Albania: Banka Kombetare Tregtare
In what has been one of the most challenging years in Albania since the financial crisis hit in 2008, Banka Kombetare Tregtare (BKT) impressed The Banker’s judges with a comparably low non-performing loans (NPL) ratio as well as increases in its assets and net profits.
Bank of the Year Awards 2014
“BKT shot [past] its competitors in a time of economic slowdown becoming the largest and most profitable bank in Albania, increasing its assets by more than 11% and reaching… a profit of $35.3m, keeping its NPL at less than one third of the Albanian banking system average at 7% at the end of third quarter of 2013,” says Seyhan Pencabligil, the bank’s CEO. Across the Albanian market, total assets increased by less than 3% in 2013, while NPLs across the country’s banking sector jumped to 25%.
BKT increased its asset base to Lk27,255bn ($243bn) in 2013, making it the largest bank by assets in the country. In the utility bill payment business, BKT’s 33,000 utility payments accounted for almost one-third of the market in Albania.
In the past year, BKT increased its number of ATMs, opened three more branches, bringing the total number to 87, and relocated some branches and ATMs to reflect demographic changes in the country. Meanwhile, BKT’s internet offering is widely used by its clients and almost 42% of last year’s online banking transactions in Albania were through BKT.
In 2013, BKT also launched a product to increase financial inclusion to first-time homeowners, by providing affordable loans and interest rates. “We want to become an international player in our region by opening or acquiring another bank in a different country,” says Mr Pencabligil. “We see opportunities in continuing the deleveraging process of… banks [in the Economic and Monetary Union of the EU] in south-east Europe.”
Armenia: Ardshinbank
Ardshinbank is Armenia’s Bank of the Year 2014. Strong growth of its asset base and net profits have gone hand in hand with a transformation dating back to 2012, which saw the bank evolve from a Soviet-style banking model to its current form.
The bank’s cost-to-income ratio decreased from more than 50% in 2011 to about 42% as of 2013, while profitability also improved. Return on equity for 2013 was 3.5 percentage points higher year on year at 16.1%. The figure for 2011 was 7.7%.
Assets and deposits have also grown by more than 1.5 times since 2011.
“Today, the bank is the leading services provider in both personal and commercial banking sectors,” says Mher Grigoryan, CEO at Ardshinbank. “We are the main bank for most of the leading corporates in Armenia, while our retail customer base numbers more than 220,000 – meaning that every fourth household in Armenia is banking with us.”
Ardshinbank’s branches are present in all the regions of the country, both urban and rural and while the bank’s main focus was traditionally on corporate and retail banking, it now plans to also expand in micro-lending in rural areas.
Besides direct lending to its customers, Ardshinbank started a new initiative to co-operate with microfinance institutions in the country, providing them with liquidity for lending in rural areas.
In addition to its cash machines, Ardshinbank further offers services through a large network of e-terminals, which allow customers to pay expenses, such as utility bills or loans, as well as to pay in cash.
As a basis for further growth, Ardshinbank is considering expanding its capital base by raising funds in international capital markets in the form of bond issues, according to Mr Grigoryan. At the end of 2013, Ardshinbank had Tier 1 capital of 39.34bn dram ($94.8m) – a 19.5% increase year on year.
Azerbaijan: Unibank CB
Bolstered by economic growth related to the country’s oil export revenues, Azerbaijan’s banking sector enjoyed a good year for lending in 2013. In an increasingly competitive banking market, Unibank won the Bank of the Year 2014 award in Azerbaijan.
Unibank drastically increased its net profits, from 4.9m manat ($6.25m) in 2012 to 22.5m manat at the end of 2013, in part thanks to its significant expansion in retail banking and credit cards.
In the past 15 months, Unibank has increased its customer base 10 times from 50,000 retail clients to more than 500,000, which it mainly provides with credit cards and consumer loans of up to €10,000.
One of Unibank’s strategic projects is Albali, a credit card that offers holders interest-free instalments on products and services bought at one of Unibank’s more than 1000 partners. In addition to that, its Albali Plus card is based on an internationally recognised MasterCard and provides holders with a grace period and an interest-bearing account.
In the past year, Unibank has made substantial investment in IT and services, including a special department for complaint management. It also opened another 11 branches and invested in the strategic relocation or renovation of some of its existing network. Apart from its network of 38 branches, the bank’s multichannel strategy provides support through its online help chat as well as its call centre.
Unibank also introduced new tools and products such as money transfers via its cashpoints and plans to invest heavily in the development of its multichannel strategy.
Unibank, which is majority-owned by local business men and women, with additional stakes held by the European Bank for Reconstruction and Development and Germany’s Kreditanstalt fuer Wiederaufbau, is putting an emphasis on strong institutional and corporate governance.
Belarus: BPS-Sberbank
BPS-Sberbank is our Bank of the Year for 2014 in Belarus. In the past year, BPS-Sberbank has reported solid results with Rbs384bn ($35.4m) of net profits, up from Rbs234bn in 2012, and an 11% increase in assets.
While the bank’s non-performing loan ratio increased slightly from 1.1%, it still remains low at 1.75%. BPS-Sberbank’s Tier 1 capital was boosted by nearly Rbs1000bn in 2013 to Rbs3429bn.
“One of the main challenges in the past year was the toughening of bank regulatory capital requirements,” says Vasily Matyushevsky, BPS-Sberbank's chairman of the board. “In these circumstances, efficient measures were taken to increase the bank’s capitalisation [through] direct investment into the authorised capital of an amount equal to $20m by the principal shareholder Sberbank of Russia, as well as through a capitalisation of profits.”
To serve its corporate clients, BPS-Sberbank uses remote banking services including its smartphone and tablet app, Vypiska Mobile. The app allows the corporate customer to control the company’s accounts on their mobile device – the first such service offering in Belarus. Electronic services contributed to the increased use of remote banking products by BPS-Sberbank’s corporate customers, with 87% uptake at the end of 2013. Meanwhile, the transfer of operations of BPS-Sberbank’s private individuals into remote channels is also under way.
“We keep moving forward and are actively implementing the development strategy for 2014 to 2018,” says Mr Matyushevsky. “Key priorities of the bank for this period are customer focus, efficiency improvement, innovation management, attention to global trends in the [financial] world and new technologies.”
For the coming year, BPS-Sberbank sees an opportunity in the cross-selling of products in the bank’s insurance, leasing, investment banking and consulting services businesses, as well as in the strengthening of its co-operation with major shareholder Sberbank.
Bosnia-Herzegovina: Raiffeisen Bank Bosnia-Herzegovina
Raiffeisen Bank Bosnia-Herzegovina’s strong performance and impressive market share are the reasons for the lender being awarded the title of 2014’s Bank of the Year in Bosnia-Herzegovina. In a market that is still feeling the effects of the global economic crisis, the bank increased its net profits by 16.4% to Km42.5m ($27m) in 2013, while Tier 1 capital and assets also grew.
In its corporate segment, Raiffeisen focused on capital-light products, such as cash management, trade finance and treasury products, where it achieved a considerable market share and a fee income ratio of more than 42% in 2013. Meanwhile, in its retail business, the bank recorded a 5.22% increase in its loan portfolio at the end of the first six months of 2013, while savings grew by 4.08%.
“Our biggest success is understanding the needs of our clients and retaining their loyalty,” says Karlheinz Dobnigg, CEO at Raiffeisen Bank Bosnia-Herzegovina. “Our focus has been on raising the client service quality, but also on the optimisation of our cost structure and business processes and adjustments to new business conditions. We developed new products for private individuals, corporate and small and medium-sized enterprises clients [tailored] to their needs and requirements.”
In 2013, Raiffeisen set a focus on alternative sales channels and promoted the use of its electronic channels online as well as through its new mobile banking service, R‘m’B.
“In the coming year, we will continue improving our services, as well as keeping pace with new technologies and solutions in the banking environment in order to provide more comfortable banking to our clients,” says Mr Dobnigg. “However, we will not neglect traditional banking as an inseparable part of our business. Due to our broad experience, good market position and skilled and professional workforce, we are ready to respond to all challenges ahead of us.”
Bulgaria: UniCredit Bulbank
UniCredit Bulbank’s innovative approach and leading market position have made itThe Banker’s Bank of the Year 2014 in Bulgaria. In a sector characterised by consolidations and market exits, Bulgaria’s largest bank by assets and Tier 1 capital posted another increase in 2013. Capital rose by 4.7%, while assets were up 6.9% to Lv13.54bn ($8.58bn).
Furthermore, the volatility in the banking sector experienced in 2014 due to political instability and the run on two competitor banks did not have a negative impact on UniCredit Bulbank. Instead, and without active promotion, thousands of new clients were attracted to UniCredit Bulbank, according to data for the first six months of 2014 from the Bulgarian National Bank.
“Over the past year, we have continued to improve our reputation, increasing the positive gap versus our competitors,” says Levon Hampartzoumian, chief executive at UniCredit Bulbank. “The results of the customer satisfaction survey showed that the bank preserved its number one market position in both the retail and corporate segments, with a strong competitive advantage.”
In 2013, UniCredit Bulbank opened the first branch featuring a new concept to be rolled out across UniCredit Group’s central and eastern European division. The Branch of the Future is aimed at making the banking experience more attractive and hassle-free for customers with more interactive products than in a conventional branch.
UniCredit Bulbank also was the first bank in southern and eastern Europe to implement the Cash M service, which allows money to be sent through cash points.
“We will continue to be the most innovative bank in Bulgaria,” says Mr Hampartzoumian. “We are monitoring the changes in the behaviour of our clients and we are actively listening to them to be ready to answer their needs. We will also continue to work on the simplification of the processes.”
Croatia: Raiffeisen Bank Croatia
Raiffeisen Bank Croatia’s performance against the backdrop of a challenging macroeconomic environment has convinced the judges to award it the title of Bank of the Year in Croatia for 2014.
In a market of negative real economic growth rates and subdued credit demand in the corporate segment, Raiffeisen put a focus on adapting to the business environment and reducing expenses.
While the bank’s cost-to-income ratio edged slightly higher to 51.73% and profits dropped by 1.39 percentage points to 5.09% return on equity in 2013, Raiffeisen succeeded in lowering its non-performing loan ratio by 0.4 percentage points to 9.87%.
“A timely adjustment of the business model to market changes, integrating the risk management function in it, has resulted in reduced risk-related portfolio losses,” says Michael Müller, chief executive at Raiffeisen Bank Croatia. “Thanks to a parallel optimisation of business processes, we have managed to reduce operating expenses and achieve profitability growth despite a more challenging business environment.”
The focus on the bank’s internal processes underlines Raiffeisen’s change in business strategy following the halt in the growth of loans and sale of other financial services to clients.
In a sluggish lending environment, Raiffeisen was largely providing working capital credit facilities, which made use of funding by supranational development banks or the Croatian Bank for Reconstruction and Development.
During 2013, Raiffeisen has launched a mobile banking service called FotoNalog, which provides the option of preparing payment data by using the phone’s camera, while it also supports scanning of barcodes and payment slips to pay invoices.
“With no expected recovery in demand for loans or other financial services, our sales growth is planned to stem from modernisation,” says Mr Müller. “Technological advances will both increase our operating efficiency and enable the delivery of a more innovative service tailored to our customers’ requirements via modernised distribution channels, fostering long-term relationships.”
Czech Republic: Ceská sporitelna
Ceská sporitelna has impressed The Banker’s judges with a solid performance in a difficult market. Faced with a low interest rate environment in the Czech Republic over the past year, the bank has managed to maintain strong profitability and even lower its non-performing loan ratio from 4.4% in 2012 to 3.9% at the end of 2013.
“We experienced some adverse developments in the market with interest rates at record low levels and pressures to further decrease banking margins,” says Pavel Kysilka, CEO at Ceská sporitelna. “At the same time, we’ve been challenged by the changing demographic and behavioural features of the Czech population. Still, we managed not only to keep our profitability, but also to keep upgrading our services to customers.”
While net profits fell by 6.2% to Kcs15.59bn ($702m), return on equity still stood at 16.2% at the end of 2013.
In the past year, Ceská sporitelna has launched a number of innovative products, including a mobile phone app for its corporate clients – Business 24 Mobile Bank – which allows them to manage their accounts via their mobiles.
In the corporate segment, Ceská sporitelna also worked on the initial public offering of shares in domestic brewery company, Pivovary Lobkowicz Group. It was also involved in the largest corporate bond issue in Czech koruna to have taken place in the past decade, which was for gas transmission system operator NET4Gas.
Ceská sporitelna also became the first bank in the country to introduce a separate brand for personal banking services, with its new ‘Blue’ brand.
“We are ready to pioneer some breakthrough projects, such as retail services supported by business-to-business partnerships [in the next year],” says Mr Kysilka. “Also, we’ve been preparing the roll out of a new branch type that could help us explore new ways of servicing customers in our branches.”
Estonia: SEB Bank Estonia
SEB Bank Estonia made a compelling case to The Banker’s judges, leading to it being awarded 2014’s title for the Bank of the Year in Estonia.
The macroeconomic environment in Estonia was not too favourable in 2013, with real gross domestic product (GDP) growth falling to 0.8%, while geopolitical issues around Ukraine and Russia in 2014 could cause GDP to slow down further.
Still, SEB reported stable profits of €72.8m and return on equity of just below 10%, while significantly lowering its non-performing loan portfolio, despite the market backdrop.
“There was a significant improvement in the quality of loans, with the proportion of non-performing loans dropping below 2%, a level not seen since early 2008,” says Riho Unt, CEO of SEB Estonia. “Despite low business activity, SEB Bank’s financing portfolio of companies grew by 10% in 2013 and despite cost control and introduction of some new fees, the bank was able to improve its perception among customers and partners.”
Growth of 10% is also expected for SEB’s corporate loan and leasing portfolio in 2014.
SEB was involved in almost all of Estonia’s big corporate banking transactions related to buyouts and mergers and acquisitions, according to Mr Unt, who expects to continue to see opportunities in this field. “We see SEB as lead advisory for our customers and lead arranger for syndicates introduced in the Estonian market,” he says.
In the past year, the clients of SEB Bank have increasingly opted for the electronic channels over branch visits when using banking services. About 99% of bank transactions at SEB were made via e-channels, either using internet or mobile banking. All electronic banking services mean that the clients are less dependent on the physical presence of the bank facilities, reaching wider parts of the community all over the country and even aboard.
Georgia: TBC Bank
TBC Bank’s successful initial public offering (IPO) and its strong financials make it The Banker’s Bank of the Year 2014 in Georgia. In 2013, TBC increased its net profits by 27% to La124m ($70.41m), returning 18.7% on its equity.
The bank also grew its asset base, by 17.9% in 2013, while total loans increased by 16.7%. TBC’s non-performing loans are low, at 1.1%, and its cost-to-income ratio slightly decreased, year on year, by 4.37 percentage points to 52.1% at the end of 2013.
“We set ourselves the strategic challenge of achieving clear leadership in the retail segment of the banking sector and we are now accomplishing this,” says Vakhtang Butskhrikidze, CEO at TBC Bank. “We have been the market leader in retail deposits for a long period and for the first nine months of 2014 we have also been the leader in retail loans under International Financial Reporting Standards.”
The past 12 months have been important for TBC, as the bank raised $239m through a listing of its shares through global depository receipts at $13 each on the London Stock Exchange. This valued the company at $640m.
“This was the largest ever IPO by a Georgian company and our share price is one of the few among recent new listings to have out-performed the market since then,” says Mr Butskhrikidze.
In the past year, TBC Bank has launched several innovative solutions, including Georgia’s first mobile sticker payments. The stickers are linked to a customer’s debit card and can be attached to any object for fast payment through Visa PayWave technology.
Apart from in retail, TBC sees continuing opportunities in the fast-growing small and medium-sized business and microfinance sectors, which offer considerable scope for increased penetration of banking services, according to Mr Butskhrikidze.
“To strengthen our position in microfinance, we acquired Bank Constanta and we intend fully to integrate its operations in 2015, significantly increasing our geographical coverage,” he says.
Hungary: K&H Bank
In a political environment that has put increasing pressure on lender’s profitability through bank levies, K&H Bank stood out in Hungary. While profits at the bank were impacted, its figures contracted less than those of some of its competitors. K&H made net profits of Ft17.5bn ($11.1bn), which was 15% lower than in the previous year, while return on equity reached 8.3%.
Meanwhile, the bank increased its disbursement of new mortgage loans to households, and investment loans to corporations, while also increasing its market shares in deposits, according to Hendrik Scheerlinck, CEO at K&H Banking Group. The group also reached the highest client satisfaction rates among financial institutions in Hungary, he adds, which has led to an increasing number of customers choosing K&H as their primary bank.
The bank is working on a growth strategy, called ‘Smart’, which will improve client penetration. K&H plans to have a stronger focus on its clients, while extending its multi-channel strategy.
“K&H will evolve from a branch-centric distribution model to an integrated bank and insurance multi-channel distribution model where channels will have a more equal importance,” says Mr Scheerlinck. “Advisory will remain a core element of our value proposition but remote advisory will be created and gain more ground.”
In line with this strategy, K&H has already introduced video meetings, allowing clients to remotely access investment advisory services from their homes – even when the branches are closed in the evenings and on Saturdays. Furthermore, for customers of smaller branches, K&H has introduced a video conference-based mortgage lending service, which allows clients to discuss their needs with a mortgage expert in a bigger K&H branch through a video meeting.
Kosovo: Raiffeisen Bank Kosovo
Raiffeisen Bank Kosovo impressed The Banker’s judges with its overall performance, driven by significant loan growth, to be awarded the title of Bank of the Year in Kosovo.
In 2013, Raiffeisen recorded a market share of more than 50% in corporate loans, while its share across all credit grew to 26%, making it the largest lender in Kosovo. Retail lending was up 3.7% year on year, net profits grew by 20.7% to €15.2m year on year and assets increased by 11.1% to €689.1m.
“The main challenge was the profitable growth of the bank in a difficult macroeconomic environment and with increasingly price-driven competitors,” says Robert Wright, chief executive at Raiffeisen Bank Kosovo. “To overcome the pricing challenge… we focused on… customer service, where we significantly improved our performance in all segments, and… the development and launch of market-leading digital banking services, which improved our customer experience and also reduced our operating costs.”
Raiffeisen Bank saw its cost-to-income ratio fall by 3.8 percentage points year on year to 54.5%.
Kosovo’s banking sector has faced challenges due to the lack of a government following inconclusive elections in June 2014 and a failure to find a solution to the problem, says Mr Wright.
“[Next year] will be a year of continuing to develop our competitive advantages in areas such as customer service, distribution networks and digital banking,” he says. “We will also continue to grow our loan portfolio with a specific focus on mortgages, credit cards and working capital loans for our business customers. Growth of our subsidiary businesses in leasing and insurance brokering will also be a high priority as there are significant opportunities in these markets.”
Latvia: SEB Bank Latvia
An improvement across profits, costs and the non-performing loan ratio has seen SEB Bank Latvia win this year’s Bank of the Year award for Latvia. The bank improved its net profits by €6m year on year in 2013 and saw return on equity increase from 4.7% to 6% – despite having to deal with one-off costs related to the introduction of the euro in Latvia in January 2014.
“Our support for our clients to introduce the euro, to deal with EU-Russia sanctions and face other challenges has strengthened our relationships and helped us to improve the returns for our customers and our shareholders,” says Ainars Ozols, CEO of SEB Latvia.
SEB saw its customer base increase by 12.5% among private individuals and by 12.2% in the small to medium-sized enterprises bracket. Deposits in SEB increased by 19% to reach €2.12bn, while loans stayed stable at about €2.92bn.
SEB has extended its use of contactless card technology, which allows for payments in public transport and school canteens in the Jelgava municipality, and has also introduced the first contactless credit card, Dinamo.
SEB is keen to help improve its clients’ financial literacy. In preparation for the introduction of the euro, it launched a ‘banking café’ concept to interact with clients. In the SEB Euro Café, customers were able to obtain information on the euro using tablet computers and other materials. Since the euro introduction, customers have been able to visit the Daily Café to receive financial advice while having lunch.
“The banking environment is becoming more and more challenging both from the economic and regulatory perspective,” says Mr Ozols. “Nevertheless, the key to success still remains the same: keep your focus on clients’ needs and deliver high-quality services. We see that our strategy – to be the trusted partner for customers with aspirations – is bearing fruit in Latvia and across other Baltic markets as well.”
Lithuania: SEB Bank Lithuania
SEB Bank Lithuania is The Banker’s Bank of the Year in Lithuania, posting profits of 212.3m litas ($76.5m) in 2013 – a significant increase on the previous year – while also improving its asset and Tier 1 capital base.
It signed 4.6bn litas-worth of new loans to corporate and private individuals in 2013, a 12% increase compared with 2012, underlining SEB’s position as Lithuania’s largest bank by assets. Special attention was paid to mortgage products, as Lithuania’s real estate market is showing signs of recovery. SEB held events focusing on Lithuanian real estate and lending market trends, and brought together both a real estate advisory firm, developer, and a construction service provider. SEB also increased its deposit portfolio from 12.8bn litas in 2012 to 13.2bn litas in 2013.
“In the past 12 months, SEB maintained focus on corporate and individual financial advisory, fulfilling our home bank strategy… [of] being a long-term customer relationship bank, offering modern universal banking services, providing them in a professional and convenient way, taking into consideration each customer’s needs and expectations,” says Raimondas Kvedaras, CEO of SEB Bank Lithuania. “Going along this chosen path, we paid significant attention to improving our daily banking services, presenting new opportunities to clients, and running client consulting campaigns.”
In 2013, SEB launched a redesigned and upgraded internet banking system, which in part contributed to 46,000 additional customers signing up for internet banking throughout the year. At the end of 2013, SEB had 1.1 million internet banking customers.
“Our professional advisory is the greatest added value we have to offer, helping us earn customers’ trust as a partner every day, supporting them in fulfilling their ambitions,” says Mr Kvedaras. “This… is the cornerstone of our bank’s vision and we will adhere to it when implementing various internal and external projects or campaigns in the future.”
Macedonia: NLB Tutunska Banka AD Skopje
Strong profit growth at NLB Tutunska Banka AD Skopje and a stable non-performing loan (NPL) ratio have led The Banker to name NLB the Bank of the Year for Macedonia. The bank recorded profits of MKD1.065bn ($21m) in 2013 – more than double the figure from the previous year – despite pressure on credit growth derived from weak economic activity.
“The bank’s sound risk policies allowed us to outperform the [rest of the country’s] banking sector,” says Gjorgji Janchevski, CEO of NLB Tutunska Banka AD Skopje. He adds that NLB maintained a stable NPL ratio of 7.8% and a steady deposit base, as well as reaching a capital adequacy ratio of 15.4% and a 12.4% coverage ratio for the total loan portfolio.
“The good quality of the portfolio… enabled us to finish another successful year with growth [in our] customer base and increased profitability of 15% return on equity,” says Mr Janchevski.
In the past year, the bank has increased its operations with micro, small and medium-sized businesses (MSMEs), which has helped to increase its operating margin. In the coming year, NLB aims to increase sales and profitability by offering more financial support for MSMEs, as well as through increased retail operations. It is anticipated that this will lead to an increase in the bank’s customer base and diversify its income sources as well as ensuring stable growth of its return on equity, according to Mr Janchevski.
“The bank will use a multi-channel sales strategy and intensify cross-selling activities between the corporate and retail segment, and retail to retail, in order to provide comprehensive services and easy access to its products, for which new investments in… the branch network and electronic channels are planned,” he says.
Montenegro: Société Générale Montenegro
Société Générale Montenegro is our Bank of the Year in Montenegro, thanks to its significant rebound in 2013, with profits up 25% to €3.7m. This came after a year of profit contraction in 2012. Assets also increased by 12% in 2013 to €348m – a trend which is continuing in 2014.
Non-performing loans (NPLs) are a problem in Montenegro. The ratio for the whole banking sector reached 18.5% at the end of June 2013, up from 16.9% at the end of 2012, according to a paper by the European Commission. While Société Générale Montenegro also saw its NPL ratio rise, it still remained far below market average with its rise from 2012’s 5.93% to 8.64% at the end of 2013.
This year has been a challenging one for Montenegro’s economy and thus its banking sector. Gross domestic product growth in 2014 decreased to a mere 0.3% in the second quarter of the year, compared to 2.9% in the second quarter of 2013.
This contributed to a more challenging credit environment in 2014, which saw banks’ loan portfolios shrink. Nevertheless, Société Générale Montenegro achieved an additional 4% increase in retail loans and 4.5% in corporate loans in the first half of 2014 compared with year-end 2013. Deposits also grew – by 8% for retail and 7% for corporate clients.
The Banker’s judges were impressed by Société Générale Montenegro’s SOe-banking service for both retail and corporate clients, which offers access to account statements via text message, while the innovative SMSConto allows clients to pay their monthly bills through their mobile phones by text message. Furthermore, through its La Rata MasterCard, clients get the opportunity to pay off their credit card bills in instalments without having to pay interest.
Poland: PKO Bank
PKO Bank is The Banker’s Bank of the Year 2014 in Poland. Over the past 12 months, its position in the Polish banking sector has been strengthened by the acquisition of the Polish operations of Nordea, making it the largest bank by assets in the country. With 199bn zlotys ($58.57bn) in assets at the end of 2013, the takeover increases PKO’s sales network by 25% in Poland’s largest cities, while increasing its ‘affluent’ customers by 8%.
PKO estimates that the acquisition will increase the bank’s scale of operations by 16%. Following the integration, estimated earnings per share are expected to rise by nearly 9%, with return on investment of about 13%. It is estimated that gross synergies will be worth 224m zlotys following the completion of the integration process in 2017.
“The acquisition of Nordea assets has already yielded both cost and revenue-side synergies,” says Zbigniew Jagiello, president of the management board at PKO Bank Polski. “We have expanded the operations and developed new competencies, thereby creating sustainable shareholder value.”
While PKO’s return on equity fell from 15.9% in 2012 to 13.2% in 2013, this figure was still among the highest in Poland and edged marginally higher in the first quarter of 2014 to 13.3%.
In the past year, PKO has introduced several innovative new products, including PKO Junior, an account for children under the age of 13 and their parents. PKO Junior includes a personal account under parental control as well as prepaid cards for children.
In the coming year, PKO aims to continue to build a solid foundation to develop competitive advantages and new revenue sources, according to Mr Jagiello.
“We will expand our competencies in corporate banking, and particularly in servicing multinational companies,” he says. “We intend to open corporate branches abroad, among others, in Germany, the UK and France.”
Romania: Raiffeisen Bank Romania
Raiffeisen Bank’s Romanian operations outperformed the country’s economy, reporting an 18% rise in profits in 2013 as well as higher assets, which made it 2014’s Bank of the Year in Romania.
The slow recovery of the economy was reflected in the need for additional provisions, while demand for loans remained sluggish due to uncertainty over future household income and investment opportunities.
Still, Raiffeisen kept its cost-to-income ratio stable at 57% and saw its non-performing loans increase only slightly from 7.2% in 2012 to 8.7% in 2013.
Raiffeisen finished 2013 with return on equity of 17.2%, strongly outperforming a banking sector average of 1.3% after the industry was widely hit by losses.
“Raiffeisen Bank continued to play its central role in financing the economy by investing in projects of individuals and businesses to support growth with loans to the value of €1.2bn,” says Steven van Groningen, chief executive at Raiffeisen Bank Romania, adding that the bank also succeeded in growing deposits by 15% year on year.
For the bank, 2013 also meant the takeover and integration of Citibank’s Romanian consumer portfolio, which came with more than €90m in gross assets and more than €175m in deposits, as well as 125 employees. The transfer of almost 100,000 customers from Citi to Raiffeisen was performed seamlessly and achieved two months ahead of schedule.
“Developing a long-term partnership with our clients remains one of our main objectives for the months to come,” says Mr van Groningen. “We are pleased that our small and medium-sized enterprises and premium client base registered a high increase this year and we hope we’ll manage to enlarge all the other segments. For that we need to continue to deliver high-quality financial solutions through superior technology that reach our customers’ multiple needs.”
Russia: Credit Bank of Moscow
Despite only operating in the Russian capital and the region surrounding it, Credit Bank of Moscow’s performance in the past year has been impressive enough to earn it the title of 2014’s Bank of the Year in Russia. The bank’s strong profit generation, relatively low cost-to-income ratio and low non-performing loans (NPL) levels were among the factors that helped it earn the award.
In 2013, net profits increased by about 54% on 2012 to Rbs8.9bn ($195m), with return on equity of 20.1%.
“We delivered sustainable growth in our core business segments accompanied by robust margins,” says Vladimir Chubar, chairman of the management board at Credit Bank of Moscow. “We continued to build up our international capital markets presence with a syndicated loan issued in 2014, which became a resounding success in the face of a tough environment.”
The bank specifically targets high-quality large and medium-sized corporates, while maintaining an emphasis on the wholesale trading industry and expanding servicing of Russian blue-chip clients. It further developed a strategy to capitalise from its well-developed corporate client base to grow the bank’s retail business via cross-selling to employees of corporate customers. The aim is to reach a retail client share of 35% by the end of 2014.
Credit Bank of Moscow grew its assets by 47% on 2012 to Rbs454bn in 2013, while keeping its cost-to-income ratio down at 31.2% and NPLs at a low level of 1.3%.
“Robust risk management will be the cornerstone of further growth in the coming year, [while] maintaining core share of retail and wholesale trading companies in the loan portfolio,” says Mr Chubar. “In addition to individual customer lending development, the bank will continue to search the market for opportunities [to acquire] new high-quality corporate customers.”
Serbia: Raiffeisen Bank Beograd
Serbia’s Raiffeisen Bank Beograd has grown its customer and asset base convincingly with an asset quality that outperforms its peers, despite the challenging macroeconomic environment and a banking sector characterised by high non-performing loans and a lack of creditworthy demand.
In 2013, Raiffeisen increased its customers in the small business segment by 4% and executed 3% more domestic and foreign currency payments. Small business assets grew by 3% and liabilities by 25% compared with year-end 2012.
In the retail segment, client reward initiatives contributed to a 13% increase in the number of customers, while in corporate banking, maximised usage of supranational funding from the European Investment Bank as well as state-subsidised loans helped Raiffeisen achieve a better-than-expected performance in 2013.
“We remained the bank of choice for the majority of large corporations and multinationals in Serbia,” says Zoran Petrovic, chairman at Raiffeisen Bank Beograd. “In retail, several cost-oriented initiatives… and branch network optimisation enabled us to have lower operating expenses than usual. We managed to increase our customer base and revenues, which overall resulted in the best cost-to-income ratio and financial result in the history of [our] retail [banking operations].”
While Raiffeisen’s non-performing loans ratio increased year on year from 10.5% in 2012 to 11.2% in 2013, the ratio is still relatively low compared with Serbia’s 21.1% banking sector average in 2013.
Profits remained stable at about RSD6.2bn ($63.9m), with return on equity down to 9.9% from 2012’s 11.3%. This, however, is still significantly outperforming the market, which on average made a loss in 2013. As of August 2014, returns were still below 6% for Serbia’s banks, according to the National Bank of Serbia.
“To stay on top in a very competitive environment, we need to… continue further optimisation of the organisation,” says Mr Petrovic. “We will continue investing in new technologies [and] in our staff.”
Slovakia: Slovenská sporitelna
With profits largely outperforming its peers, Slovenská sporitelna is The Banker’s Bank of the Year in Slovakia. A return on equity of close to 16% was the highest among all Slovakian banks in 2013, which came despite continuing regulatory pressures.
The Slovakian banking sector has been facing a number of challenges, including government initiatives related to consumer protection and a bank levy to be paid by all banks and branches of foreign banks. Still, Slovenská sporitelna was able to keep its cost-to-income ratio stable at just under 43%, thanks to a focus on operational efficiency, while also lowering its non-performing loan ratio.
With a Tier 1 capital ratio of more than 20% at the end of 2013, Slovenská sporitelna has been able to benefit from its capital and liquidity situation by improving its market position.
“Amid intensifying competition, Slovenská sporitelna was able to solidify its leading position in its core segment of retail loans,” says Jozef Síkela, chief executive of Slovenská sporitelna. “Our retail loan portfolio rose by 11% year on year as of September and the bank’s market share also improved markedly over the past year. Despite high capital adequacy, Slovenská sporitelna has maintained return on equity of more than 14% so far in 2014, which places it among the EU’s top banks.”
The bank has also developed a QR code-based payment execution that allows clients to add standardised codes, which include all payment instructions, to an invoice. The invoice can then be paid simply through taking a photograph of the code in a mobile app, which will execute the payment.
“We see potential for further market growth, especially in the retail segment,” says Mr Síkela. “Our strong capital position and loan-to-deposit ratio below 86% enables us to further expand our loan portfolio.”
Ukraine: PrivatBank
PrivatBank has won Bank of the Year 2014 in Ukraine through its efforts to adapt to the political unrest in the country. With 2014 dominated by the crisis between Russia and Ukraine, banks bore the brunt of the uncertainty, with customers withdrawing their deposits, afraid of market instability and a considerable drop in the exchange rate.
PrivatBank, however, met this challenge by offering special bonus programmes for loyal depositors, while toughening credit scoring models to put more emphasis on improving the quality of the bank’s loan portfolio.
“It’s hard to plan regular activities in conditions of a war,” says Alexander Dubilet, chairman of PrivatBank. “Nevertheless, it is important, despite everything, to continue technological development. Technologies will reduce the cost of banking and thus provide support to businesses and households.”
Not only did PrivatBank stand out for its adaptability, its 2013 results also showed a strong performance compared with competitors. The bank had already started to tackle its non-performing loan portfolio in 2013, with the year-end ratio falling to 5.8% from 6.1% in 2012. The bank implemented personal offers to change the interest rates on deposits, allowing for a personalised restructuring of debt.
PrivatBank was also one of the few banks in Ukraine to show a significant increase in its asset base, from about Hrv166bn ($12.5bn) at year-end 2012 to Hrv198bn at the end of 2013. It is also strong in technological innovation. The bank’s Privat24 has become the world’s first cloud-based payment app for mobile phones using the Android operating system, effectively turning the devices into an electronic purse. As of June 1, 9.2 million customers were using the app.
PrivatBank has also launched a 5% cash back offer for the 4.5 million-plus holders of the bank’s salary cards when the card is used to buy things. This has helped attract new salary projects to the bank.
