erste Bank Polska is operating at, that will only lead to a further improvement of these efficiency metrics. Our best guesstimate and guidance at this point in time is around 45%.

And with this, over to Alexandra for more details on credit risk.

Thanks, Stefan, and also good morning, and welcome to this call. I'm now on Page 19. In the final quarter of 2025, we booked risk costs of EUR 159 million or 27 basis points. This is better than a year ago, even though FLI and overlay releases in both quarters were more or less comparable. As shown on the left-hand chart, we continue to book risk costs in our Austrian retail and SME operations, so Erste Bank Austria and Savings Banks, but the asset quality situation in Austria has definitely stabilized, thanks to somewhat lower NPL inflows in 2025 versus 2024. Fourth quarter risk cost bookings in Central and Eastern Europe continued to be very low.

Looking at 2025 overall at 21 basis points, we came in right in line with our improved full year guidance. As in the previous year, again, EB Group and Sparkassen savings banks accounted for the largest part of net allocations in the context of an exceptionally strong performance in the CEE region. However, again, both at Erste Bank Uusterich and at the savings banks, risk costs improved compared to 2024, in line with trends seen in the broader Austrian banking industry. As far as FLI industry overlay provisions are concerned, we now hold a stock of about EUR 350 million, down by EUR 109 million compared to the third quarter on the back of FLI and overlay releases. For 2026, we currently project further releases of roughly EUR 60 million.

When it comes to the risk cost outlook, including Erste Bank Polska for 2026, we forecast 25 to 30 basis points as risk costs tend to be somewhat higher in the Polish market. This is adjusted for the already previously communicated one-off ECL provisions of EUR 300 million gross with a net impact of EUR 120 million that is required by IFRS 9 on first-time consolidation. For Erste excluding Poland, we would see risk costs similar to 2025 levels, somewhere between 20 to 25 basis points given the generally robust macro backdrop.

Let's now turn to asset quality on Page 20. The group NPL ratio improved both quarter-on-quarter as well as year-on-year to 2.4%, thanks to a stable NPL stock and a dynamically growing loan book. The stable NPL stock resulted from lower NPL inflows as well as higher recoveries. Let me again comment on Austria in this context as it has been and still is in the spotlight. For Erste Bank Austria and the Sparkassen asset quality metrics are perfectly acceptable and have improved in 2025. We saw lower NPL inflows, higher NPL recoveries. And importantly, we saw hardly any new entrants into our early warning list. And we expect more of the same in 2026 as the Austrian economy is recovering slowly.

In Central and Eastern Europe, the asset quality performance remained excellent. It is hard to single out a country for doing better than the other, whether we talk about the Czech Republic or Hungary or Serbia because all of them did really well. In Romania, you might recall, where we saw some NPL inflows early in the year, the situation stabilized. We sold some NPLs. And with this, our NPL ratio in Romania is once again below 3%. In terms of projections for year-end 2026, we expect that the group NPL ratio will stay more or less at current levels, and that applies to both Erste with and without Erste Bank Polska. NPL coverage is projected to slip slightly, but only slightly and should stay close enough to 70%.

And with this, I hand back to Stefan.

Thanks, Alexandra. Let's turn to Page 21. To top off an exceptional year, other result also turned in a tremendous performance in the fourth quarter, again, benefiting from positive one-offs in the form of real estate selling gains and releases of legal provisions, particularly in the Czech Republic and Romania. When looking at other results from an annual perspective, we saw the best print since 2007. Thomas had to go back that far in analyzing the data to find a better print. And to put this into context, back then, banking levies or resolution fund contributions, which today run into the hundreds of millions of euros and annually were unheard of. As a result of this extraordinary performance throughout 2025, one thing must be clear. This is a onetime event that is very unlikely to be repeated in 2026.

We estimate that the net positive onetime items amounted to approximately EUR 270 million, as Peter already mentioned, pretax and that in 2026, other result will more closely mirror regulatory charges, which based on higher banking levies in Hungary and Romania should be in the order of approximately EUR 450 million. Typically, we already expect one or the other positive or also negative print there for the first quarter, we are anticipating a better print due to the closing of the Erste transaction in Croatia.

Based on what you heard about record annual and quarterly operating performance as well as quarterly and annual other results, and I'm on Page 22. In the meantime, it follows that quarterly and annual net profits were comfortably record prints as well. And one could argue somewhat inflated, obviously, to the benefit of capital and capital ratios, so no complaints here. But still, therefore, it is only fair to adjust net profit for onetime items. And if we do this, clean net profit prior to AT1 dividend deduction, as Peter already mentioned, would be closer to EUR 3.3 billion rather than the reported figure of EUR 3.5 billion. By extension, the same comments apply to reported earnings per share and return on tangible equity, both benefited from one-off supported net profits. If one adjusts reported 2025 EPS of EUR 8.24 for this, then underlying EPS would amount to EUR 7.72 and ROTE would be closer to EUR 515.5 as opposed to the reported figure of 16.6%.

When it comes to the outlook for 2026, we confirm everything we have said since the announcement of the Polish acquisition on 5th of May 2025. We expect a significant improvement on return on tangible equity to around 19% and an earnings per share uplift north of 20%. These targets are based on reported net figures adjusted for extraordinary items with EUR 3.3 billion serving as a basis for 2025 and a figure of greater than EUR 4 billion being the target for 2026 adjusted. And with this, let's move on to wholesale funding and capital, starting on Page 24.

Stability and competitive advantage are the name of the game when it comes to funding. High granular and well-diversified retail and SME deposit base remains a key source of long-term funding. Wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits. The stock of debt securities was pushed up primarily by issuance of covered bonds and senior preferred bonds.

On to Page 25, in order to look in more detail at our long-term wholesale funding. My short summary would be that we successfully completed our 2025 funding plan and that we had a busy and successful start to the 2026 funding year. Next to several transactions of our subsidiaries, we have issued a Tier 2 and a senior preferred note, EUR 750 million each on group level in January. Overall, we expect similar funding volumes this year as in 2025 and we'll have more focus on MREL instruments compared to covered bonds.

Let's now move to regulatory capital and risk-weighted assets on Page 26. In the context of other results, I talked already about a onetime event, and I think this is also a fair statement for the development of regulatory capital and risk-weighted assets. We saw a massive buildup in capital and at the same time, a massive reduction in risk-weighted assets in 2025. Of course, most of this did not happen by chance, but was the result of a well-executed strategy that was instrumental in funding the acquisition of Erste Bank Polska exclusively from internal resources.

To give you an idea about the scale of the achievements, we grew loans by about EUR 14 billion in 2025, as already discussed, while risk-weighted assets were down by almost EUR 10 billion. The main drivers for this were the increased use of securitizations, positive portfolio effects and last, but not at all least, Basel IV implementation also came in handy. These factors more than offset the volume growth related up drift. The strong growth in CET1 capital by EUR 4.5 billion during 2025 is rooted in strong profitability and temporarily increased profit retention. The former also benefited from positive one-offs as detailed earlier in the presentation, but was mainly driven by strong business momentum, while the latter was supported by suspension of the share buyback we already announced early in the year and a lower dividend payout from 2025 profits.

The result of these massive moves, you can see on Page 27, our CET1 waterfall, a 408-basis point increase in our CET1 ratio in 2025. Viewed differently, one could say that we absorbed almost the entire expected CET1 drawdown expected from the Erste Bank Polska acquisition within 1 calendar year. And I can only repeat what Peter said. We have far outperformed all capital commitments that we gave to the regulator in the run-up to the transaction. That's the CET1 ratio floor of 13.5% and the new increased target ratio of 14.25% to be achieved during the course of 2026.

When it comes to capital distribution, we will stick to our communicated dividend policy for 2025, resulting in a payout of EUR 0.75 per share. I think it is also evident that we have the full capacity to return to our pre-transaction dividend policy of 40% to 50% and possibly even put share buybacks back on the menu if this is in the best interest of shareholders. When it comes to the CET1 ratio outlook for 2026, the triangle of profitability, loan growth and shareholder distribution will determine the extent and speed of any further buildup. In any case, we have created a space for many options for future growth.

And with this, over to you, Peter, for concluding remarks.

Thank you, Alexandra. Thank you, Stefan. Let's take a step back again and look at the bigger picture. What emerges in front of us, you can see summarized on Page 29. It's about strong organic growth momentum in the Erste's business without Erste Bank Polska. On a like-for-like basis, we expect loan growth of higher than 5%. We project mid-single-digit net interest income growth. We once again target fee growth of north of 5%, and we aim to push cost inflation down to 3%. With this positive operating jaws and improved cost-income ratio are firmly on the agenda for 2026. Risk costs are expected to stay at a very level. And even if other will be more in line with the reported net profit should at least be on par with what we achieved in 2025. Erste Bank Polska to the mix that the future will be brighter still.

Growth opportunities will multiply by having access to the largest market in the CEE region. On the back of a better macro backdrop, we therefore project loans to surpass EUR 285 billion for the combined entity of new Erste, if you prefer. We see net interest income north of EUR 11 billion, fees at about EUR 4 billion and costs in the order of about EUR 7 billion. Risk costs will inch up to 25 to 30 basis points, leaving aside the one-off related to first-time consolidation. All of this is set to result in a significant increased return on tangible equity of 19% and an increase in earnings per share of more than 20%. Despite this very robust financial outlook, we are not getting carried away. Our full focus and attention is on integration of Erste Bank Polska and rebranding.

At the same time, you can rest assured that we will not lose sight of strategic opportunities, which we expect to open up in front of us as the year progresses. Superior profitability and consequently, fast capital build will enable us to choose from a number of options ranging from increased capital return before further M&A, all of which have the potential to create significant shareholder value.

And this, ladies and gentlemen, concludes our presentation remarks. Thanks for your attention, and we are now ready to take your questions.

[Operator Instructions] And the first question comes from Jeremy Sigee from BNP Paribas.

Could you just give us a quick update on the integration time line for Poland? What are the big steps in terms of systems migration or other big things? And when do they happen? And then second question, you've talked about the various options that you've got for growth. Could you talk a bit about both organic and M&A opportunities, what your priorities are, where you see opportunities presenting themselves?

If I may start with the integration in Poland, we plan to be done with the integration when it comes to IT and technology within 24 months. We have already started to work with our colleagues in Poland. So, this is a lot of work in front of us, but we have both sides very experienced IT people. So, we know what we have in front of us to be able to manage. The second also very important part is the rebranding, which will take place in the second quarter. So, we have more than 400 branches, we have to rebrand. We have a lot of ATMs, we have cards, we have papers. So, a lot of things in front of us, but very much looking forward to use the opportunity to build up a very strong brand in the Polish banking market.

When it comes to growth opportunities and potential M&A, it is very much depending on the market situation. I think it's much too early. I would like to -- just to remind you, although we have a very strong capital position now, we just had closing on of January. And again, now we are very much focused on integrating Poland. But if something pops up where we think it's a business opportunity and is creating value to our shareholders, we will definitely look at it.

The next question comes from Gabor Kemeny from Autonomous Research.

Thanks for walking us through the intricacies of the Polish consolidation. But my first question is actually on the business ex-Poland and the NII guidance there, I mean, 5% growth you guide for, which is decent, but it's actually similar to the Q4 run rate. It implies similar NII to the Q4 run rate, I believe. So, what makes you assume that NII will not grow sequentially from here together with loans? And the second question would be on cost. I mean you expect cost growth to half practically on an organic basis. Can you walk us -- which is a significant improvement. Can you walk us through what you actually expect to drive this slowdown and perhaps give us some quantification of those drivers? And then finally, on the capital deployment options, how do you think about your options for this year, including if you could comment on the possibility of raising your stake further in the Polish bank.

Let me start with the remark on the interest rates for 2026. I understood you right. You wanted a reply to, say, on our growth expectations on the former Erste Group, I would call it. Look, let's not forget there are a couple of points that we need to observe when it comes to the translation of loan growth into NII. First of all, we all know that this is a buildup throughout the year. So, if we expect better growth on the loan side than 4%, 5%, then this will only get into NII numbers over the year, not only for the first quarter. The second element is, and I mentioned it on a side comment when running the presentation, we have paid EUR 7 billion for the acquisition of Erste Bank Polska. So that's in a simple calculation around EUR 130 million that we simply have less of interest on excess liquidity.

It's not a huge amount given the overall dimension of NII nowadays, but it's not to be completely ignored and it is a certain churn on our growth year-on-year. And last but not least, the interest rate environment should be still okay-ish and kind of supportive, but definitely, we will not have tailwinds or tail storms from the interest rate environment. We've put ourselves in a position that is quite neutral to interest rate developments. So, from that end, we shouldn't expect too much of an uplift. And if you look at the 2025 developments, we've had a good momentum still from our investment book. This is still there, but significantly slowing down. So, I would say, at the end of the day, we are back into a game which is mainly depending on growth. You're perfectly right, but it's not a one-on-one translation of loan growth into NII. So, I think if we can deliver 5% on existing group, I would be very satisfied.

The other point was on cost growth, look, it's very simple. Inflation is now really sharply coming down even in the countries like Austria, where we saw after really super elevated prints, we saw in January now a 2% number. That will help the negotiations for collective bargaining are ongoing. We hope that there will be a reasonable behavior on all sides like it was in other industries in this country. In the other countries, we see wage inflation still around, but significantly lower than in the past. So that's the external element. And the internal element, we have always communicated that the impact of the efficiency investments that we started already in the end of 2024 should have a first-time impact in 2026, and that is also something we are committed to deliver. And this in combination would land around this 3% level. Of course, a lot of integration efforts will be there, but you were asking about the core group.

And then I think capital deployment. Look, Peter already made it clear in his answer just before. We are evaluating all options, but we are also not deviating from our super focus. We got everything very well done. We were achieving not only the signing, but also the closing in a very smooth manner. And I really want to praise the teams here on all sides who guaranteed very smooth operations day 1 already across the group, and we will build on that. But let's not forget that the integration will still occupy a lot of resources. And therefore, we will elevate very, very precisely how much we have still in our pockets to invest into, let me say, new adventures.

I think you know the markets that we look at. There are some of the markets which are able to do transactions, for example, on themselves. If there are options opening, we will analyze them, but I think it's much too early to say. Last comment, since this is obviously also part of your question, we will not comment at this point in time about any kind of precise dividend indication for 2026, but it's natural that we have full capacity to at least -- let me stress this, at least get back to the capital distribution that you were used to up until the year 2024.

The next question comes from Ben Maher from KBW.

I actually have one. It's just on the growth in the Corporate Center NII was very strong last year, effectively doubling. I think you mentioned the securities portfolio, that tailwind perhaps tailing off a bit this year. But any guidance around NII in the Corporate Center for 2026 to 2027 would be helpful.

In short, it's going to be slightly up, not as strong growth momentum as you rightly observed for '25, but certainly also not falling from the slightly up is an indication that I can give you.

The next question comes from Amit Ranjan from JPM.

The first one is on capital. What's the current outlook on balance sheet measures going forward, SRTs, et cetera? How much did you achieve in 2025? Because if I look at the credit RWAs, they declined by almost EUR 4 billion quarter-on-quarter. So, if you could highlight that and also the costs associated with that SRT in 2025? And how should we think about that in 2026? And then the second one is on -- you have provided very clear 2026 targets. How should we think about medium- to long-term targets for the group? Is that something we can expect to be provided during 2026? Are you planning a Capital Markets Day at some point for the combined entity? And last one, if I may, on loan growth. Are you seeing any pickup in corporate loan demand in the various geographies? And is there any assumption you're making around benefit from the fiscal stimulus in Germany and the infrastructure spending for countries like Austria, Czech Republic, please?

I'll take the first question and then hand it over to Peter. So, first thing, the costs, not to forget around securitization, around about EUR 60 million, and that's in the fees. Maybe let me use this opportunity to say 2 sentences about fee development, which I'm very impressed from colleagues do a great job there. We have had already cost for securitization during the year 2025 in fees. It's even more remarkable to see the results. And that will be around about EUR 60 million in the year 2026, first point. Second point, I want to be precise on what I said on the fee trading stuff when it comes to our EUR 4 billion target. We have observed a little bit of a different treatment in the Polish market around FX fees or let's say, fixed trading revenues rather. And we will analyze in the next weeks whether we can also show this on the group level in fees or whether we have to put it in trading. So just that you can put my remark here in perspective because it fits to this point.

And last but not least, in terms of planning for 2026, so nothing tremendous being planned at this point in time for securitizations in 2026. We will do 2, 3 further transactions for sure as we use this toolbox ongoingly, but significantly less than in 2025 since the effort here was directed to the capital -- I wouldn't call it rebuild, but the capital optimization effort in 2025. Peter, please?

Yes. When it comes to midterm outlook, I think as we mentioned already before, I think this year, on the one hand, we are heavily focused on integrating Erste Bank Polska. It's very clear. we will see the full positive impact in terms of P&L, of course, in 2027. On the other hand, it's also fair to say that we are very -- again, very strong being up capital, which gives us a lot of opportunities. And this is exactly the other part for this year to make up our mind and see how markets are developing and what kind of opportunities are poping up in terms of M&A or further increase in our stake in Erste Bank Polska, also depending on the Polish scheme, how we are able to increase. So, there are still a lot of things we have to think through. But you can be assured that we are very well aware. And I think we are in a luxury situation in terms of our strengths being able to build up capital.

When it comes to your question about the Capital Market Day, this is something we are making up our mind. Stefan, Alexandra and myself, we are, of course, discussing it. But it's also very obvious that we would go for a Capital Markets Day if we have something detailed to you, which is worth the effort of you and your colleagues to join.

When it comes to potential impact of Germany, I mean, this is something we are waiting for already 1.5 years. Of course, we expect a positive impact in countries like Czech Republic, Slovakia, Poland, Romania, but the political procedure in Germany just takes longer as we expected. And therefore, we didn't take it into consideration, as mentioned during our presentation in our P&L for this year because we are sounding a little bit like broken record every time telling that there will be an impact, there will be an impact, there will be an impact and so far we cannot.

The next question now from Mate Nemes from UBS.

I have 3 questions, please. The first one would be a follow-up on your -- Stefan, on fee growth. I understand the uncertainty around the treatment of some of the FX commissions or FX fees in Poland. For the rest of the portfolio, putting that uncertainty aside, is there any reason why fee growth shouldn't be in the high-single digits given your track record, given strong volume growth, given good traction with the securities business and so on? That's the first one. The second question would be just a clarification, please. Could you clarify what exactly will be added back to get to the adjusted net profit in 2026, i.e., the amount slightly above EUR 4 billion. Is that the EUR 240 million intangibles amortization and the EUR 180 million integration costs or it's only the integration costs? So that's the second question.

And the third question is just a, I guess, conceptual one perhaps for Peter. The outlook on retail lending, very, very strong performance in 2025, retail growth and within that housing loan growth in the CEE region is very strong. Could you talk about expectations whether that momentum can be maintained in one or the other country, be it Croatia, be it Czech, be it Hungary? Or we could see some moderation here and there? And also in that context, perhaps, what is your expectation in retail growth in Austria?

All right. So let me take the number question first. So, we talk about roughly EUR 350 million that you should consider in this, so to say, adjustment logic, and this is the sum of ECL impact the integration costs, as you rightly assume, and the intangibles. Honestly speaking, we really try to manage, and I think we have kind of got 80%, 90% there to absorb everything as much as possible in 2026. So, you heard the question before, the earlier question to Peter regarding integration costs. That's also what we have been discussing internally. While we will be busy with a couple of the things on 28 when it comes to really absorbing most of the matters in P&L representation and so on, I would say, given the dimension of the numbers, everything that comes there after 2026 with the sole exception of the depreciation of the customer list I would personally from a CFO perspective, say you can pretty much forget, right?

So, it's EUR 50 million here, EUR 30 million there, for sure, not numbers to be ignored in a bigger sense. But the way we look at, for example, NII of a base EUR 11 billion plus, yes, have an item here in 2027 impact of EUR 80 million, EUR 90 million. But frankly speaking, a small change in interest rate environment also does a much, much bigger impact, as you very well know. Fee growth. To specify the dimension that we are discussing here with the Polish colleagues and also with the audience is EUR 200 million, just to be precise. So, it's about EUR 200 million to be allocated rather to fees or FX. So that is around the -- if you map it to the EUR 4 billion total, it's around 5% difference, not to be ignored. Of course, it doesn't do anything to the total operating income. It's pretty clear. And that was the reason why Thomas and the Board discussed which guidance should we give. Otherwise, we would have been coming up with greater than 4. Now we are around 4%. We will clarify that. And by Q1, we will be very clear about where to book this.

When it comes to growth, thanks for your confidence in our growth potential. I do not disagree. However, if we look around at what happened in the last 2, 3 years, let's also be fair. We had quite strong supportive factors, not the least, a positive inflationary environment, which, of course, by indexation of payment fees and so on, not only for us, but for the whole industry was supportive. And if we now go significantly down with our growth expectations on costs, it's also consequently clear that some of the tailwinds are slowing down on the fee side. That's point number one. And point number 2, as you know better than anyone else, if we have such a supportive capital market every year as we had in the last 2, 3 years, is also not a given -- and some not all, but some components of the income here on asset management fees and securities business depending on it. So do I rule out that we come up with higher than 5%. So, I think you said upper mid-single digit again in 2026? No. Do I want to guide for it at this point in time? Also no. Peter?

Yes. Thank you, Stefan. When it comes to mortgage business, when we talk about volume, it's very much about Czech Republic, Austria. So, we don't see any -- or we don't expect any change in the demand in Czech Republic. So, the market is still strong I would expect even a little bit more positive momentum in Austria because demand has come back already over the last 12, 18 months, and we saw a clear correlation that demand was picking up and interest rates are coming slightly down. And Croatia, I think we are doing very well in terms of balancing between mortgage lending and consumer lending. So, which was true also for the whole year in 2025 that we have between these 2 product lines.

Good that you asked for Croatia because we took a special effort in Croatia and set up an initiative to improve our mortgage lending there because there, I think it's fair to say that from our perspective, we are a little bit underpenetrated when it comes to mortgage lending is an area we would like to take more efforts to improve the situation.

The next question comes from Riccardo Rovere from Mediobanca.

Two or 3, if I may. The first one is on the NII guidance. I mean in Erste stand-alone a couple of billion per quarter in Q4. So, say before any growth land, you could land in the EUR 8 billion region without being too sophisticated. And Erste Bank Polska reported kind of anywhere between EUR 750 million and EUR 800 million in Q4. So that could be another, say, EUR 3 billion or so more or less. So, before growth will be in the EUR 1 billion ballpark and this before, again, loan growth. So, I was kind of -- I just want to understand what -- and you also say, Stefan, if I'm not mistaken, that you expect kind of supportive policy rate environment, if I got it right during the call. So, I was wondering if there is no margin pressure and if the growth stays as you land, what could to go above or well above EUR 11 billion and more than EUR 11 billion could be EUR 11.5 billion in your mind.

Then again, on growth, I mean you're growing at 6.4% before Poland. Macro is expected to be to improve. Maybe you're going to have an impact from fiscal in Germany are at 7% and pretty good when they make their projections. So why 5% when the macro is improving and you're exiting '25 at 6.4%. The other question I have is on common equity. I mean, you end at 19.3%, take out EUR 460, you end at EUR 14.7 billion divided by 2, it's another EUR 2 billion, risk assets, say, EUR 180 million, EUR 150 million from you, 30, 30-something from Erste Bank Polska is another more than 100 basis point. So, as it is today, we will land anywhere between 15.5% and 16%. So, the question here, I just want to connect to what Jeremy asked right at the beginning of this call. What's the priority here? Is because the share price suffered quite a lot on in early 2025 when there was uncertainty about capital use.

So just to be clear, what's the priority here? Is the priority more M&A? Or is the priority returning capital to shareholders as you have to integrate Poland, which is a transaction? Because the numbers do not adopt just don't adapt with the numbers what you said. Just to say so, but I think the market needs a little bit of clarity on that.

So first, unfortunately, the sound was very bad. So, let's make sure that we got everything right because you started by saying 3 questions, I only identified kind of 2.5. But anyway, the first one is very clear. And I completely -- I completely can follow your thinking EUR 8 billion here because you guys are already at EUR 2 billion in Q4, then simply extrapolate that and then add the EUR 3 billion from Poland and they go EUR 11 billion plus the growth, why don't you talk about EUR 11.5 billion. That's in a nutshell what you said.

Look, it's not exactly that easy this time for sure, at least from today's perspective. Number one, again, we have a clear subtraction. This is a super simple calculation of EUR 130 million from the nonrecurrence of the interest on our paid here. It's not a huge element, but not to be completely. Secondly, and I give you the precise description, we have EUR 170 million, and we always talk about the gross figures here, right? I said it -- talk about the gross figures because 11, 11.5 is also, of course, the gross NII for 2026 in the whole group. EUR 170 million impact from hedge accounting adjustments and the debt securities, both around about close to EUR 100 million adding up there, and there's a little bit of a counter effect on other positions. So, it's a total of EUR 300 million, please, Riccardo, that you have to take. This is not something which is kind of a question of optimism or pessimism. It's just the fact that this is 100% clear that this will be booked this way.

So, I have to take this into consideration because then with your expectation somewhere between EUR 11.2 billion to EUR 11.5 billion, we are already talking a little bit of a different story. And the rest -- yes, the rest is a question of interpretation if everything goes fully our way, if interest rate environment is as supportive as we expected. And therefore, we decided to go for a greater than EUR 11 billion guidance, which I think is leaving also upside. And you know us then when we have more evidence for better development, we will adjust the guidance. At this point in time, I think it's a task to get there with all the moving parts around the first-time consolidation.

And on capital, look, I think referring back to the first part of 2025, I don't believe it's really helpful because you know that we were negotiating the deal at that point in time. And you guys know much better than anyone else how strict capital market communication is on indicating anything that is not really watertight in terms of insider what the hell. So therefore, yes, it was also not my most pleasant quarterly call on the 30th of April 2025. I very, very much remember, and we were dancing around how we deploy capital. I agree. This was not a pleasure, but in the same moment, it was a pleasure then making very clear what we do with the capital 1 week later.

It's not the case this time. This I can assure you. We are not in any whatsoever kind of negotiations or so. But what we are in is in analyzing our opportunities, both legally, Peter already mentioned it, but also in terms of how we can manage also a step-up in Poland in an efficient manner for our shareholders and in a way that we are not endangering, so to say, our economics.

Other countries, I think, have been commented on by Peter and me already. I think it's fair to say, looking at my colleagues that after the first quarter, we will have a little bit more clarity. However, to satisfy everything of your expectations, what we will do with the excess capital, it might still not be enough. And it's going to be a question of the next couple of months to evaluate the deployment. We try to do the best with the excess capital, but there are many moving parts. I think there was a third kind of question, but I didn't get it from the sound.

Mr. Rovere, you're still on the line.

Let's move to the next question please.

The next question comes from Jovan Sikimic from ODDO BHF.

I would have also a question related to Poland. I mean, your colleagues from the new subsidiary, right, they indicated a kind of new strategy in coming months. But maybe at this stage, can you tell us just the key parameters, right, in terms of loan growth, in terms of NII year-over-year? And what is actually the interest rate which you incorporate because currently, it's like 25 to 50 basis points. Let's say, difference within consensus where the rates will end up in Poland, how the sensitivity is? And also from this perspective, if you can share what would be kind of cost/income ratio in the longer-term horizon because Polish subs or Polish bank kind of has significantly lower cost-to-income ratio compared to your current subsidiaries?

And if you could also remind us what's the agreement on Swiss franc provisioning. I mean Q4, in my view, in Poland was a bit below expectations in terms of kind of adding to the current outstanding volumes. But what's the position at this stage in your case?

If I may start in terms of strategy, please don't expect too many changes in terms of strategy in our Polish subsidiary because from our perspective, strategy is already very much aligned. So, we have a very similar approach in retail banking. We have a very similar approach in corporate banking. I think there's a lot of added value, of course, in the corporate area because the pure size of the economy in Poland is fantastic in the way how this economy in terms of economic infrastructure was built up over the last decades. I think this is a huge opportunity also for the rest of our group. And we see also kind of network value related to it because there's a lot of money flow between companies within our region now and a lot of Polish companies operating in other parts of our group and vice versa.

So there, we have very, very positive client feedback. When you refer to cost-to-income ratio, of course, it's great how our colleagues are managing efficiency. Of course, it's all kind of very supportive where we have relatively high NII margins when it comes to cost/income ratio. And please, we ask for your understanding that we don't want to comment too much on local entities, especially when they are stock listed in terms of NII sensitivity.

And that also, if I may add, Peter, that also holds true for the strategy of the local bank when it comes to Swiss franc. I think the colleagues are commenting on that. The read-through to the group is well known. So, there's nothing to add to that. Nothing has changed on that side. And all the rest is decided by our local colleagues and will be also communicated by them in their capital market communication.

Great. And if I may add one maybe on -- it's maybe of a minor importance, but still your positioning in Hungary on rate cuts or further rate cuts and also in Romania. How would it affect the group NII?

No, happy to take this in a very short manner. We saw the rate cut yesterday or the day before yesterday, I guess, in Hungary. We expect overall a relatively stable development of key interest rates for this year, at least for the next 2, 3 quarters. You know the policy of the Romanian National Bank. Further later in the year, there might be some changes depending on inflationary environment and so on. But at the moment, we do not see an aggressive rate cut cycle of either of the 2 national banks.

We have a follow-up from Riccardo Rovere from Mediobanca.

And just a quick follow-up on the previous one on loan growth. Why 5% when you're exiting the year at 6.4% and the macro is supposed to get better and maybe you're going to have some boost from Germany fiscal support. And then on bank taxes, if I may, can you shed some light what should be the situation in 2026 and if possible, onward, where do we stand there?

If I may start with loan growth. From our perspective, we were even a little bit more aggressive than last year in terms of giving the guidance because we see loan growth above 5%, right? And as Stefan mentioned already during his presentation or answers, loan growth is accelerating over the year. So, you don't have the full impact immediately in the P&L in the first 2 months of the year. But be assured that we believe -- strongly believe in loan growth above 5%.

What was the other question, Riccardo?

Just on bank taxes, what should you expect? What should we expect for 2026 on bank taxes in general?

The existing ones, I think you know precisely. It will go up in numbers a little bit. And then you know the situation in Poland, which again is to be commented mainly by our local colleagues, but we, of course, consider in our assumptions the elevated corporate income tax in Poland of 30% for the year 2026, which is expected to go down, not expected, it's in the law, to go down to 26% in 2027 and then to 23% in 2028. Those are elements that we have to consider, which all are in our guidance that we mentioned today. Other than that, forecasting or so to say, making any kind of assumptions around political decisions, I guess, is definitely not my task. And I think, Peter, you also don't want to probably say that.

I would not expect any kind of material impact during 2026, but long-term trends are very, very much depending on how budget deficits in other countries will develop over the upcoming years from that perspective. We don't see any kind of that there will be additional taxes for this year.

The next question comes from Robert Brzoza from PKO BP Securities.

Congratulations on the results. Sorry if I make a repeated question because I joined later during this call. I have 3 questions, actually. One on the adjusted net target. What are the adjustments actually? Is this only the integration cost or also the fair value adjustment? So that's question number one. Question number two, the 3% OpEx growth target for '26, does it include the indexation to wages? How do you manage this? And question number three, I've spotted that the NII in Hungary and Romania were relatively flattish despite great quarter-to-quarter loan book growth. What is it related to? Does it mean that you had to compromise a bit on the pricing of loans?

Thank you very much. You were touching upon of the stuff we discussed already, but no problem. So, first answer, I specified already before, it's around EUR 350 million of adjustment. It includes the integration cost, but not only. It's also the onetime booking of the IFRS 3 related ECLs CLSA and the intangibles, as you rightly assume. So that's a correct assumption. Those 3 components play into there. When it comes to wage inflation, I mentioned in an earlier answer, it's supposed to come down. We see inflation coming down now even in Austria and other places, and that's what will certainly drive the levels of, let me say, wage and personnel cost increases down. But I also mentioned that another element of our guidance there is that we will benefit from efficiency gains that we invested in '24 and '25.

And last but not least, you're right. We had a slower development in Hungary and Romania, and it is partially due to quite some pricing competition in these markets, which we usually do not take a part in as aggressively as competitors, but we cannot exclude ourselves completely. So that's certainly a driver of the NIMs in those 2 specific markets. Just adding that in Hungary, we always say, please don't analyze this market line by line. You will not get anywhere. Look at what our fantastic colleagues there have achieved in bottom line delivery, and that's really the measure that we look at.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference over to Peter Bosek for any closing remarks.

Yes. Thank you very much, ladies and gentlemen, for taking your time. Thank you very much for your questions. What I would like to mention is that our Annual General Meeting will take place on the 17th of April and the results for the first quarter of 2026 are on 30th of April. Thank you very much.

Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Erste Group Third Quarter 2025 Results Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Thomas Sommerauer, our Head, Group Investor Relations. Please go ahead, sir.

Thank you very much, Sandra, for the kind introduction and also a warm welcome from my end to this third quarter conference call of Erste Group. We follow our usual procedure according to which Peter Bosek, our Chief Executive Officer; Stefan Dorfler, our Chief Financial Officer; and Alexandra Habeler-Drabek, our Chief Risk Officer, will lead you through a brief presentation highlighting the financial achievements of the third quarter and year-to-date. After which time, we will be ready to take your questions.

Before I hand over to Peter Bosek, the usual highlighting of the disclaimer on Page 2 in regard to forward-looking statements.

And with this, I hand over to Peter.

Good morning, ladies and gentlemen. Welcome again to our third quarter 2025 conference call. Let me place 2 messages right at the start. First, we are progressing well towards first-time consolidation of Santander Polska around year-end 2025. We received all competition authority approvals, and it's our current expectation that we will get the nod of the Polish regulator KNF by year-end. The integration work streams with our future colleagues are also right on track as is our capital build. Actually, it's progressing even better than we have planned.

And this brings me right to my second message, and this is our existing business is doing exceptionally well. We benefit from strong volume growth dynamics across our region, which translates into healthy top line performance and good bottom line profitability. And if you add these 2 things up, the strength of our existing business and the integration of a leading bank in the largest CEE market, Erste will become a real powerhouse in CEE banking with an unrivaled profitability and growth profile. And while it's unlikely that we hit the EUR 4 billion profit mark in 2026 on a reported basis due to the booking of customary onetime items that have to be absorbed with first-time consolidation of such transaction, this doesn't change anything in our ambition to get there on a clean basis already in 2026.

Such onetime items include purely technical and overtime P&L-neutral IFRS effects such as the measurement of acquired assets at fair value and the resulting immediate recognition of expected credit losses on the newly acquired portfolio and certainly, also one-off integration costs, which we still see around EUR 200 million.

With this, let me highlight a couple of points of our third quarter performance. For the first time ever, we posted quarterly revenues north of EUR 2.9 billion. This resulted from a record net interest income of close to EUR 2 billion, supported by strong loan growth, a stable interest rate environment and continued deposit pricing strengths. In addition, we printed fees of almost EUR 800 million, also a quarterly record. On the cost side, we probably could have done a touch better, but this is definitely an area where we still have a potential going into the fourth quarter. But despite elevated costs, quarterly operating profit was also in record territory by a comfortable margin. Risk costs remained moderate, and we are fully in line with our guidance. And we again benefited from a positive one-off in the other operating result despite higher banking taxes. Altogether, we achieved an excellent return on tangible equity of 18% flat in the third quarter.

Based on these numbers, we slightly tweaked our 2025 guidance. We now see net interest income growing by more than 2% instead of more than 0%. And consequently, we rather see the cost/income ratio at around 48% instead of below 50%. Furthermore, we are raising our year-end CET1 ratio projection to higher than 18.5% due to continued strong capital build in the case first-time consolidation has not happened by this time. All other '25 guidance items, most of which we already upgraded a quarter ago, are hereby confirmed.

When analyzing our P&L metrics, I'm on Page 5. In the meantime, we see continued net interest margin recovery. This was not necessarily driven by an expansion of product spreads, but rather by the factors I already mentioned like higher NII on the back of loan growth and strong deposit pricing power in addition to still muted interest-bearing asset inflation. The latter was supported by limited growth in financial assets and interbank assets in the past quarter. Operating efficiency also remained at a sound level, just shy of 47% as did risk costs at somewhat above 20 basis points. Banking taxes went up in the past quarter due to doubling of the tax rate in Romania starting in July.

Quarterly earnings per share also rose despite reported net profit being down slightly quarter-on-quarter due to the nondeduction of AT1 dividends in the third quarter. The same effects also explain the rise of the return on tangible equity to 8%. I don't want to sound repetitive, but clearly, what the positive effect in our P&L is also reflected in the year-to-date balance sheet development.

On Page 6, you can see the main driver of asset side growth was higher customer loan volumes. In fact, since the start of the year, added almost EUR 10 billion to our loan stock. Stefan will tell you more where it exactly came from later. So for now, I will only say that the positive trends of the previous quarters, good growth across Central and Eastern Europe and solid growth in Austria and better growth in retail and corporate business continued in the third quarter. Total customer deposits grew by 2.5% year-to-date, while core retail and SME deposits, which includes deposits held in the savings banks increased by 2.4% over the same time frame. The Retail segment on its own saw deposit growth by 3.5% since the start of the year.

All in all, we are seeing healthy volume growth for the past couple of quarters now and the third quarter was no exception. So this increasingly looks like a sustainable trend. This makes us confident that we will comfortably deliver our full year guidance of growing customer loans by more than 5%.

Looking at the same key balance sheet metrics on Slide 7. My key message to you is that all of them are pretty much in a sweet spot territory. The loan-to-deposit ratio stands at 92%. Here, we saw a little bit of an uptick since the start of the year due to strong loan growth dynamics and compared to that somewhat slower growth in deposits. The asset quality backdrop remained excellent in the third quarter with a stable NPL ratio of 2.5% and unchanged coverage versus the previous quarter of about 74%. Importantly, the asset quality situation in Austria remained stable despite the weak economic backdrop. Asset quality across Central and Eastern Europe remained very strong and the Czech Republic and Hungary doing particularly well. As usual, Alexandra will provide you further details on credit risk later.

Our capital position continued to expand in the run-up for the first time consolidation of our Polish acquisition expected for around year-end of 2025. On a pro forma basis, we added another 74 basis points to our CET1 ratio in the third quarter, which now stands at 18.2%. Quarterly profit inclusion, the lack of any dividend accrual and the first positive impact from securitization were key drivers of this strong print. While the lower left-hand chart on the slide shows the reported CET1 number where third quarter profit is not included due to not being audited -- reviewed.

And with this, let's now examine the macroeconomic environment and in particular, the outlook for 2026. I'm on Slide 9 now. In the past quarter, we saw a continuation of geopolitical and trade tensions, which prolonged the weakness of German industry. The fiscal spending plans announced in spring of this year didn't yet show any noticeable positive effect to date other than a slight improvement in sentiment. Accordingly, the German economy is expected to flatline in 2025. Due to this and necessary fiscal consolidation measures, the Austrian economy also struggled to produce growth. The situation was different in Central and Eastern Europe, where moderate growth in the range of 1% to 3% is expected in 2025.

And I would like to highlight the good economic performance of the Czech Republic in this context, which is still our most important CEE market. A key pillar of strength was the healthy labor market across our region, and that includes Austria. Consumer price inflation remained relatively elevated in our region, impacted by high energy prices, but also good domestic demand. Fiscal and external balances were mixed with once again the Czech Republic standing out in terms of fiscal prudence and a positive external balance. When looking forward to 2026, current forecast project higher growth rates in most of our markets and adverse a stable growth performance.

Consumer price inflation should ease somewhat and the labor markets are expected to remain in good shape. Fiscal deficit should improve, especially in Romania and overall indebtedness should also remain at sustainable levels. This is an environment that works well for us and should ensure that we will continue to grow profitably in 2026 despite all uncertainties that unfortunately more than ever are a feature of doing business.

Despite the mixed macro backdrop, retail business continued to do very well in the third quarter. I'm on Page 10 now. We saw balanced growth in retail loans with housing and consumer finance contributing to growth in equal measure, both rising in high single digits year-on-year. Asset quality remained stable at low levels. When it comes to retail liabilities, deposits also grew by a significant 6.4% year-on-year, mainly due to the increase in current account and saving deposits, while term deposits were down year-on-year as well as quarter-on-quarter, in line with trends we have already observed for a couple of quarters now.

From the bank's point of view, this trend is positive as the shift towards lower-priced deposits decreased funding costs and supports net interest income. But the good news don't stop here. We also saw continuous growth in our balance sheet -- in off-balance sheet customer funds, security savings plans that enable customers to build long-term wealth in an easy-to-manage digital format topped EUR 1.9 million at the end of the third quarter, and they have generated gross fund sales in excess of EUR 1.1 billion year-to-date. George, our digital platform for retail clients, continued on its growth path. The number of onboarded users reached 11.2 million in the third quarter and the digital sales ratio in the retail business equaled 65.8%. Going forward, our ambition is unchanged to develop George into a fully fledged financial adviser in order to give even larger parts of our client population access to high-quality financial advice.

In the Corporate segment, I'm on Page 11 already. Loans were up 6.9% year-on-year and 1.3% quarter-on-quarter. Growth was well distributed among all 4 business lines in the third quarter, while year-on-year, the large corporate business made the best contribution, expanding by 10.4%. In terms of products, there was definitely more demand for investment loans than in the third quarter. While year-on-year, there was a good balance between investments and working capital loans. The markets business built on its strong start in 2025 with our ECM and DCM teams successfully executing 236 transactions with an issuance volume of EUR 173 billion year-to-date. In Asset Management business, we reached a historical milestone in the third quarter with assets under management topping EUR 100 billion for the first time ever. This achievement will support future fee growth.

And with that, I hand over to Stefan for the presentation of the quarterly operating trends.

Thanks very much, Peter, and also a warm welcome to this call from my side.

Please follow me to Page 13. When analyzing the loan volume performance by country, I would also single out the Czech business in the same way as Peter did in the context of macro. Not only is it our largest and most profitable market in Central Eastern Europe, but it's also the most consistent performer when it comes to loan growth. In the third quarter, we continued to see growth across the board there. Demand was strong across all product categories with good balance between investment loans and working capital facilities in the corporate business, while mortgages continued to lead the way in the retail space with annual growth in the mid-teens.

Mortgages were also the key growth driver in Slovakia, increasing by almost 10% year-on-year. Corporate loan demand was heavily tilted towards working capital facilities there. In Hungary, the retail business clearly outperformed the corporate business with both mortgages and consumer loans growing in the mid-teens year-on-year. Please bear in mind that euro growth rates are somewhat flattered by the strong appreciation of Hungarian forint over the past months. But even when adjusting for this, retail growth was really strong. In Croatia, the development was similar to that in Hungary with growth being better in retail and in corporate business. And within retail, mortgages were ahead.

So when we said in July that mortgage lending in Central Eastern Europe is back, third quarter data provides further evidence that this trend is strong and has legs. In our Austrian retail and SME operations, Erste Bank Österreichs and the savings banks, volume growth is slowly but surely approaching the mid-single digits, actually not bad given the lackluster economic backdrop. Interestingly, growth was somewhat better in the corporate business than in retail with especially good demand for investment loans. Given the strong loan growth year-to-date, we feel very comfortable with our greater than 5% guidance for 2025.

On the liability side, see Page 14, the trends we have observed for the past couple of quarters also continued in the third quarter of 2025. Importantly, the favorable structural shift in our West retail deposit base of almost EUR 170 billion from term deposits back to current account deposits and savings accounts or put differently, from the most expensive to cheaper retail deposits showed no signs of slowing. A similar trend was visible in the corporate business with overnight deposits increasing, while term deposits declined year-on-year. Consequently, the cost of deposits has declined to the lowest level in almost 3 years with corresponding positive read across to net interest income, as we will see shortly.

In terms of total deposit volumes, we are up 3.4% year-on-year and flat compared to the second quarter. Growth was driven by core retail, SME and savings banks deposits, up 5.2% over the past 12 months, while deposits in the Corporate segment flatlined over the same period, due in particular to offsetting volatility in the large corporate and public sector subsegments. In terms of geographic segment highlights, annual growth was satisfactory across the retail and SME businesses in Austria and Central and Eastern Europe, while the year-on-year decline in the other Austria segment was entirely attributable to lower noncore financial institution deposits.

Let me now move to net interest income on Page 15. We have already talked about many NII drivers, be it strong loan growth, lower cost of deposits or a stabilization in the interest rate environment. Add to that, a steepening of yield curves, allowing for better reinvestment opportunities and tighter funding spreads. And you have all ingredients for posting record quarterly net interest income. Record NII of close to EUR 2 billion, in fact, up 3.7% year-on-year and also up 3.1% quarter-on-quarter. Net interest margin also edged up quarter-on-quarter, thanks to a muted increase in interest-bearing assets on the back of lower interbank business volumes. In terms of geographic highlights, net interest income at the Austrian retail and SME business continued to stabilize on the back of significant downward repricing of deposits, while downward repricing of variable rate loans came almost to a standstill.

In Czech Republic and Slovakia, continued deposit repricing also had a positive impact year-on-year compounded by the continued upward repricing of mortgage loans due to refixations at higher levels. The Other segment, which includes holding asset liability management operations benefited from higher income mainly from government bond investments.

And a final comment on NII. Our sensitivity to rate cuts is more or less unchanged at about or even slightly below EUR 200 million for a 100 basis point instant downward rate shock with the bulk of the impact expected at the minority-owned savings bank, so no big deal for shareholders. As a result of all of this, we are upgrading again our 2025 outlook for net interest income from previously growth at higher than 0% to growth of higher than 2%.

Flipping to fees on Page 16 and on to a blockbuster, sorry, fee quarter. Net fee income rose by a massive 8.6% year-on-year and increased by 4.8% quarter-on-quarter. With this, we set a new quarterly record of almost EUR 800 million. In terms of growth drivers, the story is by and large unchanged. Year-on-year fees generated by payment services and securities business led the way, even though the increase in payment fees is understated by the shift of loan account fees from payment to lending as of first quarter 2025.

I would not like to highlight individual countries in this context as we saw encouraging trends across the board, but rather add a comment to the other Austria segment. In addition to good asset management sales, the year-on-year jump there is also explained by the integration of new asset management companies, so bolt-on acquisitions have worked very well there. Quarter-on-quarter, the drivers were pretty much the same as year-on-year with excellent performances registered in Payment Services as well as Securities business. Based on the strong year-to-date performance, we confirm our full year guidance of growth comfortably exceeding 5% in 2025.

Let me turn to operating expenses on Slide 17. Quarter-on-quarter costs were unchanged, both in terms of absolute amount and structure. Somewhat higher IT expenses were offset by lower personnel costs. Other than that, there were no major developments. Year-on-year cost inflation remained elevated at 8% compared to the third quarters of 2024 and 2025 and at 6.8% looking at the first 3 quarters, respectively. The reasons are well known, ranging from higher staff costs to higher IT and consulting expenses. Very importantly, we do believe that with this, we have seen the peak of cost inflation. And in the fourth quarter of 2025, the year-on-year cost uplift will decline significantly.

Consequently, it is still our ambition to get as close to the 5% guidance in 2025 as possible. Actually, the only moving target in this context is the size and timing of the booking of integration costs related to the Santander Polska acquisition. Looking further out and limiting my comments to existing Erste operations, we do believe that cost growth will decline materially from 2025 levels in 2026, which bodes well for positive operating leverage given that we also have a strong top line momentum.

Talking about operating performance, we move to Page 18 and can conclude that the top line performance is the story of the third quarter. We posted record quarterly revenues, which fully offset elevated costs, resulting in record operating profit. The cost/income ratio also improved to 46.7% for the quarter. Based on the strong year-to-date operating performance, we are upgrading the full year cost/income ratio guidance for 2025 to about 48%. And as I mentioned before, we have a constructive stance when it comes to the 2026 operating result outlook of our existing Erste operations due to strong top line momentum and moderating cost inflation in 2026.

And with this, over to you, Alexandra, for more details on credit risk.

Thank you, Stefan, and good morning, and welcome to this call also from my end. I'm on Page 19. In the third quarter of 2025, we booked risk costs of EUR 136 million or 24 basis points. A year ago, risk costs were lower, but back then, we benefited from FLI and overlay releases in the amount of EUR 101 million as opposed to only EUR 19 million this quarter. So net-net, we actually saw an improvement year-on-year. As is visible on the left-hand chart, we continue to book risk costs in our Austrian retail and SME operations, but the asset quality situation in Austria has definitely stabilized, thanks to lower NPL inflows year-to-date.

The third quarter bookings in Romania and Slovakia were mostly attributable to the retail business. And like Stefan and Peter, I also would like to explicitly mention the Czech Republic, which continued to excel also in terms of risk performance. As far as FLI and industry overlay provisions are concerned, we now hold the stock of about EUR 460 million, slightly down compared to the second quarter on the back of the already mentioned only minor FLI releases. Accordingly, we are again adjusting our forecast of such provision release in the remainder of 2025 to about EUR 70 million.

Let me also come back to a point that Peter mentioned in his comments on onetime effects related to the first-time consolidation of Santander Polska. According to IFRS 3 and IFRS 9, we are required to measure all acquired assets at fair value on the date of acquisition and immediately provide for performing ECL of the acquired portfolio on parent company level. Purely technical IFRS bookings that will make our risk cost line look worse by up to EUR 300 million in 2026, but are P&L neutral over time. And importantly, this is not a reflection of any underlying portfolio deterioration of the acquired assets. Moving back to 2025 and given our strong year-to-date credit risk performance, which, as said, benefited much less from FLI and overlay releases than in previous years, we confirm our full year risk cost outlook of about 20 basis points.

Let's now turn to asset quality on Page 20. With a consolidated NPL ratio of 2.5% and an NPL coverage ratio, excluding collateral, as always, of 74%, asset quality metrics remain strong and this across our footprint. Overall, the NPL ratio benefited from somewhat lower NPL inflows and significantly higher recoveries year-to-date. Central and Eastern Europe and again, especially the Czech Republic, continued to do very well with only Romania and Slovakia showing a small deterioration. In Romania, NPL inflows were registered in the third quarter in retail as well as in the corporate business, while in Slovakia, this was due to some inflows in the retail space. In Austria, the situation was broadly stable with most of the NPL inflows being tied to the real estate segment as we have already observed over the past couple of quarters.

Nonetheless, and let me stress this once again, the asset quality situation in this segment has definitely not deteriorated, but rather continues to consolidate at somewhat elevated levels. So I still maintain my comments from the second quarter that we have seen the peak in defaults in Austria, but that at the same time, you should not overestimate the speed of recovery given the still challenging economic environment. In terms of projections for year-end 2025, we expect the group NPL ratio to stay more or less at current levels. Similarly, coverage is expected to remain broadly unchanged, subject to the structure of new defaults and the magnitude of further FLI and overlay releases.

And with this, I already hand back to Stefan.

Thanks, Alexandra. Let's briefly look at how the other result performed this quarter on Page 21. In short, other result once again benefited from a positive one-off. After posting a positive one-off of EUR 88 million in the second quarter, the third quarter saw a positive one-off in the form of a provision release related to a legal case in Romania in the amount of EUR 77 million, which also explains the quarter-on-quarter deterioration to which the increased banking tax in Romania from July also contributed. Year-on-year, the comparison looks more favorable, even though the tripling of the Austrian banking tax since the start of 2025 did not help in this context. In terms of guidance for the fourth quarter of 2025, we would definitely expect to come in significantly better than for the last quarter a year ago.

On Page 22 and summing up the P&L for third quarter of 2025. The record operating performance, combined with moderate, however, year-on-year and quarter-on-quarter slightly higher risk costs resulted in a quarterly net profit of EUR 901 million, earnings per share of EUR 2.2 and a return on tangible equity of 18%. As Peter mentioned already, the reason why earnings per share and return on tangible equity both improved quarter-on-quarter despite reported net profit trailing the second quarter figure has exclusively to do with the timing of AT1 dividend payments. In the second quarter, we had some deductions due to this, while in the third quarter, there were no such payments. Overall, we are fully on track to deliver a return on tangible equity of greater than 15% in 2025.

With this, let's spend a few minutes on wholesale funding and capital. Page 24 shows that our highly granular and well-diversified retail and SME deposit base, of course, remains the key source of long-term funding. Wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits, mainly repos. The stock of debt securities was pushed up primarily by issuance of covered bonds and senior preferred bonds, characterizing a very successful issuance year for Erste Group, resulting in the updated maturity profile on Page 25.

My very short summary would be that we successfully completed our 2025 funding plan well ahead of time. Third quarter issuance highlights included a EUR 750 million Tier 2 note on holding level as well as senior nonpreferred paper and a covered bond in the amount of EUR 500 million each issued by our Czech and Slovak subsidiaries, respectively.

And finally, for my part, let's look at capital, starting on Page 26. Our first half 2025 performance when it comes to regulatory capital and risk-weighted assets was exceptional, and the third quarter was no different. While this is not visible in reported CET1 capital, which is almost entirely attributable to the noninclusion of third quarter profit, it's all the more visible in risk-weighted assets on the right-hand chart on this slide. The increase in risk-weighted assets from strong business growth was more than offset by asset quality-related portfolio effects as well as the successful execution of optimization measures such as securitizations. The former cover such factors as rating upgrades and downgrades, migrations to default and parameter updates. The later, thanks to small securitization transactions in Slovakia and Hungary, also reduced risk-weighted assets by almost EUR 1 billion. And consequently, risk-weighted assets overall declined by another EUR 1.5 billion in the third quarter.

Let's now turn to the important pro forma view of our CET1 ratio on Page 27. If we focus on pro forma, we can see that we are pretty much where we targeted to be at year-end already now after the third quarter. At 18.2%, we could have closed the Polish transaction already in September without falling below our minimum threshold of 13.5% announced at the time of acquisition or signing of the SPA in May. Now the fourth quarter profit and most of the balance sheet optimization are still to come. So far, securitizations contributed only 12 basis points and asset sales another 11 basis points roundabout. All the rest came from organic capital generation, obviously supported by the temporarily reduced shareholder distributions.

Consequently, we now project the year-end 2025 CET1 ratios of higher than 18.5% should the Santander Bank Polska acquisition close in early 2026 or alternatively of higher than 14% should the transaction be completed inside this year. And with the assumption of RWA drawdown unchanged at about 460 basis points as a result of first-time consolidation of Santander Bank Polska, we should be well on our way to exceed our post-consolidation CET1 ratio target of 14.25% during the course of 2026. And at the same time, return to our dividend payout policy of 40% to 50%.

And with this, over to you, Peter, for the outlook.

Thank you, Stefan. Thank you, Alexandra. I'm concluding the presentation with our detailed financial outlook for 2025 on Page 29. In addition, I will sketch out how I see 2026 shaping up, but let's start with 2025. As is evident from the numbers presented today, 2025 is already a strong year, and we have no reason to believe that the fourth quarter will be any different. We have healthy customer volume growth. We have a reasonable favorable interest rate environment. And as market leader, we have a pricing power, all of which support an upgrade in our NII outlook for 2025. We now expect growth of more than 2%. Fees continue to do very well for us. So the guidance of greater than 5% is probably on the conservative end. With this, our top line should grow nicely in 2025.

On the cost side, we stick to our guidance of roughly 5% increase in 2025, even though we do realize that the year-end-to-date performance and the possible front-loading of some integration costs related to Poland might push this figure slightly higher. Even factoring some cost volatility in, we believe that we have a good shot of printing a 48% handle when it comes to the 2025 cost/income ratio, supported by a strong top line. Risk costs should be in line with our existing guidance of about 20 basis points and return on tangible equity should be comfortably above 15%, also fully in line with guidance.

Let's now to the more interesting part in this 2026. First of all, we entered 2026 from a position of strength. Erste, as we know it today, enjoys strong growth dynamics. Add to that, that 2026 economic outlook for our region is somewhat better than it was for 2025. So volume growth should continue to be healthy. And if we don't see big shifts in the interest rate environment, which is the current expectation, then our top line in 2026 should grow faster than it did in 2025. At the same time, cost inflation should definitely come down next year. So positive operating leverage is not unrealistic for 2026. And with a continued solid credit risk backdrop, we would expect to print a return on tangible equity north of 15%. That's the existing Erste business. We are talking about a business that even prior to the acquisition of Santander Polska is in excellent shape in terms of growth and profitability.

If we now add Poland to the 2026 equation and leave one-offs aside, our profit and capital generation capacity will only improve from here. In terms of level 2026 guidance for the combined entity, we, therefore, feel comfortable with confirming our targets made at the time of transaction announcement, and that's a return on tangible equity of about 19% and EPS uplift of higher than 20% based on current market consensus expectations for 2025. And to be absolutely clear about it, the guidance relates to reported figures rather than figures adjusted for onetime items. And this, ladies and gentlemen, concludes our presentation remarks. Thank you for your attention.

We are now ready to take your questions.

[Operator Instructions] Our first question comes from Gulnara Saitkulova from Morgan Stanley.

So a question on costs. You noted that the cost growth is expected to decline materially in 2026. Could you provide additional color on the cost outlook for the coming year and the key factors influencing the cost dynamics across your various markets? Where do you see and expect the most significant cost savings to come from and maybe potential areas of pressure? And how are you planning to manage these developments?

All right. That's it. Okay. Very good. Thank you very much for the question. Now look, let's start with the environment. I think what we have seen was -- and that's, of course, the flip side of the coin of stable rate environment. We have seen that the inflation while coming down from the super elevated levels over the cycle, has still been at quite elevated level above the average of Euroland. And equally so, we have a couple of high inflation countries, to name Hungary or Romania. This, combined with the very tight labor markets, definitely has been keeping the pressure on wage inflation up. On the flip side of that is, of course, a very, very strong retail business, strong [indiscernible] business, very good asset quality. So that all, of course, is connected to each other. So that much to the overall backdrop.

On the internal, so to say, view, we have always been pointing out that the investments that we started in the second half of 2024 and have been ramping up throughout 2025 in order to improve our process efficiency, are clearly seen in our cost line. So we always have been flagging that as around 1.5 percentage points. And that is, of course, now also part of the slightly elevated cost numbers in 2025. What of this will come down in 2026? First of all, we see significantly reducing wage inflation pressure all across countries. Actually, I don't need to be specific anywhere. Of course, the absolute levels are different. But all of them have been coming down by, let's say, 1 to 3 percentage points from what we saw in '24 and '25. That's point number one.

Point number two, the index adjustments of, let's say, the broad IT spending and so on are hopefully mostly finalized, and there definitely is an easing effect. And thirdly, and that's, of course, most important for you to see how we work on the matters. We will already and we have seen already significant achievements in the process efficiency and the automation. That means that especially in the operations area and the typical mid- to back office areas, you will see reduction of staff here and there, not a huge reduction, but a significant one in order to bring down the cost inflation substantially, i.e., as Peter, Alexandra and myself have described, we see a very good chance to come up with a positive operating jaws in 2026 altogether.

The next question comes from Amit Ranjan from JPMorgan.

The first one is on capital. Can you please talk about how much of the 40 bps optimization measures are now in the numbers? I think, Stefan, you mentioned around 12 basis points. If you could confirm that, please? And what's the outlook for these benefits in the fourth quarter, please? And the second one is on capital return outlook from 2026 onwards. The 40% to 50% dividend payout range, could there be upside to this range given the pace of capital build so far? Would it be dividends, more share -- could there be share buybacks part of the equation as well, please? And the payout, would it be based on stated net income? Or would it exclude the one-off from its list?

All right. So one after the other. First question, how much is in? Less than half of the 40 bps. However, given the very successful progress all across the measures we are taking, let's not forget, the market was quite supportive, very tight spreads. So we could do a little bit more of asset sales. Securitizations are on a very good track, as you saw also in one or the other, let me say, statement reported around it. we believe it's going to be above 40 bps at the end of the year and some of the measures might still happen in Q1. So in other words, so far, only around about half of the 30 basis points of particular measures are in. But towards the end of the year, it will be more than 40 bps. That's why we are overall, in general, on better track with CET1 ratio. So that's point number one.

I think you were asking about dividend EUR 0.25 -- so EUR 0.25 very simply put. We will not change anything here. It's going to be 10% of the net profit. Obviously, with the net profit, there is certain fluctuations. So if you put the numbers together, the best guess is somewhere between EUR 0.50 and EUR 0.75 to the euro. But that's just, so to say, simply calculated, nothing to be changed there because our clear commitment and goal is that in 2026, shareholder returns on dividend payouts should be very much in the focus. I said it in the presentation that 40% to 50% net profit after AT1 deduction is our dividend policy. I think if we get back to that, given good profitability expectations for '26, a very interesting and attractive dividend for '26 should be expected.

The next question comes from Máté Nemes from UBS.

I have three of them. The first one would be on the Czech Republic. You're showing really strong 5% sequential NII growth. It seems like you are outperforming this sector, both in retail lending and in corporate lending. Could you talk a little bit about the drivers of that? What's behind this? And how sustainable do you see this double-digit retail loan growth in the country? How long this could continue?

The second question would be on the NII guidance north of 2% for this year. If I look at the quarterly developments and only assume a flattish sequential development in Q4, you already are at 2.8% up year-on-year. And again, you are showing really good growth in a number of markets, NII or net interest margin showing a trough perhaps in Austria and a clear expansion in a number of other markets. What prevents you actually to become more positive? What are the potential one-offs or other risks to that guidance?

And the last question would be on Q4 costs. In the first 9 months, you are 6.8% up year-on-year. Can you comment on what exactly in Q4 will help you to get to around about 5% or 5%-ish level on a full year basis? Any specific one-offs that you booked in the second half of '24 or any potential relief you're getting specifically this quarter?

Okay. Let me start to answer your first question about Czech Republic and our mortgage lending, consumer lending and corporate lending. Point number one, this trend is going on since more than 80 months -- 18 months, right? There was a kind of hangover from COVID times in terms of demand. Now it seems to us that this demand looks like quite sustainable. And we are just taking out advantage of being market leader there. So we are very well positioned in mortgage lending. And that's also true for consumer lending, but demand in mortgage lending is bigger than in consumer lending. And on the other hand, I think it's fair to say that we have a very balanced loan growth in the Czech Republic. It's not only about retail, it's also about corporate banking. We're doing very well in SME lending in corporate banking in the Czech Republic. So we are quite happy with what we have achieved so far, and we are deeply convinced that the demand in corporate and retail lending is a sustainable one.

On NII guidance, look, I can keep it very short. We don't have any whatsoever one-offs or so in mind. And greater than 2% can also be greater than 3%, right? But we simply wanted to leave a certain room of, so to say, caution in. That's all I can say. We are super confident to beat the 2%. We are reasonably confident to beat the 3%, but that's pretty much it. Nothing more to say here. Q4 costs, very interesting point. Please have a -- if you look at the quarterly cost chart in the presentation, you will very clearly see that the '24 Q4 was elevated even more than usually the Q4 bookings are elevated. There are various reasons for that.

Some of these effects will repeat, to be very honest with you. For example, we have a component for our employees and managers in the bonus payments, which is tied to share performance, and that obviously has to be provisioned in the cost. So that's one element which we repeat. I was already mentioning in my presentation that there is a small but not completely immaterial part of the Polish integration costs that we will book. So we will see some effects in Q4, but certainly not such a jump up like in 2024. That's why the year-on-year quarter 4 comparison will come down quite substantially, and that helps us come much closer to the 5% than we are in so far in the first 3 quarters. I think that's the explanation for Q4.

But let me -- allow me please also to make a statement for '26. As I already answered in the former question, that's really critical that we bring down the cost inflation in 2026. Even if we have fantastic top line, it's important for us to come to, let me say, at or even below inflation levels in order to support the overall operating performance and that we definitely have in the cards for 2026.

The next question comes from Benoit Petrarque from Kepler Cheuvreux.

So the first question on my side is on the earnings power for Poland. Just wondering what you see operationally in Poland and also looking at several factors like rate outlook and bank tax, if you could refresh us on your guidance for Poland for '26.

Then second question is, again, on NII. Yes, what can stop NII to further increase in the coming quarters, basically? I mean you have NIM stabilization, a very strong loan growth across the board, positive mix effect. So I think in your slide, you mentioned potentially flattening of the curve or ECB rate cuts, but it sounds like NII momentum will remain strong in the coming quarters. And just wanted to confirm again that with NIM stabilization, it's going to be a function of loan growth as far as NII is concerned.

And then last one, just on the loan-to-deposit ratio, which is deteriorating a bit for several quarters. Do you plan any specific steering actions to, well, rebalance deposit growth versus loan growth because loan growth will probably stay strong next year. So any planned actions there?

If I may start to answer your question. So the first part about Poland, I think yesterday or the day before yesterday, hopefully, future colleagues in Poland announced their third quarter results. So you can see they are still going very, very strong. And also the forecast for next year when it comes to economic development is the highest in the whole region, will be definitely above 3%. When it comes to NII, in general, before I hand over to Stefan, this is exactly what we tried to explain that when we assume that interest rates will more or less stay at the same level as they are today, where this is also our forecast, then there should be much more correlation between volume growth and NII growth compared to this year because we are quite happy that we succeeded to increase NII this year.

And we should not forget that this year, we have seen a decrease in interest rate environment. So it's just given the demand in our region. And again, this is the only region in Europe which is still growing. So the demand in loan growth and our capability to fulfill this demand led to a situation that our NII is growing, although interest rates are coming down. If you put this in perspective for next year, and let's assume again that interest rate level will stay where it is, then our loan growth should be even further -- NII growth should be even better.

I completely agree. That's exactly how we explain the situation. And I have absolutely no disagreement with your statement that further on in the upcoming quarters, we could also see a further growth in NII. There is nothing in our statements that would contradict that. It was only the discussion about Q4, and you know exactly that there can always be a couple of effects that drive it a little bit more up and down. I think our guidance for Q4 is also open on the upper side. So no problem with that. One reminder, just not to get too overly excited. Of course, certain measures that we took very successfully also have a certain limit. So in other words, deposit repricing doesn't go on forever, and we have been very successful in that across the markets, as we explained.

Also, let's not forget that the funding -- so for example, wholesale funding levels, which we were perfectly making use of in 2025, there is no guarantee that those funding spreads remain at tight levels. So I mean, we are super optimistic, but we also should remain realistic and not expect that things go through the roof. On your loan-to-deposit statement, I have a completely different opinion here, very simply put, I think we are in a perfect sweet spot. We're in a perfect sweet spot, anything around this 90% loan-to-deposit ratio across the group, I feel super comfortable with. Of course, there are big differences between the markets. I'm happy to go in a different session into the details market by market. But overall, the loan-to-deposit ratio is exactly where we like it to be in this rate environment. And we will, of course, very closely watch all the indicators on the liquidity and deposit front. But so far, could hardly be better.

The next question comes from Gabor Kemeny from Autonomous Research.

One question on Poland, please, on the bank tax, in particular, the bank tax proposal, I believe this is still a proposal. If this gets implemented, how would that impact the operations of Santander Polska? I believe you are expecting to create significant goodwill with the deal. Could the bank tax impact the valuation and with that, the capital impact from this acquisition? That was the first question.

Secondly, on the NII outlook, thank you for all the clarifications. Just numbers-wise, I believe you are annualizing close to the EUR 8 billion mark in Q3 or perhaps H2. And then I believe you guided around EUR 3 billion from Santander Polska, which together gets us to EUR 11 billion before considering growth. Are there any trends, any deviations you would like to highlight for our modeling the 2026 NII outlook, please?

And the final one would be, Czechia is about to, let's say, getting a new government or forming a new government. Do you have any views on the likelihood of the new government introducing another bank tax?

Gabor, let me start with the last part of your question about Czech Republic. So far and also not during the election campaigns, there was anything mentioned when it comes to banking tax. Of course, we know that all over Europe, banking taxes are an issue because a lot of countries have an issue with the public debt levels, which is not so much the case for the Czech Republic. I think therefore, this is not such a hot topic in Czech Republic. So from today's perspective, we don't expect the banking tax in Czech Republic. But of course, I need a political disclaimer, you never know when it comes to politics.

On NII, Gabor, very briefly. I mean, I think your statement on the existing parameter of Erste Group can only be signed off, if that's correct. That's all fine. I'm not in a position to comment yet on detailed outlook for our future Polish subsidiaries. First of all, we don't know the detailed internal drivers, the hedges, all of that. So please ask you for understanding that we can only talk about that really after closing. And certainly, you can read a lot out of this from the reporting of future Polish colleagues.

On the banking tax, look, I completely agree. It's still in the political decision process. There are all kinds of discussions around that. I don't want to, and I cannot comment on that in more detail. What is very important to understand, even if the government proposal goes through one-to-one, we are talking about a onetime lift up to 31% in 2026, then 26% and then 23% as, so to say, the new level, which, of course, eases substantially your assumption in terms of the terminal value and stuff like impairment tests and goodwill assumptions.

So we have been doing the numbers, obviously, and we don't see any whatsoever reason to adjust them now. But of course, we will do this ongoingly. We are in constant contact, of course, already today with our auditors in assessing the situation. But so far, we don't see any changes on that. Adding to this, of course, and Peter said it in a couple of statements also publicly, the strategic rationale as well as the overall, so to say, profitability, long-term outlook doesn't change at all. We are used to those kind of measures. Do we like them? Obviously not. Do we have to live with them? Certainly, yes.

The next question comes from Ben Maher from KBW.

Two quick ones. First one is just on the cost growth we're seeing in Czechia. That's obviously accelerated a fair bit in the quarter, but inflation has been quite low there for a while. So just interested to see what the main driver of that is. And then my second question is just on the overlay releases. I think you did mention it before that you're guiding to, I guess, fewer releases than what you were guiding to last quarter. I was wondering if you could give any color on the potential releases for next year? And do you have a view on the terminal stock that you're targeting? Or is this something that you don't really target?

I'll start with your question on the releases of FLI overlays. So as I said, for this year -- for the remainder of this year, it's roughly EUR 70 million, which we expect and going forward with even somewhat lower levels, yes. So maybe around EUR 50 million releases next year, and then we would rather expect to have come to a certain stock of FLI, which we would also then carry forward. So this is the current expectation. So no huge releases, but some...

Okay. I think your question -- we had a bad line at this moment, but I think your question was around Czech costs, right?

Just the acceleration in the cost growth in Czechia during the quarter.

No, I think -- I mean, look, I just looked up a couple of numbers with my colleagues. I don't see any specific -- look, the wage inflation level around about is in the mid-single digits. So we had adjustments of salaries around 5%. We had a couple of very good and forward-looking initiatives on IT side, AI and so on in Czech Republic, which also played to it. But maybe if you can be more specific, I don't see any outlier whatsoever in Czech Republic, by no means on the cost side. So it's business as usual, I would say. And comparing to the market, I think we are at average. But maybe you spotted something, then let us know.

The next question comes from Krishnendra Dubey from Barclays.

I just wanted to check on the fee guidance actually. So as of -- till 9 months, you're trading at 8% y-o-y, I know you say more than 5%, so it could be 5%, 6%, 7%, consensus at 6.5%. How do you see that trend developing? And the second question was on the 2026 net profit guidance. When you talk about adjusted EUR 4 billion, is it pre-AT1? Or is it post-AT1? And lastly, you talked about EUR 200 million of one-offs. Are those tax deductible or those are not tax deductible?

Okay. The second one is easy. Everything that we talk about is pre-AT1. So if you do, so to say, your math around, for example, dividend calculation or the like, and we can provide you with the AT1 payments, absolutely no problem. So that's all the numbers that Peter and myself were using are pre-AT1 dividend or, so to say, AT1 costs.

On the fee trends, look, yes, you're perfectly right that we had these discussions, as you can imagine. Given the Q3 or year-to-date numbers, the greater than 5% looks a bit conservative. On the other hand, we all know that on fees, 1 percentage point is something around EUR 25 million, EUR 30 million. So that can easily jump up and down. So what value is there if you go to mid-single upper-digit [indiscernible]. So in that sense, there is no break in whatsoever. Q4 usually is very strong, always subject to, for example, capital markets and so on in terms of asset management fees and so on. But there is no whatsoever slowdown, as I said in the presentation, already visible. What will be interesting, of course, to see on the back of [indiscernible], again, the similar effect in the other direction. If inflation constantly comes down and slows down and obviously, some of the fee drivers might slow. But nonetheless, with our strategic focus, we are super optimistic, by the way, also for Poland that we can improve some of the fee-generating activities substantially.

And maybe if I may add some kind of sentiment from a business point of view. As Stefan absolutely rightly mentioned, I mean, inflation was already coming down this year. So what we have expected for this year was a little bit more decrease in the related payments, which didn't happen so far. So I think our capability to generate new clients is supporting us there to compensate the decrease in inflation and the potential impact on the payment fees. When it comes to asset management, it's clear that the volatility can increase, of course, in the upcoming months, which will be mainly reflected in the volume of our assets under management in Asset Management.

When it comes to fee income generation, the way how we have built up or continue to build up our asset management proposition in most of our countries is this monthly regular investments in asset management products, which makes us not so much dependent on volatility in the market because it's kind of cost average principle which is supporting our clients to build up wheels in a very stable way. And last but not least, also coming back to Stefan's remarks, we see a huge potential in terms of fee income in the Asset Management in Poland because we believe that this market is somehow underpenetrated when it comes to asset management, which is not a surprise because there was a different history in interest rates compared to other countries we are operating in. So if I remember correctly, we have never seen negative interest rates in Poland. So the engagement or the love to term deposits is a little bit higher compared to other countries. But when you look at the volumes of asset management and given the size of the market and given the proposition of our bank, we see a lot of opportunities.

And we were -- thanks, Peter. We were speculating. I think you asked about the tax deductibility and integration costs and so on. This is a very important information. The lion's share of it certainly is tax deductible. That's absolutely clear. Details can be given once we are more specific and have the detailed costs and everything on the table. But the general answer is yes.

The next question comes from Riccardo Rovere from Mediobanca.

First of all is on the -- if I'm not mistaken, EUR 300 million credit losses that may burden your profit and loss in 2026. Just to be clear, this is the purchase price allocation when you're measuring all the assets and all the liabilities of Santander Bank Polska at market prices. So this eventually should lower the goodwill that you will book out of the transaction. So it should be kind of capital neutral if I understand it Correctly, So Completely Irrelevant from That Standpoint. .

The second question is just a clarification from Alexandra. If I'm not mistaken, I understand that in 2026, you expect to use only EUR 50 million of FLIs, just a confirmation of this number. Then if possible, I would love to hear your thoughts if the SRTs that you have done and that you plan to do as far as I understand, will have a revenue impact at some point or in case how much it could be? Then I have a question on Poland and the Advocate General a month ago or whenever it was, talked about -- said that the, let's say, the Polish court have the right to look into the VIBOR -- using VIBOR as a benchmark. Is this something that you're looking in us? Is it something that worries you? Is it something that should be -- is not a matter of concern for you?

And then I have another question on deposits, if I may. I mean, wage growth in all the countries where you operate is running above GDP growth. And I guess this is the reason why the deposit growth outpacing at least in some countries loan growth. Is that supposed to continue, you think? And if that continues, do you see reason or ways to move some of these deposits considering 90% loan-to-deposit ratio or something like that into the Asset Management, which, if I'm not mistaken, hit EUR 100 billion. So those have been growing pretty fast. And you are happy with the amount of asset management fees, wealth management fees within your revenue base. Or is this something that you could consider expand?

Okay. Let me start. So first, very short, yes, I can confirm we expect currently EUR 50 million release for 2026, but not only from FLI, this also includes some releases from the current overlays that we have for the cyclicals. Now the second one, this I cannot confirm. So this up to maximum EUR 300 million that I was mentioning, day 1 ECL recognition is not the PPA effect. So IFRS, there are 2 topics. The one is IFRS 3, where we are obliged to measure the financial assets at fair value on the acquisition date. And on top comes IFRS 9, subsequent measurement, where we are forced to book the performing ECL of the acquired portfolio on the level of the mother company immediately. So it's not a PPA effect. It's a combination of IFRS 3 fair valuation and additionally IFRS 9 requirements. We also have -- if you're interested, the paragraphs for you to look it up, but I'm sure Thomas will be happy to take this up afterwards.

All right. On to SRTs, and thanks for the question because it gives me opportunity to answer a few points. Of course, the ones you were asking about, but also some you have not been asking for. So first, what costs are associated with the SRTs. Obviously, there is no free lunch anywhere. Therefore, very clearly, if we conclude all the SRTs currently foreseen for the rest of the year or latest in Q1, then you have around about for the next 2, 3 years, a fee expense of EUR 50 million. So that's exactly the cost. It's booked in the fee expenses since they are kind of considered as insurance payments if you want to have a comparison, but you know that anyway.

What is very important to mention is that we have an extremely well-diversified portfolio of SRTs in planning, both in terms of geographies as well as in terms of areas, so to say, of business. And forward-looking, and Alexandra and myself have discussed this in very much detail with our teams, we want to use SRTs not only as a capital optimization measure, but also as a kind of portfolio optimization tool. And I think it's both in terms of segment risk as well as optimization on pockets right and left. And we learned a lot in the last 2 years again, and we are super happy to have this tool at hand. And in terms of, so to say, cost and capital relief, I think it's a fantastic tool for our current tasks and for our current goals.

Maybe last comment to put these things in perspective. If you look at the overall European landscape of banks and comparable players in the market, we have been way below the utilization of SRTs so far. And with all the executions that we are aiming for, we should land somewhere at the average of European banks comparable to ourselves. That's also where we feel very comfortable.

And if I may answer [indiscernible] the law lecture you when it comes to VIBOR, so not too much news since we talked last time. So there is this preparation of the decision of the European Court, which is saying that the usage of VIBOR in a contract is compliant in loan contracts. So there are also some decisions in Poland from local courts, which are in favor of banks. So I don't want to downplay it too much because it's drilling down that this seems to be not a systemic problem like the Swiss franc topic was several years ago, but it seems to be a topic which is drilling down to the concrete advice, which was given to clients if advisers have made clients aware that they have floating rates. So I think this is a completely different situation.

But to sum it up, I mean, we are fully aware that consumer protection is here to stay, and this is something we are dealing with in all our markets. And just to remember, everyone started in Austria roughly 20 years ago. So it's not only about countries like Hungary or Poland or so. This is a topic where we are dealing with all the time. And the easiest way to be compliant is to come up with compliant products.

Yes. I think, Peter, do you want to -- I think I take the first part of the deposit question. With regard to growth, yes, well spotted. Of course, there are short term -- there are deviations from GDP growth, deposit growth, both on individual level for us, but also in the respective markets that stems from various matters, as you perfectly know, it's Central Bank liquidity as well as money supply overall. I think that in general, we are an extremely attractive bank to our depositors. The trust is that we have been gaining and we are working on every single day is a factor. We are a big player in all the markets. All of that plays into this.

On your other question, and I think that's obvious, we want to have a very good balance between keeping a strong deposit base, but of course, advising our clients for a right balance of asset management products, long-term savings and better yielding products. And I think it's all about the balance. It's all about good advice. And if you look at also the feedback of the market and all these measures like NPS, CXI, I think our colleagues are doing an outstanding job there. And that's also the goal for the future. Money which is available for a longer-term saving, of course, should not be kept necessarily on the lowest dealings. That's the way we are advising our clients, and that's how we want to help them build their wealth for their long-term future.

Thanks, Stefan. If I may follow up one second on this topic. At the moment, with the current pricing at the moment of the deposit, is it better to have the deposits on balance sheet. So feeding NII or off balance sheet in asset management? What is the margin better now?

I think there's no -- if I may jump in, there is no clear answer to it. It's very much depending on client situation, of course. And on the other hand, it's also fair to say that I think we have proven over the last, let's say, '24 or even longer period of time that our capability to manage interest rates on deposits in both kind of environments, increasing interest rates and decreasing interest rates, we are doing very well, point number one.

Point number two, as Stefan rightly mentioned, for long-term investments, we are very much in favor of our clients to invest in asset management products because we still believe that this is an area not only in countries like Poland, where we see room for improvement. This is true for all over Europe. Look at the [indiscernible] report, look at the [indiscernible] report, look at every kind of speech politicians are giving typically on Sunday, not obviously me impacted, of course. But this is very obvious that there will be a strong tendency over the upcoming 20 to 30 years that people in Europe will invest much more in asset management products. So there is no clear guidance between technical P&L measures. We are doing very well in managing interest rate levels and of course, giving advice to the right -- proper advice to our clients when it comes to asset management.

The next question comes from [ Seamus Murphy from Carraighill ].

Two questions, please. Just -- I suppose one of the major positives for Erste when we look across Europe is that relative to most of your peers who are also growing is that you've kept your FTEs or your employee numbers pretty constant since '22 despite the balance sheet growth. I suppose my question is how long can this be sustained? And should we consider that the employee numbers will grow into '27? Or how are you thinking about the growth in employee numbers?

And secondly, just very briefly on NII. I suppose when I think about NII, there's 2 components to it. Obviously, we have the structural element to it, which is the potential yield uplift, still to come from your current account reinvestment of your maturing fixed rate products. So I mean, in this quarter, I think you mentioned Slovakia in particular, for this in terms of uplift that came this quarter. But assuming that this is happening across the group, I suppose it would be great to know the size of the fixed rate mortgage pool back in your current accounts and also what the current back book yield is on those products versus the front book, so we can have some estimate of how this component of NII evolves kind of like in the next 3 to 4 years.

And I suppose the last component of that question is just, obviously, we've seen this move into current accounts. And as the curve steepens from here in the risk that you do believe the curves to steepen, how quickly do you -- or how do you decide between the reinvestment rate, whether you put it in cash at Central Bank or whether you again reinvest in your own fixed rate mortgage products?

If I may start. Let me answer your question related to FTE development. Of course, we try to keep the numbers of FTEs flat in a way that we -- the way how we look at our business is, it should be a scalable business, which is anyhow not an easy task because we are in the same situation like all other European banks when it comes to IT legacy. So it's a lot of work to further improve efficiency in terms of technology. But this is a clear part of our strategy and you have seen some investments this year already, really what we always call investments related to our strategy that we want to achieve a level of end-to-end processes, which should help us to keep FTE development stable in the future, even adding additional business on our balance sheet. This is a very clear goal. And of course, putting aside that we will have roughly 10,000 employees more after the acquisition of Poland.

Let me take up your question, which is a very interesting one. And let me say at the start that some of the details, I would kindly ask you to take offline with Thomas because, of course, we could talk about overall interest rate strategy for at least an hour or so. But let me state a few of the most important matters.

I think what is helping us at this very point in time, and that's why, for example, Slovakia is outperforming so much, Czech Republic to part as well is that we have refixations in durations, which are now upward pricing. So mortgages in Slovakia, for example, have a typical fixation period of 5 years, right? So we are now still fixing substantially upwards. And in the same moment, deposits are coming down. That's why a country -- a euro country like Slovakia is so well performing apart from their excellent new production. That's one effect.

The other one, if you look at the details of the NII results of the last couple of quarters, you see that other Austria, typically where we have the ALM investments, where we have been booking, of course, also kind of investments going against the sensitivities of the Austrian/euro, sensitivity for downward pressure have been gaining substantially. So these are big bond investments, which are in amortized costs, but of course, are benefiting from the high investment yields, which leads me to your third point, and that's the steeper curve.

Now look, I mean, this on the trading book, having been a trader myself in the past, it is not a trading book where we are reacting on a day, on a weekly basis. But of course, we are very closely looking into the shapes of the yield curves, okay. Sometimes you get it better, sometimes not as good. But I think the last 18, 24 months, we were anticipating the shape of the yield curve and the spots in the curve where we thought the duration is the best, very well. And currently, we have a duration on the overall investment book of around about 4.5 years, a little bit different from country to country. But overall, the yield has, of course, been shifting upwards.

For those who know us for a long time, the investment book has been coming down substantially for many, many years and now has been going further up for, Thomas, I think, 5 years, right, 5 years upward trending. And this -- on Page 43 of the presentation, you'll find a very good description of how the allocation looks like in terms of geographies as well as, so to say, accounting logic.

Can I -- just a very brief follow-up, if you don't mind. I suppose that what I'm just trying to figure out, is it still a couple of hundred basis points or more in terms of the refixations that we will see over the next few years? Or I mean, some quantum would be super beneficial.

What I can say from top of my head, in Slovakia, for example, since I was talking about Slovakia, we have another 2 years to go roughly in terms of positive refixations. Austria is different, as you know, because there is a different mix between variable and fixed loans on the Austrian [indiscernible], it's more fixed. On the [indiscernible], it's more variable. That's why we always have a bigger sensitivity there. In terms of absolute numbers, I kindly ask Thomas to follow up with you to give you the breakdown of volumes country by country. There's no problem. We have all of that.

The next question comes from Robert Brzoza from PKO BP Securities.

I want to revisit the adjusted profit guidance for '26 to see if I got it correctly. Am I right that you see this in adjusted terms at around EUR 4 billion level? And then if you could provide sort of a rough bridge between the adjusted and reported. Should we assume that the potential IFRS 9, EUR 300 million would be sort of included in that bridge plus the potential EUR 100 million to EUR 200 million additional reorganization and post-acquisition costs. So that's on adjusted versus reported '26 outlook. And related to that, can you reiterate what's your post-acquisition RoTE guidance? Is this guidance based on the adjusted or reported figure?

Okay. So thanks very much. So again, clarifying what Peter and myself said and also Alexandra was perfectly explaining the IFRS 3 and IFRS 9 effects and so on. First of all, we don't talk about the guidance here to be very precise. We talk about our ambition levels. And once we have finalized the closing successfully, then certainly, when we talk to the market to you again, end of February, then we will translate everything into a real guidance. So just to be precise here. We are always talking about the difference between adjusted -- sorry, adjusted and reported. You're perfectly right in your description. When we talk about the ballpark EUR 200 million integration costs and the estimated EUR 300 million of the FX, which are long-term P&L neutral that Alexandra and Peter explained, we are looking at a reported matter for 2026. But again, guidance and more detailed insights, we will then be providing with the, hopefully, end of February reporting for the full year 2025.

Right. And then the post-acquisition, RoTE, I assume that would also be sort of highlighted in February, correct?

19%, unchanged. Absolutely correct, on reported basis.

We have a follow-up question from Riccardo Rovere from Mediobanca.

When it comes to the EUR 462 million of overlays and FLIs, Alexandra, is it possible to have a split between the 2, how much is the overlays? And could the overlays be used against the EUR 300 million that you expect on performing loans in Poland? The other question I have is, how do you think about the fiscal boost from the debt break relaxation in Germany? Do you see any potential positive spillover in Austria and in -- do you have any idea how this could eventually play out?

Okay. So the breakdown as of Q3, we are talking about EUR 462 million of stock. Thereof, EUR 323 million FLI, EUR 122 million overlays cyclicals and some minor other overlays. So this is the breakdown. And we expect -- but this is really only an expectation. So in case we can release or can have to, it's both, EUR 70 million released until end of 2025, this would be a split of the EUR 70 million between FLI and [indiscernible] overlays.

To your question, if we can use going forward for '26, so this is against this ECL day 1 booking, we cannot. These are 2 completely different concepts. But yes, but of course, the release is always a release. And if you add provisions, but we cannot net it in the sense of a methodological netting. This is not possible.

And if I may take the question about Germany. To be clear, we expected a positive impact even a little bit earlier, but it's taking longer due to different reasons. But let me share with you -- I had a discussion with the CEO of a construction company, one of our bigger clients, and he is doing roughly 50% of his turnover in Germany. And they are building a street in Romania at the moment, in Bucharest, and they are able to build the street for 30 kilometers in one shot. In Germany, it's a different frame and a different scheme, how things are operated.

There you have to tender every 5 kilometers. And I don't want to judge it. It makes very much sense how they do it in Germany, but it just takes longer. On the other hand, it should be much more sustainable because it's -- to spend this EUR 500 billion, it will take some time. There should be a positive support for economic development. And yes, of course, we are expecting positive impact in countries like Poland, but also Czech Republic, maybe Slovakia. But this is something we expect for 2026. And I personally expect it in the second half of 2025. So you see a slight increase in the economic sentiment in Germany, but so far not the super bazooka boost as it was announced at the beginning.

Peter, if I understand you correctly, you expect to see something in '26 on the back of that?

Yes, exactly.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peter Bosek for any closing remarks.

So then let me say thank you to all of you. Thank you for listening to us. Thank you for your questions. Stefan and I are very much looking forward to see some of you at least in person next week during our roadshow. And let me tell you that we will come up with the full year results 2025 on the 26th of February 2026. Very much looking forward to it. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Hello, everybody. Welcome to -- everybody that came from CEE on [Foreign Language].

[Interpreted] My name is [Margaret T], and I'm heading Enterprise Communication of Erste Group, and I will guide you through the press conference today. The results will be presented by CEO, Peter Bosek, Alexandra Habeler-Drabek, COO and CFO, Stefan Dorfler.

The presentation will be held in German, you can ask your questions in German as well as in English. I'd like to pass the floor to Peter Bosek.

Good morning. I guess you can say good morning at 11:00. Thank you very much for the large turnout, very pleased about the interest coming from other countries outside of Australia. And in particular, I would like to also welcome our Polish colleagues. We are here for the first time for our half year press conference. So I think that you're aware of the fact that this has been a very exciting first half year because we have managed to enter the Polish market. In autumn of last year, we informed you about the fact that we had completed our strategy and that we have been interested in entering the Polish market for some time.

So we're very pleased that we were able to announce on the 5th of May that we had agreed with Santander and that the Santander Bank Polska which we acquired. So actually, we will acquire 49% of this bank. This still gives us the possibility of full consolidation to appoint them as the Supervisory Board and to name all the Board members.

And In addition, we'll also acquire the Asset Management company that is in part a subsidiary of the bank and partially belong to Santander Bank. Now there is, of course, a situation where -- we will be transformed as a group. As you know, over the past few years, we have operated very successfully in 7 countries. I think that the figures that Stefan Dorfler will be referring to in more detail.

These figures are extremely positive for the first 6 months of this year. But of course, due to the market entry in Poland, we are now coming to a completely different level. Poland is one of the biggest economies of the European unit. It's our biggest market with 38 million inhabitants. And if you look at Poland and its economic development over the past 30 years, it's been clearly one of the biggest success stories in Europe. Poland has annual growth rate of more than 3% in the past. And the outlook for the years to come will always provide for economic growth of more than 3%.

We are in a situation where there's a good internal demand, domestic demand has also a lot of development -- research and development, especially in banking that are very experienced and well-trained employees because American banks started operating there very early.

So on the banking side, it's a very interesting market. And like I said, Poland is definitely a poster child of the European economic development, not only because the training of people there is extremely good and that also the mindset with respect to work is at an extremely high level the acquisition of Santander Bank Polska for us, well, what does it mean? It's the third largest bank in Poland.

It is the largest privately owned bank because the first 2 banks belong to the government. And what we have been able to do in our negotiations with Santander to acquire a 49% stake. Now if you take a look at the KPIs of the Polish bank, they have 6 million customers, close to 10,000 employees, it's about our credit book there large loan book. And we as a group after we get all the approvals from the authorities, 2/3 of our customer portfolio will be outside of Austria.

So that is quite strong significant statement and a strong commitment to this region of Europe, because we are convinced that it is the best region to be in Europe because this is where economic growth is happening and because there's also a good long-term prospect that is suitable for banking.

Polska has a very strong retail arm and a strong corporate arm, so I believe that it is worth mentioning what we are focusing on, what we're looking forward in a positive sense. What you see on this slide, as the result of the excellent work of our customers in the markets on the corporate side. In recent years, as Stefan has always succeeded to work in -- to be leading in the region in terms of the bond business and the equity business. This is something that actually happens quite a lot so that we are in the global ratings, but we are the fifth largest when it comes to covered bond issuance.

And we know the league tables of our potential colleagues in Poland, who are also leading in the area of debt and capital markets and debt and equity capital markets. So what we are going to do is we are going to come up with a capital markets powerhouse in Central Europe, which is very good for us because you know that we are interested in building a capital market infrastructure in the countries where we are operating because we are firmly convinced of the fact that the capital market infrastructure is a prerequisite for long-term economic growth.

And this was in a position where the region that we have been operating in, we now have a good or an excellent position even in Central Europe. And I think this is extremely positive for the future outlook. Of course, there's a lot that needs to be done now. And I would like to use this opportunity to thank all our employees in the group because the workload has really increased in the past months. So we have already achieved a lot, and there's a lot that's still ahead of us. So it's a major transaction means that where we had the signing of course, and then there's the closing. So the closing is when the bank really belongs to us. Now we've just signed the purchase agreement with Santander and the phase in between is about getting all the required approvals and authorizations, also the approvals of the local Polish supervisory authorities, KFN -- KNF and also some additional approvals from the European Commission and to trust approvals, but also other approvals in countries where we are working indirectly through our savings banks. So we need to be antitrust approvers from them.

And I can tell you that all the supervisory authorities, including the European Central Bank. That is, of course, the authority that has the oversight. So they have a -- it's not that they look at the oversight. So of course, they are all very supportive. And I think it's a positive momentum because that's the biggest cross-country M&A acquisitions since 2014. And in Austria, it's the biggest transaction that our company has been doing in another country.

So as far as we can see, we are on track in order to obtain these approvals. And we believe that towards the end of the year, we can have the closing and then the 49% of Santander Bank Polska will belong to us and then we'll also have the ownership of the asset manager there. If you take a look at the first half of the year, and of course, Stefan Dorfler will be reporting about this in more detail.

We are extremely happy that we have managed to build up so much capital. You know that we are refinancing this transaction without the need for any capital increase. And that has also been 1 of the reasons why the capital markets reacted so positively because we have the same number of shares of 410 million shares, and we'll have higher profits and this KPI, the earnings per share is, of course, highly relevant for us. And this is only possible if we have the possibility of generating capital and we can only generate capital if we have profits.

So this is why we are so pleased that the common equity Tier 1 is now at 17.4%. And it's also a very positive fact that volumes in Central Europe have developed positively in the past 12 months. We already reported that housing finance in the Czech Republic and in Slovakia and partially also in Austria, has begun to increase again in some countries such as Romania, we are seeing positive growth in consumer lending and that has led to an increase not only in the loan volume, but also the net interest income because the interest rates have developed positively, and this has led to a better result.

Something that's also very positive is Asset Management, the development of asset management and that's also a phenomenon of the capital market structure that we are trying to implement and deploy in the region. You know that Erste Asset Management has always played a very strong role in the past 12 months. We made 2 minor acquisitions in the area of asset management. And this is why we now have assets under management to the amount of almost EUR 96 billion. And if the markets develop more or less positively, we will probably soon cross EUR 100 billion limit.

Of course, there are also other activities that we consistently pursued such as -- as you can see here, continuing to bet on securities of savings plans, investments in asset management products because we think this is a suitable instrument for our customers.

So they don't need to worry about the volatility. So if the markets develop positively, they will buy less and in the long run, this leads to the best results. So we continue to develop additional models that help us facilitate online banking for our customers in the Czech Republic, we developed a George, which is a digital assistant, which makes online banking easier to handle.

So we have close to 2 million customers for George. The feedback is very positive, but you know that we normally use the customer feedback to develop our products further, so step-by-step, we're going to also implement this and roll it out to other countries. Our corporate variant of online banking has also been further developed and we now have more customers, and we are also beginning to roll it out to other countries. So I believe that essentially this is something that you're already familiar with. So this is what we are doing. This is our day-to-day efforts to improve our services to our customers.

And of course, we will continue along this line, this is where we place the emphasis to ensure that the existing customers in the various countries we're operating in will have a better service quality and now I'd like to hand over to Stefan.

Thank you very much, Peter. Ladies and gentlemen, a cordial welcome. Very nice good morning. First of all, I would like to talk about the operating result, the operating income and talk about the specific figures. In the first half year 2025, and we always compare this period with the same period in 2024. We increased our operating income by 2.7%. So we had a better net interest income and in an absolute way, an increase in the fee business, which is very pleasing because this plays a very important strategic role for us. And we wanted to have a balanced field in the medium term. All other fields are negligible.

What do we expect for the rest of the year? In the second half of the year, and I'll come back to that when talking about volumes. In the second half of the year, we will benefit from higher loan volumes, which I will describe higher credit volumes in Central and Eastern Europe. And following the last signals of the central banks, we expect a rather stable interest environment.

You know that ECB expected downgrades of interest rates. But an hour ago, we saw that the Erste interest rate is 3.6%. And this means that we cannot say goodbye to any inflationary trends. And this is why ECB will have to analyze the situation and thinking about reducing further interest rates below 2.2%. In Eastern Europe, the situation is similar. Just let me highlight the Czech Republic, the prime rates are 3.5% at the moment.

Looking at the cost side, of course, this is also influenced by the environment, which I just mentioned. Alexandra will come back to asset quality. But in all countries that we're doing business in, we have very strong labor markets. We reported that in the past years and the situation hasn't changed so far. This also means that we have pressure on the salaries of our employees. And this is also reflected in personnel costs, which have also significantly risen in Austria.

In absolute terms, we see an increase in costs that's currently compared with the increase in operating income. What do we expect for the rest of the year, we expect this trend to level out because in the first half year, we have one-off bookings. So for example, contribution to the deposit organizations are booked in the first half year, but it's much too early to give a detailed outlook to 2025 -- the whole year 2025. We had very promising future-oriented investments in the past 1.5 years. And as far as our business is concerned and also efficiency is concerned, we expect the first effects for 2026, and we'll continue to inform you about that.

What is very pleasing for me and what is very important for our group and for controlling and steering our group is that we have a very balanced development as far as loans and deposits are concerned, asset and liability side. This is the basic prerequisite for serving our customers, our private customers and corporate customers and supporting them, the liquidity situation and the risk situation is a basic prerequisite for that. I have reported several times as there is a certain feeling what we feel at ease. So [90%] as far as the loan deposit ratio is concerned, is a very pleasing one and we want to do perfect business within our customers.

I personally expect that as far as the loan side is concerned, we hope for certain effects that I -- will I -- I will describe later on. That is to say, we can use our excellent liquidity situation for business with our customers. And we do hope to support our investment cycle that we expect for the near future. As far as the investments are concerned, you know that Erste Group is very strong in all countries and has a very good position in the private customer business and corporate customer business.

Let me continue with Peter already mentioned. We see the first time for a more sustainable loan growth. What is the reason for that? We see different situations in the individual countries, and these different figures depend on the public sector and the large corporate companies basically in our region and what is very pleasing also in Austria, we see a higher demand in housing loans, which has been subdued for certain time due to various reasons in some Eastern and Central European countries, we have double-digit growth rates based on a lower basis and in Slovakia, for example, the figures were very good last year, and we see an increase this year of 7%.

This makes us optimistic that in our core business in retail and in housing, we will be successful. And this is also supported by consumer lending. This is a very sustainable growth path and I don't want to exaggerate that because interests are much too high at the moment. As far as Austria is concerned, we'll see how the further development will materialize. We have good demand, corporate demand in Austria, but this is not relating to long-term investment, but short-term investments and we do hope to have long-term investments following a German investment plans, but we have good demand in revolving business on the corporate side and the mortgage business was already mentioned. This is very important for us that it's a sound business that we have a good asset quality, and this is where Alexandra comes in.

Thank you very much. My colleagues already mentioned that we have a rise in credit volume. What is not rising is risk costs. You all know the left bar, it was the COVID crisis, the beginning of the COVID crisis followed by other -- by several years, which were not characterized by this bar not in Austria and not in Central and Eastern Europe, we had extremely low interest risk costs at the beginning of 2024, a difficult economic environment in Austria and fill that in our portfolio, we had 18 basis points. And looking at the first half of 2025, that's the green bar at the right-hand side.

If you look at this bar, we are slightly below 2024 at 16% at an annualized basis. And this means that we book the same risk costs in the second half of the year as in the first half. So we have 16 basis points at the end of the year. See what is the cost of risk costs. In 2024, I told you that in Central and Eastern Europe, we had 0 risk cost net that were booked and everything was caused by Austria. And this is what we expected for 2025.

We expected higher risk costs and higher defaults in Austria, but slightly lower than 2024, and we expected an excellent risk profile in Central and Eastern Europe, but not the net 0 that we saw in 2024. And this is what happened in the first half year. The situation in Austria improved. Looking at the first half year 2025 and comparing it with 2024, bookings in NPLs went down in Austria, went down markedly. But we remain conscious. The environment in Austria remains to be difficult. You all know that. And the economic recovery could take longer than expected a longer than desired.

But nevertheless, we see a recovery in Austria in a year-on-year comparison. Central and Eastern Europe, credit situation is very good, and this hasn't changed so far. So let me continue with an NPL ratio. NPL ratio at group level is 2.5%. This is slightly below the level at the end of 2024. And this is also the level that we expect for the end of this year. Looking at the individual countries, you see that the situation is very good in the Central and Eastern European countries with just 1 exception mainly Romania and here, we are talking about isolated cases in the agricultural field after draught periods and also hit by the war in Ukraine. So these are isolated cases and it's not an indication that our portfolio deteriorates.

As far as Austria is concerned, what are NPA inflows in Austria. It's some cases from commercial, real property, but the volumes are lower. And we hope and expect that this recovery is continuing, maybe not dramatic -- dramatically, but sustainably so that we achieve an NPL ratio of 2.5% at the end of the year. Our risk cost guidance was taken back. Originally, we expected up to 25 basis points. But in view of the excellent first half of the year. Where we didn't have to dissolve FLIs and stage overlays. So we see a market improvement year-on-year. And we're very confident and our risk-cost expectations amounts to 20 basis points. Back to Stefan.

Thank you very much, Alexandra. This were the components that can be characterized by the waterfall chart, 2025. I already said before that operating income and operating expenses are balancing out. We have slightly higher costs in the first half of the year and risk costs have already been described so far. And they are slightly lower than last year. So we had a slight reduction. In other business, we had a better result than last year. And last but not least, how many of you know that minorities has an bivalent story they are green if the savings earn less and red if savings banks earn more. So what you see here is the reflection of the weaker results in Austria in total.

If we compare 2024 and 2025, not in relation to the net result, which is very good. But year-on-year, it is not a spectacle. What is not unspectacular is the development of our equity. Peter already talked about the basic pillars. And allow me to make a few comments that differ from what I said in the previous years. You know that I am -- I always commenting our capital ratio and in connection with liquidity.

And I always say that this is the way to support our customers. This is the basis of acting offensively and supporting industrial and private customers. Of course, this is still true, but there is another aspect, which I would like to highlight this time. The acquisition in Poland can be done without any capital increase. I don't want to go into technical detail, but I nevertheless wanted to explain what the drivers are that will make us fit for the end of the year for the full integration of Santander Polska without increasing capital.

On the one hand, it's, of course, profitability. This is logical. The central driver of capital generation is profit. And we see that this materialized in the first half of 2024, and also the profitability of minorities as far as they are reviewed and audited. The second major input is that we temporarily and want to emphasize that we temporarily reduce distribution, profit distributions. We are not having any share buybacks. And in 2025, we will pay out a reduced dividend. We will -- we accrued up to 10% of our net profit. So we will pay out a dividend but a slightly lower dividend. So if we have a net profit of EUR 2 billion, you can calculate that this will be between EUR 0.50 and EUR 0.75 per share. But this is the cap. And this was already discussed with the regulator. And there are several other issues that are very important in this respect.

It is how we steer our balance sheet. In the first half year, we haven't set any measures and in no country will we stop our active customer business. But what we will do is we will have AT1 emissions, which we did in the second quarter. And as far as bond positions are concerned, we will strengthen our position combined with securitizations, we will aim at achieving the goal earlier than planded. By the end of the year, and we said that we will have a 13.1% CET1 ratio, including the consolidated Poland position.

Of course, it is not the goal to have 13.51% but markedly higher. Due to good developments in the first half year, we have 18.25% more for the existing Erste Group if we deduct 4.6% for the first consolidation of Santander Polska, we see that we already higher than 13.6%. We will see how the situation turns out because you also have to take into account certain risk components, and I'm optimistic that we will exceed this figure and start full momentum with our Polish colleagues in the Polish business.

So let me close with the guidance for 2025. All the things that you see here have already been mentioned. Nevertheless, let me summarize here. We increased our expectations for credit growth by more -- about more than 5% from plus 5%. We hope that we can increase interest income. You see in the first half year, it was 2.7%. The second half of 2024 was very strong, and we are very conscious and we announced a better result than 2024.

Some analysts might know it will be markedly better. We are somewhat more conscious in this respect. Let's have a look at what -- how things develop. The risk costs have already been mentioned by Alexandra in detail. The return on tangible equity will be more than 15% by the end of 2025. Distribution ratio has [payout] ratio has already been mentioned, and CET1 ratio was already described. I think, not only in our existing business, we will prepare for the coming months.

But we are also very good equipped for the market entry in Poland, which we are looking forward too. And I think we have the economic strength to do that market entry. And -- but on the other hand, we have high respect in view of this task, it's a large country that we are entering and we have respect as far as this integration is concerned.

Okay. Allow me to summarize. At first, we are working intensively to obtain the necessary regulatory approvals until the end of the year. And as Stefan and Alexandra are looking forward to working with our Polish colleagues. Of course, we are also continuing to implement our strategy. So we want to achieve progress in the area of digitization, online banking. We are trying hard to get an even bigger footprint in asset management because we believe that this is extremely important in this region, and we have a large number of activities apart from the acquisition in Poland that we are driving forward in the various countries where we are active.

But let me summarize, of course, this is happening in a geopolitical environment that is quite challenging, as we know. It is characterized not only by volatile markets, but also a lot of problems in terms of communication on other continents, but we are fairly convinced that the region we're operating in still have us a lot of growth potential and a lot of innovation. There's so many well-trained people all over Europe. And we really are convinced that Europe deserves to develop a new self-confidence.

And I think it would be a good idea to not so much follow every tweet that happens across the Atlantic on the other side of the pond, but we should focus on what we can do here on this side of the Atlantic in order to promote the economic development in all of our countries in Europe in general. We are trying to set a good example and we're trying to lead the way courageously. We are ready and we'll continue to invest in CE in that region, and we can only do that because we have a good basis of confidence with our customers. We're doing everything to ensure that this stays that way, and we are looking forward to, hopefully, by the end of the year, we'll get the final approvals of the closing. Thank you very much for your attention. We're looking forward to your questions.

[Operator Instructions]

The first question to [indiscernible] Saleski from XYZ.

Thank you. I have 3 questions. And as you might guess, they all will concern about acquisition in Poland. Firstly, you have the largest bank in Czech, Slovakia, Austria. In Poland, we will be the third player. That's why I want to know what is your approach to increasing market position in the future. Will Erste be open to acquiring other banks in Poland in the future? Or do you want to focus on organic growth. That's my first question.

The second question, Polish Financial Supervision Authority would like to maintain the practice of dual listing for owners of large Polish bank. Is Erste Group considering a debut in Warsaw in this case. At my last question, Santander Bank has a Bancassurance business joint venture actually with alliance in Poland, we know that Erste has been cooperating with Vienna Insurance Group in 4 years and in every market. Will that mean a change in Bancassurance partner in Poland as well. That's all.

On a very short notice, too early, too early, too early. But coming back to your first part of the question in terms of being becoming the third largest bank in your home country. It was always our strategy over the last 20 to 25 years that we would be within the first 3 biggest banks in the country. We are extremely happy that we got the opportunity to enter the market, we're taking over this 49% something that mostly because it's the third largest bank and the biggest privately owned. So far, there was no other possibility. This was by far the best opportunity we got even over the last 20 years to enter into Poland because obviously, the government still has the view that they would like to keep the other 2 banks and let's see if there will be some kind of market momentum in the future and the government will change its view. From our perspective, it's very clear that for the next 2 to 3 years, we will take very much clear about to integrate, so to say, Santander Bank Polska because it's a huge acquisition in January. As mentioned before, it's the biggest transaction -- M&A transaction in Europe since 2014.

So at this point in time, we are definitely not making up our mind to -- for another M&A opportunities in Poland for the next 2, 3 years. Having said that, of course, we have a strong belief in organic growth. This is what we have been doing in most of our countries, you're right. From time to time, we also took the opportunity for inorganic growth in our existing countries like Hungary or Czech Republic or the last 2 to 3 years. But we believe there is a strong growth momentum in Poland also in retail banking and in corporate banking.

So we fully rely on the growth capabilities which are definitely proven when you look at the financial results of Santander Bank Polska in organic growth in the next years to come.

The second question dual listing, yes, too early. I mean it's clear that we will be keep the listing of the local entity if it make sense to have a dual listing, let's see, but we highly appreciate the role of [Austria's] Stock Exchange is playing in Europe because in Central and Eastern Europe, it's definitely from the leading stock exchange. It is a higher market capitalization in the Austrian Stock Exchange. The just Austrian Stock Exchange is a little bit higher in trading volumes, which is very much related to our own share, but too early to charge.

The last part of your question related insurance business, that's definitely too early. I think the cooperation between Santander Bank Polska and Allianz is going away. You're absolutely right. The other countries, we have our preferred partnership with VIG, which is also working very well. So we will cross the bridge when we are there.

Next question [indiscernible] please. Use the microphone, please.

I have a question. In your press release, you are referring to the fact that the bank taxes have increased by almost 50% with a windfall profit tax or excess profit tax. There's no end in sight in terms of these taxes. Do you believe that this will become a permanent tax and internal tax as the typical for Austria. And on the other hand, with such a high tax burden, the profitability will, of course, be reduced. And the opportunities to grow in other Central and Eastern European countries. And if further acquisitions will be slowed down. So it is not only yes, but all the Austrian banks will find it harder to acquire other banks in the growth markets. So I'd like to have your comment on that.

And the Austrian Central Bank emphasized in an event about a month ago that the second half of 2025 will be used to in order to focus more on the fine-tuning of the digital euro. So we think there will be an app on the phone. And what the consumers expect of this is that it won't cost anything. Well, I have my doubts. Do you have your doubts as well.

Well, let us move on to the first part of your question, the banking tax. I fully share your view, but -- there is 1 thing that I see differently. The Austrian government has promised that this increase of banking tax will be limited to 2 years' time. And I believe that this will be the case. This is a federal government that will live up to its promises.

Now let's take a different look at things a different perspective. Of course, you are saying that this will limit us in terms of future acquisitions. Also our competitors will be hampered in making acquisitions. But it's not only about that. It's also about how we can support economic growth through activities. And I think in Austria, it is important because this is the third year running that we have a recession as we all know. And if you take a look at our profit and loss statement, our income statement, it is quite obvious that we have a higher tax burden than we do have risk costs we paid more than 900 million bank taxes in all countries, including Austria, but we only have EUR 400 million risk costs.

And it is my understanding for banking industry that our core competence in terms of economic growth is that we keep loans to corporate customers who will then invest and produce economic growth. Now if we pay higher taxes and risk costs and risk cost is actually a translation of transformational risk for borrowed capital. We don't have any equity risk, but we have borrowed capital risk. And this is why the risk costs -- well, we're not afraid of those. That's part of our business.

Banks have no risk costs, well, there's something you miss. But if you pay twice as much taxes as you have risk costs, well, you're probably an ATM for the fiscal authorities and not a lender.

And well, this is a question that needs to be addressed by those who've implemented these banking taxes. Now in terms of the digital euro, I think it is quite well known that the digital euro is a solution that has no problems. The cost of implementation based on a PwC study, just EUR 22 billion. I think is some initial resistance in European Parliament on the subject because the question whether it makes sense to have this digital euro, but I think the dynamic doesn't happen in Europe because if you take a look at the development of stablecoins in the United States, well, I think this can actually change the rules of the game in a completely different way than maybe people expected in the past 2 years. And I think that this is a situation we need to keep monitoring and whether the digital euro makes sense, but I still don't understand whether it makes sense. But maybe this is me.

[indiscernible] from Bloomberg.

Can you hear me?

Yes.

Okay. So I have 2 questions since -- since I come from Belgrade, I would like to ask, do you see an interest in the coming period in strengthening your presence in the Austria region in countries for former Yugoslavia, either through acquisitions in the countries where you are already present or by entering new markets? That would be my first question.

And the second one is what do you see as the dominant trends in the Serbian banking market over, let's say, next 5 years in terms of further market consolidation and service development, technology or some other aspect.

When it comes to potential M&A transaction from our side over the next 2 to 3 years, as mentioned before, we are now fully focused on the acquisition of Santander Polska. We have lot of respect in front of this acquisition. And as Stefan rightly mentioned we are -- we are, of course, in a situation where we are building up capital and this is necessary to manage our existing portfolio. So for the next 2, 3 years, I don't see too many -- I don't see any activities on our side.

The situation when you asked about Serbia in general, I think volume growth has increased over the last years because you see a lot of investments in Serbia. I think if I remember correctly.

So still the majority of investments. So around 55% is coming from European Union, but you have also investments from other continents. And I think that in general, the economic development in Serbia is going quite well.

The next question comes from [Hosanna Osman].

From Romania from [indiscernible] most of my questions will be about the results in Romania. We saw some contrasting figures in Romania in some aspects compared to other markets. So can you please explain the decline in loans and deposits, especially in the second quarter in Romania. How was the decline in loans impacted by public sector business volatility despite the fact that actually, you had a strong growth in consumer loans.

Also, why the deposits was the explanation for the decline of deposits? What happened with large companies and the public sector? And maybe because we speak a lot about the public sector, was the overall impact of the public sector problems that we have in Romania with huge deficits. What's the impact on your business? Maybe you will comment also on the fact that the government doubled the banking tax despite the fact that they promised to reduce.

I would start and then maybe Stefan can take over being very close to Romania. I mean generally -- of course, you are right that the economic development in terms of budget deficits and all these kind of environmental stuff is not great, which is, of course, not a super prerequisite for growing banks there. But having said that I mean, we are in a situation that [indiscernible] is a very stable institution and we definitely want to drive organic growth there. This is also the reason why on the retail side, we started several campaigns last year which were quite successful.

We are investing a lot in kind of loyalty schemes, digital banking. So we really try to improve the service level of our offering for retail clients. I think in the corporate area, we have always been doing quite well there. So I think [indiscernible] is also in capital market business and typically corporate banking, they're doing well. Our appetite for other acquisitions is mentioned now for bank and for other banks, potential banks in Poland. It's not existing at the moment because we are very much taking care about Polish acquisition when it comes to bit different.

Yes. Maybe a couple of very brief comments structured in 3 parts. First one, specifically your point on the latest developments that we both have been touching upon in the analyst call and also today, with the weaker quarterly result in terms of volumes. This is purely due to one of you touched upon it in public sector and large corporates. So the underlying trends in Romania on the lending side. And then yesterday, the retail Board member, just I guess it's perfect update.

Latest numbers is very strong. We have good -- we have good growth on the consumer lending side on the back of winning over new clients as Peter was describing, but also mortgage lending is doing okay. That's, I would say, okay, it's not the strongest market, obviously, as you can read from the other markets, but it's okay.

The second point is, of course, a big topic. I mean, it's absolutely no doubt that the debt levels, as we saw them forecasted for Romania of this year around 8% to 9%, if I'm not misjudging. This is something which everyone knows is not sustainable. And of course, also the Romanian decision-makers know that. That's why they have been implementing quite substantial austerity measures. I understand that the markets are starting to win some confidence.

I'm very closely watching the spread levels that Romania has in the market, there was a massive increase, and it's now kind of stabilizing. And I'm sure if the market gains confidence in the budget deficit management, this will further improve.

And the third part is on Erste's [indiscernible] sales. In terms of profitability, we are extremely happy with the performance of the Romanian bank. The colleagues have done a tremendous job there, both on the client side as well as on the profitability side. So we try to help the situation in the country on the clients as well as in contact with public decision makers. And hopefully, they will manage a turnaround soon.

And the banking tax, do you have an estimate for the amount you're going to ...

It's perfectly building on what Peter said, more generally, be it on the Austrian or other banking taxes. I think at this point in time, it's very much a part of the overall austerity measures. You know that it's not so to say, too much banking specific, although, yes, there is a concrete banking level, we have it fully incorporated in our outlook, both for the local bank and for the group bank. And let's see how it further evolves. We know that it starts basically I think with August. If I'm not mistaken, 1st of August, it kicks in. And at debt levels, it's absorbable. We are not happy about it, as you can imagine, but it's at a level that we can swallow and I hope it will not be, let me say, further discuss the debt levels. Now we simply accept it and move on.

Can you publish the guidance upgrade for the group. Can you say how is Romania in line with this -- with this upgrade? Do you see a possibility for a bigger loan growth in Romania and also for the net interest income in line with what you expect for the group?

So Romania in terms of financial performance compared to the others, what you mean or?

The goals for the targets, how they impacted the target upgrade. That's how I...

Yes, part of it. An excellent performance in the last couple of years. Also on the risks, I think Alexandra, very strong and no, I think Romania has been -- if you look at the history of the Romanian entity in Erste Group, I'm sure you're very well aware, I really could hardly be happier about what has been achieved in the last couple of years. So excellent performance also this year we expect excellent results, I think, both net and operating.

And one more for Alexandra. Just one, what perspective for the risk costs do you see in Romania? And also since we had a increase in NPLs 3.5. I think it was the only market because sure of agriculture situation. What measures do you expect to reduce this.

We are constantly -- we're having constant measures to manage our NPLs and workout strategies and recoveries. And as Stefan also mentioned, this first half of '25, we've seen very strong recoveries, mainly in Austria, but also in Romania, we have seen and over the time. And we are working and we are quite confident that we will lower the 3.5% NPL ratio in Romania that have seen by half year that it will go down until year end with the classical toolbox that we have in restructuring. So working together with the clients trying to get them up, trying to have them upgraded recoveries, collection, all these topics.

Overall, we are also maybe just one because Stefan also mentioned it, overall, we think that Romania will be able to also stay within the expected risk cost budget for the full year.

The next question comes from Mr. [indiscernible]. I hope I have pronounced it well, and then we go to the online questions.

Yes. Thank you. But I think every question I had has already been answered.

Perfect. Then we will go to some of the online questions.

[Operator Instructions]

There was a whole bunch of questions that arise from [Carolina Visota from Grupa VP]. It's 27 questions. I apologize that we cannot answer all of them. And I will ask only a few of them because most of them are too soon, which were very concrete on the Polish acquisition. But I will ask 3 of them. What are Erste group's long-term plans for the Polish market, will Poland become the strategic market of the group on par with Austria or the Czech Republic. That's the first question.

The second, does the acquisition of the bank size -- of this size pose any risk to Erste Group's financial stability, what safeguards are in place.

And the third, how would you describe your cooperation with the Polish Financial Supervision Authority. Has the acquisition process been smooth from a regulatory standpoint?

Okay. Let me start with the last part of the question, so the cooperation and the work we are hearing on our [table] with the Polish regulator kind of is doing great, so they are treating us very, very professional with a high level of respect. So it's fair to say it's a pleasure to work with them point number 1. Point number 2, you asked the strategic importance of Poland, this is the biggest country.

Financial stability.

Sorry.

Financial stability. This was last...

Question number 1 was about, is it easy to say a strategic country like Czech Republic, of course, it's our biggest market. It's the biggest country we are operating in, and it's the biggest investment we ever made. So I think this is -- this will definitely answer your question and will be an extremely important role in our group.

The question of is it adding risk I mean, of course, every kind of investment is related with some kind of risk. But as Stefan and Alexandra and myself mentioned several times to mitigate this risk is very much strong -- to have a very strong capital position, which we succeeded already to build up point number 1, point number 2, and other kind of mitigation of these risk is with our colleagues in Poland have succeeded to build up a very successful bank in all financial indicators, well, in terms of profitability, in terms of number of client growth in terms of quality of client service. So they are really doing great and building the opportunity to buy such a bank, which is in such a good shape is also kind of mitigation of risk in entering another country.

The next question comes from [indiscernible] Suda from Business Insider. How do you assess the Polish banking market? What factors were decisive regarding the acquisition of Santander Bank Polska. What are, in your view, the biggest risk related to the Polish market? For example, what is your take on discussions about windfall tax or legal risks to LIBOR-related contracts.

Yes. I mean, I think we mentioned already several times how positively excited we are about the Polish banking market in general because the banking market is -- the reason for the fact that the Polish banking market is very interesting is because Polish economy is doing so well. And this over the last 30 years, and we are 100% sure with the next 30 years because the structure of the economy and the level of education in the country and the attitude in this country, they are just doing great.

The entering another market in the European Union, this is typically risk, which are, of course, always around consumer protection, so this is something we experienced in -- especially in the retail banking area over the last let's say 20, 25 years that you always confronted with kind of court decisions when it comes to consumer protection.

But to be also very clear, of course, it's not our goal to end up with our clients in front of the court -- of course, we always try to through all our products and all our terms of conditions in a 100% compliant. This is our way how we try to mitigate these risks, of course, from time-to-time, opinion from [course] of the regulator can change. This is nothing that we can influence too much, but this is kind of part of our normal business. And when it comes to banking intake, I think we already answered it several times that this is something we don't like, but we have to deal with.

Maybe just as a very brief wrap-up adding to your comments, Peter, and to the colleagues in Poland asking this question. On 2 levels, we have been and will be our and we'll be looking at all those risks on the 1 hand, of course, on the operating level locally in Poland, our future colleagues are dealing with all those matters with an enormous level of responsibility. We are aware of those risks. There's always risks associated not only with such an investment, but doing the business there. But in the same moment, the upside potential on the opportunity side, I regard is much, much higher.

And the second one, I just wanted to add, Peter, on the -- from the perspective of the overall Erste Group diversification of risk. This is exactly the feedback that we got very quickly from many analysts, and you can read the respective statements. It's, of course, an improvement because as I think the other journalist Margarita was asking, where do you see it in a position. Yes, we have a very strong Czech market.

Yes, we have a very strong Austrian market. We have a strong Romanian market. But obviously, the diversification on different pillars is much significant -- it's much more improving with the add-on of the Polish market. Yes, we will have risks here and there. But the overall risk position is, I guess, in the long run, substantially improving this way.

We have 2 questions in the room. First, [Christoph Kovalzk] from [indiscernible] and then [Martin Eder].

Okay. Let's talk about Poland once more. What specific synergies, can you say between Santander Bank Polska and Erste Group? And the second question is what return on this investment we expect in which time -- in which [favorite] period of that time. And you mentioned that you will have and influence on the board, so I need to ask you whether you are going to change anything in the Board of -- the Management Board of Santander Bank Polska.

Okay. Let me start with the last part of the question. We think that the management team in Santander Polska is doing a great job. So we don't see a need for any change.

Second point is the profitability, level of profitability. So given the fact that they are already quite successful in terms of the financial results, we expect that their financial results are kicking in immediately after closing. And so when you look the high-level basis on our net profit development. So we are now somewhere around the EUR 3 billion net profit company and with the potential impact, of course, related to the approvals of authorities we would come close to become a EUR 4 billion company.

In terms of our return on tangible equity for the whole group, this would mean that we are around 19% [ROI] and in terms of earnings per share, we will see an increase of slightly above 20%. So we could be potentially earnings per share, and it will be depending on the interest rate curves around roughly EUR 10 per share.

Your question about synergies. There are absolutely no synergies in a way that we have a very successful, a very small investment boutique in Poland. But this is definitely not the cost synergy case. So for us, this is definitely a growth opportunity. It's a huge growth opportunity and not about cost synergies.

Every number, so I'm very proud of my CEO every number was perfectly correct without looking up any. The only add-on I would say because I think you also asked about ROI this is very -- it's sometimes used is I would not say. So in the overall Erste Group context not so helpful. But to be precise, we had it also assuming a EUR 7 billion overall investment on the perimeter that we are defining, you can calculate with something like an 11% for the upcoming years, assuming a profitability reflecting this number, everything else exactly as Peter said.

Next question, Martin [indiscernible], Bloomberg.

Had a question on dividends in the last 2 years. Your guidance in the half year report was announced. And I know this year, it is a bit less relevant. And Stefan has already given us the numbers and his estimates. But the question is why is there no dividend guidance.

For the recent dividend guidance as up to 10% of net profit. And in cooperation with the regulators. We are not announcing any absolute figures during the year. That's a change.

So the guidance is up to 10%. And up to 10%, of course, it's not a concrete number because we do the numbers if the net profit is expected to be a bit more than EUR 3 billion, then 411 million shares. That's about EUR 0.50 to EUR 0.75. That's the guidance for this year.

And for next year, the clear goal is to return to our usual dividend policy, which will, of course, then depend on the profitability and will then be calculated in terms of a concrete number.

Next question online, Susan [indiscernible]. Two questions. You hope for long-term investments in Germany. What do we expect in specifically, [Mr. Bosek] last year said that digital services will be changed markedly. What has changed?

Well, the first part of the question, investment from Germany, we do believe that it will have a positive impact on -- impact on our region. We are seeing that the sentiment in the commercial business is improving in the entire region. It's too early to put it in concrete numbers. I think the federal government are planning to pay this out instead. So it's not a onetime investment to invest EUR 500 billion in infrastructure, but we can see an improvement of the mood and the atmosphere in Germany.

So the companies are getting ready for this. Of course, if you're going to invest a lot in infrastructure, you'll send it all the approvals, and these things have a certain lead time. So we expect this to begin in the coming 12 months. And then it will take several years, and it will be invested step-by-step, I guess.

So we do believe that all things considered the activities that are underway in Germany will have a very positive impact on the dynamic in the region and for Europe as a whole. Now when it comes to digital advice, well, we are tackling this step-by-step. We'll start with this measure that I mentioned in between [Hey] George platform that we have 2 million customers in the Czech Republic when they use online banking, they get AI support, and we will roll this out throughout the group.

In parallel, we're working to generate real digital advice, digital advisory services. So we have begun to offer this. So in the entire group, we interviewed our best customer advisers, and we are now trying to structure all this information in order to be able to program it. And maybe the coming maybe 12 months, we'll have the first pilots that we're going to roll out in the various countries.

Comes from Martin [indiscernible] HCG from Hungary.

Just a quick question again about the bank tax. So can you share with us how does it look by country, the amount of bank tax you paid.

Sorry, how much we pay in Hungary or ...

By country, yes.

By country.

By country, we can share this with you.

I think we have it. We can make up seconds. I can look it up. Maybe we can take another question get back to [indiscernible].

It is different from country to country.

The next question comes from Poland, [indiscernible] Drydock from [indiscernible]. Deutsche Bank's Merchant Solution business is integrating their interest payments acceptance offering ahead of the mobile wallets launch in Germany. It is news from this week. There is a competitive solution in the Polish BLIK system, which heavily relies on cooperation with Erste. What plans does the group have in this regard?

Yes. So it's very clear that we will stick to BLIK payments in Poland. This is 100% given because I think this is quite successful in-country payment system. If I'm informed correctly, there are also plans to enter other countries, but it will be too early for us to [charge]. But BLIK -- we will be part of the BLIK infrastructure is completely clear.

[VERO] is a solution which is on the market for already several years in Germany and there is some kind of momentum now going on in Germany, partially also in Austria because as I mentioned before, there is some skepticism coming up in European parliament with the implementation of digital euro doesn't make sense at all, especially related to the costs and adding additional burden of above EUR 20 billion on European banking sector to offer currency without the European Union, Europe countries was somehow questionable.

In the discussion with the European parliament is going in a direction if the financial service industry could come up with solutions, which could be -- which could lead to a situation that Europe becomes independent from the international card schemes because this is one of the major drivers behind this political willingness to a jump on the digital euro.

The issue is [indiscernible] the issue is BLIK is a local schemes. And the question is who will now achieve, so to say, to offer close country payments. There are solutions which could enter the market, it's called -- it [indiscernible] sounds very technical, but it is sort of say, connecting these different local solutions with APIs in a nutshell. So this could really be a game changer. So if you could use, for example, in Germany [VERO] and include in Poland BLIK. And then you could say, offer this interoperability then you would have a solution, which could make potentially the European even happy.

So this is some kind of development I expect to there will be a decision most probably from European Commission and European Parliament, I would expect end of this year, or first quarter next year. But it's a very dynamic market situation. We will definitely stay we split, and we are seriously looking at [VERO] because it could be a solution for countries like Austria, Germany.

Do we have the answer on that.

Yes, of course. So Peter Bosek was mentioning the overall tax burden that, of course, includes the ordinary corporate income tax. And then we have very creative different ways of, so to say, imposing the taxes, we have to be a little bit careful, I'll be very concrete on each country. We had less last year in typical banking taxes, really bank directed not elevated corporate income tax, like, for example, in Slovakia, where there is an elevated corporate income tax for certain sectors.

Last year, we had EUR 245 million overall directly banking market-related taxes. And this year, in the half year, we have already almost EUR 200 million. The split is as follows: almost EUR 70 million in Austria. And then Romania, 20%, but this was before the increase that we discussed with the colleagues before. So there will be a significant increase in the second half of the year. And then Hungary. I think you are from Hungary, if I'm not mistaken.

We have 2 big components. The one is the banking levy, the explicit one. This is EUR 48 million, depending always on [FX] little bit. The first half year. And then you have the transactional tax, which is, as I believe, also a big burden for the market overall. And that amounted to not less than EUR 61 million in the first half of the year. So in total, first half year explicit banking market related taxes, almost EUR 200 million. On top of that, we have elevated corporate income taxes here and there. So that's plus the corporate income tax. It's up to the -- did you say, I think EUR 900 million, right?

EUR 900 million per year. The next question comes from Robert [indiscernible] Austria.

[Interpreted] You said that there's more real estate loans now, the KIM regulations have expired, but not quite. So what can you say about this slight interpretation? this is strange interpretation, let's put it that way.

Well, last autumn, I already told you that the housing financing business has improved again in Austria. I'm convinced that this is due to the lower interest rates and due to the lower real estate prices that we are seeing in Austria. Of course, there are various segments and various regions where there are major differences as you all know. But that, from my perspective, has been the main reason for an increase of demand.

[Interpreted] As to the continuation of the KIM regulations. Well, the KIM regulations over in terms of the legal structure that it had. So it's history and the recommendations of the Austrian Financial Market Authorities, even though some colleagues maybe have said, me saying that, that it's not so off the mark. We need a certain amount of equity capital, if you want to take that alone. Of course, you need to be able to pay your bills. So that's reasonable, right? And of course, the KIM regulations -- well, there's also some exceptional contingents.

There are some companies who take out a loan, even though they have enough capital of their own. Then, of course, it is a different matter. So these exceptional contingents have added a level of bureaucracy. We don't want that, of course, that's not great. But that the supervisory authorities share to worry how banks award loans and that they should behave normally, well I think this is not really surprising.

Next question, Ingrid [indiscernible] from Graziano. I have a question relating to Poland. I have a look at the population. Poland is 4x as large as Austria and double the size of Romania, and that's huge. In all the other countries, you already have an established position, but this is another world. How do you approach the process? Or do you approach everything differently. So we already had questions relating to risk, and we have a very large single market. So things can happen, say, what is your approach as far as the risk is concerned.

And next question relates to the management board. Do you plan to change the composition of the management board.

Okay. Let me start and then you can come in. In terms of the structure of the transaction of course, it is completely different. The last big transaction was a long time ago. But in the past, we bought some banks that have been previously owned by banks, we then transformed them. So it was took a while and then we were able to operate successfully in those countries. This time, it's different. It's a private bank that we're acquiring. It is listed on the stock exchange, a majority owner was Santander. And it's not a restructuring case. It's a very successful bank.

And as mentioned repeatedly, if you take a look at the financial KPIs, they are really doing an extremely good job. Now what this means for us when we enter such a big country, where it's about re-branding. And we know in a situation where we need to try to understand the market and what we can do there because, again, this bank is very successful.

And Erste as an institution is known to some, but not all. So re-branding will be an issue, and we have started dealing with that intensively. Now in terms of the local management, well, you can see this in all our countries in the group, we always want to have a strong local management in the various countries because we believe that we need to have entrepreneurial people in these management functions. And of course, if you grow up in a country, you understand it's better. So we have a great fans of local management. And that's how we see it.

Let me add is it stock listed. It was part of a large banking group, which was under the supervision of ECB and had to follow very strong rules. So we are entering the market at a very high level of comfort, so to speak, as a new owner.

One more thing I would like to add. You talked about the atmosphere that previous said yes, that's the questions that we have been asking ourselves and that we are still asking ourselves this acquisition, of course, will change our group. There's no doubt about that. But of course, that was also clear when it came to earlier acquisitions. It's a long time ago, but someone may have forgotten this. Of course, this is highly specific, and we talked about the risk situation, the financials and all that, but 2 things are specific, and we need to consider this.

We are not taking over a controlling stake, we're not taking over the entire bank. So for all the other international owners in Poland, it's the same. Why is that? because all the major Polish banks are listed on the stock exchange. Also, the previously mentioned 2 state-owned companies are listed on the stock exchange. So even if we had wanted to, we couldn't have acquired 100% of the bank because the Polish regulators the advisory authority asked for a listing.

So Santander had a maximum of 68%. They never had more than 68% of the local group. So the minority shareholders, of course, do play a role. And another point that may have been lost in today's debate and Peter addressed it in his presentation, of course. The opportunity to further strengthen the capital market in Central and Eastern Europe to develop it further, can only be done in a combination by Austria, Poland and a few other countries who are beginning to go in this direction.

So this is what our Polish future colleagues have already started. This is extremely helpful and this is going to strengthen our position in terms of that. So like I said at the beginning, our approach and our mindset is that we are going to this with a lot of confidence, but also with a lot of respect because the step will change the entire growth. There's no doubt.

I think there are no further questions in the room. There is one. Please ask your question.

[Interpreted] This is Alexandra [indiscernible] from Business Portal in Belgrade [indiscernible]. From the beginning of this year. He has kept 3 key interest rates unchanged, so can you tell me how do you comment on this from the perspective of your business? And what are your expectations in this regard for the future? And the second question is about Serbia. So how satisfied are you with operations in our country and is there any particular segment that you would like to highlight?

Maybe I'll start to answer the question of how happy we are with Serbia, and maybe Stefan can take over interest rate European Central Bank. So I mean, as mentioned before, the volumes in Serbia, especially in the corporate banking are growing because there are a lot of foreign investments in Serbia going on. And of course, this is a kind of prerequisite for growth for the overall country. So we are quite happy with our operation in Serbia.

Yes. And on interest rate front, I briefly also touched upon it already in the presentation, but to be more precise. Our analysts were one of the few who had for a long time already, the anticipation that the ECB will hold at the 2% level. Even for the rest of the year, let's see, this still depends. It was relatively expected that they will hold on July. Let's see for the further meetings where they will go, given current inflation prints, I would personally, personally expect that for the next 1 or 2 meetings, the hold is likely. How good is this for us? Very good. I mean we are not depending too much on the sensitivity, but if I could choose, I would prefer the 2%, but that's a very personal opinion.

If there are no -- there is a question, please go ahead.

[Interpreted] In Poland, you also acquired an asset management company. Can you say some words about the size of the company and compare it with Erste Management -- Asset Management.

Yes. The asset management subsidiary has assets under management worth EUR 6 billion more or less. It's still early days to say how this works, technically speaking with Erste Asset Management. But of course, we are looking at the asset management on the group level. So there will be a strong cooperation there, definitely. And we do believe that in Poland, in terms of asset management, where there's still a lot of room for growth compared to other countries where we are operating. We believe that there's still some room for improvement potential there, and we're looking forward to the market opportunities there. And like Stefan Dorfler said, the regulators have always tried to ensure that the banking infrastructure is listed.

So the activities that we have in Poland to build up a capital market. Actually, is proportionately good and has also worked really well in the past. So there's a pension fund -- pension fund business there. There's also institutional investors there and these institutional investors are also a basic prerequisite for well-functioning capital markets because they have the deep pockets.

So we are taking the last few questions, but I need to close then. There is one from [indiscernible] from Business Insider, Poland. Santander Bank Polska has a good track record of combining quite high dividends with organic growth, should minority shareholders expect a change of that approach?

No.

No.

No is not a very long answer, but no.

And there was a question on rebranding and what the new name will be, but far too early given that we were working on regulatory approvals. So thank you very, very much for your attendance. [Foreign Language]. If there is any help you with these in contacting us also for those that have traveled from far abroad if we can make your stay here nicer let us know. We are very, very happy to support. [Foreign Language]. Thank you very much for coming, and we'll be available for questions any time. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.].

I'm Serge, the Chorus Call operator. [Operator Instructions]. And the conference being recorded. [Operator Instructions]. At this time, it's my pleasure to hand over to Thomas Sommerauer. Please go ahead.

Thank you, Serge, and good morning to everybody who is listening in. We follow our usual conference call routine, this quarter again. Peter Bosek, Chief Executive Officer of the Erste Group; Stefan Dorfler, Chief Financial Officer of the Erste Group; and Alexandra Habeler-Drabek, Chief Risk Official of Erste Group. They will lead you through a brief presentation highlighting the financial achievements of the past quarter, the second quarter of 2025. After which time, they are ready to take your questions. As usual, my reminder on forward-looking statements and the disclaimer on Page 2 of the presentation.

And with this, I hand over to Peter Bosek. Please go ahead.

Thank you, Thomas. Good morning, ladies and gentlemen. Welcome again to our second quarter 2025 conference call. Quite a few things happened over the past quarter. We announced the acquisition of a controlling 49% stake in the third largest Polish bank, Santander Bank Polska. We are excited about this move because of its tremendous long-term potential for our shareholders, leading to a significant earnings per share uplift starting from 2026 and a better growth profile group overall.

We also made a big step forward in our capital position with the CET1 ratio reaching 17.4% at half year, which puts us right on track for the first time consolidation around year-end 2025. Leaving this transformatory transaction aside for a minute, let's now focus on the second quarter performance of our existing business because this was not bad either, not bad at all, I'm tempted to say. I'm on Page 4 of the presentation. Core revenues developed well with net interest income up both quarter-on-quarter as well as year-on-year.

Fees moved sideways for another quarter, but we are up comfortably year-on-year. This is actually the revenue line item where we are most bullish on going forward. And with all other revenue items, as expected, we bring record quarterly revenues. Costs were also in line with budget and risk costs again came in substantially below the full year guidance despite the fact that we had no material changes in FLI and overlay provisions. On top of the strong operating performance, we had some additional tailwinds in other operating results this quarter. And if you put the whole picture together, we reached an excellent return on tangible equity of 17.5% in Q2 2025.

Based on these numbers, we reviewed our full year guidance and decided to upgrade several items. We now expect that net interest income will grow slightly in 2025 as opposed to remaining flat. And as we have upgraded the fee outlook just last quarter, we see upside potential to our cost-income ratio guidance of lower than 50%, principally driven by higher revenues, but keep this unchanged for the time being. We also improved the risk cost outlook to around 20 basis points and lifted the return on tangible equity outlook to higher than 50% compared to about 50% despite expecting a material increase in our equity base. When we look at our P&L performance metric in more detail on Page 5, we can see that the net interest margin bounced back quite nicely in the second quarter. This was driven by higher NII, while at the same time, interest-bearing assets remained flat quarter-on-quarter.

The latter resulted from a lower interbank business volumes, while customer volumes show improving trends. Based on the second quarter performance, I can confirm what I said last quarter, namely that the best estimate for net interest margin in 2025 is around 2.4%, plus/minus a couple of basis points. Higher NII was also the key driver behind the quarter-on-quarter improvement of the cost-income ratio. The risk cost ratio was stable quarter-on-quarter, tracking well below our original 2025 guidance, thanks to continued strong asset quality in CEE as well as somewhat improving trends in Austria. Banking taxes have come down quarter-on-quarter on seasonality, but were and will continue to be above the levels seen in the previous year when it comes to the higher banking tax in Austria.

Despite this, as already mentioned, second quarter return on tangible equity topped 17%. As far as the balance sheet is concerned, and I'm on Page 6 in the meantime, I would like to highlight the solid volume trends in customer loans as well as customer deposits. In a year-to-date view, loan growth at 2.7% was most noteworthy across Central and Eastern Europe, maybe with the exception of Romania. Importantly, in Austria, we also registered increased demand, especially in the second quarter. In terms of business lines, growth was somewhat more pronounced in retail and corporates, mainly driven by the consumer segment, but also accelerating mortgage loan demand, especially in CEE.

These positive developments were helped primarily by somewhat lower client interest rates. Customer deposits advanced by 2.8% year-to-date, mainly in the Czech Republic, Hungary and Austria. We have seen good growth traction in retail deposits across CEE, but also in Austria, while the key growth driver in the corporate space was public sector and primarily in the Czech Republic. Overall, our retail and SME deposits advanced by 1.8% year-to-date. So to sum it up, volume trends are good and improving, especially on the asset side. In addition, growth is well balanced across assets and liabilities with a more even distribution throughout the year than we have seen in 2024.

Last quarter, I said that it was too early to upgrade our loan growth guidance just yet. But this time, given the growth evidence in the second quarter, we are now confident that loan growth will exceed our original 5% growth target in 2025. Moving to our key balance sheet indicators on Slide 7. Thanks to our overall strong business performance, all parameters continue to be excellent. Our stable loan-to-deposit ratio at 90% reflects balanced loan and deposit growth, as already mentioned. Asset quality continued to be very good. NPL ratio improved to 2.5% since the start of the year, while the NPL coverage ratio stay broadly flat at 73.6%.

In Austria, which was responsible for the slight consolidated asset quality deterioration over the past quarters, we saw a trend reversal in a positive direction at the savings banks, while -- as Bank Austria saw only a minor further deterioration. The asset quality situation across Central and Eastern Europe remained very strong. As [indiscernible] and Alexandra will provide you further color on credit risk. Let me now turn to capital because we have made some tremendous progress here. This is all the more important -- more important is our decision to fully fund the Polish acquisition from internal resources, thereby avoiding any kind of share count dilution always required us to build up capital in an accelerated manner between the first quarter and the year-end. And I'm happy to report that we have done just that in the second quarter. The CET1 ratio now stands at 17.4% with 2 quarters to go until year-end.

Clearly, this spin benefiting from adding back to the previous deducted share buyback and the lack of any dividend accrual, but also from strong profitability, of course, significantly, this figure doesn't yet include any meaningful effects from balance sheet optimization measures. Still we have laid a strong foundation for successful financing the transaction, possibly with some capital to spare at the year-end.

And with this, let's now examine the macroeconomic environment. I'm on Slide 9. The short story is that despite all the noise, not much has actually changed since we last reported at the end of April. We still talk about tariffs, although based on the recent news, the topic seems to be resolved between the U.S. and the European Union. We still talked about German's fiscal super and yet economist hardly changed their forecast for our region. For Austria, growth forecasts were up a little, but still are anemic. For CEE, we saw either no changes or slight reductions of growth expectations. One important takeaway remains though, CEE will grow faster than the Western Europe, which, of course, is good news for our shareholders.

All other macro variables remain broadly unchanged. Consumer price inflation is still forecast to hover in the low mid-single digits in the CEE region in 2025. Current account balances for most countries are set to remain manageable. In many of our markets, especially of those that reported larger deficits in 2024, the budgetary situation is forecasted to improve in 2025, which will help keep public debt in relation to GDP at sustainable levels. Given all the moving parts and also accounting for the uncertainties that are clearly out there, the performance of the first half of 2025 proves that we can operate very profitable even in challenging business environment, and we expect more of the same for the second half of the year.

After macro, let's see how the micro level performed in the second quarter. I'm on Page 10 now. Retail volume momentum was strong and accelerating. We saw continued healthy demand for consumer loans, especially in Romania, while mortgage demand also picked up significantly. The latter was particularly pronounced in the Czech Republic, but in actual effect visible across most of the Central and Eastern European countries. Lower interest rates and strong labor markets were major drivers. Importantly, in Austria, the same thing played out, albeit at lower growth rates. Asset quality in the retail business remained excellent.

On the liability side, volume trends were equally encouraging with good quarter-on-quarter as well year-on-year growth rates. The structural shift back towards current accounts -- current account deposits from term deposits continued, not unhelpful as far as future NII performance is concerned. Stefan will give you more detail about this shortly. At the same time, our security savings plan business that enables customers to build long-term wealth in an easy-to-manage digital format continued to grow rapidly. The stock of such savings plans exceeded [ EUR 1.8 ] million, supporting long-term fee growth in our asset management business. George, our digital platform for retail clients, hit a new milestone with 9 million monthly active users, helping us to push the digital sales ratio in the retail business to 67.6% in the second quarter. Almost 70% of consumer loans and more than half of insurance products were sold digitally.

Going forward, it's our ambition to develop George into a fully fledged financial adviser for our entire retail customer base. In the Corporate segment, I'm on Page 11 already, loans were up 6.3% year-on-year and 2.1% quarter-on-quarter. Growth was particularly encouraging in the large corporate and SME business lines in the second quarter. In terms of product growth, it was fairly balanced between investment and working capital loans. Czech Republic, Austria and Serbia were the clear growth leaders. The markets business built on a strong start to 2025, positioning an increase in net profit in the first half of this year. Our ECM and DCM teams once again did an amazing job successfully executing 165 transactions with higher issuance volumes than a year ago. The asset management business also showed a very healthy second quarter. Assets under management rose to a new all-time high of EUR 95.6 billion, supported by solid retail sales and minor M&A tailwind.

And with that, I hand over to Stefan for the presentation of the quarterly operating trends.

Thank you very much, and good morning, everybody. As always, I start with lending dynamics on Page 13, and I would like to provide you with a couple of geographic highlights. Our Czech business once again turned in a strong performance in the past quarter, both in relation to retail as well as corporate business. Growth on the retail side was mainly driven by mortgages, where we enjoyed double-digit growth of 11% on an annual basis. Slovakia also did well, which is noteworthy given the high base. Similar to the Czech Republic, the retail business benefited from improved mortgage loan demand, where year-on-year growth topped 7%. In the same period, corporate loan grew somewhat less.

Hungary was also a country where retail business clearly outperformed the corporate business. And there, again, it was the mortgage business, up almost 13% year-on-year. In Croatia, it was no different. Retail mortgages up almost 16%, and that's, of course, on a little bit smaller base than in the countries I mentioned before. Romania, Peter mentioned it, was the only country showing a quarter-on-quarter decline. However, this was purely driven by public sector volatility, while the consumer and mortgage loans developed very well. So if you connect all the dots, a clear picture emerges in front of us. Mortgage lending in Central Eastern Europe is back. In Austria, the situation was different in so far as corporate loan growth outpaced retail growth. And within the retail, consumer loans grew faster than mortgages. Still, mortgage demand also in Austria showed an improving development in the second quarter.

Given the good loan volume trends in Central Eastern Europe and improvements in Austria, we decided to upgrade our full year loan growth guidance to above 5% year-on-year for the year 2025. Moving on to Page 14, one can say that the good news on volumes continue with deposits. I would like to expand on a topic that Peter already touched on briefly, and that is the increasingly favorable structural shift on our last retail deposit base of almost EUR 170 billion from term deposits back to current account deposits, of course differently from the more expensive to the cheapest retail deposits. If this trend continues, and this is not an unreasonable expectation. This means nothing less than lower funding costs for us with corresponding positive read across on net interest income, more about that in a minute.

In addition, our retail deposit base grew at a higher rate, up 6.7% year-on-year and 2% quarter-on-quarter than deposits in our Corporates & Markets business, which exhibited their usual volatility. Volatility in large corporate and public sector has also been the driver of geographical differences, while retail growth was healthy and widespread. All in all, customer deposit growth ticked all the boxes in the second quarter, with retail deposits growing fastest and within retail current accounts posting the best quarter-on-quarter growth. Let me now move to net interest income on Page 15. We have already talked about quite a few input factors for NII and all of them developed positively. So it should not come as a big surprise that we upgrade the 2025 outlook for net interest income. Given favorable volume trends on both the assets and liability side, combined with a helpful business mix, good deposit pricing power, plus a reasonably constructive interest rate backdrop, we now believe that we can grow net interest income over the year 2025.

This is supported by a strong quarter print of Q2 2025 of more than EUR 1.9 billion. In fact, that year-to-date, we are already up by 2.7%. As a result, net interest margin also bounced back to the 2.4% handle, something we see as a realistic assumption to be hovering around for the rest of the year. The key geographic highlight is the NII stabilization in Austria. Erste Bank Oesterreich and the Savings banks benefited from significant downward pricing of deposits while downward pricing of variable rate loans showed a slowdown. In the Czech Republic and Slovakia, continued deposit repricing made a positive impact, compounded by higher bond income as well as normal course of business balance sheet management activities, supported the results in the holding, which you find in the other Austria segment. Our sensitivity always very important for the REIT forward to rate cuts is more or less unchanged at about EUR 200 million for 100 basis point instant downward ratio with the bulk of the impact expected to at the minority-owned savings banks, so no big deal for to share.

On to fees on Page 16. Net fee income rose by a healthy 7.2% year-on-year and down slightly quarter-on-quarter by 2.4% from the record levels we have seen both in Q4 '24 as well as Q1 '25. The year-on-year drivers were, by and large, the same as in previous quarters, namely payments, securities and insurance brokerage. Even though in payments, this is obscured by the shift of loan account fees from payments to lending as of the first quarter 2025. This was roughly at EUR 12 million to EUR 13 million impact. The best performance was registered in the Austrian segment on account of higher insurance and securities fees. The jump in the other Austria segment resulted from asset management fees attributable to the integration of new companies, but also good and very much upward drift in sales. Looking specifically at the quarter-on-quarter drivers, payment and insurance brokerage fees held up well, while securities fees trended slightly weaker. Based on the strong year-to-date performance, we confirm our full year guidance, which we upgraded just after the first quarter, and we confirmed the growth to be exceeding 5% in 2025.

Let me turn to operating expenses on Slide 17. Quarter-on-quarter costs were effectively flat as higher wage costs on the back of regular annual wage settlements in Austria were effectively fully offset by the seasonally lower deposit insurance contributions, which are mostly booked in the first quarter of any given year. Year-on-year, cost inflation was tracking somewhat above our target. Once again, this was driven by our personnel costs, but compounded by higher IT, marketing and consulting costs, mainly manifesting itself in the Austrian units. The increase in the other Austria segment was partly driven by M&A activities in the asset management that benefited us on the fee front, as just mentioned before. Since some of the drivers of the Q2 cost expansion should not be reoccurring and also taking into account the elevated cost trend in the fourth quarter of 2024, we are confident to deliver on our 5% cost target in 2025.

We are summarizing our operating performance on Page 18. With quarterly revenues hitting a new all-time high and costs being elevated, we produced a quarterly operating result of just above EUR 1.5 billion. Despite the strong performance, cost/income ratio deteriorated slightly year-on-year to 47.5%, still at a respectable level and well inside the full year guidance of below 50%. Quarter-on-quarter, we saw an improved operating performance as revenue growth, mainly driven by strong net interest income outpaced cost inflation. Consequently, our cost/income ratio improved somewhat this quarter. As we are already well inside our 2025 cost/income ratio guidance of less than 50%, we confirm this outlook unchanged, acknowledging that based on the first half performance, a tick of room for improvement could perform. And with that, over to Alexandra for more details on the credit situation.

Thank you, Stefan, and good morning from Vienna also from my end. Let me guide you through Page 19. In the second quarter of 2025, we posted risk costs of EUR 97 million or 17 basis points. A year ago, risk costs were even lower, but back then and you surely remember, we benefited from FLI overlay releases in the amount of EUR 88 million as opposed to EUR 6 million. So net-net, we actually saw an improvement year-on-year. Quarter-on-quarter risk costs were broadly stable. The solid year-to-date performance is a result of lower NPL inflows in the Erste Bank Oesterreich and the [ Savings banks ], while the credit risk performance in our [ CE ] operations remained excellent. As far as FLI and industry overlay provisions are concerned, we still hold a stock of about EUR 480 million, almost unchanged compared to the first quarter as the net effect from the FLI releases in Romania and top-ups in Austria was negligible.

Accordingly, we are now adjusting our forecast of such provision releases in the remainder of 2025 from EUR 190 million or max EUR 190 million it was the latest to about EUR 140 million, of which roughly half is expected to have a net positive P&L impact, while the other half will be used for expected changes in risk parameters. Given the good first half performance, we decided to upgrade our risk cost guidance for the full year 2025 to about 20 basis simply because economies are holding up reasonably well. Loan growth has picked up and defaults have certainly not increased year-on-year.

Let's now turn to asset quality on Page 20. With a consolidated NPL ratio of 2.5% and an NPL coverage ratio, excluding collateral of 74%, asset quality remains strong across our footprint. Overall, the NPL ratio benefited from, as already mentioned, lower NPL inflows and also significantly higher recoveries year-to-date. As already mentioned in the context of risk cost, Central and Eastern Europe continued to excel with Romania being the only out. we saw some NPL inflows related to agricultural exposures, which basically push up the NPL ratio. These are few single cases, so we expect this to remain a onetime event.

On the positive side, we saw improvements in Austria, most notably at the savings banks, which were the main driver of asset quality deterioration over the past couple of quarters as NPL inflows slowed down significantly in the first half of 2025. Also the Erste Bank Oesterreich the deterioration in asset quality slowed. So I believe that our assessment that we have seen the peak in defaults in Austria is still correct, even so I would caution against overestimating the speed of recovery given the still difficult and somewhat choppy economic environment. In terms of projections for 2025, we expect the group NPL ratio will stay more or less at current levels, so 2.5%. Similarly, coverage is expected to remain broadly unchanged, maybe rather a little up until year-end, subject to the structure of new defaults and the magnitude of further FLI overlay releases.

And with this, I hand back to Stefan.

On Page 21, let's briefly look at how the other result performed this quarter. In short, it was once again affected by one-offs this time in a positive way. We booked a one-off in the amount of EUR 88 million as a result of a technical change in the inclusion of associate. This amount is entirely a catch-up effect from past year. This meant that other results came in very light this quarter, especially when compared to the previous quarters and also the quarter a year ago, both of which were affected by negative one-off.

So please note that neither the second quarter nor the first quarter are usual guide for any run rate, but probably something in between highly dependent on one-off. Looking at our net result development on Page 22. The combination of strong operating performance, moderate risk costs and a positive one-off in other results brings a strong second quarter with EUR 921 million net profit. Comparing the first half year of 2025 to 2024, the EUR 1.665 billion net profit are 2.2% above last year. Therefore, and despite the strong increase in our equity base, we upgrade our return on tangible equity guidance to greater than 15%.

Given the signing of the Santander Polska acquisition on May 5, our capital position has even more taken center stage. Hence, let's now move to the wholesale funding and capital section. Looking at Page 24, we have talked already about Erste Group's highly granular and well-diversified retail and SME deposit base, which, of course, remains the key source of our long-term funding. The wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits, in particular, repos. And the stock of debt securities was pushed up primarily by issuance of covered and senior preferred bonds, resulting into the updated debt maturity profile on Page 25.

As you certainly remember, we had a busy first quarter that included 3 benchmark transactions, 2 EUR 750 million green senior preferred bonds and a covered bond in the volume of EUR 1 billion. In May, we successfully executed our largest ever AT1 transaction and also added to our pool of covered bonds. Both transactions had a volume of EUR 1 billion each. With these year-to-date placements, our annual funding plan is very comfortably on track. Let me now refer you to Page 26 and talk about one of the key achievements of this quarter, and that's the very fast capital build.

Obviously, this is connected to our Polish transaction and the related fact that we have decided to fund this acquisition exclusively from internal funds in order to maximize shareholder value. Consequently, we need to build capital quickly and manage to do so at quite some speed. In the past quarter, Q2 2025 alone, we added EUR 2.6 billion in CET1 capital and more than EUR 3 billion in total capital. This resulted from the inclusion of interim profits as well as minority profits, the cancellation of the share buyback in the amount of EUR 700 million and limited dividend accrual requirement plus our largest AT1 issuance today, as mentioned, while a Tier 2 benchmark transaction in the amount of EUR 500 million was called in Q2.

Risk-weighted assets development was also contributing positively this quarter as increases driven by business growth were at least partly offset by rating upgrades and to a lesser degree, by migrations to default in Austria. Market risk RWAs, thanks to active exposure management continued to decline in the second quarter, thereby also supporting a favorable RWA credit. With this, we move to the CET1 year-to-date waterfall on Page 27.

With CET1 capital enjoying a massive boost and RWA growth being muted in the second quarter, the CET1 ratio increased significantly to 17.45% to be precise. With this, we are on an excellent way to beat our goals set out in the Santander Polska acquisition presentation in May. We have 2 more quarters to go in 2025, 2 more quarters that are not burdened by dividend accruals and that will benefit from strong business dynamics, as already mentioned earlier in the presentation. Hence, let me close with a little bit of a scenario analysis for you here.

Assuming that we will close the Santander Polska acquisition in early 2026, we target a year-end CET1 ratio above 18.25% on the current Erste Group or alternatively of comfortably higher than 13.5% if the transaction still closes inside 2025. With the assumption of the RWA drawdown unchanged at about 460 basis points as a result of first-time consolidation of Santander Polska, we should then be well on our way to exceed our post-consolidation CET1 ratio target of 14.25% during the course of 2026. And at the same time, return to our dividend payout policy of 40% to 50%.

And with this, I hand back to Peter for the update.

Thank you very much, Stefan. I'm concluding this presentation with our detailed financial outlook for 2025 on Page 29. We had a very strong first half of '25 with improving volume momentum almost across the entire group. Hence, the upgrade of the loan growth guidance to above 5%. Better volumes, of course, means better revenues. Last quarter, we already upgraded the fee outlook and now it's NII turn. We expect net interest income to actually grow somewhat in 2025. Despite the volume and revenue upgrades, we stick to our cost income ratio forecast of less than 50%, even though we see upside potential there.

Credit risk performance has been strong as well. Hence, we are tightening the risk cost guidance to about 20 basis points from previously 25. And finally, we are lifting our return on tangible equity outlook to above 15%. So to sum it up, from my point of view, there are 3 key takeaways from today's result presentation. Number one, our existing business is going strong, as evidenced by the broad-based upgrade of our 2025 financial outlook as just presented. Number two, we are right on track for first-time consolidation of Santander Polska around year-end of '25, not least supported by the faster-than-expected capital.

And number three, the future will even be brighter from 2026 onwards as the new Erste Group will grow faster and will be more profitable than it's now. Consequently, we explicitly confirm all of the financial projections for 2026 published in conjunction with our Polish acquisition, namely a return on tangible equity of about 19% and EPS uplift of more than 20% which should bring us within striking distance of a net profit of EUR 4 billion and earnings per share of about EUR 10 already in 2026.

And this, ladies and gentlemen, concludes our presentation remarks. Thank you very much for your attention, and we are now ready to take your questions.

[Operator Instructions]

And we have the first question coming from the line of Gulnara Saitkulova from Morgan Stanley.

On the cost outlook, can you elaborate a bit more on your outlook when it comes to expenses and the main drivers of your costs in various markets for the next 12 months? Where -- and from which markets do you think most of the pressure could come from? And how do you think about IT investments as well as integration costs for the Polish unit? Do you have any visibility there? Are there levers you can pull to maintain cost discipline if revenues soften?

So I would like to split the answer as follows. So first, I take the integration cost assumptions. Obviously, it's not easy to give you a very precise number, but Peter and myself have been communicating this EUR 150 million to EUR 200 million overall integration costs for, let's say, the next 12 to 24 months. That is covering just to be very clear, the IT expenses that you have been mentioning, of course, TSAs that we will be concluding together with our Polish -- future Polish colleagues and in terms of our Spanish counterpart and rebranding costs and so on.

Obviously, we will be in much more detail once we have closed the transaction and then give you a more detailed breakdown on where the costs exactly arising, which are really integration costs, which are running costs and so on and so forth. But the ballpark number has not changed throughout the last 2 months and the close analysis in interaction with the colleagues in Madrid and Warsaw. When it comes to the operating expenses running, so first, I want to explain how do we get to the 5% confirmation. That's very simple.

Look at the Q4 2024 print. This was for various reasons that we explained back then, elevated. That's one of the reasons why on a year-on-year comparison, the 5% is still very much in reach. Second component, as you very well know, is obviously FX volatility, depending on where finally, especially Euro Czech, but also [ euro half and euro Rome ] will stand at the end of the year. There is always a room for plus/minus 1%, and we will flag that and explain in detail once we are there.

On your point with regard to levels, let's be very clear. We have seen significant wage inflation all across our countries. That's also true for Austria. On the back of that, of course, the top line was very well supported in many areas. So it's a mix that is, on the one hand, driven by the market, the broader market, the tight labor markets, which serve us extremely well on asset quality as well as on business performance, but they come for a certain price and that you see in the cost line. And nonetheless, I want to add that we have used our very strong position to invest into our future on the technology side as well as on process optimization. We've always been flagging this at around 1.5 percentage points. That's it to sum it up and a little bit of a feeling for '26, we will certainly give by the end of October when we report on the Q3.

The next question comes from the line of Gabor Kemeny from Autonomous Research.

My first question is on NII, please. I noticed that most of the Q2 NII growth came from the Savings bank and the other segment. Is there -- can you elaborate a bit on the trends in the other segment, please? And note anything confirm is there any nonrecurring items in there? The other question on the NII is just going forward, shall we expect your NII to grow roughly in line with loan growth? Or are there any moving parts in your net interest margin you would like to call out?

And my final question will be on income [indiscernible] in Q3. In term of your 14.25% CET1 ratio target a year earlier, like by the end of this year, would you reconsider your up to 10% payout target for this year?

All right. First and very short and straightforward, what we see in other Austria is simply our positioning on the ALM side, pretty much hedging our downward, so to say, in the Austrian segment, as you know, we have an exposure to lower rates, and that's mainly on the [ position that we ] see in Other Austria. Also the business on the corporate, large corporate side has been going well. That's the NII drivers on Other Austria.

On the capital, look, it's very simple. First goal is to achieve all the targets that we have been promising a, to the market and b, to the regulator. And once we are there, we will definitely reconsider our communication around capital return. I do not consider a very high likelihood to change anything around the '25 distribution. But when it comes to '26 distribution, if things go in the direction that Peter has been describing in his summary, then certainly, we will early enough start to think about how we can build an attractive capital return. That would be my answer at this point in time. So relatively low likelihood to change anything around the '25 indications, but quite significant chances to have a very attractive capital return in 2026. I think there was the third part of the question, which I didn't hear, sorry. Now we can hear third part.

Yes. Sorry, if I can squeeze in one more, please, on the loan growth. You're guiding 5% plus. You were running at 6% already in 2Q. So can you elaborate on how far you think loan growth could accelerate in the next few quarters? And what -- which market segments do you expect to drive this?

So I think we are guiding for more than 5% that would include 6.5%. So that's the one. And secondly, I think what we have really seen, and I be very honest with you, a little bit surprised also on the positive side was how quickly the mortgage lending came back. Now you all know as good as we do. We have to be a little bit careful with the percentage increases because if we grow 16% in Hungary or 13% in Croatia, that's great for what the colleagues are doing there. But in the same moment on the group side, it doesn't move the percentages too much.

So still, I would say the main driver as it seems for the moment for even better growth comes from the retail side, discussing with the corporate colleagues, we should have a solid growth, but maybe not, let me say, an extraordinary one unless we see a better boost from the German investments that's probably not yet arriving in Q3, Q4, but we see a good optimism for 2026 and [ forth quarter ]. Central Eastern Europe, mortgage lending, core business are the drivers.

The next question comes from the line of Amit Ranjan from JPMorgan.

I have 2, please. The first one is on capital. You had talked about some balance sheet optimization measures, including securitization, hedging, et cetera, around 40 bps benefit. Did you take any measures during the quarter? Is all the 40 bps expected to come in the second half, please? And the second one was, again, on capital, more than 18.25% at year-end '25, how does it compare to your expectation when you had announced the acquisition? Is it running ahead by how much, if you could give any indication? And then the 14.25%, I thought is 14.25% -- is the target greater than 14.25% or 14.25% for 2026? That would be the 2 questions.

Okay. So I see 2 to 3. Let me start with the capital, as you call it, balance sheet management optimization. So first answer, pretty much nothing in so far this year and not in Q2. We have used the time to prepare and have started now in the third quarter to execute a little bit already. One part is that we are selling and making use of this extremely tight spread environment, making use of some activities on noncore business sales. This lightens up our RWA, so to say, position. The second element that we have been flagging is our SRTs. We are very well progressing. We have been selecting portfolios. There will be a couple of countries in Central Eastern Europe and also an Austrian portfolio that we will market in the next couple of weeks and months.

And we are very optimistic that we will achieve the goal of about 40 basis points effect. Most of it probably this year, maybe a little bit of that depending on the approvals going into next year. So balance sheet management optimization so far has not been a strong element of the capital build, but will be a little bit more in the second half of the year 2025. On the 18.25%, it's a very simple calculation. We said that we want to achieve a 13.5% plus consolidated CET1 ratio position as a minimum, which means we have a 4.6% drag from the inclusion in the consolidation that results in 18.1%. In the meanwhile, we are absolutely confident that 18.25% is a very, very solid floor to what we are achieving. Of course, our goal is not to land at 18.25% exactly, but slightly higher. That's a little bit too early to say. We will see what we can update you on this one going into the Q3 reporting.

And last but not least, 14.25% is going to be our new CET1 ratio management target in the course of the year 2026. And that means that we want to achieve this level. Everything above, we regard in principle as excess capital. Of course, you cannot steer it by the basis points, but that's the way you should look at it. We are not aiming for something substantially higher, but 14.25% is the new CET1 ratio management target for the year 2026.

The next question comes from the line of Máté Nemes from UBS.

I have 3 questions, please. The first one is just a follow-up on RWA optimization. I hear you, Stefan, you said none of -- pretty much none of the 40 basis points was realized in the quarter. But you did mention some balance sheet and RWA optimization. Could you quantify this specifically for Q2? And how was this achieved? That's the first question. The second question would be on Austria and on Austrian deposits. Can you update us on the deposit beta in the country? And how do you think about further repricing opportunity on deposits?

And lastly, a question on loan growth. It's good to see corporate loan growth also accelerating. I'm wondering if you can talk about a little bit on what extent do you see already some prefinancing demand shaping up on the back of the German fiscal stimulus, i.e., German corporates operating in Austria or in [ CE ] taking investment type of loans and also any suppliers or Austrian suppliers preparing for this, how does the pipeline look like? And to what extent can we expect a meaningful acceleration in corporate loan growth, maybe slightly beyond the next 2 quarters?

Yes, good to hear you. First point can be straightforward, around about 5 to 10 basis points, not more are there in the second quarter. I said already answering Amit's question before. The only thing that we did very quickly after signing was reducing market risk RWAs. All the rest is the future music, meaning Q3, Q4 and also going into 2026. So 5 to 10 basis points is a good proxy. Austrian deposit betas, look, it really took a while.

But now in the second quarter, you saw a substantial repricing, not only in our books, but also in the market, and that will help also going forward. I think that with the ECB trajectory somewhere being either 2% until the end of the year or 25 bps lower, let's see, we will be landing there on the deposit side in Austria. So I can't give you a precise beta, but deposits are pricing downwards. We have a lot of term deposits expiring still, which will help to reduce our funding costs further. So of course, NII in Austria will not be reaching the '23 levels, but it's very much stabilizing, and we are optimistic to beat our originally budgeted NII in 2025. Peter.

On the last part of your question related to expectations in terms of corporate lending and volume growth. I think in a positive way, we are somewhere a little bit in between. On the one hand, as Stefan before rightly mentioned, the biggest driver of our loan growth so far was retail in the mortgage area and the consumer lending area. But having said that, what we have seen over the last quarter was a kind of pickup in the loan demand in the corporate area, especially in the large corp area and in the SME area, which we highly appreciate. Is this related to the German Polska, no, most probably no. What we have seen so far is the sentiment is improving. So the overall mood of our clients is getting better because revenue is taking really tough actions. But we don't see it so far in our numbers.

And again, coming back to what Stefan rightly mentioned before, so in terms of loan growth and volumes, we are quite optimistic when it comes to 2026. We are absolutely positive for the second half of the year, but the impact of German Polska will see most probably in 2026 and 2027.

The next question comes from the line of Riccardo Robert from Mediobanca.

Two or 3, if I may. The first one is on NIM. You have 5% loan growth, but you have 0 or above now just about 0% NII growth in 2025. But in the meantime, you have the deposit base, which is growing fast. You are saying that within the deposit base, you see shift to overnight, which is the stuff that cost you less. So you have roughly 50% of your book, which is fixed rate, 45%, if I'm not mistaken. And that is being repriced probably at higher rates today than when they were written 4, 5 years ago. So what do you need -- what kind of spread compression do you need to see such gap between 5% or more than 5% loan growth and kind of 0% NII growth in 2025.

And given the different -- how the funding mix is reshaped, do you think that is a leading cycle talking about margin expansion is an abomination at this stage? That's my first question. The second question though is for Alexandra. You have -- the coverage ratio of stage 3 loans goes up by 0.8%, which my calculations are not wrong, that would account for roughly EUR 30 million to EUR 40 million in a quarter.

So the question is, why did you need to increase the coverage by 0.8% to 44.6% when the level of NPL collateralization actually has gone up a little bit. And do you see that the increase in the stage 3 coverage ratio this quarter is a sort of one-off because if that is the underlying risk cost is not EUR 97 million, but it's much more similar to EUR 60 million or so. So that may be question also the 20 basis points. And the third question I have that goes for Peter. Can you reassure us that with Santander Bank Polska, your appetite for M&A is being satisfied for the next 2, 3...

May I start with the last part of the question about our risk appetite for M&A transaction, I fully confirm that our risk appetite for the next 2 to most probably 3 years is now somehow limited. We are now fully focused on integrating Santander Bank Polska. And I think our target to come up with a EUR 4 billion net profit company is an ambitious one, and we are quite convinced that we will succeed in 2026 to be there. And in the meantime, we will still build up capital.

All right. On your NIM question, Riccardo, I think without being too long in addressing all the points that you were mentioned, First thing, obviously, the loan growth that we are indicating is, of course, spread over the whole year. So you cannot one-to-one translate the 5% into a better NII. Of course, you know that. The other point is, why was NIM going back up from Q1 to Q2. And we were obviously also investigating that in very much detail. While the customer loans have been increasing on the back of some of the activities I mentioned on the market and other places, we have been reducing in other places, interest-bearing assets. which, of course, then means that the average NIM on the total interest-bearing assets has been somewhat ticking up. So our expectation for the end of the year on a broader range would be 2.3 to 2.45 could be 5 basis points up or down. What is very important is the medium-term outlook.

And on that one, I completely agree with you that on the medium-term perspective, as long as we can keep the spreads on both sides of the balance sheet at reasonably stable levels, then the loan growth, of course, has to translate into future NII. That's absolutely out of question. But let's not forget that we had very muted loan growth for quite a long time, and that is not something that immediately translates into NII. So we are registering a better NII assumption for 2025 already. But the real effect of the, hopefully, also sustainable better loan growth will only be there in '26 and forth quarter.

Let me try now to address your questions. So you rightly noted that the NPL coverage including collateral remained stable. So this is also something that we are closely looking at. The change in the NPL coverage itself was very, very minor. And as you surely know, NPL coverage level is a functional result of individual cases. So if you have a higher collateral loan loss provisions and the other way around. And I was mentioning in the presentation, we had very few and to be super precise, 2 cases, larger cases in Romania where the level of collateralization was lower. So the NPL or the loan loss provisioning was higher.

But to be honest, the change was so small I would not -- because of a lot issues I would not interpret this too much. So we are very confident and very satisfied with the overall level of 72, 73 something for the year-end, we expect roughly 75 or broadly stable what we see today. The same is true for the NPL coverage, including collateral. And some indicated that around 20 bps might be even lower around 20 bps, please bear with us and allow for staying somewhat cautious as mentioned previously, and we all know the uncertainty around tariffs and macroeconomic environment is still a little bit fragile. We think with around 20 basis points we show still prudent, but a bit good guidance.

And if I may, just a quick follow-up on this, Alexandra. The EUR 480 million FLI that you still have in the balance sheet, used very little in this quarter, if I'm not mistaken. At what point will you have to take [indiscernible] you using part of it. But is this going to take another 2, maybe 3 years or at some point, maybe year or a half you will have to take a decision provided that tariff impact does not come as too dangerous or too risky. What's the reason of using EUR 140 million if I'm not mistaken. So at this speed, say, 3 years or so, 4 years or so to get rid of the EUR 480 million.

Let me come back what we previously I think it was [indiscernible] So the reason why we took it down from EUR 190 million, maximum EUR 190 million to EUR 140 million still is or simply is the macroeconomic environment and the change in the Austrian, especially the Austrian macro economy. We are doing this FLI update, as you know, every quarter. And as you rightly said, in Q2, the net result was very minor. We had some releases in Romania from the FLI update, some top-ups in Austria. Overall, this net to roughly EUR 6 million. We do it again in Q3. And in case the economic -- macroeconomic outlook in Austria will change for the better, which we do not know yet, this may result also in a positive development on FLI in Austria.

Overall, this is our current estimation, EUR 140 million overall release for this year driven by macroeconomic development mainly. We expect further releases next year. And then we expect that we have reached a certain amount a floor in the FLIs of roughly EUR 300 million, which then will remain overall a basis for changes. This could go down a little bit, but this is what we expect to be the floor on FLI provisions going forward. So not 3 to 4 years, this year and next year for P&L effective releases and then staying with the stock of roughly EUR 300 million FLI.

Next question comes from the line of Ben Maher from KBW.

Just a couple of quick ones from me. I was just interested to get the rate assumptions that your upgraded NII guidance is now based off. I think last quarter, you're guiding to low double-digit decline in Austria and the evolution appears a bit more positive this quarter. I was wondering whether you see perhaps a slightly softer decline in Austria this year on the NII line.

First of all, rate assumptions. At this point in time, we assume most of the key rates to hold flattish for the rest of the year. ECB assumptions, as you can read from the market forwards as well, is more leaning towards the 2% key rate for most of the remaining year then further cuts. And even if they come very late, it will not change the picture for us at all. Czech National Bank is from the perspective of our analysts, most likely going to cut one more time somewhere in Q3, Q4, but definitely not going below 3%. And for the rest of the spectrum, you know about the Romanian situation in order to protect the currency and manage the overall budget situation. We don't expect too much of moves there, maybe one cut, let's see.

So overall picture quite friendly for us in terms of key rates. I think you are following the whole sector, and you see that this is quite supportive for banks. The other point on Austrian NII, we have 2 effects there. The one we have described already in very much detail during the call, that's the deposit repricing, which is going very much in our favor, both in Savings bank and Erste Bank Oesterreich. I'll leave out purely focusing on the core business. Of course, still on the other side, on the asset side for the remaining variable loan book, you will see repricing downward. So it's not going to be a walk in the park for the Austrian entities. They will still have declines on the asset side NII and let's see when, so to say, this turning point comes where the volume growth can outpace the decline, most likely on the asset side, not yet this year, but the deposit side is helping.

For all the other countries, and I'm sure here, we have a much better situation given the structure of the loan book. For example, Slovakia, I wasn't going into all the specifics today on the NII discussion, but what we see there is very nice. We see a very nice upward repricing of the loan book. Why? Because the mortgages typically have a duration of 5% refixing. And there we see now the higher refixing from the formerly ultra-low rate environment. So you can be confident that also in the other euro countries, we will see a very solid NII in the forthcoming quarters.

The next question comes from the line of Benoit Petrarque from Kepler Cheuvreux.

So the first one is actually to come back quickly on NII. You are calling for flat NIM to 2.4%. Volume growth will continue. So can we expect sequential improvement of NII going forward into '25? And just to come back on the guidance on kind of close to 0% NII growth, what prevented you to upgrade the guidance to just 1% to be more precise, basically with a bit of sequential improvement of NII, you still get to a 1% NII growth in '25 without much program.

The next question is actually on Polska. What do you have in mind on the earnings power currently? We've seen the Q2 reporting. We've seen some rate developments in the quarter. So could you update us on the earnings power of Santander Polska? And then maybe just a final one on the day 1 CET1 ratio above the 13.5%. Yes, the buildup is of capital is going extremely well. Could we be close to the 14% level on day 1, assuming closing in the fourth quarter?

Now we are on, all right. Let me try to cover those very quickly. So first of all, to be very clear, and thanks for the question. We are not guiding for a NIM. We're not guiding for a NIM. It was just my indication where we believe we will be hovering around. You know how sensitive this number is. It can be easily 10 bps lower or higher due to interest-bearing asset volume and so on and so forth. But one thing is very clear, and we have discussed it in answering the questions of other colleagues. One thing is very clear. Should we be able to confirm the loan growth that we are seeing at the moment also in the forthcoming quarters and the market spreads, let me say, develop neutral, that's enough.

Then, of course, the outlook especially for the future years on NII should be in the existing perimeter, obviously quite positive. That comes without saying. Frankly speaking, I ask you for understanding whether I'm guiding for greater than 0% or 1% NII increase at this point in time. I hope this will not make much of a difference. We will be as precise as possible in October when we talk about Q3. But for today, we simply have the guidance we will beat the 2024 NII. Everything else is a little bit, to be honest, that number crunching, which we are not confident enough to give a more precise number.

Santander Polska. Obviously, and I ask you for understanding, we are not commenting on any details regarding the performance. What we can say is that everything we have seen so far, all the stuff that is publicly available, but of course, the conversations we have had with our Spanish and Polish colleagues is very, very positively giving us future confidence and Peter has already been mentioning, we are very optimistic. We are looking forward to work also on the ground and in Poland after closing. And that's all very much reconfirming to say the least, all our assumptions. And last but not least, the simple answer is, yes, it's possible. Of course, it is possible that we will be close to 14% CET1 ratio. Whether it will be the end then be 13.83% or 13.92%, I have absolutely no clue. It depends on many things. It depends on the approval process of the SRT. It depends on market swings. But yes, it is -- we have been saying basically without today's indication that we will be -- if you assume 18.5%, minus 460 will be higher than 13.65% and that also includes being close to 14%.

The next question comes from the line of Krishnendra Dubey from Barclays.

I guess just one small follow-up on the NII. I guess on the other revenue, on the other NII that continues to be performing better, like it was 2% of NII, now it comes around 5%. If you could guide around what are the drivers for that? And how should I look at that part of NII?

Yes, as I said already, this is mainly [indiscernible]. So there are many things, but the key matter that you see in Other Austria is our investment book. On the one hand, I wouldn't use the word hedge. I'm careful with this word because hedging is misused very often. But of course, it stands against the exposure that rate sensitivity that we have on the Austrian entities, in particular to downward shifts in euro rates. That's the one part. The other part is, and we have been constantly reporting about that, that we still see an upward drifting return from our investment book, not because we are increasing the volumes so much. Volumes have been relatively constant over the last couple of quarters, but simply because the reinvestment yields are still slightly upward moving. That's true for the Czech Republic. It's true for Romania, but it's also particularly that what you see in other Austria, also still true due to the shape of the curve, steeper curve is also still true for the Austrian perimeter. In other words, holding, that explains the very good development on the other Austria book.

Just small follow-up. I was referring not to just other Austria, I was referring to the other division actually, which is like 119 in this quarter, it was like it continues to do well Q-on-Q, and it was -- it's up from 57 to 119. So I was referring to other division, not Other Austria.

Absolutely right, other divisions. Thanks very much for clarifying.

We a follow-up question coming from the line of Riccardo Rovere from Mediobanca.

Just a quick one. Could you please update us on what you think about bank taxes, bank levies in the various countries.

Talking about banking taxes, we don't expect during the second half of 2025 any changes. I think there has been already a lot of noise in the first part of 2025. So we don't [indiscernible] also in 2025. So we don't [indiscernible] in this year.

The level that we are seeing today should be assumed to stay more or less as it is for the next 2 years.

Yes, there will be a slight increase in Romania, but in general, it should stay roughly on this level where we are for this year.

Okay. And this is, let's say, '26 and '27.

Should ask [indiscernible] I think it's fair to say that our banking tax is higher than our so it [indiscernible] question.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to Peter Bosek for any closing remarks.

Thank you so much for joining our call. We wish you a very nice August. We will be back in on 31st of October with our third quarter results. Thank you very much.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the call. You may now disconnect your lines. Goodbye.