This article first appeared on GuruFocus .
Release Date: July 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Bawag Group AG ( BWAGF ) reported a strong net profit of EUR 255 million for the second quarter, with an EPS of 3.28 and a return on tangible common equity of 29%.
-
Core revenues increased by 8% year-over-year to EUR 590 million, demonstrating strong operating performance.
-
The company maintains a low non-performing loan (NPL) ratio of 90 basis points, indicating solid credit performance.
-
Bawag Group AG ( BWAGF ) has a robust balance sheet with EUR 14.5 billion in cash, representing approximately 20% of its balance sheet, and a liquidity coverage ratio (LCR) of 217%.
-
The company is well-positioned to self-fund its acquisition of PTSB, with a CET1 ratio of 17.4%, translating into over EUR 1 billion of excess capital.
Negative Points
-
Total risk costs increased to EUR 75 million, translating into a risk-cost ratio of 54 basis points, which is higher than the previous quarter.
-
The company's average customer loans and funding were flat quarter-over-quarter, indicating a lack of growth in these areas.
-
Mortgage volumes remain subdued, reflecting challenges in this segment.
-
The tax rate was unusually low at 23.1% due to a one-off effect, which may not be sustainable in future quarters.
-
There is increased competition in the non-retail deposit market, particularly in Austria, which could impact future deposit growth.
Q & A Highlights
Q: You reported almost $1.4 billion reduction in risk-rated assets this quarter. Could you walk us through the key drivers behind that reduction? A: The reduction is mostly driven by the credit card SRT executed in Q2, which is reflected in the retail and SME segment. It's roughly a $1 billion decline from that transaction. We are looking at more measures for the future but can't share more details at this time.
Q: Can you comment on the competitive situation on deposits in your markets, including in Austria? A: Deposit levels were flat or slightly up across different markets and franchises. In Germany, we decided to let some online deposits run off due to higher costs. In Austria, we see increased competition in the non-retail part, especially in the money market and from government offers.
Q: Could you give more granularity on core revenue targets and whether loan growth was slowed to support capital creation for the PTSB deal? A: We have been diligent in managing RWAs with the pending transaction, but it hasn't impacted our business pursuit. Markets are frothy, and we were redeemed out of some positions. We have a good pipeline and expect core revenues to align with your estimates.
Q: On risk cost guidance revision to 50 basis points, is this due to additional macro provisions or a shift towards credit card and consumer lending? A: The 50 basis points guidance reflects a change in asset mix, with muted mortgage demand and increased high-yielding consumer unsecured lending. This comes with a stronger top-line but also a front-loading of the ECL effect, driving the risk cost ratio.
Q: Could you update on litigation risks, particularly regarding trailing commissions with investment accounts? A: Litigation risks are part of the new normal, with consumer protection topics emerging. Financial impacts are reflected in our numbers, and we expect such issues to continue in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
