(Bloomberg) -- Erste Group Bank AG new chief executive officer pledged a record dividend and raised the bank’s outlook in the first earnings report he oversaw since taking office a month ago.
The largest lender in the European Union’s east will target a €3 dividend per share, according to a statement on Friday. That’s up from €2.7 last year and compares with €2.92 forecast by 15 analysts in a Bloomberg survey.
The Vienna-based bank now sees its full-year net interest income unchanged from last year, compared with a decline of 3% seen earlier. It also raised projections for fee income and lowered a target for risk costs.
The report is the first presented by Peter Bosek, who took over as CEO in July. Investors had been anticipating the publication for more clarity on Erste’s plans on using excess capital, which some analysts forecast to reach €2.7 billion by year-end. The bank said the capital stock provided flexibility to offer enhanced capital returns or seek acquisitions.
“The increased dividend we are indicating for 2024 doesn’t limit us in any form in our ambitions to grow organically, but also potentially inorganically,” Chief Financial Officer Stefan Doerfler said in an interview with Bloomberg Television. “We have a feeling that the M&A market overall might be picking up.”
Shares of the lender rose 0.3% in Vienna as of 10:40 a.m. as European bank shares broadly declined.
Speaking to analysts, CEO Bosek said the bank will remain opportunistic on acquisitions with the focus remaining on the eastern members of the European Union. The price of any deal will remain key, especially in the region’s largest country Poland, where Erste has yet to set foot.
“We would be interested in Poland, but we definitely don’t want to run into a situation where we are not creating shareholder value,” Bosek said. “We are not under pressure to jump on inorganic growth.”
Erste booked €846 million net income in the second quarter, beating the €767 million average estimate in a Bloomberg survey.
--With assistance from Andrey Biryukov.
(Adds share reaction in sixth paragraph, CEO comments from seventh.)
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