Still a top pick in Europe Erste has strong solvency (FL CT1 ratio of c.13.9% over the forecast period) and good asset quality (gross NPE ratio of 2.5% with c.54% coverage in H1 21), which allow for a steady dividend flow. At the current price we expect an average dividend yield of 6.2% in 2021-23e (including a special DPS of EUR1 in Q4 21). While these are common characteristics of many European banks, Erste stands out from the pack with regards to prospective profitability (c.11% ROTE in 2021-23e) and revenue growth (4.3% CAGR in 2020-23e vs 2% for the sector). Increasing our estimates further - we stay ahead of consensus Following Q2 results we increase our 2021-22-23e adj. EPS estimates by respectively 11%, 2% and 4% due to a combination of higher fees, lower provisions, lower costs and a lower tax rate. In the past 2 months we have increased our 2022e and 2023e adj. EPS estimates by 31% and 24% respectively and are currently over 13% and 11% above consensus respectively. Still too cheap Erste has outperformed the sector by 11% in the past 3 months. Yet it still trades at a small P/E discount despite a best-in-class balance sheet, a structurally higher profitability due to its presence in CEE, very good earnings visibility and strong momentum. We trim our TP marginally from EUR40 to EUR39.5 on lower prospective solvency.