Erste Group benefits from mega-expansion to Poland

Founded in 1819 as the “First Austrian Spar-Casse”, Erste Group has developed into one of the leading banks in the growth region of Central and Eastern Europe with around 16.6 million customers in seven countries.

Of course, this is not the end of the story. Poland is now not only a huge market and the eighth country after Austria, the Czech Republic, Romania, Slovakia, Croatia, Hungary and Serbia, but also another 1,000 branches and around six million customers.

Largest transaction

After approval by the EU Commission in September, the Polish supervisory authorities also gave the green light for the mega deal a few days ago. Specifically, Erste Group is acquiring a controlling stake of 49 percent in the Polish subsidiary of the Spanish bank Santander for 6.8 billion euros. It is one of the largest cross-border banking transactions in Europe in recent years.

The purchase will be financed exclusively from our own resources. To achieve this, the bank is, among other things, foregoing a planned share buyback program and temporarily reducing the payout ratio for the 2025 financial year.

Santander Bank Polska is the third largest bank in the country after two state-owned banks, with a market share of more than eight percent. Erste Group expects earnings per share to increase by over 20 percent in 2026.

Most observers also share this assessment, although the latest analyzes seem to have almost been overtaken by developments on the stock market. The Swiss UBS only confirmed its “Buy” recommendation at the beginning of the month and increased the price target for Erste Group from 97 to 108 euros. The responsible experts Nicolas O’Sullivan and Mate Nemes consider Erste to be a well-diversified bank that benefits from strong volume and margin trends in Central and Eastern Europe.

Top pick in the East

The bank is also the “top pick” in Eastern Europe for Swiss analysts because it offers high-quality retail banking with access to long-term growth in the core countries of Central and Eastern Europe, conservative risk provisioning and high profitability. Dividends of 0.75, 4.20 and 4.50 euros per share are expected for the years 2025 to 2027.

Barclays also recommends the bank as “Overweight” and increased its price target from 86 to 106 euros shortly before UBS. One reason is that “positive impulses” are expected particularly from the growth dynamics following a peace agreement in the Ukraine/Russia war.

The Vienna Stock Exchange’s website also states: “A strong local presence and group-wide collaboration enable comprehensive customer support, regardless of where the customer is at home. In addition to traditional banking products, Erste offers a range of digital solutions and is considered the most innovative bank in Austria.”

Peter Bosek, CEO of the institute, is very happy to hear that. In July 2024 he inherited Willibald Cernko at the helm of the major bank. Even then, Bosek said: “There is one country that we are definitely focusing on, and that is Poland.” Erste Group has been interested in the region for 25 years, but it has always been too expensive.

Background: Credit growth increases profits

Growth in loan volumes of around EUR 10 billion to EUR 228 billion helped Erste Group generate more revenue and more profit in the first nine months of the 2025 financial year. There was particularly higher demand in the Czech Republic, Austria and Slovakia. Net interest income increased by three percent to 5.76 billion euros. The bottom line was a net profit of 2.57 billion euros, after 2.52 billion euros in the same period last year.

The bank has raised its outlook for the full year. Bank boss Peter Bosek was satisfied with the numbers. “We were able to further expand our growth in customer business in the third quarter.” “Central and Eastern Europe remains Europe’s growth market.”