SEE banking sec­tor sees ro­bust profit growth, top lender Za­gre­backa turns to loss

Top 100 See - - Top 100 Banks - By Siana Mishkova

South­east Europe’s banking sec­tor re­mained largely stable in 2015 and 2016 amid stricter cap­i­tal re­quire­ments and low in­ter­est rate en­vi­ron­ment. Although as­set qual­ity re­mained a chal­lenge for the in­dus­try with high non-per­form­ing loan (NPL) lev­els hin­der­ing stronger credit growth, bet­ter op­er­at­ing con­di­tions in a re­vi­talised eco­nomic en­vi­ron­ment helped the re­gion’s big­gest banks im­prove their over­all earn­ings per­for­mance and boost as­sets.

The com­bined net profit of the Top 100 SEE banks for 2015 reached 1.45 bil­lion euro, well above the tiny 53.6 mil­lion euro profit re­alised by last year's top 100 lenders in 2014 (ex­clud­ing the huge 2.2 bil­lion euro loss of Bulgaria's col­lapsed Corp­bank). If we take the same 100 banks that made it into the 2016 rank­ings, their com­bined profit was again much higher, ris­ing from 545 mil­lion euro a year ear­lier.

The to­tal as­sets of SEE's 100 big­gest banks edged up 1.3% in 2015 to 251.4 bil­lion euro, with 62 lenders re­port­ing growth. The top three banks, ac­count­ing for 15% of the to­tal as­sets, re­mained the same as last year, as no. 1 and 3 - Za­gre­backa Banka and BRD – out­paced the pack, while BCR man­aged to keep its se­cond po­si­tion de­spite its slower growth. With an im­pres­sive 33% as­set growth im­pacted by a merger with Volks­bank Ro­ma­nia (VBRO), Banca Tran­sil­va­nia climbed by two spots to no. 4, while UNICREDIT Bul­bank went up to no. 6 from 8 on the back of a 17% or­ganic ex­pan­sion. On the other hand, NLB lost two places to no. 7 as its as­sets fell 2%.

Look­ing at the wider top 100 rank­ing, OTP Bank Ro­ma­nia was the best per­former, ad­vanc­ing by 18 spots to num­ber 45 with an 81% as­set ex­pan­sion af­fected by the con­sol­i­da­tion of Mil­len­nium Bank, which it bought for 39 mil­lion euro in Jan­uary 2015. On the neg­a­tive side, the as­sets of Al­pha Bank's Branch in Bulgaria shrank 71%, drag­ging it 52 po­si­tions down to the bot­tom of the ta­ble. In July 2015, Greece's Al­pha Bank agreed to sell its Bul­gar­ian unit to the lo­cal sub­sidiary of Greece's Eurobank EFG. The deal was com­pleted in March 2016.

Ro­ma­nia's largest pri­vately-owned lender, Banca Tran­sil­va­nia, shined with a record high profit of 534 mil­lion euro, up 5.5 times from 2014. Croa­tia's Hypo Alpe-Adria-Bank was the big­gest loser, end­ing up 333 mil­lion euro in the red. Out of the to­tal Top 100, 24 banks made losses, amount­ing to a com­bined 1.0 bil­lion euro in 2015, while 76 made prof­its of an aggregate 2.5 bil­lion euro. Nine lenders swung to profit last year, while 12 turned to loss, in­clud­ing leader Za­gre­backa Banka. As a whole, the bot­tom line of 57 banks im­proved year-on-year, while that of 43 wors­ened. In the 2015 rank­ing (ex­clud­ing Corp­bank), 26 banks booked losses, worth a com­bined 1.76 bil­lion euro, while 75 made prof­its of 1.82 bil­lion euro, with Za­gre­backa hav­ing the big­gest profit and BCR – the largest loss.

By coun­try, Ro­ma­nia was best rep­re­sented in the rank­ing with 21 banks, fol­lowed by Bulgaria with 18, and Ser­bia with 15, the same as last year. The num­ber of Slove­nian and Croa­t­ian lenders fell by one each, to 14 and 9, re­spec­tively, while that of Bos­nian and Al­ba­nian ones rose to 8 from 6 and to 7 from 6, re­spec­tively. Ro­ma­nia was also a leader in terms of as­sets with an 80 bil­lion euro aggregate bal­ance sheet of its Top 100 SEE rep­re­sen­ta­tives, or al­most a third of the re­gion's to­tal, fol­lowed by Croa­tia with 47.3 bil­lion euro, Bulgaria with 42.6 bil­lion euro, Slove­nia with 34.7 bil­lion euro, and Ser­bia with 23 bil­lion euro. The data sug­gests that Ser­bia of­fers the most favourable op­por­tu­ni­ties for merg­ers and ac­qui­si­tions with many smaller banks, while the banking ac­tiv­ity in Croa­tia is con­cen­trated in sev­eral big lenders, with its low­est rank­ing bank at 55th spot. The top 10 of the rank­ing was again dom­i­nated by Ro­ma­nia with five banks, Croa­tia had three rep­re­sen­ta­tives, and Bulgaria and Slove­nia had one each.

Hav­ing in mind that the SEE banking sec­tor is dom­i­nated by western Euro­pean banks, hold­ing roughly two thirds of as­sets, Italy stands out in our Top 10 rank­ing, ac­count­ing for 40% of the as­sets of the 10 big­gest lenders, with UNICREDIT's units in Croa­tia, Bulgaria and Ro­ma­nia hold­ing a to­tal of 29.5 bil­lion euro in as­sets and In­tesa San­paolo's Croa­t­ian sub­sidiary hold­ing 9.1 bil­lion euro. Next comes Aus­tria with a 29% share, as Erste's units in Ro­ma­nia and Croa­tia have a com­bined 20.9 bil­lion euro of as­sets and Raif­feisen's Ro­ma­nian arm holds an­other 7 bil­lion euro. France also made it to the Top 10 with So­ci­ete Gen­erale's Ro­ma­nian unit ac­count­ing for an 11% share, joined by Banca Tran­sil­va­nia, in which the EBRD is the largest share­holder with a 15% stake, and Slove­nia's sate-owned NLB, which was res­cued by the govern­ment in 2013 and is now set to be pri­va­tised via the stock ex­change in the com­ing months.

The num­ber of new­com­ers to the 2016 Top 100 Banks rank­ing was six, with Sparkasse Bank Sara­jevo en­ter­ing high­est, at 89th po­si­tion A year ear­lier new­com­ers were five, as Banca So­ciala was the top per­former at 78th spot. At the same time, the en­try thresh­old fell to 504 mil­lion euro from 545 mil­lion euro.

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