Central and eastern European winners:
Albania: Banka Kombetare Tregtare
Despite weak growth being recorded domestically and concerns growing over the intensifying economic crisis in neighbouring Greece, Albania’s Banka Kombetare Tregtare (BKT) had a good year in 2014. The bank reported its highest ever profits of Lk5062bn (or $43.75bn) at year-end and grew to become the country’s largest bank by total assets, deposits, retail loans and net profit.
BKT also has a comparatively low non-performing loan ratio for the Albanian banking sector. Its ratio decreased from 8.61% in 2013 to 6.47% in 2014 – compared with a market average of 22.8%. BKT’s improvement in asset quality was related to an increase in lending activity, but also to an improvement in its infrastructure for automatic collections. The bank’s Peng Payment Engine solution can scan the accounts of customers depending on certain requirements, and help collect receivables.
“The main challenge for us has been to keep our return on equity close to 20% against a background of falling interest rates and a generally pessimistic business environment,” says Seyhan Pencabligil, chief executive and board member at BKT. “The government’s crackdown on businesses in an effort to increase tax revenues and fight informality will be beneficial in the long run to improve Albania’s business climate, but this has inevitable short-term consequences, which we have managed to avoid.”
BKT has launched innovative products such as a unique e-banking traffic fine payment service. Customers can register for the service, which will send automatic notifications for any fines immediately after the police have updated their system.
In a quest to further maximise profits, BKT is considering further acquisitions in neighbouring countries, according to Mr Pencabligil. “Our success in Kosovo, where we opened in 2007, gives us the courage and the motivation for further expansion,” he says.
In a challenging year for the Armenian banking sector, marked by economic difficulties and new banking regulation, Ameriabank defied the circumstances and continued to grow dynamically in 2014. The lender posted double-digit increases across profits, assets and capital – boosting return on equity by two percentage points to 17.8%. The country’s largest bank by assets and capital also further grew its loan portfolio and deposit base at a significantly faster pace than the banking sector average.
“Ameriabank has reinforced its leadership position by most of the key financial indicators,” says Artak Hanesyan, CEO at Ameriabank. “[The] main reasons of this success were our client-centric approach; service quality; continuous innovations; professional staff; and balanced risk-management, all of which earned the trust of our customers. One thing that stands out is agreement with Ireland-based CR2 [that has led to us] introducing a new omni-channel banking platform – a first of its kind in Armenia.”
Ameriabank is committed to finding innovative solutions for its clients, through products such as VPOS, a virtual point-of-sale solution serving as an e-commerce tool for merchants, and Ameria Persona, which caters for busy clients valuing personalised service with dedicated relationship manager and preferential rates.
The bank works closely with international financial institutions such as the European Bank for Reconstruction and Development (EBRD) and Dutch development bank FMO. With the latter, it signed the first convertible subordinated debt facility in Armenia’s banking sector.
“Ameriabank will continue to invest into innovative solutions with special attention [being paid] to distance banking platforms,” says Mr Hanesyan. “We will focus on strengthening our leading positions through steady growth of [our] key financial indicators and provision of quality services in 2016.”
Azerbaijan, like many countries in the Commonwealth of Independent States region, is strongly reliant on oil – a factor that has made the past two years difficult. While the country’s economy has grown, this growth was much slower than in previous years. Yet AccessBank, The Banker’s Bank of the Year for 2015 in Azerbaijan, still managed to boost assets, profits and capital.
Net profits at the country’s fourth largest bank by assets and capital rose by 58% to 43m manat ($55m at December 31, 2014) in 2014, with assets up 32% and capital 27% higher.
“AccessBank has been able to adapt quickly to the sudden change in the economic environment, switching successfully from growth to crisis management by focusing mainly on preserving asset quality and a comfortable liquidity cushion – especially in local currency – as well as applying strict cost controls,” says Michael Hoffman, chief executive of AccessBank.
Despite the economic woes suffered by Azerbaijan, credit rating agency Fitch lifted AccessBank’s ratings from BB+ to investment grade in 2014. Though specialising in catering for micro-businesses, AccessBank increased its client base among small and medium enterprises, while an expansion in the regional branch network boosted its market share, making it a leading lender to rural businesses.
During judging, AccessBank launched its core banking software T24 to bolster the bank’s competitiveness by quickly adapting to European standards in banking technology.
Mr Hoffman expects the Azerbaijani economy to remain challenging in 2016, as the downturn in Russia and the devaluation of the local currency have already had a negative impact on borrower’s debt service capacity and on demand for borrowings. “Focusing on offering a high-quality service to core customers, maintaining sector-leading asset quality and further enhancing operational efficiency are the bank’s main strategic objectives for the next year,” he says.
In an economy affected by the downturn in neighbouring Russia and Ukraine, banks with lesser exposure to the large Belarusian state-owned businesses and more clients in the small and medium enterprise (SME) space are benefiting. MTBank has SMEs as its target customers, alongside retail clients, providing it with some resilience against difficult economic conditions.
MTBank works with both the local Development Bank of the Republic of Belarus and international financial institutions such as the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) in making cheaper funds available to SMEs in Belarus.
To best cater for SMEs, MTBank organises business conferences, providing SME clients with networking opportunities and business management expertise through their peers.
The largest non-state-owned Belarusian bank with majority shareholding from within Belarus, MTBank is one of the few banks in the country working with international financial institutions.
“MTBank is the first private independent bank in the Republic of Belarus starting to provide energy-efficiency loans from EBRD and IFC to its clients,” says Andrey Zhishkevich, chairman of the management board at MTBank. “In April 2014, MTBank signed the agreement with the Nordic Environment Finance Corporation on supporting ecological and energy-efficiency projects.”
MTBank is also innovative in other business areas, such as through its instalment card Halva – a product unique in Belarus. Halva is an interest-free card, which sees the trade partners selling goods or services to the client who repays the loan while the sellers take care of the interest. MTBank has further designed a special mobile app for the holders of Halva, offering information such as the card balance, usage history and a tool to find associated partners.
Bosnia-Herzegovina: Raiffeisen Bank dd Bosna i Hercegovina
With strong profitability and new product innovation, Raiffeisen Bank dd Bosna i Hercegovina is The Banker’s bank of the year in Bosnia-Herzegovina. Raiffeisen recorded a 27% jump in profits to Km53.8m ($33.3m as of December 31, 2014) in 2014, while assets remained largely flat at Km3.7bn. This amounts to a market share of about 16% across assets and deposits in the country’s banking sector.
“As a market participant, Raiffeisen Bank has always been recognised as a respectable and trustful financial institution with a professional team providing a wide range of services, keeping the client’s needs fully served,” says Raiffeisen Bank dd Bosna i Hercegovina chief executive Karlheinz Dobnigg. “We believe in the success of our business model and operate in line with our sustainability strategy which encompasses economic, social and environmental aspects.”
Raiffeisen was the first bank in Bosnia-Herzegovina to offer domestic factoring products with recourse – a service offered to large local and international companies, as well as mid-market and small enterprises, and public companies. New discount and loan factoring products were introduced as a result of the country’s draft factoring law.
In the retail segment, Raiffeisen launched the SoGood loan, a commodity loan intended for purchasing goods and services with merchants holding contracts signed with the bank. The customer can apply and receive approval for the loan directly at the merchant location without needing to visit a bank branch.
“We strive to follow changes in the banking sector, adjust to trends and work on our progress in order to provide superb service to our clients,” says Mr Dobnigg. “[And despite the bank’s focus on capital-lite products] we will still be active in lending [in 2016] as our long-term orientation is to be a partner and reliable financial institution.”
In a banking sector troubled by a run on two leading banks in 2014 and the insolvency of Corporate Commercial Bank, strong customer relationships are crucial in Bulgaria. This year’s bank of the year in the country, DSK-Bank, is putting particular emphasis on this. The subsidiary of Hungary’s OTP Bank has about 16% of retail customer deposits – the largest in Bulgaria, while it is also market leader in consumer and mortgage loans. DSK further grew its asset base by 12% to about Lv10bn ($6.2bn as of December 31, 2014) while keeping its interest spread stable.
DSK managed to compensate to a great extent the negative impact on the profitability of the still stagnant lending activity in Bulgaria – net profits rose year on year by 17% to Lv226m at the end of 2014.
“In the unfavourable macroeconomic environment in the past years the positive image of the bank system has persisted and the shareholders’ priorities have changed towards preserving stability by maintaining adequate capital and liquidity positions,” says Violina Marinova, chief executive at DSK-Bank.
In a banking sector with a relatively high non-performing loan ratio, DSK-Bank managed to improve its figures by 1.6 percentage points to 13.4%. DSK further puts special emphasis on keeping a sufficient level of total capital adequacy to cover risks and to comply with regulatory requirements. As of December 2014, DSK’s total capital adequacy ratio was 18%, with Tier 1 capital of about Lv1.1bn.
DSK-Bank has further set strategic priorities for its corporate and small and medium-sized enterprises business, where it offers specialised treatment to clients, boosting the bank’s capacity of providing services.
“Tailored approaches to different client groups, [as well as] offering hi-tech solutions and channels, will remain the main focus of our business,” says Ms Marinova.
Croatia: Privredna banka Zagreb
Croatia’s economy had experienced six consecutive years of contraction leading up to 2014, leaving its banking sector seriously challenged by external factors. Nevertheless, Privredna banka Zagreb (PBZ), The Banker’s bank of the year in Croatia, increased its asset base, capital position and net profit in 2014.
“PBZ Group managed to outperform our peers in many aspects despite difficult macroeconomic conditions,” says Bo‑o Prka, president of the management board of Privredna banka Zagreb, highlighting the bank’s 11% rise in consolidated net profits in 2014.
“This result was accomplished by executing our predetermined business strategy, thus keeping a steady course, also reflecting the resilience of our earnings power in challenging conditions and the strength of our strong continued customer relations.”
PBZ puts further emphasis on innovation to cater for its clients. The country’s second largest bank by assets is, for example, the first bank in Croatia to offer its customers the Visa Inspire Wave 2 Pay sticker card – an upgraded version of the current Visa Inspire debit card for current accounts, which has a smaller shape in the form of a sticker that is easily placed on a mobile phone for faster and easier payment for goods and services worldwide.
The bank has also pioneered contactless mobile payment, in co-operation with American Express and Intesa Sanpaolo, based on host card emulation technology for near-field communication payments at point-of-sale terminals of the PBZ group.
“We have defined our plans focusing on strengthening our position as fully client-oriented providers of financial services,” says Mr Prka. “Responsible growth will continue to be our main strategic choice, while focusing on technological developments and changes in the business environment in refining our strategy.”
Czech Republic: Ceskoslovenská obchodní banka
With all-time low interest rates in many developed countries of the world, banks in the Czech Republic have been operating in an unfavourable environment for the financial sector.
Ceskoslovenská obchodní banka (CSOB), the country’s third largest bank by assets and capital, has managed this well – reporting net profits of Kcs13.6bn ($550m) in 2014, largely flat year on year, and keeping the cost of risk relatively flat at 47.6%.
In 2014, CSOB’s net fee and commission income increased on the back of higher demand for investments, card transactions and bank insurance products, while net interest margins decreased only slightly, by 3 basis points.
“The success was balanced across all key segments,” says John Arthur Hollows, chairman of the board of directors at CSOB. “We continued in further enhancing our client offering and developed an unparalleled bank insurance concept among Czech banks. Together with innovations and new products, which are in some cases unique in the Czech market, our loan market share has increased and deposits grew in line with the market.”
CSOB closely manages its credit risk via prudent and responsible underwriting standards, and maintains strong capital and liquidity positions. Its non-performing loan ratio decreased by 58 basis points year on year to 4.07%, positively influenced by the growth of loans.
CSOB is a forerunner in innovation through technological advancements such as the introduction of contactless sticker and QR code for payment orders, as well as its unique ‘Gap in the Market’ project.
This invites residents to inform entrepreneurs what shops or services they are missing in their neighbourhoods. CSOB then seeks to assist entrepreneurs with the expansion of their business to cater for the residents’ suggestions.
Solid profits, asset growth and the management of costs and non-performing loans makes SEB Pank The Banker’s bank of the year in Estonia. The second largest bank by assets in the country increased its capital base, assets and profit by double-digit figures.
“In 2014, SEB Bank recorded a strong net profit, showing a 16.7% increase year on year, [which] was achieved in spite of some adverse economic developments in some of Estonia’s crucial export markets,” says Allan Parik, chief executive at SEB Pank. “No matter the economic cycle we go through, SEB in Estonia has always been able to strive for excellence in providing service and advice as a relationship bank for its customers.”
In 2014, Western sanctions on Russia put a strain on some of Estonia’s exporters. Yet, SEB Pank managed to even lower its ratio of non-performing loans year on year from 0.79% to 0.76%.
“SEB helped clients to monitor potential risks well in time, as we implemented a special advisory tool for business client financial assessment a few years back,” says Mr Parik.
In the first quarter of 2015, SEB Pank launched its innovative Mark the Places mobile app, which helps users to mark shops or restaurants where card payment services are not offered but where customers would like to pay for their purchases by card. The information collected helps companies assess the benefits of introducing card payments to their business opportunities and generally promotes the usage of card payments in Estonia.
In the market for small and medium-sized enterprises (SMEs), SEB Pank’s strategy is to develop and expand its offering. To do so, in September 2014, the bank started another edition of its SME advisory campaign, counselling more than 500 Estonian businesses, to assess future strategies and forecast the segment development in 2015 across business sectors and regions in Estonia.
Georgia has suffered from the economic downturn and rouble devaluation in Russia. While the Georgian economy is still growing, rates are considerably lower than in previous years and the country’s currency has seen its own devaluation, which started in late 2014.
In spite of all these negatives, Bank of Georgia reported another year of growth in 2014. Net profits rose by 15% year on year, while assets and Tier 1 capital also increased by double-digit percentage figures.
In December 2014, Bank of Georgia introduced its updated ‘4x20%’ strategy, targeting 20% return on average equity, a 20% Tier 1 capital ratio, a 20% retail loan book growth and a minimum of 20% internal rate of return in investment business.
The country’s largest bank by assets further expanded its market share in 2015, when it took over the Georgian operations of Ukraine’s Privatbank, a retail bank with a particular focus on credit cards. Privatbank increased Bank of Georgia’s market share in retail loans by 4.3 percentage points and in retail deposits by 2.5 percentage points as of the end of March 2015.
Bank of Georgia managed to integrate the business ahead of schedule, in less than five months, and achieved a significant reduction in Privatbank’s operating costs through a closure of 58 out of 93 branches, after Bank of Georgia’s Express Pay terminals, which act as self-service substitutes to branches, proved very popular with Privatbank’s customers.
The Express Banking service is Bank of Georgia’s strategic approach to multi-channel banking targeted to attract mass-market customers, bringing transactional banking services under one umbrella, packaged in a customer-friendly way to make banking services convenient, time efficient and affordable for customers.
Georgia remains a country with low banking penetration – a characteristic that Bank of Georgia is hoping to further capitalise from.
Hungary: UniCredit Bank Hungary
Banking in Hungary has been difficult in the past year. The government’s bank levy and compensation and conversion arrangements for holders of Swiss franc-denominated mortgages put pressure on profits across the sector, leaving UniCredit Bank Hungary one of the few banks not to record a loss.
“The conversion of foreign exchange mortgage loans and the compensation of mortgage customers ordered by law was the number one challenge both logistically and financially,” says Mihaly Patai, chief executive at UniCredit Bank Hungary. “The price tag for our bank was €107m.”
Other challenges included the low-interest-rate environment, which banks had to adjust to, as well as the “tense relation between the government and the banking sector”, which has not been relieved by conciliation but sees a “continuous struggling with the government, meaning a steady challenge for the years coming”, according to Mr Patai.
Despite all this, UniCredit boosted its net profits from Ft6.5bn ($22.2m) to Ft16bn in 2014 – including some Ft33m of provisions. The bank further significantly cut its costs and lowered its non-performing loan ratio by 1.3 percentage points to 16.7%.
Strong growth in assets of 26.5% saw UniCredit Bank Hungary increase its market share in 2014 to move from being the sixth largest bank in Hungary by assets to become the third largest with Ft2235.7bn.
UniCredit Bank Hungary assigns special importance to small and medium-sized enterprise and corporate business, offering them dedicated relationship managers and cash management services, among others. And Mr Patai puts special emphasis on corporate business for the future.
“Multinationals, large and medium-sized Hungarian companies continue to create value in the Hungarian, as well as the European market, and UniCredit Bank Hungary definitely wants to contribute to it with its excellent service capabilities,” he says.
Boasting a 145% increase in net profits as well as innovative client products, TEB Kosovo is The Banker’s bank of the year in Kosovo.
Kosovo, with a population of 1.8 million, is still a young country and is struggling to reduce unemployment and improve economic development. And at 2.7% growth in 2014, its gross domestic product is not rising as fast as many would like.
“In adapting to the prevalent macroeconomic conditions, TEB has designed a strategy and an operational plan to meet the expectations of the shareholders and establish a working culture that drives forward the growth of the bank,” says Ayhan Albeyoglu, chief executive at TEB Kosovo.
TEB stands out with innovations such as Kosovo’s first ever agricultural credit card, a multifunctional credit card that provides easy access to finance for farmers, optimising their value through a 0% interest rate and a grace period on loans.
In 2014, the subsidiary of French bank BNP Paribas also introduced the green loan, a distinct instalment loan that enables business customers to invest in energy-efficient and environmental projects that increase their competitiveness.
“TEB has consistently pioneered products that stimulate purchasing power, such as a range of tailored Star Cards – a name for this Visa-licensed product that has become the word for ‘credit card’ in Kosovo,” says Mr Albeyoglu. “[We also attach] great importance to activities based on the principle of giving back to society. One of these activities is [our] Women Entrepreneurship Support Programme, specifically designed to empower the participation of women into business, as well as [our] General Entrepreneurship Programme, which promotes tech entrepreneurs.”
In Kosovo, TEB so far is the only bank working with the European Bank for Reconstruction and Development to provide women in business with targeted funds.
With a continuously low cost-to-income ratio and falling non-performing loans (NPLs), Swedbank Latvia is The Banker’s bank of the year in Latvia for 2015. Swedbank lowered its NPLs by 2.7 percentage points to 4.2% and costs by one percentage point to 38.8%, year on year, underlining its focus on improving internal efficiency and adapting its cost level to changing market conditions.
Despite the importance attached to cost efficiency, Swedbank is not retreating from serving its customers through branches.
“We are particularly proud of being able to develop not only digital and mobile channels, but also physical presence – branches as places for in-depth consultations and cash machines as self-service banking points are increasingly covering all of Latvia,” says Maris Mancinskis, head of Swedbank Latvia. “The wide range of channels combined with an improved service model has doubled our consulting capacity and increased customer satisfaction.”
Swedbank’s strategy lies in developing digital solutions and enabling remote access to everyday services, while focusing on in-depth advisory through face-to-face relationships, helping customers with less complex needs primarily through digital channels, while having the capabilities to provide more personalised services such as investment advice and complex financing solutions for companies or families in branch.
Swedbank is looking to particularly focus on a lending increase for small and medium-sized enterprises as well as strengthening its ties with local communities all over Latvia, according to Mr Mancinskis. “Our customers will also be able to use the opportunities brought by contactless and mobile technologies combined with the wide customer base of Swedbank,” he says.
The subsidiary of Sweden’s Swedbank has already launched a range of solutions in different digital environments, including enhanced mobile banking capabilities, e-invoices and live communication channels.
After a year marked by a strong performance, significant growth and the successful integration of two businesses, Šiaulių bankas is The Banker’s bank of the year in Lithuania. In the financial year ended December 2014, Šiaulių grew its profits more than threefold from €3.1m to €10.6m, increased its assets by 5.9% to €1.6bn, and lowered both its cost-to-income ratio and non-performing loan ratio.
The fourth largest bank by assets and capital in Lithuania, which took over the healthy parts of bankrupt Ukio bankas in 2013, made the decision to keep the Ukio-related leasing company Ukio Banko Lizingas and life insurer Bonus Publicum, and successfully integrated them into iauliu in 2014.
In 2015, Šiaulių went further, acquiring Bankas Finasta and financial brokerage firm FMI Finasta, the merger of which is currently under way.
“By suitably diversifying revenue and making rational investment decisions for expansion, we ensured the bank’s stability and steady growth of profit,” says chief executive Vytautas Sinius. “By acquiring new companies and integrating them into the bank, we expanded and improved our insurance, leasing and investment services.
“We [further] offset commission fee losses, for example, by sharply intensifying lending to participants in the housing modernisation programme, which is conducted through the European Investment Bank. We became the leaders in this area in Lithuania.”
Housing modernisation is one of the bank’s areas of strategic focus. Šiaulių has signed 836 renovation credit agreements worth €183m since 2010. The housing focus has made a significant contribution to Šiaulių’s higher profits, alongside growth in other sources of fee and commission income, preparing the bank well for a eurozone entry-related drop in income opportunities for all Lithuanian banks amid smaller international transfer fees and fewer currency exchange operations.
Strong competition in the Macedonian banking sector, along with low interest rates and low private consumption, has forced banks to reconsider their sales offering, client approach and investigate new market segments. NLB Tutunska Banka has done just this.
A subsidiary of Slovenia’s Nova Ljubljanska Banka since 2000, the bank launched a special programme with a personal approach to all micro, small and medium-sized enterprise clients with a flexible, tailored and on-time banking service.
This proved a strategy that brought additional client growth.
The second largest bank in the country by assets also promoted new loan products for the purchase of used vehicles secured by a vehicle pledge for employees and retirees, as well as instant loans in co-operation with telecoms operator VIP and promotional housing loans among others.
NLB was ahead of the curve in lowering interest rates on deposits – something it did three times in 2014 – but nevertheless kept its deposit base stable and growing, allowing it to increase its interest margin from 3.2% in 2013 to 3.9% in 2014 and to 4.3% in 2015.
In 2014, NLB introduced its ‘credit price calculator’ and with it the concept of testing the profitability of each client and each product.
“The bank’s business strategy for the next period focuses on the increase of financial support for small and medium-sized enterprises, micro businesses and individuals, and the increase of retail operations,” says Gjorgji Janchevski, president of the management board and CEO of NLB Tutunska Banka AD Skopje.
NLB is looking to use a multi-channel sales strategy to provide comprehensive services and easy access to its products, for which it is planning to invest in enhancing the branch network and electronic channels, according to Mr Janchevski.
Montenegro: Société Générale Montenegro
In an environment of slow economic growth and increasing competition in the Montenegrin banking sector, Société Générale Montenegro impressed judges with its innovative products, while growing its assets and generating 17% higher profits.
“The main success achieved is the continuous growth of customer relationships in all segments, materialised by new clients, the gain in market share in banking services and, in general, the improvement of major activity key indicators,” says Miroslav Hirl, chief executive at Société Générale Montenegro.
“We are also very proud of registering once again high profitability demonstrating the bank’s capacity to develop its revenues while controlling expenses and cost of risk.”
Société Générale Montenegro reported the lowest cost-to-income ratio in the country’s banking sector with 57%, having improved the ratio by three percentage points year on year.
The bank further introduced some innovative services to the Montenegrin market such as SMS Conto, a unique service allowing clients to pay bills through text messages, and La Rata Card, a credit card with specific advantages for customers.
Furthermore, Société Générale Montenegro was the first Montenegrin bank to introduce factoring services for small and medium-sized enterprises and corporate customers.
“[The] next period will be focused on speeding up our digital transformation in an environment where fundamental changes in client behaviours are accelerating,” says Mr Hirl. “We see these changes as an excellent opportunity to accomplish our goal of being the leading bank for client relationships.
“In order to adapt and continue generating profitable growth, we must continue to improve our operational efficiency, as well as the expertise of our employees, which are the main value of our brand.”
In a challenging year for Poland’s banking sector, ING Bank Slaski stood out for its technical innovation and sound financial performance.
“The plunge in interest rates, substantial cuts in the interchange fees, as well as doubled contribution to the bank guarantee fund impacted the profitability of the entire banking sector,” says Magorzata Koakowska, chief executive at ING Bank Slaski.
“Yet, ING Bank Slaski maintained a strong growth of its business across all segments, closing 2014 with a record high net profit of 1.041bn zlotys [$294m].”
The bank further increased its asset base from 86.8bn zlotys to 99.9bn zlotys year on year, all while lowering its costs and non-performing loan ratio. ING Bank Slaski puts special emphasis on modern, convenient and simple product offerings, growing primary bank relationships in retail banking and specific sector knowledge in catering for corporate clients, all of which have contributed to organic growth in business volumes and better financial results.
“Within the past five years, the bank’s lending assets have more than doubled and the growth is comparable to taking over an average-sized bank in Poland,” says Ms Koakowska.
ING Bank Slaski’s technical innovation is one of the most significant in Poland. The bank was one of six co-creators of the country’s mobile standard payment method via Blik codes, which allows clients to finalise any transaction on their mobile device through a six-digit code and a PIN code confirmation. Other innovative features include ING Bank Slaski’s receipt storage functionality, allowing customers to store receipts, and a ‘split the bill’ service, which enables clients to email or text a friend with information about a payment and add a receipt as an attachment. Both services are part of ING BankMobile’s mobile banking app.
Romania: Raiffeisen Bank Romania
In a banking sector still challenged by the country’s slow growth, Raiffeisen Bank Romania achieved positive results across profit and cost control. Net profits were 8.8% higher at €113m than in 2013, assets were growing at 8.3%, while non-performing loans and cost-to-income ratio fell by 1.2 percentage points and 3.3 percentage points, respectively.
“We increased our customer base by 9%, we raised our corporate revenues, attracted more deposits and decreased operational costs,” says Steven van Groningen, president and chief executive at Raiffeisen Bank Romania. “All [this tells] us we made an additional step towards being better and more efficient. Moreover, the bank continued to remain committed to funding the [Romanian] economy with €1.4bn term loan disbursements.”
Raiffeisen Bank Romania has put a strong emphasis on catering for small and medium-sized clients, as seen through the launch in 2011 of its product for the European Commission’s Joint European Resources for Micro to Medium Enterprises along with the European Investment Fund (EIF). In September 2014, Raiffeisen Bank Romania was one of the few banks selected to enter the new EIF’s Portfolio Risk Sharing Loan programme for small and medium-sized enterprises.
“In 2014, Raiffeisen Bank Romania managed to report excellent results despite volatility and uncertainty [in the market; the] main challenges for most businesses in Romania,” says Mr van Groningen. “However, despite these hardships, our company managed to find the right mix between clear strategic decisions and actions, and a sound operational set-up.”
One such decision was the integration of its local investment bank, which concluded in 2014. Through this, Raiffeisen Bank Romania became a participant of Bucharest Stock Exchange’s trading system and clearing settlement, and managed the largest initial public offering on Romania’s capital market at the time – Electrica’s €444m listing in June 2014.
Western sanctions hit much of Russia’s economy in 2014. That, coupled with the oil price slump, made for a challenging environment for the country’s banking sector. As profits were widely down year on year, Credit Bank of Moscow (CBM) kept its costs and non-performing loan (NPL) ratio low, and impressed the judges with its capital markets strategy.
“The main challenges were to ensure that the bank [would] maintain an adequate level of liquidity and capital in the context of a difficult macroeconomic environment heavily impacting the Russian banking sector,” says Vladimir Chubar, chairman of the management board at Credit Bank of Moscow. “This was particularly difficult as the overall liquidity in the market decreased sharply after sanctions against Russia were implemented. In parallel, the deterioration of asset quality in the market led to an increase in provisioning, impacting negatively on profits and capital levels of banks.”
Despite a 37% reduction in net profits, CBM’s cost-to-income ratio rose by only 1.5 percentage points, while NPLs saw a one-percentage-point rise, underlining the success of the bank’s strategy of sophisticated risk management and focus on corporate banking business, with a special focus on blue-chip corporate borrowers.
Against great odds, CBM itself stood in the spotlight in 2014, as the bank increased its Tier 2 capital through a Rbs5bn ($88m) subordinated Eurobond dual placement on Ireland’s and Moscow’s exchanges in December, having sold its first ever mortgage-backed bonds and signed a syndicated loan facility earlier that year. In June 2015, CBM even completed an initial public offering (IPO) on the Moscow Exchange with an 18.8% free float.
“The IPO was a milestone that contributed to the level of recognition of the bank among investors, presented new opportunities and became the cornerstone of [our] future sustainable development,” says Mr Chubar.
Serbia: Raiffeisen banka ad Beograd
In a still-challenging economic environment with limited creditworthy demand for loans and increasing non-performing loan (NPL) ratio, Raiffeisen banka ad Beograd showed the advantage of offering tailor-made products, while keeping a focus on credit portfolio stabilisation. Despite a 1.8% contraction in the Serbian economy, NPLs at the bank edged up by only one percentage point, with net profits 3% down year on year.
“We have remained the bank of choice for the majority of large corporations and multinationals in Serbia,” says Zoran Petrovic, chief executive at Raiffeisen banka ad Beograd. “Our strategy to promote quality has been once again verified by the lower NPL ratios than the market average.
“In retail, we have launched a completely new mBanking application and redesigned our online platform and website. These innovations have confirmed our position as one of the most technologically advanced banks in the market.”
In 2014, Raiffeisen banka ad Beograd increased its retail deposits by more than 12% year on year. The bank introduced contactless payment functionality to all existing payment card products for retail customers in Serbia, while point-of-sale terminals, suitable for both chip contact and contactless payment card, were also launched.
In banking for small businesses and corporates, Raiffeisen banka ad Beograd put an emphasis on the use of competitive external sources of financing and capital-lite products, such as supranational funding from the European Investment Bank, which reached a total of €85.4m by the end of 2014, as well as state-subsidised loans.
Mr Petrovic says the bank’s strategy has seen it through the past few challenging years and that Raiffeisen banka ad Beograd will continue with its “two basic pillars” – investment in the bank’s staff and in new technologies. “This is what successful banking in the future will rely on,” he says.
Slovakia: Slovenská sporitelna
In an environment of low interest rates, Slovakia’s banks are dealing with challenges similar to those of most western European banks – low interest margins. Yet, Slovenská sporitelna managed to increase its net interest income thanks to the double-digit growth of its loan portfolio. In 2014, Slovenská sporitelna especially excelled in retail lending, where it recorded 16% year-on-year growth of the portfolio, outgrowing the Slovak market’s strong 12% growth, while the bank’s overall assets grew by 11%.
“Slovenská sporitelna continues to achieve excellent results. The growth of loans was the main driving force behind this success,” says tefan Máj, chairman of the board of directors and chief executive of Slovenská sporitelna.
The country’s largest bank by assets also boosted its mortgage offering through its unique all-inclusive housing loan. When a client applies for the housing loan, Slovenská sporitelna takes care of the procedure and pays for the valuation of the real estate serving as collateral and processes the registration of the pledge in the cadastre instead of the client, saving the customer time and money. The product helped the bank increase its market share in housing loans to 27.2% in 2014.
The bank further redesigned its mobile app in April 2015 with a focus on simplicity and included a user-friendly interface.
“Slovenská sporitelna wants to focus on meeting customers’ needs and expectations [by devoting] greater attention to digital sales and communication channels,” says Mr Máj.
“We believe it is important to build long-term relationships with our customers [while putting a] greater focus on attracting new clients. Our ambition is to become the bank of choice for corporate clients. In addition, we will continue to place an emphasis on effective cost management.”
Slovenia: SKB banka, dd, Ljubljana
Slovenia’s economy turned a corner in 2014, after years of recession had put a strain on the country’s banks. The banking sector has been partially restructured, improving the operating environment for all, but SKB banka stood out.
SKB Group, composed of SKB Bank and SKB Leasing, posted profits of €35.3m in 2014, compared with the previous year’s loss of €30.8m – a significant turnaround largely thanks to an increased net banking income and rational cost management. The bank’s capital adequacy ratio also increased to 16.39% at the end of December 2014.
“Despite this challenging context, SKB again reached a high level of operating profit as it has been able to develop its market shares and has continued to rationalise its operating costs,” says François Turcot, chief executive at SKB banka.
“Due to our strict risk policy and the good performance of our recovery department, we enjoyed a very low net cost of risks.”
In 2014, the subsidiary of France’s Société Générale increased deposits by 4% and recorded a 1.7% growth rate in SKB housing loans, which was higher than the 0.5% of the Slovenian banking system.
The third largest Slovenian bank by assets also started an innovative partnership with telecommunications company Telekom Slovenia, providing SKB’s clients and customers of Telekom Slovenia services under special conditions.
“Innovation and quality of products and services and commitment and professionalism of our employees are the base for keeping a good business relationship with our customers,” says Mr Turcot.
“We will continue to provide them the appropriate financial services through the whole country. By strengthening the business synergy with our other two local companies, SKB Leasing and ALD Automotive, and with the group Société Générale, SKB Bank expects another successful year.”
