Top 100 CIS Banks ranking: a partial comeback

After a tough 2015, banks in the Commonwealth of Independent States (CIS) saw a modest recovery in 2016, with overall assets and Tier 1 capital rising in dollar terms. The rise in oil prices in the second half of the year contributed to the sector upturn, given that several of the larger economies in the region are heavily dependent on hydrocarbon earnings.

Another factor was the somewhat more stable exchange rate environment, with most regional currencies posting smaller declines against the US dollar than in the previous year, while the Kazakhstani tengi and Kyrgyz som rose. However, the sector’s asset and Tier 1 capital growth was not strong enough to reverse the sharp declines of 2015.

Overall assets in the region’s 11 countries rose 6.88% to $186.32bn, with aggregate return on assets (RoA) standing at 0.61% regionwide. This followed a 20.46% drop in assets in 2015, when the region was affected by Russia’s recession, plunging currencies, lower oil prices and conflict in Ukraine. Tier 1 capital rose 16.12% in 2016 to $18.13bn, after a 30.52% drop in 2015.

Kazakhstan on top

Kazakhstan accounts for 20 of the banks in the CIS Top 100, six of the top 10 banks, and more than one-third of total assets: 36.77%, or $68.51bn, up 9.93% on 2015. Aggregate Tier 1 capital rose 19.35% to $7.16bn. The uptick came even as gross domestic product growth slowed to 1% from 1.2%, though it should be seen in the context of the big hit banks took in 2015, when combined assets fell by nearly 30% and Tier 1 capital by close to 40%.

Economic and political difficulties continued to weigh on Ukrainian banks, which account for 19 of the Top 100 and 17.53% of total assets. Aggregate assets fell 3.8% to $32.67bn, and RoA remained in negative territory at -3.26%. While pre-tax losses came to $1.07bn, they were much reduced, down 62.9% on the annus horribilis of 2015. Another sign that the worst may be over came from a 107.56% leap in Tier 1 capital, to $2.53bn. Performance in US dollar terms was affected by the hryvnia’s 13.79% depreciation against the currency, though again this drop was considerably smaller than that seen in 2015.

Azerbaijan, Georgia, Tajikistan and Uzbekistan saw their leading banks’ profits shrink, though none by as much as Kyrgyzstan, where the three banks in the Top 100 saw a 42.18% drop in pre-tax profits. The seven Azerbaijani banks in the Top 100 experienced a 17.05% drop in Tier 1 capital, while pre-tax profits fell 20.58%, with performance affected by recession in the once-buoyant hydrocarbon-driven economy. The manat slid 13.46% against the dollar as the central bank abandoned its US dollar peg in December 2015.

Halyk retains CIS crown

Once again the ranking is topped by Kazakhstan’s Halyk Bank, with $1.92bn of Tier 1 capital, up 24.61% on 2015. Assets grew 22.48% to $16.05bn, and pre-tax profits 3.37% to $463m. The performance was better than forecasts earlier in the year had suggested. The bank posted RoA of 2.89% and return on capital of 24.07%, while its cost-to-income ratio was 26.09%, indicating strong profitability.

In July 2017, the bank completed a takeover of troubled rival Kazkommertsbank (KKB) in a deal supported by the government and central bank. KKB itself comes third in The Banker’s 2016 rankings, with Tier 1 capital of $1.42bn, up 28.28% on 2015, though its assets fell by 2.56% to $14.6bn. KKB received a $7.5bn bailout in March 2017 via a sale of assets to the state-run bad bank. 

State-owned Belarussian lender Belarusbank retains second place, with Tier 1 capital of $1.45bn, up 1.82% on 2015, while assets fell by 2.69% to $12.38bn, delivering RoA of 1.45%. However, net profits almost doubled, to $180m. 

Fourth and fifth places in the ranking are taken by Belarus’s state-owned Belagroprombank, with Tier 1 capital of $525m, and Kazakhstan’s ForteBank, with $516m. ForteBank merged with two other lenders in 2015, and has since adopted a strategy of focusing on retail banking and smaller businesses, while strengthening its asset quality, helping it move up from seventh place in 2015.

Consolidation impact

As a result of consolidation in the regional banking market, there are four newcomers to the top 10 banks by Tier 1 capital. State Savings Bank of Ukraine moves up to sixth from 17th place; Kazakhstan’s Tsesnabank is in seventh, up from 14th; Kaspi Bank, also from Kazakhstan, is up to ninth from 12th; and Sberbank Kazakhstan ranks 10th, up from 13th in 2015.

Ukrainian and Armenian banks account for all but one of the top 10 banks by Tier 1 capital growth, with UkrSibbank leading with a 234.43% rise to $146m in 2016, followed by Armenia’s Anelik Bank (198.41% to $68m), and VTB Bank Ukraine (195.41% to $104m).