Key takeawayAfter the third-quarter results, JPMorgan raised its earnings forecasts for Erste Group, with higher net interest income as the key support. However, higher costs offset some of the gains, and its earnings forecast for 2027 was below Bloomberg consensus.
How much were earnings forecasts raised after the third-quarter results?
- JPMorgan raised its adjusted earnings-per-share forecast for 2026 from 10.45 euros to 10.59 euros, and its forecast for 2027 from 10.95 euros to 11.20 euros; its forecast for 2028 rose from 11.89 euros to 12.07 euros.
- The company reported adjusted earnings per share of 2.83 euros in the third quarter of 2026, up from 2.62 euros in the second quarter. The bank expects 2.57 euros in the fourth quarter and, for the first time, issued a full-year forecast of 13.12 euros for 2029.
- The adjusted forecasts and Bloomberg consensus do not fully align: JPMorgan’s forecast for 2026 was above Bloomberg’s 9.97 euros, while its forecast for 2027 was below Bloomberg’s 11.46 euros.
What drove the upgrade, and how much was offset?
- Net interest income was the main driver. JPMorgan raised its forecast for 2026 from 11.017 billion euros to 11.125 billion euros, and its forecast for 2027 from 11.668 billion euros to 11.85 billion euros.
- The increase in revenue did not all translate into profit: the bank also raised its operating-expense forecast for 2026 from 7.114 billion euros to 7.185 billion euros, and its forecast for 2027 from 7.18 billion euros to 7.278 billion euros. Its fee-income forecast for 2026 was also lowered from 3.994 billion euros to 3.951 billion euros.
- With these adjustments combined, the adjusted pretax profit forecast for 2026 rose from 7.313 billion euros to 7.363 billion euros, an increase of about 1%.
What constraints could weigh on future earnings growth?
- JPMorgan expects net interest margin to rise from 2.2% in 2025 to 2.7% in 2026, then ease to 2.5% in 2027; over the same period, net interest income is still expected to increase from 11.125 billion euros in 2026 to 11.85 billion euros in 2027. The bank’s model also forecasts net loan growth of 6.5% in 2027.
- The cost of risk remains an important deduction from profit: it was 170 million euros in the third quarter of 2026, up from 144 million euros in the second quarter. The bank expects a full-year figure of 1.014 billion euros for 2026, declining to 863 million euros in 2027.
- The report lists Erste Group as unrated.
