Erste Group Bank Stock

Ladies and gentlemen, welcome to the Erste Group Third Quarter 2026 Results Conference Call. I'm Serge, the Chorus Call operator. [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 of Group Investor Relations. Please go ahead.

Thank you again for the kind introduction and also welcome to everybody this call on behalf of Erste Group. Today's call, as usual, will be hosted by Peter Bosek, our Chief Executive Officer -- Ilinka Kajgana, our Chief Risk Officer. They will lead you through a brief presentation highlighting the financial achievements of the third quarter, after which they are ready to take your questions.

As usual, my recommendation to look at the disclaimer on Page 2 on forward-looking statements because there will be one or the other in this quarter, which is a [indiscernible].

Good morning, ladies and gentlemen. Welcome again to our third quarter conference call. Even though everything around us seems to change even faster our message to assort I can again to share with you quarterly financials that a record on an estates. We bolted record revenue, complemented by a decline in costs quarter-on-quarter, which [indiscernible] these costs remain more and consequences of the offer net growth profit -- or the new quarter as you may recall. But let's look a little bit deeper and start on first quarter operating performance [indiscernible] performance higher.

Net interest income was clearly the star performer, up [ 5.5% ]. This was mainly attributable to continued volume growth and rising rates. These also posted a new record, this income from security business -- well as payment services continued to [indiscernible] Trading interest [indiscernible] lower but this was mainly due to fair valuations volatility of customer loans. With these quarterly revenues almost reached EUR 4.1 billion. At the same time -- paving the way for a record quarterly operating result that -- EUR 2.3 billion.

If you look at like-for-like year-to-date comparison [indiscernible] the picture is equally positive. Net interest income was up 7%. Net fee income by almost 10%. Net trading and familiar result rose to 30%, where costs rose by about 3%. Risk costs were broadly in line what we saw in the first 9 months of 2025. And if you add all this up, we also posted a record operating profit and record net growth for year-to-date, excluding Erste Bank Polska. Based on these strong figures, we decided to upgrade our financial outlook for 2026. We now believe that we can grow net interest income fixed as to bank post by more than 6%. And with this, should be the NII target for a large of [ EUR 100 million ] by competitive margin. This will be helped by better loan growth, we should open our year-end loan of beyond EUR 290 million, it previously about EUR 290 million years. Fee growth for as the exports should be around 10% compared to [ 79% ]. And consequently, the cost income ratio should also come in bigger for Erste -- below 46%. In addition, risk costs are expected to stay at the lower end of our 25 to 30 basis points guidance for Erste, including Polo shop. While all of these bots rail for 2027, I would kindly ask you for patience when it comes to official 2027 guidance.

For the simple reason that -- communicated at the end of September, we will launch a tender offer for Erste bank Polska shares next Monday and prior to knowing the outcome of the offer, it makes legal sales to issue concrete papers. Having said this, is a bit almost that is currently out there, we see no reason by the favorable business momentum should not continue into 2027.

Let's now move to Page 5, some additional details of our financial performance. With net interest income climbing to a new height and interest-bearing assets growing broadly in line with loans, net interest margin increased to 273 basis points. The cost income ratio also continues to improve, supported by strong revenue momentum and muted cost growth. impact increase an all-time low of 43.1% in the third quarter. The risk cost ratio on the other hand, remains [indiscernible] this is also a reflection of the general positive credit risk environment in our markets. Banking digital remained stable at high levels with the year-on-year increase explained by the inclusion of just Erste Group Polska. And finally, earnings per share and return on tangible equity also -- rate to record levels in the third quarter.

The strong P&L performance is clearly linked to -- balance sheet growth. And with this, I'm on Page 6 of the presentation. In the year-to-date, you will see it on the slide, the major growth driver is the solution of Erste Bank Polska started in with the first quarter. This, to a large degree goal of the mature increase in intangibles in equity, but more importantly, also significant increased customer loan -- the good news is that hidden behind this inorganic growth, there is also substantial organic growth in the business, excluding Erste Bank Polska. The customer loans grew by [ 5.8 ] Year-to-date, putting us right on brick to achieve our 6% to 8% growth target for 2026.

Customer deposits rose 4.5% year-to-date. On the asset side, we saw a good growth, balance with both, the retail and corporal segments making good growth. On the liability side, slower retail deposit growth was offset by higher inflows in the corporate business. But while customer deposit flows was quite in line with loan growth year-to-date, quarter-on-quarter was on small while loans continue to grow a good pace. And this explains the quarter-on-quarter rise in the local deposit ratio shown on the upper left-hand chart on Page 7. While it was down year-to-date, this rail is year-on-year on inclusion of the busiest Erste Bank Polska. Talking about year-on-year customer loan growth, excluding Erste Bank Polska equal 7.7%, while customer deposits advanced by 6.6% in line with more lease process.

Asset quality order achieving mile positive quarter-on-quarter trends post the NPL ratio -- and the coverage ratio improved by a couple of basis points. The decline in the reported CET1 ratio is -- including third quarter interim growth. But even on a pro forma basis, we saw some -- to 15% freight, this major effect we guided for last quarter, later an outsized increase in [indiscernible]. And pro forma, we continue to resecure payments at the maximum with our target payout range of 40% to 50%.

On target in this respect, the magnitude of the finance dividend for 2026 will be, of course, depending for the outcome of the Erste Bank Polska offer. When it comes to decrease in leverage ratio traditional plans of ours in the third quarter, we registered a slight decline in the green coverage and funding ratios -- the leverage ratio was stable. All these ratios remained at very sector levels.

Let's now briefly examine the macro -- we now reach on Slide 9. A quarter ago, I told you that the cheaper and we see the global economy situation was through. Today, I cannot say anything different maybe with one tangible difference that in the meantime, we saw significant increases in interest rates across the term and also in growth geographies, not in all our geographies, but also there. And of course, we also saw renewed upward pressure on energy prices.

Despite all logistic growth performance and outlook for our region remain broadly unchanged from a quarter ago. As the other key macroeconomic indicators like inflation expectations and enrollment rates is real estate tenant fees basis. Take all of this into account, we are therefore still operating in an environment that is favorable for us. Solid economic growth combined with positive upward sloping yield curves. That's the -- nice time being amidst that supports sustainable volume growth before margins.

Talking about sustainable volume growth, let me share capital performance highlights on the retail business in the third quarter '26 -- I'm on Slide 10 now. In our business, excluding Erste Bank Polska, many of the positive gains that you have by now for -- continue. We saw continued good demand for housing loans involve cross-border geographic cut segment, particularly in the Czech Republic, Angola, Croatia, but interestingly -- the Austrian same events. Our success story of an evening customers to manage their own security savings plan also continued. We now have over 2.3 million trains where customers contributed were between EUR 50 and EUR 200 monthly to invest in securities, thereby creating a stage -- of assets under management inflows for gain. This may also be 1 explanation in addition to rising interest rates, while we saw a consolidation of retail deposit volumes near record versus the third quarter. It may also help in understanding the minor mix shift we observed in the past quarter, namely as more increase in current post volumes, while current accounting sale deficit decreased slightly.

So far, this is just one data point after a couple of quarters of moving in the opposite direction, but we will certainly watch this space. And finally, George continues to grow. We have now over more than [ 1.2 million ] cans to the platform, but this is not the aim of the story. We are also doing a lot of business through our digital platform, thanks to reach our overall digital sales share surpassed 80%.

In the coverage segment, excluding Erste Bank Polska -- reached 11 already, loans were up by 7.3% year-on-year and 1.6% quarter-on-quarter, that someone bigger than as we sold in the region business. If one of the gross drivers were similarly the second quarter. There was good loan demand from SMEs is various for large corporate customers, which generates better demand for investment launch -- capital overdraft facilities.

This is consistent with the constructive economic backdrop mentioning before. Czech Republic, Angola -- but also 3 Austrian segments -- were complete contributions. Corporate deposits, which are traditionally quite waterline grew even faster. They went up by 15.5% and 3.4% year-on-year and quarter-on-quarter. Year-on-year, this was mainly due to inflows in all subsequent, while quarter-on-quarter, this was mostly driven by large corporate and public sector clients. Similar growth rates were registered for current accounting current deposits. Our market business, which is a great, great -- delivering consistent results digested in the third quarter sales.

For treasury sales as well as selling capital markets products reinstitution clients, it is one of the drivers of our fee growth story. In addition, the ECM and DCM teams also contributing to this effort year-to-date is successfully executed 256 transactions with a core range issuance volume of [ 189 million ]. In Asset Management, year-to-date net sales of EUR 3.9 billion exports -- contributes to assets and management volumes which including our Polish asset management operation for the first time, surpass EUR 120 billion.

With this, I hand over to Stefan for the presentation of the quarterly operating plans -- reporting segments.

Thanks very much, Peter, and also welcome to this call from my side. We are on Page 13. I won't repeat what Peter already told you about loan growth, but at one or the other interesting perspective. In absolute numbers, we added another EUR 4.7 billion to our net loan stock during the quarter. This translates into year-to-date organic loan growth of more than EUR 15 billion. This is quite impressive in my view and shows well how we support the economic development of the region we operate in.

In terms of geographic highlights, a couple of countries were already mentioned. Hungary continued to do well, but to a lesser extent than in previous quarters. This was due, on the one hand, to FX depreciation in the third quarter after the first half benefited from significant FX tailwinds. And on the other hand, to a slowdown in demand after 3 quarters of tremendous housing loan growth triggered by subsidized mortgage scheme introduced a year ago. The rather small quarter-on-quarter increase in Polish loan stock is also explained by FX depreciation. In constant currency terms, it was perfectly fine.

The Czech Republic continued to deliver a consistent performance with unchanged growth drivers compared to a quarter ago. both retail and corporate business grew in a balanced man. The other Austria segment, which essentially means large corporate lending across our footprint, also posted excellent growth in the third quarter. And finally, a word on the Austrian savings mix, with annual growth of 5%, they also did really well, supported by better mortgage demand on the retail side and the good growth mix of investment loans and working capital facilities in the corporate business.

Due to the continued healthy growth momentum in the first 9 months of 2026 on the back of a reasonably robust economic development, we confirm our 2026 organic loan growth target of 6% to 8%. But given all we know today, this probably means the upper half of this reach. And as a result, we again raised our year-end net loan stock guidance to higher than EUR 290 billion from previously about EUR 290 billion. This, of course, includes the banks.

Let's now move to the highlights of our deposit franchise on Page 14. Our deposit base was flat quarter-on-quarter but grew by 6.6% in real money that is more than EUR 16 billion year-on-year. The latter was driven by better growth in corporate business, while retail also contributed, but at the lower level in both client groups inflows were well balanced between current accounts and term deposits. As already mentioned, in the context of loans, quarter-on-quarter growth in Hungary and Poland was negatively affected by currency depreciation.

At the same time, growth in Slovakia somewhat overstated by a large financial institution inflow. At Erste Bank [ Viztara ] and the savings banks, we saw some mainly retail-driven current account outflows over the past quarter resulting in a slight decline of the deposit base. As Peter already pointed out, we are watching this, but should not over interpret this data point as we have seen the opposite trend in previous quarters. In any case, the most important fact when talking about deposits is funding costs. And these have only etched up marginally in the third quarter, while as we all know, interest rates have moved up noticeably. This resulted in a more profitable deposit base.

And talking about a more profitable deposit base transitions us nicely to net interest income, one of the real highlights of this quarter. I'm on Page 15 now. The main reason for the step change in net interest income growth quarter-on-quarter can be attributed to 2 factors. Firstly, volume growth held up well, and secondly, short- and long-term interest rates went up. And with roughly half of the loan book on variable rates, this obviously led to higher interest income on our loan portfolio. At the same time, as just mentioned, funding costs for our West retail deposit base only moved up margin.

Add to that, incremental NII tailwinds from higher reinvestments -- investment yields and also volumes for maturing government bonds. And there, you have a massive 5.9% increase in net interest income quarter-on-quarter. We want to be fair and adjust the second and third quarters for the minor negative had positive one-offs, respectively, the clean increase would have been more around 4.5%. But even this is a very respectable number and bodes well for our future development.

The third quarter print is the best proof that the concept of NII sensitivity is rather theoretical, assuming 100 basis points instant parallel shift on a static balance sheet is simply not reflective of real life. Loan and deposit mix, growth trends and changes in the rate environment are much more relevant. But for those who had touched significance to this number, sensitivity has barely changed over the past quarter standing at around EUR 120 million for a 100 basis point parallel upward shift while the same change to the downside would result in a minus of about EUR 110 million to EUR 150 million.

In terms of segment highlights, our Austrian retail and SME businesses continue to perform very well for the reasons already mentioned, as did our Czech operation. And finally, Hungary extended its stretch of strong NII delivery, supported by good volume trends. While as Peter already mentioned, we don't provide a concrete detailed outlook for 2027 and today, due to the imminent tender offer for Erste Bank Polska, the print we produced this quarter really warrants an upgrade of the 2026 outlook with positive implications for 2027. We now believe that Erste Polska will grow NII in excess of 6% this year. And as I can imagine, before you ask, why we guide for less than we have achieved in the third quarter year-on-year in addition to the small positive one-offs we benefited from in this quarter. This is due to a technical effect I will explain shortly in the context of other operating results later.

This effect will likely have a negative NII impact in the fourth quarter. Please note of about [ EUR 33.0 million ]. Despite this, we should deliver our 2026 guidance for the enlarged group of higher than EUR 11 billion by a comfortable margin.

Now over to our fee performance on Page 16. The quarterly fee print also set a new record and could have been even better if polish fees would not have been impacted by expenses related to a local micro campaign. These will still be significant in the fourth quarter but paid out thereafter. In all other segments, we posted good quarter-on-quarter growth in net fee income. If we exclude Erste Bank Polska and look at the year-on-year performance, growth was equally impressive. Fees grew by 10.7%, and the reasons are the same as in previous quarters. strong growth in securities business fees on the back of continued demand for asset management products and good traction in payment service fees.

Consequently, we now project Erste Polska fees to grow by about 10% instead of 7% to 9% in 2026. For Erste, including Polska, we leave the guidance unchanged at about EUR 4 billion despite allocating Polish FX fees to net trading and fair value result. Let's now check out operating expenses on Page 17. Managing expenses is all about maintaining discipline even when revenues are growing much faster than cost and cost discipline we have successfully maintained. Year-on-year cost inflation, excluding Erste Bank Polska was only 2.4% and driven primarily by the usual suspects, staff and IT costs. Quarter-on-quarter costs were even down, but here, we benefited from the nonrecurrence of Polish brand amortization. You remember, second quarter was the heavy rain introduction in Poland. That's about EUR 15.5 million and lower personnel costs on -- as a result of seasonally lower employee share incentive costs.

When it comes to our cost guidance for 2026, we only do domestic -- sorry, cosmetics with tweaks. The overall cost guidance for 2026 remains unchanged at about EUR 7 billion. Please be aware on an FX adjusted basis. We also confirm the guidance for Erste Polska, expecting roughly a 3% cost uplift. When it comes to potash integration costs, which we have forecasted at up to EUR 180 million we are mindful of the fact that we have only utilized EUR 100 million year-to-date, of which EUR 27 million in the third quarter.

From today's point of view, it is therefore unlikely that we will fully utilize the guided amount in 2026. This simply means that any unutilized amount will shift into 2027. An additional integration cost in 2027, however, will not be guided separately anymore as we don't expect them to be material on the group level. If we now add up everything you heard so far, and I'm on Page 18, 1-8 already. Namely that operating revenues hit a new record, while cost inflation was well under control, there can only be one result and that's record quarterly operating profit. This statement is insofar remarkable as in the third quarter, net trading and fair value result normalized to the lower end of the EUR 150 million to EUR 200 million quarterly run rate. This was entirely due to fair valuation volatility of our Hungarian loan portfolio, where the volume of fair value loans doubled to more than EUR 2 billion over the past year as a result of the introduction of a subsidized mortgage team. And this had a negative effect of EUR 68 quarter-on-quarter due to rates going up.

In a year-to-date comparison, the effect was insignificant though. Returning to record operating profit. Importantly, this statement is true in all relations. So irrespective whether you include or exclude or stamps or whether we look quarter-on-quarter or year-on-year or even a clean year-to-date comparison. This also means that the cost/income ratio also reached its best ever quarterly level at 43.1% as already mentioned by Peter before.

In light of all this, we decided to upgrade our cost-income ratio guidance for the business excluding Erste Bank Polska to lower than 46%, underscoring strong positive operating leverage in 2026, while we confirm the full year outlook of lower than 45%, including our Polish operation.

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

Thanks, gentlemen, and good morning. I'm now on Page 19. When talking about credit risk, no news is usually good news. In the third quarter of 2026 is a perfect example of a by and large, known news quarter. As Peter has already mentioned several times, the credit risk environment in our region remains good. Deposit risk costs of 24 basis points which is on a key basis pretty much unchanged compared to the first 2 quarters of the year. We released the last remaining industry overlays in the amount of EUR 71 million, which mostly benefited the Austrian savings bank.

We also topped up FLI provisions by EUR 25 million, and this mainly impacted the other Austria segment and explains the quarterly charge provision -- in total, we now have about EUR 350 million of primarily FLI provisions, which we move with the changing macro -- as a result, we do not expect and hence, to not guide for material overall releases going forward. In terms of segment and country highlights, we mainly posted allocations in the corporate business in Austria which includes also the FLI impact in other Austria, which I have mentioned before, while there were only minor net allocations in the retail business overall.

Slovakia benefited from a significant provision release related to the corporate business on the back of rating upgrades, which explains the net release in the third quarter. Everything else was unexpected. We, therefore, confirm our full year outlook, 25 to 30 basis points, including steppers. And I mean that realistically, we are talking about the lower end of this range. The rationale for doing so despite being ahead of guidance in the first 9 months of the year is the same as small quarter ago. The ongoing volatility in over to politics and its possible downstream effects.

Let's now turn to asset quality on Page 20. In line with what I just told you about risk costs, stability is also the name of the game when it comes to asset quality. In actual fact, we saw minor quarter-on-quarter improvements in the NPL and in the NPL ratio and the NPL coverage. The former now stands at 2.3%, while the latter excluding collateral, sits at 68.8%. It's hard to highlight any specific developments in countries or segments is we haven't seen any material shifts over the past quarter, certainly not to the negative. This is also backed up by the fact the NPL inflows continue to be on a declining trend overall. Based on this, 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 current levels, while NPL coverage is projected somewhere around 70%.

And with this, I already hand back to Stefan.

Thanks, Alexandra. We are on Page 21 now. The year-on-year decline in other results, excluding Erste Bank Polska fully explained by the third quarter 2025, benefiting from a significant one-off legal provision release in Romania in the amount of EUR 77 million. Quarter-on-quarter, we also posted a small deterioration, which was driven by 3 partly offsetting factors.

Firstly, we posted some real estate selling gains in the amount of EUR 48 million in the other Austria segment. Secondly, Erste Bank Polska continued to book a fixed legal provisions in the amount of EUR 32 million. And thirdly, since the new government in Hungary has yet to retract the mortgage interest rate cap, we booked a provision of EUR 38 million to account for the possibility that this may not happen at all. In which case, and here, I'm now circling back to my comment on the full year NII outlook not being more aggressive. This provision would be released in the fourth quarter of 2026 and the impact booked in the appropriate lines, about 80%, so think of EUR 30 million would negatively impact net interest income, the remainder risk cost.

So in P&L terms, the impact is fully digested in the current quarter, but it may still impact NII risk costs in the fourth quarter versus the benefit in other opportunities. Hence, when it comes to the 2026 outlook, we would expect other results to, on the one hand, closely track banking levy charges adjusted for any one-off bookings that happened or may still happen in 2026, including the effect I just explained.

Let's now move to the bottom line and returns on Page 22. With operating profit hitting a new high risk costs being moderate and other results broadly in line with expectations, quarterly net profit for the first time surpassed EUR 1.1 billion. As a result, earnings per share rose to EUR 2.74 for the quarter and return on tangible equity increased to 23.8%.

Ordinary return on equity also improved to 18.2%. Tangible equity climbed by another EUR 2.1 per share in the quarter to almost EUR 47, while book value per share improved to 61 units. One small caveat in the context of returns in the third quarter, they are always somewhat exaggerated as there are no AT1 coupon deductions.

All of this puts us in an excellent position to deliver on our recently upgraded bottom line guidance which we hereby fully confirm. That's a return on tangible equity of higher than 20% and a higher than 20% earnings per share uplift based on a reported net profit of higher than EUR 4 billion in 2026.

With that, let's now move to wholesale funding and capital on Page 24. The main impact on our liability structure year-to-date was clearly coming from the consolidation of Erste Bank Polska. Quarter-on-quarter, there were no meaningful changes aside from a small increase in outstanding debt securities on the back of increased MREL-related senior unsecured issuance. In addition, we were also more active in issuing certificates of deposits. But our key funding source remains unchanged. That's our strong customer deposit franchise across all markets, and in particular, the highly granular and well diversified retail deposits.

When looking at our wholesale funding activities. The third quarter was another busy quarter that helped us to complete our 2026 funding plan early. The key highlights here on Page 25, come from a group perspective from the first EUR 1.5 billion dual tranche issuance in senior preferred format. Our CE subsidiaries were also very active during the quarter, [ Jas telna ] successfully executed a second EUR 500 million cavern benchmark transaction, while Erste Bank Hungary issued a senior preferred debt. in the same amount and very successfully when it comes to the spread levels, if I may say.

Looking at regulatory capital and risk-weighted assets on Page 26, let me remind you that in any third quarter interim profit is not included in reported regulatory capital as it's neither reviewed nor audited. And this, together with a minor impact -- negative impact from our -- from other comprehensive income explains why CET1 capital slipped slightly quarter-on-quarter. At the same time, risk-weighted assets rose by 3.2% or about EUR 6 billion quarter-on-quarter to EUR 292.8 billion. This development was driven by an increase in credit risk RWA by about EUR 5 billion, primarily driven by the EUR 3 billion one-off method effect we have already flagged last quarter, while the overall growth is also a reflection of a strong loan growth we have experienced during the third quarter.

Market risk RWAs contributed about EUR 1 billion to the quarterly RWA in Greece. When looking towards year-end, regulatory capital should benefit from full profit inclusion, while risk-weighted asset growth should be more in line with asset growth plus a markup in operational risk, which is mechanically tied to profitability.

Consequently, I would expect our CET1 ratio to be somewhat higher at year-end compared to the third quarter pro forma level of 15%. Think of somewhere in the area where we were around half year. And you can see the waterfall for the third quarter on Page 27. That's purely the organic view and does not take into account the outcome of our tender offer for Erste Bank Polska shifts. So in reality, we will certainly end up somewhere else, depending on shareholder taken.

As far as the third quarter pro forma print is concerned, we maintained the dividend accrual at the upper end of our target payout range of 40% to 50%. With this, we indicate our strong confidence in our distribution capacity. Nonetheless, we retain full flexibility when it comes to deciding about the eventual 2026 payout in order to be able to internally fund and up to 46% additional stake in stents.

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

Thank you, Stefan. I'm on Page 29 now. As I already mentioned at the start of the presentation, the good business performance year-to-date allows us to upgrade our financial guidance for 2026. In light of many uncertainties that are out there [indiscernible]. But thanks to encouraging volume trends, a very constructive interest rate environment, the demand for asset management products and smooth integration with Erste Bank Polska, an acquisition in its -- we are now confident that to grow our loan growth, excluding Erste Bank Polska towards the upper end of the 6% to 8% target range, which, combined with our Polish business should result in a year-end net growth of north of EUR 290 billion.

We are also more positive in net interest income -- expecting an increase above 6%, excluding Erste Bank Polska our EUR 11 billion target, including Polska by comparable margin. Fees exports should grow by about 10% and help us to push the cost-to-income ratio, excluding Erste Bank Polska improved below 6%. And finally, thanks to the general good asset quality back we target risk costs, including Erste Bank Polska lowering of our 25 or 30 basis points target range. Everything is remains unchanged. Meaning that we should comfortably deliver return on tangible equity, above rank result and reported net profit above EUR 4 billion crores. All of this puts us on a strong run rate for 2027 for which we will provide detailed guidance with for results at the beginning of February. The next stage, we will know the outcome of [indiscernible]Erste Bank Polska which having received all the required regulatory approvals, we will launch next Monday is -- in community.

With this, ladies and gentlemen, we are concluding our presentation, we are looking forward to your questions.

[Operator Instructions]. And we have the first question coming from Gulnara Saitkulova from Morgan Stanley.

So first, on Poland, Santander commented on its results call earlier this week that they are comfortable with the remaining stake in Erste Bank Polska. And given the position what has to be prepared to revisit the pricing of tender offer to increase the likelihood of acquiring additional shares? And how do you balance the strategic benefits of increasing ownership against the maintaining attractive returns on your investment from potentially paying a higher price?

So maybe if I may start, the course for the ore just to jump in. I mean the strategic regression and for us to increase our participation in poster is very clear and obvious we are now owning this [ 29% ]. So good news since beginning of the year is that there are no surprises. Everything is going as expected. We see a strong profitability. We have a very positive outlook on the economic growth reported in the upcoming years. We have really good coverage in place, although the chart is closing beginning of this year, as you are aware, we are right on track with our IT integration. So we are very happy with around 49% investment, of course, we would like to increase -- when it comes to Santander, it's, of course, up to Santander to decide. It will also situation from our perspective. But it's very clear that related to the price of the shares, I think there are different interests to very obvious. And this is not a point to speculate about the price now as we are starting our money.

This Will launch on Monday, having received all the approvals. I think exactly it was by day and last weekend -- and then let's see what happens in the course of the tender offer. That's it.

And just adding to that the question on capital. Given the decline in capital this quarter, could you provide more color on this EUR 3 billion one-off increase in credit risk-weighted assets Specifically, what is it related to? And previously, you mentioned that MST transaction could potentially mostly offset the risk-weighted asset inflation from the LGT updates. Could you confirm whether you still expect to realize this effective benefit this year and highlight any other key capital headwinds or tailwinds that investors should be mindful of going forward?

Yes. Thanks very much for this question, important 1 these days, obviously. And I can start with a very clear and storm statement. Absolutely no whatsoever headwinds are expected. To the contrary, to be honest, rather tailwinds expected in the near future. Namely, we will be very likely concluding a significant in the fourth quarter. We have very good signs that in terms of regulatory requirements, it's going to be smoothly in the sense of if anything than even a small relief. So that regarding sort of the environment we operate concretely to the third quarter, please be reminded that we have been flagging already in the second quarter impact, which Alexander will explain in more detail of EUR 3 billion from an LGD model for corporates, which, of course, was exactly arriving then in July as expected. If you adjust for that and the OCI, which comes from this translation, then you are in a very normal development.

So when it comes to fourth quarter outlook, my personal expectation, as I already shared with you in the presentation, is that we will trend higher or, of course, subject then to the BTO and all of that. So in other words, we will have a lot of capacity for going either into a significant step-up in our holding in stars or if this does not materialize in a significant distribution. So that's my take. But Alexandra what details maybe on this model EBITDA?

The EUR 3 billion on effect that Stefan mentioned consists of 0.25% of something related to CCS and EUR 2.6 billion to the retail HD material voltage. This is a very long time planned and one-off effects. We already applied in April 2024 for this model. production go live was then in July 2026. So 26 months of regulatory approval. And this -- the updrift is simply coming from the adoption of changes in IRB regulation in the meantime and the conservative addressing of historical data quality. So overall, a one-off effect, nothing unexpected. And yes, so much to the model.

And just to complete the picture, since this has been in many course of our colleagues also an interesting point of discussion I think we informed you about our SRT impact on the CET1 ratio in the half year and give you an update on this. We back then said 72 basis points, barely changing in the third quarter. We are now at 73 basis points why that -- we had a very successful and I'm very happy about that for sort of development of this great market, implementation of a small SRT's more in the respect of the group level in Croatia, which had an add-on effect. And then, of course, we have a runoff of the existing sites. And the effect that we are planning for the fourth quarter should lead us to something around about 80 basis points overall effect by the end of the year, a very important indicator in our dialogues with the rig.

The next question comes from Gabor Kemeny from Autonomous Research.

Firstly, on your NII, please. You mentioned that the higher reinvestment yields benefited your NII and your margins in Q3, I see a 3.5% average yield on your financial asset portfolio. So presumably, you have some room left for upward repricing. Can you give us a sense, obviously, how much is left? And how this may impact your NII in 2027? The small technicality, you mentioned on the Hungarian interest rate caps. So you moved the cost in other results. which you expect -- remain unchanged to rebook to NII with a neutral bottom line impact in Q4. Is this correct? Or have I missed something? And then back to the is and your comment on adjusting the dividend payout. Do you mean that you would cut the payout to ensure that you see a Tier1 ratio stand above the 14.25% target. So you would -- to protect the CET1 target. Thank you.

All right. Gabor, thanks for these 3 very important points. First, our replication book A little rather, I see it rather 3.4% and 3.5%, everything else corrected you say we're still upward trending. And as you saw and you remember, we discussed this after Q1 and after Q2, the overall net interest margin now printing at 2.73% for the third quarter reflects all the points that we discussed during the call today already. And I think it's a very, very positive signal.

This volume development, combined with the net interest margin, I think in my personal opinion, ticks all the boxes. On the an area, just to confirm exactly it is like the EUR 38 million we booked now in the other operating result, simply reflecting the full impact of, so to say, internal application of this interest rate cap that has been introduced already a while ago, but a former government should there be, at any point in time, reduction adjustment shortage of this, then it will have a positive impact when it comes to the allocation to the lines, NII and risk. You are right, the EUR 38 million would translate to roughly going into NII and then the remainder into risk. And of course, the positive effect would be another price. So in other words, just to confirm, as you phrased your question.

And look, on the video take up, now I could talk for the next 20 minutes about all the facts that are influencing, so to say, a potential impact on CET1. You know all of those volume, prices -- but too. The message is, at the moment, we are accruing for the absolute maximum of our dividend policy. And as long as we do not have a final take-up that would reduce that significantly, that's the assumption. Obviously, should there be a significant take-up by the minority shareholders at a certain level that would, as we always said, also have an influence of the dividend in 2026. It's simply much too early to say.

Got it, Stefan. And the replication portfolio, what -- maybe I met your comments. So what is the benefit now and how you expect it to evolve next deal, please?

I think, we have talked about that, that we are somewhere in the area of 2% to 3.4% yield. But you are asking about the absolute number, right? Or what's your question concretely?

NII impact, yes.

Yes. So the total volume is now just north of EUR 80 billion with all the components included, including Erste Bank Polska and so on and so forth. And the impact on the NII is in the area of let me just check the concrete number EUR 3 billion, EUR 3.1 billion roughly business year 2026. And if you ask me, which I assume, what do I think about 2027. So everything else equal, it should be still upward trading, however, at a slower pace.

The next question comes from Benoit Petrarque from Kepler Cheuvreux.

So the first one is on your NII guidance above the EUR 11 billion number for the full year. Obviously, you have a very strong print on Q3. Even if I take the EUR 30 million adjustment in the fourth quarter, I still get to exactly EUR 11 billion, I get to a small decline quarter-on-quarter. So I was wondering why you've not maybe upgrade your NII guidance for the full year to maybe a slightly higher number? Or do you expect operational trends to maybe be less favorable in the fourth quarter?

The second question is actually again on NII, but this time on the trajectory into 2027. So is your Q3 NII a good run rate to think about '27. And could you talk maybe about this trajectory in looking at the current forward curve, obviously, the deposit pricing in your main markets, potential for mix shift and obviously, the volume growth, which remained strong. So could you maybe help us to look at '27 a bit more in details.

Look, let me start with '26. I share with you that in the Q1 roadshow, I had not 20 -- 30 discussion rounds about what range in our NII would be feasible and the expectation of the investors was anywhere between just below 11%, up to 11% in the quarter. And frankly speaking, if I reflect on those discussions back then, we are exactly in this range. Now 11.25% will be too much. below 11% is, of course, too low. So it's the range has been tightening a little bit. But I do not disagree with you that if you extrapolate the third quarter, even adjusting for the we discussed before, then you will rather not end up with 11% or 20%. So that's the story. But everything is still live. We still have 2 months to go. So north of 11%, as I always strongly emphasize doesn't exclude also a print of 11.1%, 11.50%, but I cannot really go further than this because there are so many moving parts as we discuss heme into 2027. Everyone would love to see a guidance into '27. We don't give one today. However, if you look at the volumes, if you look at the margins, including certain pressures on the deposit side, as we heard, especially also from our competition, to be honest. We have had a very good quarter in that respect as well. Then you can certainly expect a very, very solid NII guidance for us to be published end of February. So in my own belief, we will have a significant NII drive assuming, let me say, a supportive interest rate environment during the year 2027. But more color I ask you for understanding then with the full year numbers in February.

This is very clear. Just in the past, you said that volume growth will be the main driver, and we could assume a stable NIM. Do you think it's going to be the same in '27? Basically minor by far will be volume growth and NIM could stay roughly stable?

Yes. Look, in principle, yes. But I just want to point to one thing that we all know, you know as good as we do. There is a certain level of interest rates when the dynamics on term deposit repricing and deposit beta kicks in more aggressive. Are we there today? Probably not. Might we get there? Maybe let's see ECP and our expectation we'll do 1 more step. The Czech guys will do one more step. Will this be enough to generate a certain deposit best better dynamics as we saw it in the last retake cycle, let's see. So those are the moving parts. But in principle, there is no change to that. If I have a solid volume growth, if I do a healthy business both from a risk perspective, but also from a margin perspective, that's the main driver, and that's exactly our growth story.

The next question comes from Tarik El Mejjad from Bank of America.

Two questions, please. So to come back on the tender in Poland. And I mean, I think it's obvious that the checkup will be relatively small. And I'm not sure if you can give us a bit more guidance in case of the -- especially on the light of Santander, the valuation what's really the reach the 50% already accrued payouts. And I would be even a bit more provocative in my question is, if you want to -- if you take up a small and you still as you see you said in our recent conference, you want to balance between distribution and longer-term buildup of the stake in Poland, if you can be actually even more generous in terms of special distribution on top of our policy as you build up on the market stake?

Second question is on asset quality. And I mean, I heard your comments on the initial presentation. but you can see flare-ups here and there. I mean, especially in Central Europe, could you -- what kind of comfort you can give this is not something that will surprise the market and maybe yourself in terms of how tiger this relation?

Maybe let me start with the first part of the question when it comes to the voluntary time off reported [indiscernible] answer. So it would be for us, great. If we achieve something slightly above 50% because this would put us in a situation that we can [indiscernible] in increasing our participation without asking for additional approvals. So everything is very much depending on market situation, as you rightly mentioned, in the second part of the equation, we are trying -- shareholder with you, I think it doesn't make sense to pay too high prices for the share because this is something we will closely nonpoint how to distribute our capital and is improving in the past, and we're waiting to can rely on as we came in the second in the quarter in the fourth quarter when it comes to the tender offer.

Coming to your question on asset quality, if I understood correctly, it's about CEE in general and also going forward. So if you just look at the Q3 formation of net impairments of 170, only 33 come out of seed. So this is a very good picture, and it's not a one-off special quarter. which shows pretty well how extremely resilient and how good the risk profile in CEE has been developing for a very long time and also going forward. We would not expect any bigger changes. It's coming to Romania. Romania was, as you might recall, especially in Q1 was an outlier out of the CE community, but also Romania in the course of the year until now recovered from the Q1 impact on unsecured. There have been sales of unsecured NPLs, which led to releases of provisions, and the remainder of the bigger impact in Romania is due to FLI, and we all know how macroeconomic situation in Romania looks like. Poland, we also published or we published today or published today the figures roughly 30 bps as of Q3, a very, very good level. So overall, in CE, nothing which is on also going forward.

The next question comes from Ben Maher from KBW.

I just got 2, please. I apologize if you already commented had issues during the call at the beginning and some fees. Looking at the EUR 4 billion guidance that implies quite a solid or strong 4Q as required to be that guy just interested around different given parts line that gives you that confidence. Also I've seen some check pension reforms that are currently going through parliament and that looks like it could be potentially quite impactful if those do come through? Just interested in any thoughts or any guidance around potential impacts to check fees from those changes. And then loan growth you see, you touched on a deceleration during the quarter. Obviously, rates appear to be going back up and you look forward markets in -- Czech, for example. Just interested in how you see the loan growth in some of these countries into next year?

So let me take -- thanks for the question. It's an important one. Let me take the fees stood your question correctly, you had to join the call a little bit. We were addressing that in our statements already. But just as an explanation again. In all the countries, the developments have been at or, I would say, half of them above our expectations so far. That's why we raised also the year-on-year guidance for the development of the fee line to 10% year-on-year, 10.7% so far, the first 9 months.

Now the fourth quarter is typically and traditionally a very strong quarter when it comes to fees. We have the premium bookings and then all of that if you look at the '25 fourth quarter and adjust for, so to say, the overall growth that we have already achieved, you're getting relatively close. There is for sure, and I have no problem to admit that. There is, for sure, the ongoing impact from the Polish campaign, which, by the way, runs super successful when it comes to client acquisition. But this will have an impact since some effects of the investment into this kind of acquisition are still there in 2026 in the fourth quarter.

So summing all up your indication in the question that maybe getting 2 or even above EUR 4 billion might be difficult, I can confirm, but the guidance of around EUR 4 billion still holds very nicely if you sort of say, apply the typical rules of what round about EUR 4 billion. That's my statement. And with that, Peter, to you.

To the part of the question that we were mentioning the station filed corporate [indiscernible], which we see no acitretin impact into next year. We have very much [indiscernible]. But given the trends of our chain, especially in the asset management therefore, we will be able to be more on crores next year when it comes to Czech Republic. When it comes to loan growth momentum and what we are expecting in the near future, we don't see too many changes. So especially in Czech Republic, Hungary, Croatia, Austria business going for we very experienced some kind of increase of competition in Austria. So -- but this is nothing as seen from time to time in some can -- but we don't -- everything we don't have any kind of reason to expect a decrease in this low-cost demand, especially in the [indiscernible] and what you see in the corporate banking, there is a very strong demand for investment loans, which, from our perspective, a very positive signal for the further development of R&D costs because our clients are just taking in distant loans when we have a positive outlook on the future. We are optimistic when it comes to loan demand.

The next question comes from Jovan Sikimic from ODDO BHF.

I have a short question on track operations. I mean, I think you reported a bit of increasing margin in Q3. Can you tell us a bit how do you see the current competition, especially on actual both size lending and funding and how do you see it going forward? And maybe also strategic on for existing operations in Hungary and Serbia. I mean, how do you assess your current positioning compared to peers, especially in those countries witnessed, I would say, kind of major political turnaround. So would you consider eventually some inorganic growth opportunities in both of them in next future?

Yes. Let me start with Hungary and Serbia. I mean we see the strong loan growth in Hungary are seen in the half to 2 years, which was very much related to an additional subsidy scheme, which was its implemented. The change in the government. But in general, let me say, this is also true for Serbia. We are loading politics. We are being trying to support the economic growth in the region. This is our major part and most changing our view on the one moving country where there's a change in the government. When it comes to strategic positioning, I think we are very well positioned in already our team succeeded in the last years to onboard different kind of portfolios we think big about coverage portfolio -- retail portfolio Citibank. So we also when we also look on some kind of opportunities when it comes to income reconsolidation in Serbia, we are improving market perspective we are #8 in the market. So this is comparable to other parts of our not where we want to be, will that be an impact of the change in the county in the economy, I think it's much [indiscernible] our presentation right now in the first part of it, which is...

I take this better. it was about general trends of competition deposits, lending and more specifically on the checker. Let me just start with a general remark. As you rightly observed. In the third quarter, we saw rather limited pressure on the aggregate pricing, both of core deposits, but also on the lending side as the margin output shows you However, we had, of course, and we expect also going forward, as I explained before, a repricing of some term deposits. And here, Czech Republic, especially if the Czech National Bank decides to do take on or even other moves will not be an exception. What is specific to the Czech market, that's, of course, due to the excellent profitability there, that there are different players of course, now also coming in, not only the traditional competition, but also challenges. This is fine. And honestly speaking, for us, is the leading bank there also appreciated because it pushes our efforts to get better, to be honest, even further.

One specific thing that you might have observed in Czech Republic is the public sector initiative around the municipality financing. This is something which has not yet been fully rolled out, but that's something to watch when it comes to liquidity, and that's probably also the reason for your question because there were some statements by other players, I think colleagues they have made some statements in that direction. We have not seen any impact on that, but we know that this will have in terms of volumes some impact. Just to be clear, that's not, so to say, super sticky deposits or something that's influencing the liquidity ratios too much.

But in terms of volumes, it can play a role. Last but not least, Peter explained it already. earlier. We are also seeing a positive element of some deposit outflows, which are going into our own asset management activities. So you cannot sort of say, ignore that part of the benefit you love it and the other part. So all in all, Czech market will be very strong also in 2027, but certainly, it will be a tough market to manage given the competition I agree.

And if I may add a question on track fees, there were some potential changes, right, on pension fund schemes or fees. So should be rather, let's say, a bit of tough for all the banks right there.

You're right. There is a change in the major scheme, and this will have mainly fee impact in the Czech Republic, but we will give our strong performance in see to also deliver strong results.

And if I may, Peter, let me just add one thing because we did cast in very much detail with our Czech colleagues. If you look at the details of this plan in the midterm, this is purely positive, especially for a strong player like -- because the goal of the whole exercise is to significantly increase volumes in the pension fund area.

Yes, you are perfectly right and that's sort of the short term fees. The fees will have to be significantly reduced in the whole system, but think of the volume trends that are currently expected in a 2- to 3- to 4-year horizon. So we have to look at the complete picture. And then as we have are definitely interested in a significant buildup of the second pillar, right? Peter, as you always are also...

Obviously, what you even mentioned now is strategically very important or maybe next year but maybe in the upcoming years after that. because given the reduction in distribution fees for the patient products, so the market will maybe partially reset, which could keep us, we -- franchise, a huge opportunity if consolidation pension funds we and then we definitely look at it because we see this as a kind of including part of our suite business.

Okay. Great. And if I may add just a short one on the rate outlook, if you can share it just maybe for Czech Republic and Poland over the next 12 months?

My recommendation always is and having been a trader for the first part of my life, I always say, look back last 12 months, look at the analyst expectations in October 2025 and then give me a chance to also be very clear that I have no crystal ball in front of me. As I said, we expect the Czech National Bank to do one more move 25 basis points. That's our expectation.

When it comes to the Polish National Bank, there are mixed views. Some think they will do one more, something rather not then if you look at the market forward rates yes. I mean if you look at the forward rates, then -- and by the way, so look, I never aging to say my own opinion, my own opinion is that the Polish National Bank ultimately will do one step, maybe not more, but one step, it's my personal opinion, not us to see how we did. And then let's see where things go with regards to inflation, geopolitical environment and so on. Frankly speaking, I don't know anyone who could give you a serious, let me say, outlook for where we stand on a Q3 2027, a little look at the market forward rates. That's a good indication, but everything beyond that would not be a professional at fees from my side.

The next question comes from Mate Nemes from UBS.

I have a few of them. Firstly, I wanted to follow up on deposit competition, both in Czech Republic and Austria. I hear you that certainly, there's some trade-off around flows going to fee-generating products, asset management and so on. Just looking at outflows in Austria broadly stable deposits in Czech Republic and Stefan, you flagging mild pressure, upward pressure on funding costs. I was just wondering if you could talk broadly about how you're managing this upward pressure? Are you content perhaps seeing some continued outflows? Are you actively trying to direct some of these flows into fee-generating products? And what would you expect in the next 1 or 2 quarters on this front?

Second question is on corporate lending growth. Clearly, we are seeing corporate lending growth outstripping what you're seeing in retail sequentially. I was just wondering if you could talk a bit about what is driving that? Where do you see the drivers, which sectors? Or are we seeing any impact from defense spending or perhaps the stimulus program in Germany?

And the last question is on digital sales. Peter, you mentioned overall digital sales reaching 80% for the first time in terms of straight-through processing. I was wondering if you could talk a little bit about the evolution here are is that coming from? And what exactly that 80% share leads? Also related to that, what that implies in terms of the cost to serve going forward in the next couple of years?

Let me start with your question about rates and competition of deposit. I mean, for us, this is a wholly trying are of how to underpin between how did care about [indiscernible], how did care -- about the evidence of our shareholders when it comes to our P&L and how we hope to make our competitors to right? So this is something where we have to steer through -- so there is no good will it to be honest, in the business in 30 years because you have very much be in a situation that you are closely monitoring our competition in -- you also have to monitor your edit outflows in a way that there could also be a change in consumer behavior. And this is something we are regularly discussing even on holding budget will be cases quite important for us because it's an important very much aware.

So I know this is not a very significant -- answer because I can say we take this action. But I can tell you, we are also monitoring and we are willing to always to take an to be at market rate. It's never our strategic goal to be highest rates in the market because we are strongly convinced that we over the last was really a that the quality of our service is on a level where clients are when we are obviously in the market. We don't have to be above the market. We also have for to be below the market for too long. You can be below the market for a period of time, but -- always is go for firing print.

Then in terms of corporate business, I mean, as mentioned before in the presentation, I think it's healthy that we see this growth in investment loans, and so much in the other product lines. because this is exactly something where we believe is a very positive signal further development of economies. Again, because it's a kind of emotionally moved so big ties are doing and how entrepreneurs or companies are reading, reading [indiscernible] for example, yes.

Let me complement on this. So 100% confirmed its investment loan. It's a very positive and healthy appetite. And we see and you also have also seen it in the Q3 figures a large portion of the corporate growth is in other Austria, and holding in our big company business and when it comes to various industries, so the largest contributor to the current portfolio growth is machinery, which is also part a result of big investments in the energy transition, but also noncyclic consumer products, health care services have been hold. On the other hand, automotive and transportation rather going down -- so everything supporting what has been set on a healthy appetite for business.

And coming to the last part of your question, close to the same digital sales ratio -- it will be very precise what to me in the same digital sales means including is assisted sale. So this doesn't necessarily mean 80% of our clients are dicey intend for. We are also including everything, which is sold in the branch network with digital assistant. Why do we do this in this way because we started relatively early after we implemented George in our countries in term of the time just to also use it as a kind of operating system in the branch network? So on the role models in our group in Romania, for example. So clients are getting used to use George in the branch network guided by our advisers in the branch network. Therefore, we decided in some -- 4 years ago, to take this type of measurement also to give a time to our sales, the is not only about to tempt we should be in great shape when it comes to convenience is also very much about end-to-end processes, including operations. So -- in terms of cost to serve, this is the major driver behind is on the one hand, the prosecution of our clients we do a lot of stuff each year. But also in branch, it thinks very important, the rigs in end-to-end processes because in the long run -- this helps us to keep our operational costs, so to say, on a certain figure. And this also actually very much important to nation. It's also an important topic in terms of operational risk because we are trying, of course, we've seen our situation that we can ski business and the additional business doesn't necessarily mean an increase in headcount. This is a potential so we will try to achieve to keep on CDs or even slightly decrease depending on market situation. But be able to put more business on -- therefore, regulated process in place.

The next question comes from Riccardo Rovere from Mediobanca.

Two or 3, if I may. The first one is on Poland. Let's assume that at the end of the offer, you land at 50% plus 1 share. At that point, did you -- could you buy eventually more share in the market and reach the level of ownership that you think could be the most appropriate for you. And if that is possible, could this be done at any price Second question I have is on NII. Given that 50% of your book roughly is variable rate and considering the CV height rights toward the end of September. Is it fair to say that in Q3, we have not seen much of the very last rate hike by and somehow related to that, given the toll and the cut rate quite a long time ago, last time they cut, is it fair to say that the NII we see in Poland today has already absorbed all the negatives, all the tailwinds -- or the headwinds from the loss rate cuts?

Third question I have is few weeks ago, Austria decided to cut the systemic risk buffer related to the C exposures also to you. if I'm not mistaken, this should be kind of approved by the Austrian Financial Market Authority, but correct me if I'm wrong. If they approve it, would it be reasonable to assume that more or less 1 year from now, your capital requirement could be 50 basis points lower than it is today. So the 14.3 getting back to, let's say, 13.8 -- or would you be inclined to leave it at 14.3.

Okay. One after the other care, please interrupt me if I didn't get all the questions precisely right. On the first one, part 1, yes, full stop. So in other words, 50% plus 1 shares or theoretical scenario would allow us to buy in the market as every other participant further on, right, point one.

Point two. To what extent are the current Central Bank rates already in the run rate of the -- let me say, directly affected and it's mostly in Q3, yes, to be honest, because the ECB move helped, if you look at the Austrian business, EBIT as well as savings many already helped on the variable loan stock significantly. And that's also true for most of the other countries. It's a big difference due to the, let me say, slow speed, I would call it, for these rate exactly if you want to call it -- compared to last time that you have also the effect already in, but they might maintain if we don't have as we discussed with earlier questions in the -- part, if we don't have a big change in deposit betas and so on, you should maintain these run rates mostly at least for time being now.

And then to the -- yes, I agree, positive news that we saw from the September meeting of the Austrian committee. By the way, we worked a lot there with the professionals and authorities on the other side to explain them how we see the systemic risk buffer. It will be decreased in 2 steps by 25 basis points in 2027 and another one in 2028. However, there are -- due to our increasing size in terms of overall balance sheet and so on, there are other counterbalancing factors so that most likely, the net positive effect going into 2028, we're already quite significantly forward looking. We will be relatively small. Hence, to your point, of course, and we also told this to the authorities that if you are doing everything by the book. Then you have all the good reasons is -- to consider a reduction in the management target. However, since this seems to be on the interim please assume as a base case that our management target of 14.25% for the CET1 quarter remains unchanged. But the good news in all of that is you remember earlier question by a different colleague, there are absolutely no whatsoever headwinds that we are facing on capital requirements to the contrary, due to the well-diversified business model and also explaining very well our overall NPE strategy, we could get this acceptance of the Austrian MSG, which is very helpful. So thanks for laying it out.

Stefan, just a quick clarification on this. So you're basically saying that given that you're getting larger and larger because the loan book is expanding, the benefit of this will -- could be largely mitigated by other systemic risk buffer in other countries. I'm not sure I understand.

It's on the group level, it's on the group level. And we are not yet globally significant bank, but we are getting into the absolute ad category one of the risk buffers, which is simply the other systemic risk bubble, which in 2 years would have an impact of, if I make correctly, remember 40 to 45 basis points -- and that's standing against the 50 there, there is, so to say, a shift in time. So short term, January 2027, as you rightly assumed in your question, we have a relief but it's very temporary. So it's a little bit ping-pong then going down and up again. That's why please assume an unchanged management target because those 2 effects of systemic risk buffer and other systemic impact will more or less be down.

Yes, Okay. Okay. No, no, no. Stefan. Now it's very, very clear on the reason in -- I understand. Perfect.

The next question comes from Chris Hallam from Goldman Sachs.

I just have 2 questions left. I'm sorry, both on capital. At H1, you flagged it 2.7 billion RWA model effect for Q3, which we saw. But at the same time, I think you flagged there would be a EUR 2 billion SRT to partly offset that. Is that EUR 2 billion SRT slide bridge I guess, for Q4. I just ask if that's the right number. I think you said earlier on this call, it's a significant SRT. So I just wanted to check if it's bigger or smaller than or in line with the EUR 2 billion number that you flagged Q2 results. Second question, if you finished this year at 15.2% CET1 and there's no change in your Poland stake, either because there's no take-up on the tender or the free float condition is not satisfied. Then what do you do with that excess capital? What's the floor you distribute down to? And then is there a time limit on launching another tender offer? And are you able to disclose how many shares you own in Erste Bank Poland today?

So the -- what I said in the presentation already, the effect overall, all total SRTs to give you the total picture which is currently standing at 73 basis points by Q3, is expected by the year-end to be slightly above 80 outcome. We will have an impact of the expected Austrian transaction of around about 10 basis points in volume, this is EUR 1.2 billion, EUR 1.3 billion, and that will be less slightly counterbalanced by a runoff of existing portfolio. How does this compare to the EUR 2 billion that you rightly referred to. We did the creation transaction already in the third quarter. It does not add up to the EUR 2 billion, as you will easily conclude. But it adds up to something like 1.6-ish area simply because we had to redesign the portfolio a little bit since we last time talk. But the overall effect to your very initial question, will come with a very, very high likelihood in the fourth quarter, which means that in the fourth quarter, we should see very satisfying capital trends. And the other point was something on VTO again, right? I didn't...

CET1 -- how much do [indiscernible].

I think it was a reason for a number of shares.

Yes , it's [ 49 million or 100 million ].

Exactly. It's around -- it's slightly above 100 million share counts, i.e., we own just around 50 million shares as of today. and then you can do the numbers. But I don't -- I didn't hear the question.

Yes. So the question was just if you finished this year at 15.2 CET1. And then there's no change in plan -- where do you want to take CET1 down to and how?

Yes. You probably were in a different call than or earlier before already. We are accruing 50% for now. And obviously, as you know, we have done all the room to maneuver still on the dividend as well as on other distributors, to be honest, it is really too early to say because we have just announced to go live with the VTO on Monday and then we will see how this will go.

So yes, it's very clear. If we have a significant take-up, this will eat some of our excess capital -- if we have no or a very small take up, it will leave room to recommend or propose a very, very solid dividend or even at or whether there is room to discuss above. I'm looking at my CEO even above the policy. This is really too early to say as I understand.

We have a follow-up question coming from Ricardo Rovere from Mediobanca.

Somehow related to the previous question. I always have the feeling that you are not big fans of buybacks. So whenever you will have to decide on what to do with your capital repatriation -- would you say that cash dividend in whatever amount will be the main way of repatriating capital rather than a buyback at these levels.

That Ricardo. And I'll hand over to Stefan, I think you're slightly wrong, if I may say so, in a way that we are ruling out. We are not big fans of share buybacks. I think when you look at going back to middle 2024. We had a similar situation because we had 2 share buy bids before, Point number two, yes, we had excess capital in our slightly pushing back on a share buyback at this point in time because we thought that there could be an opportunity to invest in something like an -- turned out to be right. And I think from a shareholder perspective and capital distributions, I think this was absolutely the right thing to do.

Having said that, we are completely neutral to a different time of was how the distinct because at the end of the day, we look at it like a toolbox, and I think it's very important to file a mix between banks ready and of course, expectation of our shareholders in terms of getting their money back. So I would not put it in a way this take this into consideration that we are in favor of this kind of tool or this kind of tool. We look at it as a kind of portfolio of [indiscernible].

Yes. And I can share with you, car, we are not discussing this in the preparation of this call this time, but I'm very happy that my CEO is using executive morning I would have been using. There is very little to add. Just to reconfirm, look, all those tools, and I'm extremely happy and proud also the whole a team across all disciplines has managed and we are in a position to execute SSDs in almost all of our countries we have done this now, adding creation to the portfolio just last quarter, that we can at any point in time, turn to an SPB if this is feasible, let's not forget, being a fan or not depends also on what level of your so to say, price to book level, you are side share value. All of that. So I completely confirm what Peter just said, it's really about optimizing with regards to our shareholder value and, of course, our capital position overall. That's why it's the guiding principle always supporting healthy operating business. This I want to flag as our number one priority at any point in time.

Okay. Okay. It's very clear, very clear answer.

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.

Yes. Thank you very much for your participating. Thank you very much for your questions. Let me just mention that our full year results for 2026, we communicated on the 25th of February 2027. Thank you.

Ladies and gentlemen, in conference you may now disconnect your lines. Goodbye.

[Foreign Language]

[Interpreted] Prepare the infrastructure for the future development of our economy because I believe that different types of economies need different types of energy infrastructure, data centers, et cetera, in order to be able to take the next step in its economic development. And I think that for Europe, this is extremely significant because a lot of the production in recent years was outsourced or went elsewhere, was relocated for various reasons. So there are various reasons for that. We don't need to go into this. But anyway, there's been a relocation, and we need to adapt. We need to open up new business segments where we have more know-how. And I think we still have a big benefit because I believe that the education and training here in Europe is still excellent, and it's available to many people. So we are optimistic, especially optimistic for our own region.

Now I'd like to hand over to Stefan, who will focus on the other economic boundary conditions.

[Interpreted] thank you very much, Peter. A cordial welcome to you, ladies and gentlemen, here in the room and also online. Before continuing with the results, I'd like to come back to what Peter just said, namely the geopolitical situation around us, the technological transformation, transformation in general is something that you also described in your commentaries, and this requires financing instruments. And we need the environment that allows us to create the environment which allows us to take part in the race for transformation. We have a very easy -- a very simple slide that reflects reality.

Let me start with the dark bar. This is financing investments. We are often talking about equity financing and loan financing if you compare Europe and the U.S.A. The reality is that companies do investments and finance investments internally. And the second part of this slide that you should remember is the high share of loans financed by banks. And allow me to explain how Erste Group developed in this respect and also is positioned in this respect.

For many years, I think Peter, 15 years, we prioritize customer financing in our activities also in the capital market. And we also think that this is important also for the economies in the regions where we are doing business. Just let me give you a few figures. In the first half years, we advised on more than 193 capital markets transaction. And this is a very high figure because we could only dream of these figures years ago. And these transactions had a total volume of EUR 146 billion. And it's okay to earn money with that.

But we think it is important that capital market financing is on a broad basis as far as hybrid capital is concerned, equity financing and loan financing and that we have to create a broader range for that on a broader basis. And we -- if can contribute to that. This is extremely important. And I think we are on the right track because we, at the moment, have the geographical footprint that allows us to act differently from some years ago. As part of the Advisory Board of the Vienna Stock Exchange, allow me to comment that the Vienna Stock Exchange also developed positively, thanks to owing to the development of Erste Group and other financial groups. And I am convinced that the capital market of Austria will gain importance and has already gained some but we have completely different dimensions, for example, in Poland. Also as far as IPOs are concerned, Poland is the most active market in terms of IPOs, and this is why it is important for us to benefit from the experiences of our Polish colleagues and share these experiences with other countries, with our customers and with our employees outside Poland.

Mr. [indiscernible] has joined us in February, was a successful member of the Board of Santander Polska. Its Juan [indiscernible]. I talked to him and also benefited from his experiences from his visits in Central and Eastern Europe. He is enthused about the opportunities that he sees in terms of growth, and we are confident that we will grow in the next months and years.

Let me continue with the results, which are closely linked to what I just said. As you know, our central positioning in this region is very much marked by growth. We are on a growth path. We already confirmed that 2 years ago, we want to grow in loans, in loan volumes as well as all other parts of our business. I think it is justified to say that we're on a good track. The loan volume in the first half of the year rose by 21%. Of course, this is not organic growth. This is massively influenced by the consolidation of Erste Bank Polska with EUR 41.4 billion loan portfolio. And this is what I said before. It puts us into a completely different situation. It opens up a new dimension.

In all countries, we are doing business and with just one exception, namely Romania, we talk about strong loan growth expressed in euros, we have an increase -- we expect an increase for 2026 that exceeds our positive expectations that we had before Polska was consolidated. For 2026, we expect something that we didn't dream of in the years before. What you see here, higher than 100% in Poland is, of course, self-evident, but 19.2% if you exclude the currency effects in Hungary is remarkable. Of course, this might be due to the political situation. In the past quarter, that is to say, before the election, we saw that Hungary showed a very positive momentum. And we hope in the interest of the Hungarian economy that this will be sustainable -- this is -- this will be seen in the coming years and months. And of course, the counterpart of loans is deposits.

And here, as the Erste Group traditionally has a very strong position, the loan-to-deposit ratio of the Group is where we like it to be, that is to be a little bit lower than 90%. This is a very healthy rate. Of course, this is different in the individual countries, but this allows us based upon our strong deposits to continue with our Loan business in an excellent quality, and Alexandra will tell us more about that in a minute. What might be interesting for you is what about the operating result in 2026.

Here you see a graph, which will, on the one hand, show the enormous contribution of Erste Bank Polska with more than PLN 1 billion operating result. This, of course, includes the Erste Bank Polska. As such, 100%, we have 49% as a controlling stake. But of course, if you consolidated, you show the result of 100%. So half of it belongs to Erste Bank, the other half belongs to other shareholders. But what we want to show here is the excellent development in the operating result in other countries, which is driven by net interest income and also by net fee and commission income as well as our cost structure, which we improved by technological progress. And Peter already talked about AI, and this will support us further in the future. As far as the development of the operating results in our countries is concerned, we are very satisfied. And on top, we have the dynamism that is taking place in Poland. So consequently, we have a very strong capitalization.

For those of you who did not attend the annual conference of 2025, of course, we have the first time consolidation of Erste Bank Polska. And we had a CET1 ratio of 19.2%, which went down to 14.5% owing to the transaction in Poland, but we built up the CET1 ratio to 15.2% in the meantime. And this already includes a deduction of 50% dividend payment. This is important for you to know because for regulatory reasons, we have to make sure that we have the amount of money available for profit distribution, which will be approved in the Annual General Meeting for 2026 -- in 2025. So we have a very strong capitalization even after consolidation of Erste Bank Polska. We are very happy about that. And our target is our loan volume. And we have corporate customers as well as private customers and financial institutions. And due to the good development of the volume, we increased our loan volume target, and we expect that we will have EUR 290 billion in terms of loan volume, maybe a little bit more. And we'll see how the rest of the year develops so much for that.

And I'd like to hand over to Alexandra and allow me to say that this is healthy, healthy growth. Of course, you can produce volumes, but what is important is the quality of our loan book. Alexandra, please.

Thank you very much. Stefan already said that we are extremely satisfied with the operating results, and we are also very proud as far as our risk profile and the risk costs are concerned. The risk costs are according to our expectations. And in an environment that is characterized by volatility, geopolitical trends. So we have 20 basis points for the group as such. This includes Erste Bank Polska. And allow me to state, although this is still theoretical, these 20 basis points excludes the effect of first-time consolidation of EUR 300 million because this was a one-off effect in the first quarter, which will not be repeated. So the picture in the individual countries is differentiated.

Let me start with the countries that have a very good performance and continue to have a very good performance. This relates to Hungary. This is also due to risk costs. It's the only bank in our region with a net resolution of NPLs. And we have regions where we have a slight addition, the Czech Republic and Croatia. Poland also has a very good risk profile. I already told you earlier that risk costs in Poland are slightly higher than in the rest of the region. And this is -- this applies not only to our bank, but for the whole market. We published the results today, and the expectations are very optimistic as the future is concerned. And the first half year was better than expected. Romania, Peter already talked about that, has a negative economic growth. Of course, this has an effect on risk costs, in particular, as regards to the FLI model where macroeconomic factors are included. And in June, we had an addition in Romanian, a slight dissolution in Austria.

Coming back to Austria, here, we see an improvement. You all know that the previous quarters in Austria were difficult ones, in particular, as regards commercial real estate, in particular, in Vienna as around Vienna. And we see a flattening of the negative curve. We see the number of NPLs rising not as they did in the past. And though it's also a slight recovery, I -- we are still cautious, but I can say today that we are cautiously optimistic as far as the further development and further performance in Austria is concerned.

h Here, you see the NPL ratio. Excellent, which isn't only good, it's excellent. An NPL ratio at a level of 2.3% is extraordinary. I talked about Romania before. The situation is more difficult in Romania, but also in Romania, the NPL ratio is below 3% owing to portfolio analysis and portfolio sales. So it's a very -- it's an excellent figure, and we are confident that 2.3% or maybe 2.4% can be achieved by the end of the year. Growth has been mentioned several times today. And I'm as proud as everyone else that we could increase our loan volume to EUR 290 billion. And if you have the time and want to go back and see what we have in the past, you see that we grew organically, and this is remarkable. And we also managed to retain a consistent risk profile, and this is the result of consistent work of many colleagues.

But it is also the result of what you see here. A major part of risk management is diversification of the portfolio. So if you invest privately, you are still diversified. And this, of course, also relates to the bank. And here, we also see the households that are diversified in itself. Households remain the biggest category and slightly grew with the integration of Erste Bank Polska and the industries where we have the largest concentration. And if you take the 5 major industries, so concentration is now 2.5%. And if you look at real estate in Austria, which has a low risk but has high volume on the other hand. This concentration went down to 15.9% by more than 2 percentage points because the Polish bank and also other banks outside Austria do not have a super proportional business in real estate. This doesn't mean that we don't like to do real estate business. It's also always a question of balance.

Here, you see that all other industries grew slightly. So we have a higher diversification. We haven't only become bigger, but also have a broader range of diversification, which will help us to have a healthy growth rate in the past -- in the future as we had in the past. Stefan please. No Peter, its your turn.

I would like to comment on the extremely positive risk situation. It is not only the diversification has increased due to the acquisition in Poland. But for several years now, we have seen an extremely stable risk situation also in Central and Eastern Europe. And this is due to the fact that we have the best risk team in the region. We have a lot of experience in those countries. We know our customers there. We know their risk appetite. And our risk team has really done an excellent job. And of course, we have to say that -- all the corporate customers in the region have also done an excellent job in the past few years because the years after COVID were anything but easy. I think this was a steep learning curve, especially as far as liquidity control is concerned.

And this was a wake-up call in terms of increasing the resiliency of supply chains. I think it is fair to say that the corporate landscape in our region is much more robust and much better positioned than it was before COVID because people really went to great lengths in order to be better positioned. Now what is the way forward in terms of Erste Bank Polska?

We only had one weekend as we agreed with our Spanish colleague to do the rebranding. When I heard about this during negotiations, I thought, well, this is quite ambitious. So we have a large number of branch offices. It's not only about the branch offices, it's also about a lot of other assets that need to be rebranded and need to be considered for marketing. And of course, we want to create a positive impetus, also emotionally because this large customer stock that we have in Poland should not only be maintained, but also made happy. So it is our goal to make our customers happy. And of course, you need -- whenever there's any potential conversions on the IT side, you need to be very careful to make sure that it all is successful. And I'm very pleased to say that we did an excellent job. Both teams, the local and the central team did wonderful jobs. And you can imagine that this required a lot of preparation in order to be able to do this in just 2 days to change everything around and to do the rebranding with a positive outlook and a good mood.

So before I start praising ourselves, let's listen to the video.

[Presentation]

As you all know, traditionally, we don't have any media investments. So that's the Polish BBC equivalent. They're really independent. So very pleased that we're getting such excellent feedback. If you take a look at the figures, we would never have expected that after 2.5 months, we already have 68% unaided brand awareness and 78% for aided brand awareness. So the recommendation as an employer has improved. So the churn rate has come down. So it is very important that the employees are also satisfied with the new ownership and the overall satisfaction has increased by 2%, and we have more than 300,000 new customers year-to-date. So the rebranding, of course, is never finished to build up a brand takes many years. It's a long drawn-out process, and we are not only ready to invest, but we also have experience in terms of how to transform a brand to make it more attractive.

Now in terms of the IT transformation, we also have two very strong teams, local and the centralized team. They will continue to work on that for another 2 years. So our systems, our applications that were made available by Spain in the past will be either -- well provided locally or provided by the group. So that requires a lot of work, but this isn't something that we aren't really used to or that we can't manage ourselves. So the brand visibility needs to be enhanced further. The Polish market is by far our biggest market, also in terms of the number of inhabitants with 38 million. It is a huge market. So it's a big economy as well. And in the corporate business, but also in the retail and asset management business, we see a huge potential going forward in the coming 20 to 30 years.

Now let me summarize, and then we'll be available for your questions. So the way we look at Central Europe is it is the growth engine in Europe and this catch-up phase is, of course, always moving, but this has turned into a dynamic of its own and the entire region is now being put in a completely different development situation. Of course, it is important to use a well-considered approach to invest in the new business infrastructure. The reason this is important is that the flow of money from the European Union will not be there forever. So you know that a lot of funds in Europe are increasingly under pressure in many countries, there's a need to invest more in defense. This is especially important for NATO countries. So the net contributors are -- their budgets are put under pressure. So I'm also looking forward to the new round of budget negotiations for the next EU budget starting in 2028.

So it is to be expected there will be less funding available, and it is important to make the right investments now in order to be able to have everything it takes to continue to grow. I think it's also very interesting for Austria because due to our geographic location, we can either decide to participate in the dynamic of Central Europe or opt for the standstill of Western Europe. I think it is up to us to decide for either. And I think there are many reasons why we should join this dynamic, this momentum in Eastern Europe and our loan volume of EUR 290 billion would have been absurd, a couple of years ago. And now it is quite realistic to reach this goal. So I'd like to thank you for your attention. We're looking forward to your questions.

[Operator Instructions] So we'll start with Ms. [indiscernible] from [indiscernible] Press Agency.

I have a question on the customer structure in Poland. You said that real estate is not a big business there, but what about the differentiation between corporate customers, retail customers, which industries?

And the second question is on bank taxes. The spending has increased in terms of bank taxes. So what's the situation going forward? Your long-term forecast until 2030 assumes that the spending will not increase. Are you hoping that there will be changes in Hungary due to the regime change there or maybe other countries?

Well, of course, there's always hope. And in Austria, we are in a situation where we thought that the banking levy will be limited in time. Now it's been extended again. And let me share another interesting figure with you. The total taxes that we paid at the group level, also in terms of corporate taxes, we paid EUR 1 billion worth in taxes. So that's a significant amount. Do we think that this is continuing to go up? No, we don't think so.

I believe that on the whole, all stakeholders understand that we need to continue to develop the economy that can't be done by just taxing profits because that will prevent companies from investing. So I think everybody will be aware that this is not the way forward. We've also seen in Austria that tax increases don't really help grow the economy. So we do believe that people can add up one and one.

Well, extremely balanced in terms of the corporate customers, retail customers and also the industries. What's interesting about Poland as such is that when compared to other countries, it is much more diversified. In Hungary, for example, a lot of the business is concentrated in Budapest. In Poland, it's distributed over many cities and regions. It's not only Warsaw, there's also other significant economic centers in Poland and also the share in the various industries. I'm talking about all of Poland, not just our bank. So this is very well balanced. There's a good equilibrium. There's no disproportionate concentration here or there. And this is how our portfolio is structured in Poland. It reflects this very diversified economy in Poland. So its -- very balanced whether we're talking about the volume or the profitability, well, I don't know.

[Operator Instructions] The next question comes from Martin Nieder from Bloomberg.

In the analyst call, you also talked about the fact that you are preparing for increasing your share in Poland. So no decision has been taken yet, but you're preparing for it. So I'd like to ask, is Poland your top priority when it comes to further acquisitions? Or is there a possibility that other options may be more interesting? So maybe in Hungary, there will be an opportunity where you have a low market share.

I think logic dictates that we should increase our share in Poland because we have 49% of something that we consider to be an excellent investment. We also combined investments with integration, and we'd like to scale this up. So I think this is quite that we want to grow there. But we have not taken a decision yet. I think everybody knows that we're interested in increasing our share there. But of course, we need to see when it makes sense, when it's just right. As far as Hungary is concerned, well, I would not expect anything to go down in Hungary this year. I think it's a matter of our ownership structure. So if you're thinking about the bank that I have in mind, which is a conglomerate of 3 existing banks, I think it is way too soon to see how this will play out.

But you're interested?

I think we already said that we're interested in growing in Hungary. We demonstrated this in the past. The portfolio of the [ Commerz ] bank, well, it's not so long ago that we took it over. And then before that, we took over the portfolio of Citibank. And of course, we believe that Hungary is a very interesting market. You should not underestimate the fact that as far as the entrepreneurial spirit is concerned, this is one of the most interesting countries. Hungary has a long-standing tradition of start-ups going back in history for a long time.

And I believe that in the past 12 months, Hungary has really evolved and developed very well because for a long time, the country was in the deleveraging process. So they reduced loans. And now their situation has turned around. I believe that there is a positive outlook. because people only invest when they have a positive outlook going forward. So we have a very strong team in Hungary. And of course, we are ready to support the country in its economic development. I think the situation is far from being easy because they still have a very high budget deficit and I believe that the readiness to reduce existing funding is well, limited. But I think that in August, there will be a budget review for this year's budget in September and October, new budgets can be expected. And we're, of course, looking forward to seeing where people are going to invest. And we are going to orient our strategy in Hungary accordingly, and we'll continue to support the country.

Next question from Mr [indiscernible] from [indiscernible]. You talked about joining the.

You talked about joining the momentum of CEE. And you also said that Poland is the country with the highest number of IPOs. So what can we benefit from that? We are a country with a much lower number of IPOs. What can we learn from the dynamism in Poland?

I think it's also the willingness of entrepreneurs to make an IPO and this can be promoted the Vienna Stock Exchange does a good job. But we also need companies that want to be listed at the stock exchange. And we all know here that this requires a lot of work in order to create reporting, which is important for shareholders. You need investments in your accounting team, so it doesn't happen overnight without any effort. The public sector could support such a development. And allow me to say that I read an interview of the telecom regulator, which was very interesting. And this regulator said that the digital infrastructure in Austria is not owned by Austria because telcos are owned by Germans, by Asian companies or by Mexican companies.

I think 61% investment of Mexicans in Austria, maybe they are interested in selling off their investments. 60% of telecom Austria cost EUR 4.3, 4.4 billion plus a premium. [indiscernible] pays a dividend of EUR 1.2 billion, and I'd say, okay, Mr. [indiscernible] already reserved these means because he has -- he relies on this income. But why don't you why don't -- you sell 15% of [indiscernible] via the stock exchange in order to buy telecom shares? And [indiscernible] after that would be controlled by the Republic of Austria. And if we compare our pension systems, we are always looking with a certain degree of [indiscernible] to Scandinavia. Scandinavia has second pillars, much more second pillars than, for example, other countries such as Austria.

If you're talking about Norway, of course, they have oil reserves and the state has a lot of income from oil. And this is, of course, one of the prerequisites for establishing a pension structure. So we don't have oil. We don't have natural reserves that can bring us money. But I think about this as a group of professional companies, which are very important for Austria and also for Central Europe. So OMV, for example, has done sensational things also as far as their business enlargement is concerned. So it would be interesting to invest in a portfolio of companies such as [indiscernible] has than in individual companies.

Allow me to add that it must make sense for companies to go public. And people think about various opportunities to further develop their business. And if the best way is going public... And it is not done, this might be due to the frame conditions. And you might know from various discussions that the Austrian state does not promote IPOs. But I'm optimistic that something could happen in the next 2 to 3 years. So we are not talking about the capital market union, but Europe on a national basis, here, things can change. And Poland is a country that can do something at local level, but not everything seen from an international point of view.

And secondly, I'd like to turn your attention to technology. I don't want to talk about AI, but maybe approach as far as reporting is concerned and settlement can be simplified and optimized so that there is no obstacle anymore for smaller and medium-sized companies to go public. And last but not least, we shouldn't forget that there is something that is often underestimated. It's always about the long-term view if you go public. Those wanting to make quick profits will not invest in an IPO, but for the capital market as such. So if you take Erste Group as an example, and you also mentioned OMV, this is a perfect example. This is something -- that's clear. These are companies that create values over years, over decades. And I think this must be emphasized when talking about IPOs. And I think this is more important than the second or third pillar in the pension system.

We think that without a capital market, nothing goes in the medium term. I [indiscernible] hope that last, but I'm convinced that given the current environment and also the pressure that is exerted on Europe, maybe we see one or more positive reactions. We are fully taking part in this business, and we want to do everything to help.

And what Stefan showed in one of the slides also illustrates that we want to diversify our loan portfolio. Of course, we are happy about the loan volume of more than EUR 290 billion, but it is also clear that we also promote bond issuance and also equity. If you look at the economic development of the past 20 years, Europe always concentrated on industry and and trade. And this is something banks are experiencing. But many things happened in technology and software and the European banking system with the means available to us can only help partially because lending is based upon collaterals. And if you have IT, you don't have any collateral. And this is why it is no surprise that many IT applications were developed in the U.S. because there is a completely different equity structure in the U.S.

Of course, Europe was able to catch up. So equity is a scarce means, of course, and there are other sources, [ SpeedInvest ], for example, which are very successful, but there are also venture funds available that are willing to invest in such start-ups. So many developments took place that make me optimistic, and we will continue our path in Europe as a group. And as I said before, economic development in our group was characterized by innovation. It is Eastern Europe and Central and Eastern Europe is no longer the manufacturing entity of Europe.

Let me read a question by Mr. Alexander [indiscernible] from [indiscernible] a question asked online. Is there any effect of the Ukrainian war on the business of Erste Group in the region? Erste Group is part of a consortium of banks, which was responsible for a guarantee of [indiscernible] AG and new investments there. And what is the investment of Erste Group in [indiscernible]?

Let me start with the second question, and I'll be brief. We don't comment on individual transactions or comment on names. But Erste Group doesn't have any great experience with industrial holdings. That's the way it is. And of course, the war influences our business in many ways. Peter already talked about that. And of course, it is a challenge for our customers, which showed a steep learning curve after the corona crisis, after the pandemic, they are more resilient, are aware of the supply chains. Of course, investment appetite is lower in the regions that are hit by the war.

Let me turn the coin and look at the other side of the coin. But before that, a theoretical comment. Of course, we talked about Romania and the war has influences the macroeconomic environment in Romania and also has an influence on the risk cost in the FLI model, but only in a moderate way. And in conclusion, let me see it the other way around. The end of the war would have positive impact on economic growth in our countries and due to the geographical vicinity to Ukraine, we think that the companies in the region can make a great distribution to the reconstruction of the country.

Ms [indiscernible] from Wall Street Journal Romania.

How confident are you that operation in Romania will return to be stronger growth?

It's very clear that we are very convinced. I mean, we are in Romania since 2006, 2007. And I think the country is still in front of a lot of opportunities. I mean, you know it much better, more probably than us. But when you look, for example, technology development or IT development in Romania was always a very strong footprint. I think education is when it comes to universities on a very high level. The country has a size, which is, so to say, opening up a lot of opportunities to do business in itself. It's a huge economy, a huge country.

So I mean there are situations where countries are facing this situation that you have a high budget deficit. I think what is necessary that you have -- that the potential new government has a calm hand to calm things down. I think what everybody should be trying to avoid is to have any kind of extreme ways how to fix the situation. I think the country needs stability, so to say, forward-looking guidance in terms of stability, which is necessary for all international investors, and I'm sure that Romania will come back.

Isaac [indiscernible] from Portfolio [indiscernible].

Could you please elaborate more on the Hungarian situation? Last week, you met the Central Bank President and the leadership of the Central Bank, and they published that you made the commitments to each other. Could you please detail what kind of commitments are these? And could you please a little bit detail your stance on concretely on the [indiscernible] to how much extent are you interested?

No. When it comes to commitment, the topic of discussion with Hungarian Finance Minister, but also with the Head of the National Bank was very [indiscernible] that we are here to support economic growth in the country. And we will use our potential options to help the country for further development. This is not only how we can operate in Hungary by itself in terms of lending for companies and all this stuff. It's also an idea of our CEO, [indiscernible] to support the country to bring foreign investors to Hungary, because I think this is now the moment in time where when the country is able to give stability in terms of jurisdiction, tax regime, all these things which are necessary to attract foreign investors, then we are very much willing to support.

Of course, this should be proved by the government, but I'm 100% sure the current government is going in this direction. You will see a money inflow of European Union funds of around EUR 16 billion. EUR 10 billion you will see already in August, so soon. And the EUR 6 billion will follow, I think, in the second half of the year. There are some kind of pre-requises, but I think this is very clean hung is working on that. So what we see is a very positive momentum in Hungary, and we will do whatever we can do to further support this kind of development. When it comes to the bank, you mentioned, again, maybe we are disappointed when I say it, but I think it's too early because it's a situation where I think there are still discussions about the ownership structure. And we are standing on the side looking at the situation. But I don't expect anything to happen this year from my perspective.

An online question from [indiscernible]. Mr. Bosek I getting this right? You are suggesting a partial privatization of EBS, a holding company in order to refinance a renationalization of telecom.

Yes, that's correct. That's completely correct. But for a different reason. I think there should be a lot of interest to ensure that the digital infrastructure can be controlled nationally because I believe it is also quite clear that we have critical infrastructure that is worth protecting. It's not only about banks, it's about the telcos and also about the entire field of health. And I believe that we have seen some cyber attacks here in Austria, and we know that this is a European trend. The geopolitical situation has increased the risk for Europe in terms of cybersecurity.

And we know based on our activities in various countries, what other countries are doing in terms of that. So I believe that Austria should be in the driving seat when it comes to owning our own digital infrastructure. Of course, you can also have a diverging opinion, but that's my take.

Mr. from Yaroslav [indiscernible] from [indiscernible].

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

If I may because I also wanted to complement Peter's words on your question before. And I'm very thankful for the question because it's out of any discussion that the performance of [indiscernible] in the last, if you look at, say, 5 to 7 years, has been extremely good. It was not only in terms of financials, but also in terms of, for example, asset quality outstanding given, so to say, the market benchmark, right? So that's a matter of fact.

What we are facing at the moment, you know this much better than me, at least, is that we have, I would say, a mix of factors at the moment in Romania, extremely high inflation on the back of a combination of factors. On the one hand, it's the, I would say, the general environment. On the other hand, it has a lot to do with austerity measures from the government in terms of VAT and so on. So we will see a certain consolidation in the rest of the year, but still compared to other countries in the region, so it's very high, which has a lot to do and both Alexandra and Peter were commenting on that in a different context, has a lot to do with the investment appetite, so to say. Uncertainty is the biggest churn on investment appetite. And that, of course, is also due to the political situation.

We will not comment on political situation in the detail, but it's a matter of fact that the whole situation around the government and the confidence vote and right and left and now we have a pending situation for what, 2.5 months, 3 months, right, around the government is not helping. And that's the reality. So I think when it comes to -- for example, there are many, many factors where our Romanian colleagues are the benchmark inside the group. For example, when it comes to digital sales activities, we have been showing much earlier than in other countries how successful you can be in distributing your products to the satisfaction of the clients through digital channels. It has a lot, of course, also to do with the size of the country and the way we are operating there.

We have developed the brand on the financial health area very, very strongly, a measure that I think is in all the countries, very important, in particular, in Romania, [indiscernible] and the team has been doing a great job there. And last but not least, from the perspective of the CFO, it's very clear that the performance of [ HRA ] in the last couple of years was extremely strong when it comes to cost-income ratio, when it comes to net profit, you mentioned already NPL ratio. But we should not ignore reality. And the reality is that at the moment, we have a difficult environment. You all know the discussion about the question of investment grade or non-investment grade of the country. This, in my humble opinion, requires that the decision-makers beyond their different views on certain political matters stand together for the country.

And that is, so to say, the only call we can make that the decision-makers are, be it on the political side, be it on the Central Bank side, are really acting in the interest of the country, then I'm sure that as we discussed before, as you discussed with Peter, we will see on the back of entrepreneurial spirit in Romania, a very swift turnaround, but that is required. That's my take on the situation currently.

Sorry for the confusion. Now Yaroslav [indiscernible].

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

It's easier to answer the second part of the question. So our interests are very clear. I mean we are the biggest retail bank in Slovakia. I think our colleagues did very well also in corporate banking over the last year. So our market share has improved. We are very happy to be in Slovakia. Of course, this was one of the first countries where we are able to operate the bank.

I think when you compare Slovakia and Czech Republic, of course, Slovakia is lagging a little bit behind in terms of economic growth. I think somehow, but this is not so easy to touch somehow a little bit [indiscernible] in a way that to say you need something to -- as a kind of signal project, whatever that people are again starting to be very much forward-looking. I think, of course, the dependency on [indiscernible] is quite high, but I think it's not a super critical situation for the country. But it's to be clear, in general, it's a very stable situation. So if I remember correctly, you have roughly 2% GDP growth in the forecast this year. So this country here is 0.7%. So I could ask you, how do you look at Austria?

But maybe also to complement pretty much also in the line what has been said to Romania, when we -- we are very, very proud of our bank of Oesterreich [indiscernible] and also Stvensko [indiscernible] as PCR is in specific areas is also SLSB a frontrunner in specific areas. We are also very proud about the development of the brand. It was rather historically, and it is, to some extent, a brand for, let's say, the more mature clients and population and now it's gaining more and more traction also in [indiscernible] for the younger clients. We are also proud how the bank is managing this transition from a very long year serving CEO to a new CEO coming in.

Profit development, very good. Risk okay-ish, not super. I think the bank will do better, can do better and will do better again in the future, but strong corporate growth, as Peter has mentioned. But equally as in Romania, a stable environment, and this includes also a political stable environment and a certain -- I don't know the English term, maybe my colleagues will help me [Foreign Language], but what we feel very much in Poland, the commitment to growth, very active moving forward. This, of course, would help everywhere. But this is the same for Austria as well.

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

I don't have any more online questions. Hannah [indiscernible].

I have two questions concerning Croatian market. One is Croatia. One is the outlook as Croatia has successfully entered the Eurozone, the Schengen area, now the OECD is in the Finnish line. Could you comment on the -- where do you see sources of growth for Croatian market as we see the slowing down of GDP rate -- growth rates and also persistent inflation?

And the second question would be, could you comment on the announcement by the government on new taxes targeting extra profits. We can assume that they will be targeting the banks also in this area.

Maybe let me start and hand over to Stefan. I mean, I think Croatian government did a fantastic job over the last years, as you rightly mentioned, being part of Shengen, now being in front of becoming a member of OECD, financial stability in this country, I think that everything is going in the right direction.

Of course, there's a high dependency on tourism. I think this is very clear and known to everyone. But having said that, I was 3 or 4 weeks ago, I was last time in Zagreb and I was picked up at the airport by robotaxi. So unbelievable. I was just driving moms in such kind of self-driving car. This was in the Google headquarter in 2014. And now you have a relatively young entrepreneur who is doing a fantastic job. And I think he's already quite famous outside Croatia.

So what I'm saying, I met some corporate clients there, we had also dinner together. So it's also a kind of momentum in the country where you have a very high entrepreneurial spirit. And I think everybody tries to diversify economic development. And this is going in the right direction. If somebody is coming up with additional profits for over profitability, windfall profitability, this is definitely the wrong direction. I think this is -- don't ask us. I think it's very clear that we have this view. And I think it's also not going in the same direction like becoming a member of OECD and then increasing profit taxes, it's counterintuitive, let me put it this way.

But I would fully rely on the Prime Minister and the government that they are doing the right things. And I also talked to the mayor of [indiscernible], and I was deeply impressed. He was telling me his 5 upcoming investments within the city in a way and in a deep understanding of economy where I was deeply impressed. So a very high level of respect what the country already achieved. And I think you have shown that you have everything in place for further growth. And I think inflation after euro, of course, was a topic after introduction of euro. So cost of living increased quite dramatically. But hopefully, this has now come to an end a kind of one-off effect after implementation of euro.

You talked about the wars. One war relates to one of the trading routes of the international energy market. What are your expectations relating to the energy markets in the medium term and in the long term? And what influence will that have on your goals?

Of course, it's a very important question that you asked. Our expectations in the medium run and in the long run. As far as our balance sheet is concerned, we are rather neutral. And -- but of course, you are right when talking about interest rate development and interest rate decisions because they influence us, our profitability, but also our customers. We started the year expecting that the prime rates will fall. And it was expected at the beginning of 2026 that the European Central Bank will lower in the [indiscernible] prime rates, then the middle -- the war in the Far East broke out. And then we expected 2, 3, 5 interest rate increases of the top banks. And then there was a change in management of Fed. The Chairman of the Fed was replaced. So whatever takes place around us, we see a flat development of the interest rate curve.

I personally assume that if nothing happened, nothing dramatical -- if nothing dramatic happens over summer, the ECB will not do anything. There is a 50-50 expectation that the ECB will increase the interest rate by 25 basis points and 50% think not. But we are talking about incremental increases. Fed will not do anything from today's perspective, maybe also under political pressure. So if nothing dramatic changes as far as inflation is concerned, we expect a flattish interest rate environment. Of course, this is a very important topic also for entrepreneurs. What people often overlook is that you have to look at the far end of the curve, what about the 5-year interest rates or 10-year interest rates, and this is also important for investment decisions and there is an up and down in the current interest rate development. Unfortunately, I don't have the crystal ball to tell you what will happen in the future.

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

I don't see any further questions. So let me thank you for having attended. We still have some snacks outside to be able to mingle offline. So thank you very much, and see you next time.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, welcome to the Erste Group Second Quarter 2026 Results Conference Call. I'm [indiscernible] call. [Operator Instructions] and the conference is being recorded. [Operator Instructions]. At this time, it's my pleasure to hand over to Thomas Sommerauer Head of Group Investor Relations. Please go ahead.

You very much more for this kind introduction. Also one way come on behalf of Erste Group this conference call. As usual, Peter Bosek, our Chief Executive Officer; Stefan Dorfler, our Chief Financial Officer; and Alexandra Habeler-Drabek our Chief Risk Officer, will present to you the main achievements of the second quarter, after which they are ready to take your questions.

Before handing over to Peter Bosek, my usual disclaimer comment on Page 2. You will find the disclaim on forward-looking statements, which requires as usual. And with this, I hand over to Peter Bosek for the presentation.

Good morning, ladies and gentlemen. Welcome again to our second quarter 2026 conference call. I'm on Page 4 now. [indiscernible] irrespective of how we look, the financials we present today, whether we compare the second to the first quarter, also [indiscernible] already see the contribution from [indiscernible] compared the first half of 2026 is during the Polish country contribution. In the first half of 2025, the conclusions I've seen, we sold major growth in [indiscernible] cost inflation resulting in a record operating growth.

As is solid credit risk performance and you also get a regular [indiscernible] profit. And with these return on tangential [indiscernible]. Net interest income was up 1.5% quarter-on-quarter, while net interest margins did flat in effect of a strong increase in interest-bearing initiatives. The later was driven by Champion [indiscernible] even more pronounced [indiscernible]. Net fee income [indiscernible] the record rate of the first quarter. Once again, security business, which includes asset management was the growth driver.

Trading in February result also came in strong. Costs were down on quarter-on-quarter as the usual in second quarter due to seasonality, high banking levered in the first quarter. Consequesntly, operating profit [indiscernible] net profit. If we look at a clean first half comparison, so excluding the contribution from [indiscernible], the picture is equally positive. Net interest income was up 6%, net fee income by almost 9%, net trading and [indiscernible] results close to 50%, while cost grew by slightly above 3%.

Unsurprisingly, as already mentioned, we posted record operating profit and with risk costs remain moderate, also record net profit in the first half of 2026. Based on the good business and profit momentum, we decided to treat the element of our 2026 outlook to the positive. We now expect better loan growth, higher fee growth and improved operating efficiency in 2026. In addition, higher net growth with an higher recurring digital equity. But this is not the aim of as we have announced recently, we have gone one step further. We also defined medium-term financial targets in 2030. [indiscernible] in earnings per share by 2030 to more than [indiscernible] per share. There's an equipment led to a compound and we got it about 15% and also means that we should deliver a return on changing equity north of 20% throughout the forecast period.

I will share some more thoughts on our short- and medium-term guidance at [indiscernible]. But let me first give you some further color of our key [indiscernible], some points I already mentioned. So just a quick recap on those. Net interest margin was flat quarter-on-quarter but up year-on-year. The net was attributable to the inclusion of the higher-margin business. The cost/income ratio improved to 43.9%, driven by a solid performance of our preparing business and the inclusion of Erste. The improvement in risk cost ratio was almost entirely due to the nonrecurrence of the EUR 32 million for first-time consolidation of our policy unit in the third quarter.

In addition, the credit risk situation in Norwegian order remained booked, making taxes declined in the second quarter due to the full year upfront payments in Hanoi the first quarter but were up year-on-year, driven mainly by the inclusion of [indiscernible] Polska. And finally, earnings per share and return on tangible equity, more field record levels in the second quarter, as already mentioned. Let's now move to development to [indiscernible] Page 6. The impact of consolidating at [indiscernible] is immediately [indiscernible] but even without as Bank Polish balance sheet growth was excellent and we distributed in the first half of 2023, irrespective of bases for liabilities.

Customer loans, excluding Erste Bank [indiscernible], grew by 4%, while customer deposits rose by 4.5% year-to-date. On the asset side, we saw a good growth balance with both [indiscernible] segment. making good contributions. On the liability side, retail growth was lower, but contented by higher inflows in the corporates and markets businesses. The increase in intangibles by more than EUR 4 billion resulting from the decision of the estimate Polska.

Roughly half of this amount is it could be the other half for the customers the later will be attire over the next 10 years. [indiscernible]. Financial earnings is called [indiscernible], the increase in equity [indiscernible] but also future interim growth. [indiscernible] volume growth payments. I just mentioned, the loan-to-deposit ratio has been the past quarter and the level of around '27 remains.

I'm on Page 7 now. And if we look at volume growth year-on-year, it is, of course, to year-to-date within the previous slide, and exclude the impact of Erste Bank Porter, growth was also satisfactory. Loans were up by 7.7% and deposits grew by 6.4% in line with moderate risk cost aside on core stability. The NPL ratio improved slightly to 2.3% is the coverage ratio. After chasing the impact of first-time consolidation of inf in the first quarter, capital ratios advanced the [indiscernible].

Including first half growth rate and a dividend accrual of 50%. The CET1 ratio came in at 13.2%. Despite the continued deletive will retain flexibility in 2026 as far as distributions are concerned, in order to be able to take advantage of opportunities that may benefit shareholders more in making large payouts. When it comes to liquidity and leverage ratios, traditional strengths of ours, the second quarter for net change compared to the first.

Let's now briefly examine the macroeconomic environment now reach on Slide 9. Since we last week last reported 3 months ago the geopolitics [indiscernible] remained flowing. [indiscernible] to say that this volatility so far had a smaller impact on the microeconomic outlook for 2026 and previously anticipate. Yes, growth expectations continue to came down some [indiscernible] we have multiple sites where Hungary, Serbia and Slovakia, where we saw slight upgrades or no change.

The thing that we say about inflation, there were no material additional forecast changes as the energy prices were stabilized and came up in down. As far as [indiscernible] is concerned, the growth forecast remains stable. In addition, same interest rates either move slightly up, like in the [indiscernible] following unchanged previously the way [indiscernible] with the same [indiscernible] cut cycle in March. On the long end, higher interest rates will provide better reinvestment opportunities. So if you put it all together, the current operating environment is engine quite okay for banks in January and favorable for banks that operating growth markets like we do.

Talking about growth, let me share with you a couple of performance higher of the retail business in the second quarter 2026 starting now. Once again, I refurb my comments on our business, excluding stance even though the Polish retail performance was certainly encouraging the city quarter. Aside from Poland, there are two major developments in quarter period.

Number one, we saw a deceleration in the loan growth. Number 2, we posted the best year-on-year and quarter-on-quarter growth in the most possible deposit category, i.e., in overlap of current account deposits. Retail loans were up by EUR 7.8 million to EUR 419.6 billion year-over-year, growth most of being housing loans in the consumer business, particularly strong in CEE quarter-on-quarter loan growth decelerated 2.4%. It was value we balance between housing and consumer loans with most geographies doing [indiscernible] housing loans, particularly [indiscernible] Slovenia enjoying [indiscernible] in consumer. The quality of the retail [indiscernible] remained good, written deposit advanced by 2.1% quarter-on-quarter to EUR 175.5 billion. supported by higher current account equity.

Year-on-year, the deposit development mirrored the quarterly trend, stronger growth in [indiscernible] compared with term business. [indiscernible] explain that [indiscernible] customers to bid long-term wins in an easy to manage digital format, keep EUR 2.2 million in the second quarter, resulting in the growth in gross inflows of customers of more than EUR 600 million in the quarter. George, our digital platform for retail clients continued on explore fast the number of on users time 10.8 million in the second quarter, and the digital sales ratio in the retail business improved to 73%.

In the corporate segment, excluding Erste Bank Polska and APP already, loans were up by 7% year-on-year and 3% quarter-on-quarter. In the second quarter, growth was per measure primarily registered in large core business. In terms of loan types, working capability facilities in [indiscernible] in investment loans in the first quarter, it was [indiscernible]. The [indiscernible] loan growth. Corporate deposits slipped slightly in the second quarter at an exceptionally strong performance in the first. In terms of geographies, it was mostly attributable to Romania [indiscernible]. Over that it also take up comparing with panels [indiscernible] deposits.

The market business again contributed to [indiscernible] performance. The ECM and DCM teams successfully executed more than 193 transitions, and with the core range issuance with a volume of EUR 146 million in the first half of 2026. In Asset Management, net sales of EUR 2.5 billion contributed to [indiscernible] management, which reached a new high of EUR 112 million in the second quarter. If we include our Polish asset management operation, assets under management would be at EUR 120 billion.

On the digital front, we are continuing to grow our [indiscernible] business growth to geographies with these 85,000 corporate clients across our regional George business. At the same time, we continue to expand our product offering, maybe towards business even more useful to our corporate customers. And with this, I hand over to Stefan for the presentation to the quarterly operating [indiscernible] the reporting segments.

Thanks very much, Peter, and good morning overview also from my side. We move on to Page 13. Peter already told you that loan growth was strong in the second quarter. In absolute numbers, we added EUR 7.1 billion to our net loan stock during this quarter, of which EUR 1.3 billion came from Este Banks. Consequently, net customer loans increased to almost EUR 283 billion and at this level, almost matching our old full year guidance.

In terms of geographic highlights, Hungary continued to do best. Housing loans once again were the growth driver in the second quarter, but all other categories, be it customer loans, investment loans or working capital facilities also grew strongly. Admittedly, currency appreciation also helped. Importantly, the Czech Republic also performed very well. There was a good growth balance between retail and corporate business, both quarter-on-quarter and year-on-year. In retail, the balance between retail and sorry, in retail, the growth pattern for housing and consumer loans was similar, while in corporate demand for investment loans was high.

The other Austria segment benefited from increased lending to large corporate clients, as you know, thanks to the continued healthy growth momentum in the first half of 2026 and the robust macro outlook we upgrade our 2026 organic loan growth target, which excludes the impact of Esteban Polska consolidation of more than 5% to now 6% to 8%. And as a logical result, we also raised our year -- our year-end net loan stock guidance to EUR 290 billion or better. from higher than EUR 285 billion.

This, of course, includes Erste Bank Polska. Let's now move to the highlights of our deposit franchise on Page 14. Our deposit base grew by almost EUR 9 billion or 324 billion in the second quarter of 2020. Estevan Borsa contributed an exceptional EUR 5.5 billion to this excellent performance, thanks to increase across the entire deposit spectrum. Aside from Poland, we saw good quarter-on-quarter growth in Hungary, where this was attributable to the generally improved market environment and in addition, supported by currency appreciation. Inflows related to money market business drove deposits in the other Austria segment higher. And at Erste Bank stores, the good quarter-on-quarter performance was driven by retail current account inflows. Talking about current accounting flows and taking a top-down view, this is a key future of our deposit development over the past couple of quarters.

In other words, we see a continued shift in our deposit mix towards overnight deposits. This is, in particular, true for retail deposits. And this is relevant because retail overnight deposits are the most cost-effective source of funding for us. And a final comment on the cost of deposit funding itself. It was broadly flat quarter-on-quarter and slightly down year-on-year. Let's take a more detailed look now at net interest income on Page 15. I just talked about a steady but favorable shift in the deposit mix and Peter mentioned a strong rise in interest-bearing assets in the second quarter, both of which bode well for the NII outlook in the second half of 2026.

In the second quarter itself, net interest income also delayed favorably up 1.5% sequentially. If we had not booked the amortization of positive fair value adjustments resulting from the consolidation of Esteban Polska the amount of EUR 41 million and a EUR 7 million one-off related to a legal decision in Poland, it would have been even better. Excluding Este Bank Polska, net interest income was up by 5.7% year-on-year and with this fully in line with our guidance. Aside from the supportive volume development and broadly stable business margins, the trends we observed in the first quarter extended into the second quarter.

Notably, income tailwind from the replication book. And generally speaking, an interest rate environment, as mentioned by Peter [indiscernible] is supportive of bank profitability in Erste. In terms of segment highlights, the continued NII recovery in our Austrian retail and SME businesses is noteworthy. Year-on-year, this was mainly due to deposit repricing, while quarter-on-quarter, higher income from debt securities contributed as did some asset side repricing.

The Czech Republic also performed well benefiting from volume growth and higher bond income. The story was the same in Hungary. When it comes to NII sensitivity, we continue to be fairly neutral position versus 100 basis point instant ratio. In concrete numbers, the net impact is currently estimated at around EUR 130 million. A 100 basis point parallel shift downwards would have a slightly larger. In both cases, the savings banks in Esteban Poska would show the strongest effect counterbalanced by the holding positions. Now for the outlook. A quarter ago, we told you that we target net interest income north of EUR 11 billion in 2026. This we confirm today with the conviction level being higher, due to the fact that we see better volume tailwinds as evidenced by our improved loan growth guidance, which should help us cross this level by the year end. Over to our fee performance on Page 16.

This continues to be a success story for us, so much so that we are upgrading our guidance. You will certainly remember that our EUR 4 billion ambition for 2026 came with the caveat that it depends where around EUR 230 million worth of Polish FX fees will be booked. Now we are removing this disclaimer. So despite missing this income in the fee line, obviously, not missing it completely as it's booked in the trading income. We believe we can get to EUR 4 billion of fees around about, at least in the current year. This is due to the fact that our business, excluding Esteban Polska is growing faster than we expected, at the start that we expected at the start of the year.

Consequently, we now project as the expose grows to be between 7% and 9% instead of higher than 5%. The reasons for our strong fee track record are, in the meantime, very well known. Securities business, which includes asset management is a major growth driver for us. It was the key reason we managed, it was the key reason we managed to grow fees in excess of 10% year-on-year, excluding Esteban Polska, of course. The consolidation quarter-on-quarter should not confuse anyone. It's an absolute normal and, in fact, better than normal seasonal development and actually means consolidation at our record levels. Let's take a look at operating expenses on Page 17 now.

And let's start with the year-on-year development, excluding as the Esteban Polska. Costs were up only 1.8% in the second quarter, which was mainly due to higher staffers. The slight decline quarter-on-quarter is very much explained by the pattern we know from previous years. We saw the usual seasonal decline in deposit insurance contribution, which was partly offset by higher wage costs on the back of the new settlement taking effect in Austria, always from April. Second quarter costs again included the amortization of customer relationship and brand in the amount of EUR 65 million.

With this, the brand is now fully amortized. Quarterly expenses also included integration costs of EUR 43 million, with effectively the entire amount being booked locally on account of replan. To conclude on costs, we confirm our around about EUR 7 billion cost target for 2026 on an FX-adjusted basis as we likely face almost EUR 100 million of currency appreciation working against us in this line. The same is applicable to the cost inflation projection for Erste excluding Esteban Polska of 3%.

Our guidance for integration costs and intangibles amortization in 2026 remained unchanged at EUR 180 million and EUR 240 million, respectively. With operating revenues growing faster than cost, we posted record operating profit and improved operating efficiency in the second quarter as summarized on Page 18. Excluding Esteban Polska operating income, again hit a new high of EUR 3.1 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, excluding Esteban Polska, declined quarter-on-quarter for the reasons already discussed.

Consequently, quarterly operating profit for the first time surpassed EUR 1.7 billion, and the cost income ratio matched the historic best from 3 years ago at 44.7%. I Including stapes operating income climbed above EUR 4 billion in the second quarter of 2026, with a sustainably higher contribution from net trading and fair value result as the Polish FX fees, as mentioned of about EUR 230 million annually, are on group level allocated to net trading results.

In aggregate, quarterly operating profit including Polska declined to a new high of EUR 2.25 billion. In light of all this, we decided to upgrade our cost/income ratio guidance as well to lower than 45%, underscoring strong positive operating leverage in 2026. And this over to Alexandra for more details on credit risk.

Thank you, Stefan, and also good morning, everyone. I'm on Page 19. As Peter has already outlined the credit risk environment in our region remains very solid in the second quarter. We posted risk cost of 20 basis points, pretty much unchanged compared to the first quarter when adjusted for the one-off sale provision in the amount of EUR 302 million that was a requirement under IFRS 9 for the first time consolidation fasteners. The regular second quarter FLI update and the review of overlay provisions only resulted in a minor top-up of EUR 40 million. By Romania saw an increase in FL provisions, Austria benefited from some releases. In all other countries, the impact is very material.

In terms of segment and country highlights, we mainly posted allocations in the corporate business in the second quarter, but this has to be fueled in the context of net releases in the previous quarter. In the retail business allocations declined quarter-on-quarter notably. Hungary again benefited from a net release, while all other geographies with minor locations. We defer confirm our full year outlook, 25 to 30 basis points, including Esteban Polska. The rationale for doing so despite the excellent first half year performance is the ongoing volatility in Geopolitics and its possible downstream effects on energy markets as well as growth and inflation expectations.

Let's now turn to asset quality on Page 20. [indiscernible] talked about asset quality a quarter ago, I talked about all around stability. Now I would go one step further and say that all asset quality metrics are very good and actually steadily improving. The case is the NPA ratio, which now stands at 2.3% compared to 2.5% a year ago and 2.4% quarter. NPL coverage also saw a slight improvement quarter-over-quarter. While the decline year-on-year is simply attributable to the exclusion of Esteban Polska in some, if line overly releases that we did -- these developments are remarkable in so far as geopolitical backdrop was less than favorable over the customer. If we look at individual segments, the Czech Republic, Hungary and other Austria, which is home for our large corporate and large commercial militate those activities continue to present themselves in excellent shape.

But we also saw improvements in the Esteban. Croatia and also Romania. In the remaining segments, asset quality metrics were also very much accepted. Based on this first half 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 current levels, all coverages protected somewhere around 70%.

And with this, I hand back to Stefan.

Thanks very much. We move on to Page 21. In the second quarter, we saw the usual seasonal development in other results. Quarter-on-quarter, banking levies came down due to the upfront payments in Hungary and at the start of the -- the same can be said about resolution fund contribution, even though they are less significant these days. In addition, there were no significant one-offs, positive nor negative in the second quarter.

Accordingly, other result improved compared to the first quarter. Year-on-year, we saw a deterioration which was essentially attributable to two factors. First, due to the higher banking lives driven by the inclusion of Esteban Polska but also higher charges in Romania and Hanger. And secondly, other results benefited from a very positive one-off of EUR 88 million in the EUR 88 million in the second quarter. When it comes to the outlook for this line item and assuming that there will be no material one-offs in the rest of the year, we would expect other results to closely track banking levy charges adjusted for the positive creation one-off we had in the first quarter of 2026.

Let's now move to the bottom line and returns on Page 22. With operating profit hitting a new high risk costs being moderate and other results fully in line with expectations. Quarterly net profit for the first time surpassed EUR 1 billion mark, in fact, almost hit EUR 1.1 billion. Correspondingly, earnings per share rose to EUR 2.48 for the quarter, and return on tangible equity was above 20% by a comfortable margin for the first time, fully benefiting intangibles deduction. Ordinary return on equity also improved to 16.7% in the second quarter. Tangible equity declined by EUR 2.3 per share to almost EUR 45 in the second quarter, while book value per share improved to EUR 59.

All of this warranted an upgrade in our 2026 bottom line outlook. We now target a return on tangible equity of higher than 20% and instead of previously about 19%. And we believe that we can achieve a higher than 20% EPS uplift even without adjusting 2026 net profit for extraordinary items. Or in other words, we deem a reported net profit of higher than EUR 4 billion as achievable in 2026.

Now moving to Page 24. Let's turn our attention to wholesale funding and capital. The main impact on our liability structure year-to-date was clearly coming from the consolidation of Esteban. Quarter-on-quarter, there were no meaningful changes aside from the customer deposit growth that we already discussed in an incremental increase in equity. This means that we continue to benefit from very strong deposit franchise across all markets and a highly granular and well diversified retail deposit base. The wholesale funding we require we can currently issue at very favorable terms as we show on Page 25. A case in point are our funding activities in the second quarter.

In May, the parent company issued senior preferred paper in a volume of EUR 750 million. And in June, this was followed by an AT1 liability management exercise combined with the issuance of new AT1 paper in the amount of EUR 750 million at very favorable levels. Our subsidiaries were also very busy during the quarter with placements being successfully executed in Czech Republic, Croatia and Slovakia. Let's now move to regulatory capital and risk-weighted assets on Page 26. While the first quarter was primarily impacted by the first time consolidation of Esteban Polska, in the second quarter, we were pretty much back to normal course of business.

Quarter-on-quarter, we posted a big increase in regulatory capital driven by parent company and minorities profit inclusion for the half year. The former was net of dividend accrual at the level of 5%. And the lower deduction related to other comprehensive income also contributed positively to the quarterly capital. Risk-weighted assets rose by 1.8% quarter-on-quarter to EUR 186.9 billion, this was attributable to strong volume growth in loans and exposure. The main driver of trade RWA inflation was the corporate business. Forward-looking to the remaining year, we will see some credit RWA updrift by methodological effects, likely compensated by planned SRTs.

Operational RWAs will be driven upwards mechanically by high profitability, while market risk trend assets are expected to be rather stable. So while you can assume further organic capital build in the second half of 2026, you should not simply extrapolate Q2 for the rest of the year. Looking at the CET1 ratio waterfall on Page 27, we see how the ratio has developed to the very respectable level of 15.24% as of June 30. Importantly, the current CET1 ratio includes a dividend accrual assuming a payout ratio of 50%, as already mentioned. So how does this fit with what we told you a quarter ago? Well, actually, not too much has changed. We want to signal to you strong confidence in our distribution capacity, while at the same time, retaining flexibility when it comes to deciding on eventual 2026 payout. -- simply because we want to be in a position to deploy capital more profitably in case of opportunities. And with that, I hand over to Peter for concluding remarks.

Thank you, Stefan. I'm on Page 29 now. [ Three ] quarter ago I mentioned that we will review our 2026 outlook to the geopolitical macro situation allow for it. And as I already highlighted on this call and some more counterintuity that would happened over the past months. So based on the good volume and P&A performance in the second quarter and more generally in the first half of 2026, we decided to upgrade certain elements of our 2026 outlook.

We now believe that we can grow our loan book, excluding [indiscernible] by 6% to 8%. And which combined with our Polish business should bring our year-end net loan stock to about EUR 290 million. Furthermore, we are now officially upgrading our fee guidance we see net fees in 2026 to around EUR 4 billion, even with EUR 230 million [indiscernible] fees being allocated to the net trading result in group recurs and as a direct consequence of this, we also improved our efficiency outlook for [indiscernible] to reflect more sizable operating [indiscernible].

The cost income ratio should come in below 45% rate than in around. And finally, we believe that reported net profit to surpass EUR 4 billion in 2026, despite the numerous more off related to the first-time consolidation of [indiscernible] and this, in turn, is expected to result in a return on tangible equity north of 20% and both to about 19% previously.

At this stage, ladies and gentlemen, I would usually conclude this call and we get ready to answer your questions. But today, there's one more theme, and that's our medium-term financial outlook. I'm on Page 3 now. In addition to upgrading our guidance, we are also making a strong medium-term profit commitment or put it differently, we are fast aging net profit growth. The reason for this is the completion of the acquisition of 49% controlling stake in Esteban Polska capitals year.

This led us to a state and more clearly communicated our financial vision over the next few years. In my view, our Polish acquisition is a similar growth figure as it was the [indiscernible] 52% [indiscernible] in, the question of it remain as a growth rate for Easter in the same way as buying into Esteban Polska. In the early 2000s, it was all about M&A and organic growth right today. it will be all about organic growth and M&A opportunity. In the context of it, I can tell you that we are making progress towards finding a good solution for a potential Polish top half, but we are still not the idea.

What I can share with you today is how we see the financial path through 2013. Our aim is to double earnings per share by which is sales in a combined annual growth of about 15% and a return in tangible equity nor also 20% throughout the forecasting period. The baseline for this is our reported 2025 net growth rate case. This is customary for the Tier 1 dividend but also for a meaningful positive on also be benefited from last year. This yield earnings per share of EUR 7.7 for 2025. In this figure, we target to get above EUR 50 per share by [indiscernible] organic loan and deposit growth, continued expansion into asset management, better operating efficiency and continued favorable trade risk profile will be at the core.

But we are have M&D options, and we can do share by bit. We know where we want to be in 2030, but we also know that we not be a grade 1. There will be recent turns along the way. And clearly, this financial ambition is built on [indiscernible] such as regional restatement and interest rate backdrop, big problems to similar to what we are today. and no further material increase banking [indiscernible] most importantly, on the continued economic outperformance of Central Europe in which we firmly be need. [indiscernible] the bar for financial performance of gas and being still an even higher level of focus on discipline and strategy execution.

With an [indiscernible] that, in my view, is our question 1 way or another shareholders win benefit. Please now conclude our presentation, remarks. Thank you very much for your attention to take your questions.

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

So the first question on NIM trends. on the group level, they appear to be broadly stable this quarter. Can you walk us through the key drivers by market, specifically starting with the Czech Republic by seeing a further decrease in net interest margins. And a number of peers have previously highlighted increasing competition for deposits, a mix shift towards higher using deposit products and the pressure on margins. What trends did you observe in Q2, both on the asset and liability side of the balance sheet.

And how has this evolved at the start of the Q3. In addition, are you seeing the impact from the recent retail bond issuance. And do you expect these to become a more meaningful headwind going forward? And what levers they have to defend the margins and mitigate these pressures in the Czech market?

And also turning to Poland, some banks -- some local banks have commented on intense competition in the corporate banking sector. And as a result, seen some spread compression, how do you see the competitive environment evolving there? And what actions are you taking to strengthen your corporate banking franchise in Poland or protecting profitability?

If I may start, maybe answer your Polish question. So from our perspective, the skill is that important when it comes to corporate banking is extremely good. I mean, so this is one of the very huge competitive advantages we see in [indiscernible], and we are on our way to distribute this kind of knowledge group. And I think we are at the right point in time because we see a lot of local flow in terms of economic flow between the countries in our region.

We see a lot of companies doing a lot of business in other countries of Erste Group. So we are quite happy about the performance of Corporate Banking in Esteban Polska. In terms of competition, I think there's a lot of government business taking place at the moment. And of course, this is in terms of all the assets, you always see this kind of competition. I think it is not something which is seeing changed recently coming to the report, just answering from a retail perspective.

So mortgage growth is still going very strong. We see a slight increase in competition in terms of term deposits. But I think we are doing well really in [indiscernible] the balance between trying to keep our margins in mortgage lending in terms of trying to keep as much as possible margins in chemicals.

Yes. Can I build on what Peter just said around the trends in the market in the business. Look, on the NIM question, in [indiscernible] because it's, of course, the most intensive we discussed also internally when it comes to operating performance. I think we need to really look at the pages 13, 14, 15 combined. So what I'm saying the volumes, be it on the asset or be it on the deposit side, play an enormous role and we to say, short-term calculating the net interest margin as you, of course, not only technically, but also in terms of content now.

The biggest driver, obviously, was the significant increase in interest-bearing assets after the very strong loan growth in Q2. That's just a general comment. We have seen pressure on margins. Honestly speaking, more in Romania, if you look at it on a year-on-year comparison, that because if you look at the Czech market beyond what Peter said about the term deposits, we have seen a significant inflow as well as in other countries on current accounts.

And that combined with a very good loan growth, let's not forget that the Czech loan book has been growing north of 10% on a year-on-year comparison. Definitely, in the calculation yielded into a certain net interest margin calculative drop. We are watching that very closely. It's the most important market in terms of a direct contribution to the group profit. And we are very happy with the overall performance, not only on NII, but in general, on the Czech market.

The other comment I would like to make is that let's not forget that such a substantial loss we have been seeing it in the first 2 quarters, of course, always has also an indirect impact on the NIM calculation short term. So my forecast for the rest of the year remains broadly unchanged. So we are going to hover around the levels that you have seen now. And if we can maintain this level next to strong volume growth, I'm not worried about at all. To the contrary, I'm very positive about our NII development.

And can I follow up on the question on your targets. To what extent is the potential acquisition of the remaining stake in Erste Bank Polska reflected in your 2030 EPS growth outlook? And if it is included, what ownership stake have you assumed?

It's not -- you want to Peter? I mean, look, from a technical perspective in terms of how we get to the ultimate delivery of our financials, it's not depending on it, but it certainly would be a very nice helping factor. That's from a technical perspective. So there are many ways to get there. As you see in the second quarter, for example, year-to-date, half year, we certainly did not have is ownership yet, and we are delivering. There are many scenarios how to deliver without it, but having an uptick there in terms of ownership, certainly hotel. Peter, maybe...

[indiscernible] mean one of the major reasons why we are coming up with these net more long-term financial targets was that we are very much recent into a long-term stance what we have heard over the last several months from long-term investors after the initial on, they will be very much interested in such kind of mid- to long-term perspective. And although we are in a situation where we are able to upgrade our forecast for this year I think we are all aware. We did the environment is quite bumpy.

The things are changing from time to time [indiscernible] around. Therefore, we looked decision more on a line-by-line basis, you look in fee income net but very much with an overall indicator in a way that we keep our optionalities for us open. We are clearly committed to achieve this goal, but there could be over time different auctions hardly achieve because, again, the environment is not social poster as we are aware.

The next question comes from Gabor Kemeny from Autonomous Research.

My first question would be on Polish NII. And there are quite a few moving parts here clearly FX litigation charges, 1 of like amortization costs retiring. But how should we think about the developments going forward? Shall I expect your Polish NII to grow in line with balance sheet volumes, but would you highlight any other factors to consider? On the Polish minority purchases that you mentioned you were making progress. I mean what is your latest thinking around the funding of such transactions. And on the likelihood, is there a likelihood of a transaction this year? Or if not, at what stage would you be able to update us on your potential share buybacks?

And my final question would be on the 2030 targets and the capital deployment options here. So to get above EUR 15 EPS, do you foresee running at your CET1 target of 14.25% or do you think that more than EUR 15 would be achievable at possibly higher capital levels as well?

Very quickly take the NII question, and the strategic question, I hand over to Pete on Poland. Look, in principle, the answer to your core question is yes. So we are assuming going more or less with the wide chains. However, as I mentioned in my presentation already, there is a positioning slightly, so to say, bias to the upside when it comes to yield. So the Polish bank is more exposed to sensitivity to the upside, not dramatic, but we're talking about a little bit less than EUR 100 million to EUR 100 million. That's something that you have to keep in mind, depending on the how to polish Central Bank will decide further. And the other element, I kindly refer you to the reporting of our colleagues today there.

Let's never forget that in the translation of the -- from the local results to the to the results on the group level. We are, of course, seeing a significant adjustment on the NII meters from consolidation. You know that. So please, on the pure Polish performance, at least for next couple of quarters, it's better to look at the local results. And everything I hear is that they will send out the positive overall sentiment regarding their expectations.

Yes, when it comes to the acquisition or increase or potential increase of our participation [indiscernible]. As you are very much aware, of course, we think this could be a good opportunity. There is still no decision too. We are working and figuring out how such a process could dip is also prepared to come up with an opinion about how we find these cargo or situation. And coming to your question about the 2020 financial targets about our equity ratio. Listen, from our perspective, 14.25 is a very reasonable equity ratio we look our business model. Because we have a quite conservative business model as a kind of universal bank.

From our perspective, this is a very good reflection in our other handlebars we are carrying up with it's definitely helping us in further diversification, which is adding a lot of video price. And this is also something we decided to discuss with [indiscernible] agencies. Because we have defended the income stream in Poland is adding there a lot of revenue to the overall composition of our mix in terms of different revenue streams, different currencies, different industry environment which makes us much stronger being compared to Q4.

The next question comes from Amit Ranjan from JPMorgan.

The first one is on the 2030 targets. Could we please get some more details on the assumptions that we make behind these anything you can share around loan growth rates and cost growth or any other details you could share on that, please? And the second one is on the dividend accrual of 50% for the first half I didn't see a dividend payout when you mentioned on the slide to read anything into that, please.

Could you be so kind on the dividend question, the 50% gross, what exactly was the question? We had very bad sound quality.

The payout range that you used to have in the past on the 40 to 50 that is applicable [indiscernible] on the slide.

Thank you very much. It's -- no, we didn't change at all the PR range and the policy. But we are accruing on the absolute upper end of this range. That's the answer. That's why we used the upper end of the policy for accrual, and that's where we stand. Yes, that's hopefully answers your question. And before maybe Peter will say something strategic on the 2030. Look, we were looking at the trends of this year. We were looking at what we have to expect in the overall bigger as the group nowadays. So that's maybe the point which has not been so visible yet in the discussions. We are a completely different animal as Pete was describing as an overall franchise.

And we were looking into a couple of scenarios. And I can tell you very clearly that our base case scenario is delivering fully on everything we put out there in terms of order in terms of earnings per share. And that's why we said, okay, why not sharing that long-term investors is something which is, I think, signaling not only our ambition, it's what the potential is. I think many comments in the last 1 or 2 days, were reflecting that this also very much is the consensus. How to get there, there are many ways. If you look back at the last 5 years, of course, very, very terminal 5 years, but the very little indications that it might not be equally turbulent in the next 5 years.

And we were managing that in all directions. It can be if there is a good growth, which we believe in, then we will probably target most of the goals from the top line. But there could well be also a scenario, remember, early 2020 where you have a very slow environment for whatever reason, then we will have to address much more the efficiency side of the meter. So this is unforeseeable over a 5-year period. But we believe that in most of scenarios, everything that we can manage directly, we will get to what we'll be indicating and that's what we wanted to share.

That's as simple as that.

Yes, when you take a little bit. So the big game change when it comes to possibility of European or mid of 2022, when we entered the gaming phase of positive interest rates. And I think this was kind of a very important performance in a way that whole economy started to reset somehow because we more or less 10 years, we very low [indiscernible] so I have seen in most of our countries economy been very well. You see a situation where we had much higher interest rates compared to 10 years before companies are doing well, the demand for mortgage gains in there. There was just a short shock in 2022 when we were not awareness, this rate can be increased again. Now we are there and we see this is a timely mortgage changing trend on the consumer in is not a short-term trend. This is here since quite some time, and we are different.

When it comes to asset management, especially our fee income, we are deeply convinced that this is a general trade in our region for the upcoming 30 to 40 years. Why is this the case? Because compared to Western European cartons, these targets are very different retirement system. So it's very obvious to people living in the caries we are operating in that they have to take capital in sales, and this strength is here to stay. Nobody expects Central Europe to Campo already outdated Western European retirement systems because demography is a game changer. And so therefore, I think in will is a role model in terms of how people are taking the rating sites.

And this is, of course, the underlying assumption for our fee income and asset management. Besides that, we are also seeing a very clear trend in bank assurance. This is also not something new. This is ongoing since the last 20 years, and there's still a [indiscernible] and it's very clear when you have this increasing middle class in our countries, which we already see the there is a lot of room for bank insurance. And I mean, those of you who know us quite some time it was always part of our equity story that the other companies are catching up. I think now we have aimed at a different stage of development, which is boom that we have the right into the story because most probably, you will see next year that in terms of asset management, assets under management volume-wise, will be higher in the Czech Republic and Austria.

15 years ago, this was half making, but now we are there. fee income in asset management is already higher in Chester Austria. And so when you sum it up this very positive development in the region, being one of the regions in Europe, which is growing and is growing in a much more safe sufficient way in the past 25 years is the reason why we did convince that we can achieve above EUR 15 per share.

Then the next question comes from Mate Nemes from UBS.

I have three questions, please. The first one would be on Poland. I noted a 10% sequential deposit growth in Poland. I was wondering if you could give me some color on what drove that? Is there anything that has changed in the commercial strategy? Was there a deposit campaign, anything along those lines?

And also in this context, Peter, could you perhaps talk about the initial experience of ownership at Esteban what is particularly positive and positively surprising in your view after the first 6 months and also perhaps where do you see improvement opportunities in the country.

The second question is on costs. You're expecting a EUR 7 billion FX adjusted costs. I noted that in the previous guidance, the FX-adjusted part wasn't there. I'm just wondering if you could mention what does this mean on a stated basis. If I use the Q2 run rate before any growth for any inflation, I get to 7.1% for the year, so presumably $7.1 million, $7.2 million, are there any offsets to that in the back end of the year?

And your last question on the capital trajectory. Stefan mentioned there could be -- there will be some moving parts in the second half, and we should not extraploit the net capital build that we saw in -- could you quantify the moving parts, the RTs and the methodological changes that you mentioned?

If we may start with station about the experience the first 6 months. It is a in there are no surprises, which is, from my perspective, good news. The cooperation with Polish [indiscernible] is fantastic. We are very hero things are going. So together, we have a very strong local team and a strong central team. We succeeded to do rebranding within 2 days, which we believe is outstanding. When you see the first numbers in how the rebranding is working very well. In terms of Sandinas recognition, we are way the bar what we expected. We also succeeded to increase gross number of clients in retail around 300-plus clients during these 6 months, which is a strong growth that is at to see more deal after closing in a very smooth way from a client perspective, which of course -- when it comes to the skill set in the bank, we are extremely as mentioned before, to the first question, the knowledge and the way how we execute in corporate is outstanding, yes.

So we see a lot of opportunities, as [indiscernible] mentioned before, to fairly we know our corporate bank because we in all those companies within our region. In retail, they are also doing an excellent when it comes to potential opportunities where we see room for improvement, this is true for the whole market in Poland. This is very much related to asset management. When you look at the TFI, which was also part of our transition is the channel management, [indiscernible] when you take into consideration as barges the third largest being on the market and the biggest priority of thing. I think there is a clear, clear opportunity that you can relatedly increase asset management volume for the upcoming years.

Yes. So in general, we are very still, of course, in all as in terms of IT integration. But although here, we have very strong teams on both sides in 18 to 24 months as we communicated from the timing by the very went.

Yes. Thanks, Peter. I'm just complementing on the fresh picture with the technical extension on the deposit question. So there is, as you heard from [indiscernible] words, absolutely no change in a strategic manner. So however, yes, we had a substantial uplift in the second quarter, which we were looking into. It was mainly driven by the corporate side. 40% term, 30% on repos. And yes, there was some campaign in context of the rebranding, but not a strategic shift in any form when it comes to, so to say, deposit management. Second point on costs, yes, well, your view is on -- what is most important for us is that how does the overall operating leverage development.

If anything, it's still a touch better due to the fixed development. So what you see as an impact on the cost side. is more than outbalanced by top line effects. That's one of the reasons behind the very strong trading result. It's one of the reasons why we are able to uplift the fee income. So altogether, operating launch has been rather strengthened by that. And I have to say and very occasion say that we are very confident on all our deliveries of our efficiency targets that we have been putting out in '24, '25, I think the numbers are proving that. Third point, thanks for the question around RWAs. I can be very specific on that. First thing, out of the business side, we're expecting around about EUR 6 billion to [indiscernible] effect on the combined credit risk RWAs and operational roughly with a 75% to 25% ratio to each other.

That's the ordinary course of business, respectively, effect of the very good profitability. And when it comes to the methodological effects, we are expecting already in Q3 a EUR 2.7 billion effect from an LGD model effect, which will not fully, of course, but to a certain extent, be management against with ST billion-plus effect is what you can count on there. So that's why I was saying, okay, we will build capital from our profitability. But so to say, the other effects right and left are going to be rather neutral, maybe a touch negative, but that's just to flag it. So let me say the capital expectation are not going through the roof.

Thank you very much.

Then the next question comes from Ben Maher from KBW.

Just two quick questions for me, please. The first is the capital rebuild continues to exceed expectations. Do we no inorganic development later this year, how do you see the ratio by year-end? I think you mentioned stepping up that we shouldn't assume a similar quarterly run rate as we saw in 2Q. Is there also a particular reason why you've decided to clear the upper end of your payout range.

And then my second question, sorry, is another follow-up on the minorities in [indiscernible]. I appreciate no decisions have been taken. But if you do pull the trigger, would you consider issuing equity to get over the line sooner -- and do you also expect you need to have capital for a top up to the entire 100%? Or is there potentially some flexibility there?

So I think on the -- on the capital build, it was pretty much the point I discussed with the colleague before. Just to repeat Yes, it was a very dynamic capital build, in particular, in Q2, and we will build capital organically further, but not at that pace. That's the short answer and the rest I've already put in [indiscernible].

Yes, when it comes to the potential increase of our state in adapts mentioned before. So there is still no decision taken. And of course, we take and we recognize how that improves in account, but is to really to comment on this

And the next question comes from Jovan Sikimic from ODDO BHF.

I have one on loan growth outlook for the end of this year. I think it was upgraded to EUR 290 billion. Now you are at EUR 284 million. So with this EUR 7 billion quarter-to-quarter growth. I mean, do you see this kind of new target still a bit of conservative or we expect to kind of slow down in the second half of the year? And the second question would be, if you could share your thoughts if it comes to of course, related to 2030 targets, if you can share your thoughts about kind of countries performance over the next years and kind of which countries you would expect kind of more pronounced net profit creation or earnings creation in which countries may be slower?

Yes, I can be very short on the loan matter. While we have the guidance clearly around EUR 290 million, which gives a little bit of room said, I embedded in my low growth comment, a kind of small site comment that I'm personally expecting it rather to be north of it. However, look, it was a very, very strong second quarter. And one of the other observation points still to see whether this is confirmed. But I agree with you if we wanted to make a forecast today, be rather slightly above and below. But time will tell in the next 1 or 2 months, and we will certainly update you with Q3 [indiscernible].

Yes, talking about the countries in [indiscernible]. I think it's very obvious that [indiscernible] in Czech Republic will be crucial or when you look at our in last can requirement of the is a very strong competitor. The same will be true for and when you look at the economic outlook for the kind of year to have this we, of course, see now also very positive momentum in Hungary. You see very strong loan growth compared to the past because it can be for many, many years, kind of environment where it can companies and the that deleveraging this is turnaround already some time ago. So we acquired mitigant.

When you looked at the overdevelopment of Croatia over the last years and can do me how the government succeed to put everything in place. They are also in front of becoming a [indiscernible] so I think they're doing very well. And we see the strong growth being corporate [indiscernible]. So we are in capital ratio. Environment in Romania is the tough still at a relatively high budget deficit and we are all aware coveralls quite high. We still believe strongly in the potential of the company. It's very, very clear. given the [indiscernible], but it is a little bit increasing in stability, if you may see. So when it comes to Austria, I mean, Austria is now more or less this fourth year in a very low growth environment, but it's still a good place to do business because it's still a relatively rich country.

So if there will be a point in time where Austria starts to recover, given the strength of the country and the [indiscernible] country and still in very good education on a very high level and some very positive momentum in some parts of science. I'm sure that Austrian can be contract and then, of course, also will also contribute further to the financial times when it comes to improvement

Maybe if I may add one, maybe it's too detail. But of course, in some countries, there is extraordinary high kind of taxation level. So in this 2030 targets, I suppose that you also kind of incorporate normalized banking levy levels and corporate income tax, particularly in Poland, it's definitely elevated over the next 3 years.

Yes. Look, I think we said it in the presentation that we are probably also in the information about the 2030 ambition that broadly, let me say, broadly unchanged environment would be necessary to achieve, so to say, the exact. But that is, I would say, a very general statement. Honestly speaking, if you look at the 2026 situation, we have a substantial uplift in the overall tax ratio to around about 23.5 nowadays being the expectation, and we can manage. So I think as long as things don't go completely crazy out of bound, we don't really refer to it strongly.

So honestly speaking, if it comes to my expectation, looking at the budget situation in many countries and so on, do not expect massive relief. So would we count on that, we could maybe even uplift our expectations. But of course, a certain range should not be [indiscernible]. That's it. Everything else is pure speculation whenever it comes to political decisions.

And the next question comes from Riccardo Rovere from Mediobanca.

2 or 3, if I may. The first one, it is a clarification. When it comes to your financial ambitions. And my sense the suggestion here is that at some point, you should shed a little bit more light on how you want to get that. But the question here is just I want to be 100% sure that correctly that the 15% EPS CAGR does not necessarily depend upon the level of ownership in Poland that -- did I get that right? Or I misunderstood that.

No, no, no, you're absolutely got right.

Perfect. Okay. The second question I have is in the press release with regard to the 2030 financial ambitions, you mentioned inorganic growth in Poland and across the CE countries, I'm not going to ask anything on Poland. But when it comes to the are countries that you mentioned in the press release, given that you are already very -- you have generally a very strong market share where you already operate. What do you have in mind? You could share some thoughts on how we're thinking is a niche business, bolt-on acquisition, maybe portfolios, what you have in mind there?

And the last question I have is, Stefan, I'm not 100% clear I understood it correctly. When you stated that you expect NIM in the second part of the year to be kind of stable despite higher rates? I'm not sure I understood it. I got it correctly.

Yes, you may start with the question about other M&A opportunities, of course, we are always monitoring the situation in our existing countries. I think this would be a situation where we always can not to come up with kind of cost synergies. I think we showed in the past. Over the last years to get a good intake portfolios. So we have all the necessary schemes to do so, and there could be some opportunities in the upcoming years. Yes, that's more easy [indiscernible].

Yes. And thanks very much, Riccardo, for checking. I didn't say demanding on higher rates, as I was talking about, the expected ongoingly higher volumes because obviously, the name by the first place before the new business starts really yielding and contributing to NII it's immediately increasing the denominator. That was the remarks. So I said NIM to be stable, roughly stable, maybe even tick up, to be honest, you remember in the first quarter call, I was kind of indicating this 270.

I'm a little bit more cautious today because simply the policy growth was substantially better than expected. So somewhere between the 264 where we are now in the 270 would be my best years as of today. the comment was referring to volumes. So thanks very much for checking, NIM stable despite very strong volumes.

And the next question comes from Robert Brzoza from KB Securities.

I have a more detailed question regarding the adjustment affecting the Polish unit results. I'm curious where the differential between the Poland unit stand-alone reported profit before minorities versus the [indiscernible] or you reported within the group results, net profit before minorities for Poland, where this differential is coming from, as per my estimates, the group reported results in Poland is roughly, say, EUR 40 million higher from the publishing it alone reported results.

And this is despite the already discussed the fair value adjustments, which were booked in the NII. So basically, I'm wondering, where is -- what accounts for the provisioning charges, which are visible in the Polish unit P&L, less so in the consolidated accounts. And I'm also wondering whether that is being somehow covered on the consolidated level. what I think like sort of the agreement, purchase agreement with Santander Bank.

So very well spotted, if I may say this as a complement. Yes, it is exactly like that. it is absorbed in the PPA on the group level. And it has nothing to do at this point, nothing to do with Santander, yes. So that would be -- we would need a much, much, much, much higher bookings, which we don't expect to be, but it is through the price purchase allocation that is absorbed on the group level exactly like it.

Right. So I'm supposing this is going to continue throughout the year, most likely, especially when we see at some point, or maybe not any bigger Swiss bank providing in the policy unit, correct?

Absolutely correct. I have everything, so to say, goes according to the usual booking and so far it has, it's going to be fully absorbed on the group, will correct.

can you provide possibly the size in terms of the 2026 year. How much these times could amount to eventually.

No, I cannot for a simple reason because we are not influencing in any form where we cannot and will not how much the local bank is booking. So therefore, I can't give you an answer, but I can tell you if things in terms of booking the Swiss franc provisions in Poland are going as expected, will be fully absorbed on the move.

And the next question comes from Krishnendra Dubey from Barclays.

Clarification on the EPS part from the -- not including the Polish part. Just to confirm, I guess, in your better than 15 EPS, you're including some buyback and I guess -- and also you're kind of including just on -- that's the first part you're including some buyback, but that you're disclosing how much that is? And secondly, when you're talking about Roper I should look at your 40% to 50% as a number for the future year as well. Those are the two questions, actually.

All right. So on the first one, there is absolutely no possibility for us to forecast exactly what we will be doing over the next 5 years in terms of capital distribution in the detail beyond the guidance, so to say, period. But the likelihood that share buyback is going to happen 1 year or the other is relatively high, simply because of our extremely strong capital build. And unless there is every other quarter, so to say, a fantastic inorganic growth opportunity the likelihood that we will have a combination of dividend payout and share buyback at 1 point in time is very high. So that's point number one. on point number 2, it's a -- that's a very good question. I would say that actually is leading to the similar answer as with the share buybacks.

If there is no massive growth on the organic side and at the inorganic side, sooner or later, the dividend policy might be lifted further up. That's absolutely clear. when this between 26 and 2030 might possibly have make sure you understand no one else can forecast. But I think everything combined is actually doing the math on the back of the envelope to deliver on the return on tangible equity ambition that we have been communicating.

And sorry, just 1 last one, if I can get that then actually. I guess you just -- I guess earlier, you were talking about more than $4 billion on the adjusted basis. So -- so any guidance on that? I guess that's not there now. So how should we look at the adjusted run rate for the net profit.

EUR 4 billion, you mean for 2026 consensus expect.

Yes, for 2026, I guess, prior, you had like net profit below $4 billion for like a reported basis and it was on adjusted it was above EUR 4 billion. So just trying to understand the underlying run rate of the adjusted net profit, actually. So if you break down the one-off that would be great, actually, that you're kind of thinking about it.

Thanks for the clarification question. We are expecting or we are guiding for a reported north of 4% now. That's the result of the improved operating performance and the confirmed risk guidance. is that we are seeing a very solid chance to beat the EUR 4 billion in the reported. So thanks for asking the clarification. Maybe we have not been clear enough on that.

And we do have one follow-up question from Riccardo Rovere from Mediobanca.

I have one for Alexandra. If I'm not mistaken, this quarter, you have added a little bit of additional [indiscernible] related to Romania, if I'm not mistaken, if I understand correctly the wording in the slide. And with regard to that, when we look at -- when we read your financial ambition 2030, when you say we rely on solid, robust credit risk environment, how should we think about that? Should we think that the amount of FLIs that are still sitting on your balance sheet will be progressively use the release that you see the risk cost 25 to 30 basis point to stay more or less SPs if the macro scenario does not change dramatically. What -- if you can add a little bit of color on that?

Thank you, Riccardo to also for addressing the final question also to me. So first of all, yes, Romania and also to give you some more precise numbers, the F&I impact on Romania from the update in the second quarter was EUR 23 million addition, which was partially offset by smaller releases in Austria, the other countries neutral. When it is about the 2030 targets, and I think Peter also has mentioned it today twice, that we -- we consider our current -- our risk appetite is variation.

When you look at the past, we have grown substantially with a very stable and keeping and maintaining a very stable risk profile in a very demanding environment. And this is exactly what we want to do going forward. So when you look at the current risk cost levels, this is something -- so I'm not talking about Q2, the very low 20. But the overall, our guidance for this year, this is a very healthy level that we would also consider healthy going forward and still allowing for enough very good loan growth.

On the SLI, I think we discussed 2, 2 quarters ago that-- we have now reached a level where there we would not expect major going forward. So even if there's some release, there will be some base amount of 300 something which more or less remains able might go up a little bit, but go down depending on the macroeconomic development. But the big release is we have seen -- yes, we have seen in the past.

If I can, why -- given the macro -- I mean, these FLIs were built for [indiscernible], then energy, -- in other countries, for example, in the Nordics, the those post model adjustments overlays call it, as you prefer, have been in many, many cases, brought to 0. Why should EUR 300 million remain as a part of the furniture over the next 1 to 3, 5 years.

I mean the FLI model has not been basically introduced for the [indiscernible] this has been introduced and is mirroring the macroeconomic outlook and development. It was much bigger and with huge amounts, as you may remember or as you surely remember from the price situation. Look, I would not fool could go out to 200, but it can go also again to fund it always depends on the macroeconomic outlook on the model. So it's not -- to be very [indiscernible], it's not a [indiscernible] that we keep here for counterbalancing this is -- this is the output of the macroeconomic model. And when you look at our overall exposure, I think some 300-something having a base.

To be honest, maybe the others don't report the FLI model in that extent. When we will be talking about the overlays that we had for the crisis, they also have gone on now tremendously. And I also could say crisis over days will go down to 0, but this is not the same as the [indiscernible].

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

Listening in, thank you for all your questions. And let me announce that will result for [indiscernible] the third [indiscernible]. 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 conference. You may now disconnect your lines. Goodbye.

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.

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.

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.