Addiko Bank AG (ADBKF) (H1 2026) Earnings Call Highlights: Net Loss on CHF Provisions Masks ...

Negative Points

• Addiko Bank AG ( ADBKF ) reported a net loss after tax of EUR23 million for the first half of 2026, primarily due to EUR41 million in Swiss franc-related legal provisions.

• The ongoing takeover process by Raiffeisen International has created significant uncertainty and incurred EUR8.4 million in advisory costs, impacting the reported results.

• Regulatory interventions, such as the debt-to-income cap in Croatia and lending rate caps in Serbia, have reduced revenue potential by more than EUR10 million on an annualized basis.

• The SME business in Croatia experienced a 26% decline in new business due to state-driven digitalization of invoices and intense competitive pricing pressure.

• Elevated deposit competition, particularly in Serbia, generated over EUR3 million in additional interest expenses, putting pressure on net interest income.

• The company has suspended its financial guidance due to the material implications of the takeover and the uncertainty surrounding the future scope of its operations.

Q & A Highlights

Q: Are there any scenarios regarding the EUR41 million Swiss franc-related provisioning that could end up with a lesser negative extent? A: CEO Herbert Juranek and CFO Edgar Flaggl explained that the provisions were taken prudently following Supreme Court decisions in Croatia and Slovenia. They expressed significant concerns about the legal reasoning, noting that in Slovenia, the court decision could effectively result in customers receiving loans for free, and in Croatia, the ruling challenges a 2015 settlement law. The management does not expect the impact to be less negative by year-end, as the verdicts will likely trigger further legal steps. They do not currently see a higher negative impact either, as the EUR41 million was booked after detailed analysis. The bank will pursue all available legal avenues to protect its interests.

Q: How did the bank's underlying business perform despite the regulatory headwinds and the ongoing takeover process? A: CEO Herbert Juranek highlighted that despite regulatory interventions reducing revenue potential by more than EUR10 million on an annualized basis, the bank maintained stable net banking income of EUR155.5 million. The consumer lending business showed strong momentum with 9% growth, while the SME business remained resilient outside Croatia. Net interest income remained broadly stable at EUR117.2 million, and net commission income increased by 2.8% year-on-year to EUR38.3 million. The adjusted profit after tax, excluding the two exceptional items (Swiss franc provisions and takeover costs), amounted to EUR19.1 million, demonstrating the resilience of the underlying business model.

Q: What is the current status and expected timeline of the takeover process by Raiffeisen International (RBI)? A: CEO Herbert Juranek confirmed that RBI achieved the required acceptance threshold on August 3, 2026, securing declarations for 55.55% of Addiko's share capital. The additional acceptance period runs until November 3, 2026. The first major phase, focused on obtaining regulatory and antitrust approvals, is expected to be completed between November 2026 and Q1 2027, no later than the long stop date of May 14, 2027. Following this, the integration of EU operations (holding, Croatia, Slovenia) would begin, and decisions regarding the carve-out of non-EU entities would be taken, requiring additional corporate and regulatory approvals.

Q: How is the bank addressing the regulatory measures in Croatia, particularly the 40% debt-to-income cap and free account requirements? A: CMO & CIO Ganesh Krishnamoorthi stated that these measures reduced customer eligibility and demand, contributing to a 17% year-over-year decline in new business in Croatia. The bank has launched product and process mitigations to improve customer eligibility while preserving prudent risk standards. The full impact is not yet visible, but benefits are expected to become progressively evident during H2. In the SME segment, a comprehensive turnaround program has been launched, increasing sales intensity, refreshing pre-approved lending models, and expanding sales capacity, which gained traction in Q2.

Q: What is the bank's strategy for managing deposit costs and margins in the current competitive environment? A: CFO Edgar Flaggl noted that unusually aggressive deposit competition, particularly in Serbia, generated slightly more than EUR3 million of additional interest expenses during the first half. Despite this, net interest income remained stable due to lower overall funding costs, solid consumer growth, and treasury contributions. CMO Ganesh Krishnamoorthi added that the bank is evaluating selective price increases where market and regulatory conditions allow, particularly in Serbia, and utilizing new dynamic pricing features and continued deposit cost optimization to balance growth, margins, and risk appetite.

Q: How is the bank's asset quality and cost of risk developing? A: CRO Tadej Krasovec reported that the NPE ratio remained stable at 2.6%, with NPE coverage at a solid 80.2%. Cost of risk improved to EUR11.6 million, corresponding to 31 basis points on net loans, compared to EUR14.4 million in the prior year period. The consumer segment cost of risk stood at around 0.3% and SME at 0.5%, while the non-focused segment continued to show releases. The development was achieved while maintaining disciplined underwriting standards, prioritizing quality of growth over pure volume expansion.

Q: What is the bank's capital position after absorbing the exceptional items? A: CFO Edgar Flaggl confirmed that the group absorbed both the Swiss franc-related legal provisions and takeover-related expenses while maintaining a very strong capital position. The CET1 ratio stood at 21.3% at the end of June, compared to 22.4% at year-end 2025. The total capital ratio was 21.3%, entirely in CET1 capital. Risk-weighted assets increased by around EUR114 million, mainly driven by business growth and regulatory effects. The capital buffers remain comfortably above all regulatory requirements, providing substantial capacity to absorb volatility.

Q: How is the bank's SME business performing, and what strategic shifts are being implemented? A: CMO Ganesh Krishnamoorthi reported that overall SME new business remained broadly stable at minus 1% year-over-year, but excluding Croatia, it grew by 14%. In Croatia, SME new business declined by 26% due to state-driven digitalization of invoices disrupting micro and small businesses. The bank is broadening its SME proposition to slightly larger customers, with medium SME new business growing by 92% year-over-year. New products like factoring in Slovenia are being launched, and the bank is enhancing credit models and automating credit decisions to improve efficiency and risk-adjusted returns.

Q: What is the outlook for the bank's guidance and future strategic initiatives? A: CEO Herbert Juranek stated that the transaction-related implications are expected to materially change Addiko's future scope, operating basis, and earnings profile. As a result, the guidance remains suspended until these implications can be assessed with sufficient certainty. The bank is reviewing the timing and pace of selected initiatives under its specialization program, including preserving optionality for further investment in Romania until there is greater clarity regarding the group's future strategic priorities. Until the transaction is completed, Addiko remains fully independent, with priorities focused on business continuity, customer service, and maintaining strong capital and liquidity.

Q: How is the bank managing operational risks, particularly in light of the Swiss franc legal decisions and the evolving cyber threat landscape? A: CRO Tadej Krasovec noted that operational risk is impacted by the CHF-related court decisions in Slovenia and Croatia, but apart

For the complete transcript of the earnings call, please refer to the full earnings call transcript .