Our estimates were too high... Following Q2 20 results we reduce our adj. EPS estimates for 2020/21/22e by respectively 16%, 19% and 12% primarily on lower NII and a higher tax rate. Nonetheless we reiterate our Outperform rating and EUR26 target price (higher solvency and a 1ppt reduction in the cost of equity offset lower earnings). ...but management NII guidance is too conservative For 2020 vs 2019 Erste guides for flattish underlying net loans, a slight NII, a mid-single digit fall in fee income, lower operating costs and a 65-80bps cost of risk. We are aligned with the upper-end of the cost of risk guidance and see operating costs declining by c1% y/y. We are however more optimistic on revenues. In our view NII will marginally increase y/y as: a) stated volume growth will be significantly higher than ''flattish underlying net loans'' due to positive FX tailwinds (CZ and HU), additional government guaranteed lending and the likely extension of the moratoria in some countries and b) Q2 included a negative one-off of EUR26m in relation to contract modifications (primarily linked to the moratoria) which is unlikely to occur in the same extent in future quarters. Asset quality. So far so good. Only c.10% of loans benefit from COVID 19 forbearance The gross NPE ratio was stable q/q to 2.4% and coverage of stage 3 loans increased by c1ppt to 57.7%. Loans under moratoria stand at 9%, or 7% excluding Hungary and Serbia where participation rates are very high due to the opt-out nature of the measure. A further c.2% of loans benefits from other COVID 19 forbearance measures. Somewhat surprisingly only c.EUR0.6bn of government guaranteed loans have been granted, c0.5% of total loans (71% average guarantee). Excess capital is building Erste''s Q2 FL CT1 ratio stood at 14.2%. On our estimate it will remain above 14% throughout the forecast period. With the dividend ban extended to Jan 2021 we remove the payment of the 2019 dividend, but now model a...