By Mateusz Rabiega
(Reuters) -Erste Group Bank on Friday raised its annual targets after its third-quarter results beat expectations, supported by loan growth and lower customer deposit costs, sending its shares to a record high.
The Vienna-based bank’s quarterly net profit climbed to 901 million euros ($1.05 billion), exceeding a median forecast of 836 million in a company-compiled consensus.
Shares in Erste were up 5.3% at 0912 GMT.
The bank expects its net interest income for 2025 to increase by more than 2%, after it rose to record-high 1.98 billion euros in the third quarter, driven mainly by Czech Republic, Romania and Slovakia markets.
It also forecasts that its cost-to-income ratio, a measure of its operational efficiency, will to around 48% against the 50% expected before. A lower ratio indicates greater efficiency and profitability for a company.
Continuous growth of both net interest income and net profit is uncommon among European banks, with big euro zone lenders seeing a slow but sure fall in their interest revenues.
Erste has been able to grow core income lines by capitalising on growth in its seven main markets, which include Austria, the Czech Republic, Slovakia and Romania.
Its geographical spread offers relatively higher interest rates than those in countries under European Central Bank jurisdiction.
The lender has also expanded into other highly profitable regions of Poland, where it bought a 49% stake in the country’s third biggest lender Santander Bank Polska.
The acquisition came at a cost, as it was financed from funds originally intended for a 700 million euro buyback programme, and a dividend that had been temporarily reduced.
However, Erste now expects its CET1 ratio, a key measure of its financial strength, to be above 18.5% at the end of the year from above 18.25% previously.
($1 = 0.8575 euros)
(Reporting by Mateusz Rabiega; Editing by Jan Harvey and Matt Scuffham)
