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Best-performing banksSeptember 1 2016

Top 250 EU banks: assets down, profits up

The euro’s continuing fall against the dollar held back the major players in the EU, but Austria made a startling comeback and there was further good news from Romania and Croatia.
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Europe’s banks have had a mixed year. While lenders increased their pre-tax profits on average by 15.04%, both assets and the institutions’ capitalisations decreased.

Across the EU’s Top 250 banks by Tier 1 capital, lenders lost some 12% of assets compared with the previous rankings. Cyprus, the UK and Germany posted the highest reductions, and only Latvia, Malta and Romania saw an increase.

Capital also dropped by 4%, although lenders in some countries, notably Croatia and Romania, significantly increased their capitalisation.

Top 250 assets

It is worth mentioning, however, that figures for banks reporting in euros were exaggerated by the 10.43% fall in the euro/US dollar exchange rate since the previous rankings.

Euro ups and downs

In terms of profits, there was good news from Austria. The country’s banks showed a surge in profits in fiscal 2015 to $3.74bn compared with a $459m loss in the previous fiscal year. The country’s lenders benefited from a better operating environment in central and eastern Europe, where Austria’s largest banks by capital, particularly Erste Group and Raiffeisen International, have sizeable operations.

The turnaround was such that the two banks with the highest percentage in pre-tax profit change across the Top 250 EU banks are both from Austria: Raiffeisen Bank International with a 2683% turnaround to $773m and Raiffeisenlandesbank Oberoesterreich with a 600% turnaround to post $346m.

Italy’s lenders also reported a recovery, with profits of $7.7bn, in part through Banca Monte dei Paschi di Siena returning to a profit in fiscal 2015. However, Italian banks are under scrutiny by the regulators due to high non-performing exposures in the country’s banking system, and following Monte dei Paschi’s poor results in the European Central Bank's stress tests announced in July, which indicated that the bank’s entire capital would be wiped out in an adverse stress scenario.

Also back in profit are Slovenia’s banks, which faced their own banking crisis in 2013 and returned to health in fiscal 2015 with profits of $203m.

The poorest performers among EU’s Top 250 were Germany and Greece, but for different reasons. Overall data for German banks was heavily skewed by Deutsche Bank’s poor 2015 results: a $6.6bn loss and 18% drop in capital.

Top 250 profits and return

Greece’s lenders increased their Tier 1 capital base thanks to a large-scale recapitalisation exercise in 2015, but banks reported even higher losses in fiscal 2015 than in the previous year: $14.05bn compared with the previous rankings’ $9.12bn. Cyprus’s banks are also on average still in the red, alongside lenders from Portugal and the Faroe Islands.

Rising stars

One European lender worth examining is Banca Transilvania. While Romania’s banks performed strongly across the board in the rankings with Tier 1 up by 30%, pre-tax profits by 266% and assets by 3.6%, Banca Transilvania stood out. The biggest Romanian bank not to be a foreign-owned subsidiary of a larger group, it reached five of our six top 10 tables this year.

Banca Transilvania increased its assets by 18.09% to $11.47bn, lifted its profits by nearly 300% and increased its Tier 1 capital by 53.97% after taking over and successfully integrating Volksbank Romania. It also became Europe’s second most profitable bank with return on assets of 4.84% and return on capital of 39.61%.

Meanwhile, Croatia’s striking aggregate increase in capital is related to Hrvatska Postanska Banka, the largest Croatian-owned bank, which secured an $81m capital injection from private investors and the state.

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