BAWAG Reports €255 Million Q2 Profit as Permanent TSB Acquisition Nears Shareholder Approval

Strong Q2 2026 Profitability Fueled by Revenue Growth and Operational Efficiencies

BAWAG Group reported a net profit of €255 million in Q2 2026, a 21% increase from the prior-year quarter. Earnings per share reached €3.28 during this period. For H1 2026, cumulative net profit totaled €487 million. This performance highlights the group's disciplined capital allocation and ongoing realization of synergies and efficiency improvements across its expanded operations.

Profitability metrics underscore the strength of BAWAG’s core business model. Pre-provision profit rose 5.5% quarter-over-quarter to €413 million in Q2 2026, while core revenues grew 8% year-over-year to €589.7 million. For H1 2026, core revenues reached €1,168.6 million, also reflecting 8% annual growth. The company credited sustained revenue momentum to continued growth in unsecured consumer lending, which offset subdued mortgage volumes during the quarter. These results demonstrate BAWAG’s ability to generate capital while maintaining disciplined lending practices.

Cost-Income Ratio Improves to 31.0%, Well Below Through-the-Cycle Target

Operational efficiency strengthened significantly in Q2 2026, with the cost-income ratio improving to 31.0% from 37.5% in the prior-year quarter, a 6.5 percentage-point improvement driven by ongoing synergies and efficiency gains. Operating expenses declined 11% year-over-year and 2% quarter-over-quarter to €185 million, despite incorporating a 3% cost increase from a new collective bargaining agreement in Austria. For H1 2026, the cost-income ratio was 31.7%, down 5.5 percentage points from the previous year.

BAWAG’s 31.0% cost-income ratio places it well within its through-the-cycle target of below 33%, reflecting sustained operational excellence. This efficiency was achieved while integrating operations across a pan-European banking group serving over four million customers, operating a digital-first model alongside an advisory-focused branch network. The improvement is especially notable as BAWAG prepares for the Permanent TSB acquisition, expected to enhance operational leverage and market presence in Ireland.

Return on Tangible Common Equity Hits 28.7%, Exceeding Strategic Goals

BAWAG delivered a return on tangible common equity (RoTCE) of 28.7% in Q2 2026, up 1.1 percentage points from the prior-year quarter. For H1 2026, RoTCE was 27.8%, also up 1.1 points year-over-year. Both figures significantly exceed the group’s >20% through-the-cycle target, showcasing the profitability and capital efficiency of BAWAG’s business model. CEO Anas Abuzaakouk highlighted earnings per share of €3.28 and RoTCE near 29% for the quarter.

The elevated RoTCE reflects successful profitable growth across customer segments combined with disciplined capital allocation. This strong profitability offers flexibility to pursue strategic initiatives like the Permanent TSB acquisition while maintaining capital strength. Mid-term return targets will be updated with full-year 2026 results to provide investors with future profitability guidance.

Net Interest Income and Fee Growth Highlight Diversified Revenue Streams

Net interest income reached €488 million in Q2 2026, up 2% from Q1 2026 and 7% year-over-year, driven by growth in unsecured consumer lending offsetting weaker mortgage volumes. For H1 2026, net interest income totaled €968.4 million, reflecting 7% annual growth. Net fee and commission income rose to €102 million in Q2 2026, up 3% quarter-over-quarter and 12% year-over-year, supported by strong retail and SME performance, especially in credit cards and payment services.

This diversified revenue model across lending, deposits, and fees underpins BAWAG’s resilience. Retail & SME segments show strength in payment and credit card products, signaling robust customer demand. For H1 2026, net commission income was €200.2 million, up 12% year-over-year. Balanced growth across income sources reduces reliance on any single stream, valuable as the group expands via the Permanent TSB acquisition.

Asset Quality Remains Robust with 0.9% Non-Performing Loan Ratio

BAWAG maintained strong asset quality in Q2 2026, with a non-performing loan (NPL) ratio of 0.9%, reflecting disciplined underwriting and portfolio management. Risk costs totaled €75 million in Q2 2026, up from €65.2 million in Q1, driven by growth in unsecured lending and updated macroeconomic assumptions amid geopolitical developments.

For H1 2026, total risk costs were €140.6 million, a 26% increase year-over-year. Despite this, the low NPL ratio amid unsecured lending growth indicates effective risk management balancing growth with prudent underwriting. This asset quality strength reassures Permanent TSB stakeholders regarding credit risk management post-acquisition.

Capital Ratio of 17.4% Supports Full Self-Funding of Permanent TSB Deal

As of Q2 2026, BAWAG’s CET1 capital ratio stood at 17.4%, with €1.05 billion excess capital above its 12.5% target. The group temporarily adjusted its dividend policy, committing to no distributions from H1 2026 profits and limiting potential dividends to approximately €500 million from H2 earnings. Risk-weighted asset optimization, including Synthetic Risk Transfers, further bolstered capital.

With a 17.0% CET1 threshold required to fully self-fund the Permanent TSB acquisition, BAWAG’s current 17.4% ratio confirms full funding capability. This demonstrates financial discipline and commitment to completing the acquisition without significant shareholder dilution. The group continues strong capital generation and maintains multiple capital management options for future growth, balancing strategic objectives with regulatory capital and shareholder returns.

Permanent TSB Acquisition Offers Strategic Expansion in Irish Market

BAWAG agreed to a recommended all-cash offer for Permanent TSB shares on 14 April 2026, viewing Ireland as an attractive market with solid macroeconomic fundamentals. Present in Ireland since 2015 and operating a retail business under the MoCo brand since 2023, BAWAG aims to combine local expertise with its balance sheet strength, operational capabilities, and pan-European infrastructure. Ireland’s regulatory and economic environment motivates BAWAG’s strategic expansion through this acquisition.

CEO Anas Abuzaakouk stated: "We remain incredibly excited about the opportunity to acquire PTSB, a pivotal step in our commitment to the Irish market." Since announcing the offer, BAWAG has engaged extensively with regulators, the Permanent TSB Board, and stakeholders to present its business and plans. The acquisition will leverage BAWAG’s operational efficiency, digital-first approach, and European platform to enhance Permanent TSB’s market position and customer offerings. The combination of BAWAG’s management expertise, capital strength, and synergy delivery, alongside Permanent TSB’s established Irish presence, offers a compelling strategic rationale.

Regulatory Approvals Advancing; Shareholder Vote Set for 30 July 2026

The Competition and Consumer Protection Commission has cleared the proposed Permanent TSB transaction, removing a key regulatory obstacle. The shareholder vote on the Permanent TSB scheme of arrangement is scheduled for 30 July 2026. Completion remains subject to High Court and remaining regulatory approvals. CEO Abuzaakouk expects closing in Q4 2026 or Q1 2027, contingent on satisfying all conditions. The group is proactively engaging stakeholders to ensure timely approvals.

Regulatory progress and the scheduled shareholder vote establish a clear timeline for advancing the acquisition. Compliance with Irish Takeover Rules, including disclosure and dealing regulations during the offer period, is being maintained. Investors should note that under Rule 8.3(b) of the Irish Takeover Rules, holders of 1% or more of Permanent TSB securities must disclose dealings by 3:30pm Irish time on the next business day. Further details are available on the Irish Takeover Panel’s website.

2026 Profit Guidance Above €960 Million Reaffirmed Amid Strategic Progress

BAWAG Group reconfirmed its 2026 full-year net profit guidance exceeding €960 million, maintaining its strategic execution amid the Permanent TSB acquisition process. H1 2026 net profit of €487 million positions the group on track to meet this target, with projected H2 earnings around €500 million, consistent with dividend policy adjustments.

Mid-term targets will be updated with year-end 2026 results, providing forward-looking guidance post-acquisition or upon clarity of its status. An earnings call was held at 10:00am CEST on the announcement date, with details at www.bawaggroup.com. The half-year report is scheduled for 31 July 2026, offering investors comprehensive insights into financial performance, capital position, and strategic initiatives to support informed investment decisions.