Last Update 05 Dec 25

Fair value Decreased 0.23%

BG: Earnings Momentum And Capital Returns Will Drive Further Share Price Gains

Analysts have made a modest downward adjustment to BAWAG Group's price target, trimming it by approximately EUR 0.30 as they fine tune assumptions around discount rates, revenue growth, profit margins and forward valuation multiples.

Analyst Commentary

Recent research updates reflect a largely constructive stance on BAWAG Group, with price targets being refined rather than fundamentally reset. Analysts emphasize solid earnings momentum and capital generation, while acknowledging valuation sensitivity to macro and funding assumptions.

Bullish Takeaways

Bullish analysts highlight that upward revisions to price targets, even if modest, underscore confidence in the bank's medium term earnings growth and return on equity profile.
Positive views focus on BAWAG's ability to execute on cost discipline and maintain resilient net interest margins, supporting a premium valuation versus many regional peers.
Strong capital buffers and ongoing capital return potential are seen as supportive of the current valuation and provide downside protection in more volatile market conditions.
Incremental target price increases are framed as evidence that the earnings outlook is improving faster than previously modeled, particularly on fee income and operating leverage.

Bearish Takeaways

Bearish analysts maintain that even small downward adjustments to price targets signal sensitivity to assumptions around discount rates and long term revenue growth, especially in a higher for longer rate environment.
Caution centers on the risk that slowing loan growth or more aggressive competition for deposits could pressure margins, limiting upside to current valuation multiples.
There is concern that any deterioration in asset quality or higher regulatory and compliance costs could erode profitability, challenging the sustainability of elevated return targets.
Some analysts question whether the current valuation fully prices in execution risks around strategic initiatives and potential macro headwinds in BAWAG's core markets.

What's in the News

BAWAG Group AG issued guidance for 2025, stating it expects to exceed its targets of EUR 800 million in net profit and earnings per share of more than EUR 10 (company guidance).
BAWAG Group AG was added to the FTSE All World Index (USD), increasing its visibility among global index and passive investors (index announcement).

Valuation Changes

Fair Value: reduced slightly from €131.13 to €130.83, a marginal downward adjustment of about €0.30 per share.
Discount Rate: edged down marginally from 6.96 percent to 6.96 percent, indicating a very small decrease in the assumed cost of capital.
Revenue Growth: increased slightly from 8.87 percent to 8.88 percent, reflecting a modestly more optimistic top line outlook.
Profit Margin: eased fractionally from 42.85 percent to 42.84 percent, implying a virtually unchanged profitability profile.
Future P/E: decreased slightly from 10.95x to 10.93x, suggesting a marginally lower valuation multiple applied to forward earnings.

Operational integration and disciplined digital transformation are expected to enhance efficiency, margins, and revenue growth through cost savings and expanded digital adoption.
Demographic trends and strategic capital deployment position the company for sustainable fee income, robust loan growth, and resilient earnings amid evolving European markets.
Heavy dependence on interest income, regional concentration, rising costs, regulatory pressures, and digital disruption all threaten revenue growth, efficiency, and long-term profitability.

Catalysts

About BAWAG Group

Operates as a holding company for BAWAG P.S.K.What are the underlying business or industry changes driving this perspective?

Ongoing integration of Knab and Barclays Consumer Bank Europe, with expected completion by year-end (including exit from transitional service agreements and rebranding), should unlock operational synergies and drive further cost efficiency, supporting higher net margins over time.
Increasing digital engagement-evidenced by BAWAG's disciplined digital transformation and lowered cost/income ratio-positions the company to benefit from rising digital adoption in Europe, reducing cost-to-serve and boosting long-term operating margins.
Demographic tailwinds from aging populations in Western Europe are poised to increase demand for personalized, fee-based financial products (e.g., retirement planning), potentially expanding BAWAG's revenue streams and supporting sustainable fee income growth.
Strong capital ratios, substantial liquidity, and ongoing share buybacks provide flexibility to capitalize quickly on future M&A opportunities, which, given BAWAG's proven integration capabilities, can further accelerate earnings and revenue growth.
BAWAG's robust risk management, focus on conservative underwriting, and strategic allocation of excess liquidity position it to benefit from continued urbanization and economic growth in Central and Eastern Europe, supporting sustained loan growth and balancing asset quality, which should reinforce steady earnings expansion.

BAWAG Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming BAWAG Group's revenue will grow by 10.5% annually over the next 3 years.
Analysts assume that profit margins will shrink from 45.2% today to 43.4% in 3 years time.
Analysts expect earnings to reach €1.0 billion (and earnings per share of €13.97) by about September 2028, up from €795.7 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.7x on those 2028 earnings, up from 11.0x today. This future PE is greater than the current PE for the AT Banks industry at 11.0x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.9%, as per the Simply Wall St company report.

BAWAG Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The bank's high reliance on interest income and exposure to a low or declining interest rate environment in Europe-where even modest rate cuts or a prolonged low-rate scenario can compress net interest margins-poses a risk to future revenue and profitability.
BAWAG's core business remains concentrated in the DACH/NL region (Germany, Austria, Netherlands) with only limited diversification outside Western Europe, leaving it vulnerable to local economic downturns or credit cycle volatility, which could materially impact earnings through higher loan defaults or impairments.
Rising operating costs, including wage inflation from collective bargaining agreements and ongoing integration expenses from recent acquisitions, may pressure operational efficiency and net margins, particularly if cost reductions post-integration do not materialize as planned.
The European banking sector's mounting regulatory and legal requirements-including potential legal risks in Austria and higher regulatory charges-contribute to increased compliance and provision costs, thereby weighing on BAWAG's expense base and net profit.
Persistent competitive threats from fintechs, neobanks, and other non-bank lenders-combined with digital disruption-can erode BAWAG's market share, pressure fee income and customer retention, and drive further margin compression, directly impacting revenue growth and long-term profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €126.405 for BAWAG Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €149.0, and the most bearish reporting a price target of just €115.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €2.4 billion, earnings will come to €1.0 billion, and it would be trading on a PE ratio of 11.7x, assuming you use a discount rate of 6.9%.
Given the current share price of €111.1, the analyst price target of €126.4 is 12.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise BAWAG Group Price Target Amid Valuation Adjustments and Mixed Growth Outlook