This article first appeared on GuruFocus .
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Pre-Tax Profit:EUR2.82 billion in Q2 2026, an improvement from both the previous quarter and Q2 2025.
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Net Interest Income:Slight decrease from Q1 to Q2, fully explained by margin pressure from a 33 basis point higher NIBOR.
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Lending Growth:Strong growth of 2.6% in the quarter.
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Deposit Growth:6.4%, higher than lending growth.
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Credit Losses:EUR54 million, or 5 basis points, well below the normalized level of 12-15 basis points.
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Return on Equity:12.7% for the quarter (13.6% excluding merger goodwill), against a long-term target of 14%.
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Cost-to-Income Ratio:Low at 27.8%.
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CET1 Ratio:17.51%, including a 45 basis point deduction for the new 1% share buyback program.
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Operating Expenses:Increased 1.1% from Q1 to Q2, including a 2.3% central wage increase; up 2.7% year-over-year adjusted for one-offs.
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Personnel Synergies:121 FTEs taken out of the planned 150 by year-end.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Strong quarterly performance with a return on equity of 12.7%, approaching the long-term target of 14%.
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Robust lending growth of 2.6% and deposit growth of 6.4% in Q2, despite major organizational changes.
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Very low impairment losses of 5 basis points, well below the normalized level of 12-15 basis points.
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High cost efficiency with a cost-to-income ratio of 27.8%, reflecting successful synergy realization.
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Solid capital position with a CET1 ratio of 17.5%, including a buffer of 77 basis points above minimum requirements.
Negative Points
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Net interest income decreased slightly from Q1 to Q2 due to margin pressure from a 33 basis point rise in NIBOR.
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Retail interest rates were not raised immediately after the central bank's hike due to an eight-week notice period, delaying margin recovery.
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Funding synergies are behind schedule due to unexpectedly high deposit growth, reducing the need for market funding.
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Operating expenses increased by 2.7% year-over-year, driven by wage growth and higher service costs.
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Intense competition in the banking sector limits the ability to fully pass on rate hikes to customers, pressuring margins.
Q & A Highlights
Q: Could you provide more details on the significant decrease in gross Stage 3 loans quarter-over-quarter and your expectations for this metric in the coming quarters? A: The reduction in Stage 3 loans reflects normal variations at a low level, with some engagements being reclassified as performing and others finally closed. This decrease underpins the low EUR54 million in provisions, demonstrating the strength of our portfolio.
Q: Given the price changes from mid-July, is it logical to assume that net interest income will rebound quarter-over-quarter in Q3? A: Even with a rate hike on mortgages, the 33 basis point increase in NIBOR during the quarter would not be fully offset. There is fierce competition among banks, and our defense is to be cost-effective. We focus on individual investments, especially in the corporate sector, and aim to adjust lending rates while minimizing deposit rate changes to gain net margin.
Q: What is driving the very strong corporate market deposit volume growth, and are you still confident in achieving funding synergies by 2027 despite the drop-on from this process? A: Deposit growth was 23.7% overall, but 9.7% when adjusted for public municipalities, which saw a higher increase in the first half. This reduced the need for market funding, causing funding synergies to lag. However, with increased lending growth and expected lower public deposits in the second half, we expect to issue more under the certificate program. We have issued EUR1 billion so far and guided to end between EUR2 billion and EUR3 billion, with the full effect expected by 2027.
Q: One of your closest peers said they repriced retail mortgages by 25 basis points on average. Is it fair to assume you are at a similar level? A: I will be deliberately less specific than my peer due to competition authority monitoring of pricing signals. We adjust as much as possible on the lending side and as little as possible on the deposit side to gain net margin. Our ability to grow net interest income is a combination of volume growth and repricing, but I cannot be more specific, leaving it to analysts to make their own calculations.
Q: Do you think this repricing has been similar to recent interest rate hikes in the upcycle? A: An analysis from the Central Statistics Bureau showed that banks on average gave 16 basis points to customers instead of 25. We always position ourselves for even more fierce competition, and our defense is to be as cost-effective as possible. If competition becomes less fierce, we welcome it; if it becomes more fierce, it will be more difficult for other banks to cope than for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
