The bank, which operates in seven countries across the region, reported a net profit of 593.6 million euros ($653.85 million) in the first quarter, beating analysts' average estimate of 543.0 million euros provided by the company.

Its net interest income, a key metric for banks, rose 27.1% year-on-year to 1.77 billion euros in the quarter, slightly above the 1.72 billion euros expected by analysts.

The group cited favourable interest rate hikes, mainly in Austria, Hungary and Romania, and a larger customer loan volume across all markets as reasons for the strong results.

"Our bottom line also benefitted from operating expenses that were in line with expectations and from a risk environment that remained benign," Chief Financial Officer Stefan Dörfler said in a statement.

Dörfler added the group was "well underway" to meet its full-year guidance.

The group confirmed its 2023 outlook for net loan growth in the mid-single digits and return on tangible equity of between 13% and 15%.

Global banking shares plunged last month after the collapse of Silicon Valley Bank and Signature Bank in the U.S. and the forced takeover of Credit Suisse by UBS in Switzerland, but markets have since largely calmed.

Erste Group shares have been gradually gaining ground since the start of this month, after dropping by around 14% in March following the collapse of SVB.

($1 = 0.9079 euros)

(Reporting by Anna Mackenzie and Philipp Krach in Gdansk; Editing by Milla Nissi)