BAWAG earnings reached €248 million in the third quarter of 2026, with core revenue rising 8% from a year earlier despite deposit outflows and intense mortgage competition. The bank reported a 26.9% return on tangible common equity on October 19, while management said a shift toward higher-margin consumer lending was also lifting credit costs and capital requirements.
Key Takeaways
- Core revenue rose to €599 million, while the cost-income ratio stood at 29.8%.
- Deposit outflows were concentrated in German online accounts and Austrian public-sector balances.
- Management retained its full-year risk-cost outlook of around 50 basis points as the lending mix changed.
Table of Contents
- BAWAG earnings balance revenue growth with a tax comparison
- Deposit competition limits the interest-income opportunity
- Higher-yield lending brings higher credit costs
- Capital planning includes the proposed PTSB acquisition
- Conclusion
BAWAG earnings balance revenue growth with a tax comparison
Net profit fell 3% from the preceding quarter, which had benefited from a positive tax effect. That sequential decline came alongside higher year-over-year core revenue and pre-provision profit of €425 million.
BAWAG’s third-quarter results announcement put the cost-income ratio at 29.8% and return on tangible common equity at 26.9%. Management said cost synergies were arriving faster than anticipated and expected to outperform its cost outlook.
Chief Financial Officer Enver Sirucic said third-quarter costs were lower than in the second quarter and should remain broadly stable in the fourth, with no one-off or seasonal effects anticipated. Chief Executive Officer Anas Abuzaakouk attributed efficiency gains to continuous improvement, a scalable platform and insourced technology operations rather than a single initiative.
| Item | Details |
|---|---|
| Third-quarter earnings per share | €3.18 |
| First-nine-month net profit | €735 million |
| First-nine-month return on tangible common equity | 28.0% |
| Cash holdings | €13 billion, or 19% of total assets |
| Liquidity coverage ratio | 197% |
| Nonperforming loan ratio | 1% |
Deposit competition limits the interest-income opportunity
Sirucic said deposit outflows were concentrated in the German online deposit business, where BAWAG chose not to match pricing it considered excessive, and Austrian public-sector deposits facing competition from the government’s Bundeschatz savings offering.
Other deposit franchises were stable or growing, he said, while German online outflows had slowed compared with previous quarters. The bank nevertheless expected competition for deposits to intensify.
Management described a positive underlying direction for net interest income, supported by deposit margins and a shift toward consumer and small-business lending. But stronger competition could require the bank to pass more interest income to depositors, limiting the benefit. Mortgage spreads had also fallen significantly, making that business less attractive.
Higher-yield lending brings higher credit costs
Quarterly risk costs increased to €79 million, equivalent to 56 basis points, while the year-to-date ratio stood at 52 basis points. Management maintained its expectation of around 50 basis points for the full year.
Sirucic linked the elevated ratio to the growing share of higher-margin consumer and unsecured loans, as well as repayment patterns and subdued mortgage growth. The change therefore carries a trade-off: lending can generate more income while also requiring higher credit-loss allowances.
The same shift increases the risk-weighted assets used to determine capital requirements. BAWAG was exploring measures including significant risk transfers to potentially offset that pressure, but management did not present those measures as completed.
Capital planning includes the proposed PTSB acquisition
BAWAG reported a common equity Tier 1 capital ratio of 17.1%, compared with its 12.5% target, and said it was fully self-funding the planned PTSB acquisition. The transaction remained a planned acquisition, not a completed addition to the group.
Management did not disclose the transitional treatment of PTSB’s minimum requirement for own funds and eligible liabilities, known as MREL. Sirucic said details would be made public when available, leaving that element of the acquisition’s funding framework unresolved.
Conclusion
The fourth quarter will test management’s expectations for stable costs and full-year risk costs of around 50 basis points. Deposit competition and further disclosure on PTSB’s funding requirements remain the main issues to watch.
Read More News
Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
