The best banks of the past 12 months from central and eastern Europe.

 
 
 

Albania, Banka Kombëtare Tregtare 

Banka Kombëtare Tregtare (BKT) has shown another strong set of financial results, making it Bank of the Year in Albania. BKT increased its assets and deposits in the 2016 financial year, reaching a market share of 27% in total assets in Albania, with both indicators further increasing in the first half of 2017. 

The bank remained the most profitable within the country in 2016, reaching 19.1% of return on equity and a 19.4% increase in net profits – and this despite the challenges of further automation and digitalisation needs. 

BKT has made investments across channels – such as in improvements to its mobile banking app, which now allows clients to receive push notifications every time a bank transaction is made, and in launching the country’s first mobile app for companies, among others.

The lender redesigned its multi-channel architecture altogether with customer relationship management and process management systems to automate processes within its branches and direct clients towards online channels in an effort to become a paperless bank.

“We plan to use state-of-the-art technology more in everything we do,” says Seyhan Pencablıgil, BKT’s chief executive, who adds that the bank is seeking to further educate its clients to use alternative channels rather than branches. “This will bring savings, which should make up for the reduced margins.” 

BTK is also “very keen” to get involved with the public-private partnership projects launched by the new Albanian government, says Mr Pencablıgil.

BKT is expanding its financing of social housing in collaboration with public entities in different Albanian cities, and is focusing on financing small farmers and start-ups in the agricultural sector, which on a national level remains an underbanked area. 

Armenia, Ameriabank

A challenging economic environment, with only marginal growth of 0.2% at constant prices in 2016, compared with gross domestic product growth of more than 3% in the previous three years, has put pressure on the Armenian banking sector, and increased competition for better performing clients. Despite these headwinds, Ameriabank increased its net profits by 28.9% and kept return on equity stable at 10.2% in 2016.

“Excessive liquidity coupled with a significant capital injection into the Armenian banking system resulted in a lopsided increase of credit supply [and ended] with a price war and overall more fierce competition among banks,” says Artak Hanesyan, chairman of the management board and a general director at Ameriabank. Still, Ameriabank increased its assets by 39.5% in 2016, reinforcing its leadership position in the country.

With more modest growth opportunities in 2016 it “became vital to be able to offer innovative solutions, improve customer experience and efficiency”, according to Mr Hanesyan.

In 2016, for example, the country’s largest lender launched a full-scope virtual branch based around its contact centre, allowing clients to make a wide range of transactions. Ameriabank has also been working on the launch of its CR2 BankWorld omni-channel banking platform, which will unite all channels in a single platform, providing clients with convenience and standardised access.

For Ameriabank, offering “fully fledged digital banking is a top priority”, says Mr Hanesyan, who adds that the new platform should be launched in early 2018. 

Innovative and new cutting-edge solutions are also “the core” of several mid-term projects that have been launched, he adds, such as a score-based lending model, risk-based pricing and other initiatives.

Azerbaijan, Pasha Bank

Azerbaijan’s economy has been hit heavily by the drop in oil prices, which lowered gross domestic product (GDP) growth to 0.65% in 2015 and caused the country to go into recession in 2016. Its GDP fell by 3.1% in 2016, and the International Monetary Fund is forecasting a 1% contraction for 2017.

In this challenging operating environment, Pasha Bank has remained resilient, making it Bank of the Year in Azerbaijan. 

Despite the 2016 economic downturn, Pasha Bank increased its profitability and kept its cost-to-income ratio stable, while non-performing loans only increased by two percentage points to 13%. Assets increased by 43% to about 3.1bn manat ($1.8bn).

Having put an emphasis on digital innovation, Pasha Bank launched a new mobile banking app and included additional functionalities to its internet banking offering, including the tracking of transactions and enhancing of statements. 

The lender further boosted its percentage of transactions processed through internet banking to 60% and has seen a significant increase in customer usage of digital banking over branch services. 

Pasha Bank successfully migrated to a new core banking system, which features innovative technologies and supports the bank’s growth strategy. The lender expects to enjoy lower operating costs and a reduction in the time to market for new products.

To better serve small and medium-sized enterprises (SMEs), in 2017 Pasha Bank introduced a new scoring model to provide SMEs with quick access to finance through a factoring product offering. This service provides the customer with a fast-track credit decision, requiring fewer documents than the standard procedure.

Pasha Bank co-operates with the Central Bank of Azerbaijan, Junior Achievement Azerbaijan and the International Finance Co-operation to increase financial awareness among the young and low-income population. 

Belarus, Priorbank

In a challenging economic environment in 2016, which saw a second consecutive annual contraction in Belarus’s gross domestic product (GDP) and only marginal recovery, Priorbank showed impressive resilience. According to data from the International Monetary Fund, GDP at constant prices fell by 2.6% in 2016, with an expected recovery of 0.7% in 2017.

Despite that, Priorbank increased its capitalisation by 16% and added 7% more assets in the 12 months to December 2016, while keeping return on equity at 22%.

“The banking sector has to operate under conditions of low margins from one side and problems in the real sector of the economy from the other side,” says Sergey Kostyuchenko, chief executive at Priorbank. “However, thanks to the monetary policy of the [central bank] and our internal risk policy, together with cost-cutting programmes, we [have coped] with the challenges successfully.”

In the first nine months of 2017, the lender, majority-owned by Austria’s Raiffeisenbank, improved profitability by nearly 38%.

“Priorbank is one of the most profitable and effective banks in Belarus,” says Mr Kostyuchenko, who adds that its income structure across business lines is diversified and balanced, it has a strong customer base and high standard of banking products. “We have significantly developed our electronic channels – our internet banking is the most popular in Belarus,” he says.

Priorbank has further digitalisation plans, such as implementation of end-to-end processes in servicing private investment customers and the launch of electronic products for corporate and small and medium-sized enterprise customers.

Going forward, the lender plans moderate business volume growth across the bank, according to Mr Kostyuchenko. “Our aim is a more rapid increase in our retail loan portfolio, maintaining an acceptable growth of our credit portfolio and conservative steering in mid-term perspectives,” he says.

Bosnia-Herzegovina, UniCredit Bank Mostar

A solid financial performance combined with ongoing technological developments make UniCredit Bank Mostar our Bank of the Year in Bosnia-Herzegovina.

UniCredit Bank Mostar reported the highest net profit in its history in 2016 – Km81.5m ($49.1m) – and outperformed its peers. This was mainly due to significant growth in market shares in loans (from 17.4% in 2015 to 18.1% in 2016) and deposits (from 19.7% to 19.9% in the same period).

The lender, majority owned by UniCredit of Italy, achieved further reductions in its cost-to-income and non-performing loan (NPL) ratios. Cost-to-income reduced by more than two percentage points to 48.1%, while NPLs fell by one percentage point to 9.7%.

“Performing better and achieving your best results is a constant challenge for any leader in the market,” says Dalibor Cubela, chief executive at UniCredit Bank Mostar. “UniCredit Bank, as a leading bank, is successfully and continuously delivering new and innovative solutions for its clients, ensuring all the activities are in compliance with the local and European regulations and legislation.”

UniCredit Bank Mostar is investing in digital innovation such as a new platform for the approval and release of loans, which was implemented in 2016. The platform offers a simplified and automated process, which allows the lender to process retail credit products faster. 

Mr Cubela notes that UniCredit Bank Mostar’s philosophy puts customers first by “providing higher quality and more secured products and services” to all of
its clients. 

“Satisfied clients are the foundation of our business success, and their satisfaction is possible [only] with developed and dedicated employees providing quality services and being the ambassadors of the bank,” he says.

Bulgaria, Raiffeisenbank (Bulgaria)

In a low-interest-rate environment with pressure on net interest margins, Raiffeisenbank (Bulgaria) has shown increasing profits and lower costs, making it Bank of the Year in Bulgaria. 

Raiffeisenbank has continued to reduce its non-performing loan (NPL) ratio from 12.2% in 2015 to 8.6% in 2016 (compared with a market average of 12.85%) and kept its coverage ratio significantly above the market, with 72.18% compared with 52.91%. 

“We reduced our NPL ratio to a very healthy level and continued to make the bank more effective and profitable,” says Oliver Roegl, chief executive at Raiffeisenbank (Bulgaria). “This leads to excellent results in all customer segments, which we have been reporting during the past years.” 

He adds that the bank has increased its focus on investment in innovation. In 2016, in a first for the country, Raiffeisenbank (Bulgaria) introduced a public chat function through provider Viber, while ‘BOT Chat’ was introduced as an unique way of communication between the bank and its customers.

Overall, the users of Raiffeisenbank (Bulgaria)’s online banking continued to grow, and as of year-end 2016 exceeded 358,000. The national share of electronic payments reached 87% at the end of 2016 and the downloads of Raiffeisenbank’s mobile app have increased by 52% compared with 2015 figures, thanks to new functionalities such as real-time online payment processing for transactions in local currency. 

In October 2016, the lender purchased the remaining 75.5% of Raiffeisen’s Leasing Bulgaria, a stake that was previously owned by Raiffeisen Leasing International, to reinforce the relationship between the bank and the leasing company.

“We plan to strengthen Raiffeisenbank’s position as one of the leading banks in Bulgaria in all target customer segments in terms of customer experience, innovations and efficiency,” says Mr Roegl.

Croatia, Privredna Banka Zagreb

Privredna Banka Zagreb’s (PBZ’s) positive financial performance in 2016, with one of the highest profitability ratios in the country, makes it Bank of the Year in Croatia. 

The subsidiary of Italy’s Intesa Sanpaolo saw year-end 2016 profits of Hrk1.6bn ($248.4m) and 13.44% return on equity. PBZ further reported growth in lending across client segments, which contributed to a 4% increase in assets, following its business strategy built around customer relations and well-diversified sources of income.

The bank’s cost-to-income ratio fell further, from 43.73% in 2015 to 38.36% in 2016, improving the lender’s efficiency.

PBZ’s non-performing loan ratio continued its downward trend and fell from 11.9% in 2015 to 9.37% at the end of 2016, thanks to the bank’s “proactive credit risk management” and “collection strategies”, according to Bo‑o Prka, president of the management board of PBZ.

PBZ seeks to be at the pulse of new technologies, with projects such as the first contactless mobile payment service in the Croatian market, based on host card emulation technology for near-field communication mobile payments at point-of-sale terminals.

In 2017, PBZ took over Intesa Sanpaolo’s subsidiaries in Bosnia-Herzegovina and Slovenia as part of a corporate restructuring within the group, making PBZ a regional hub.

“We have a strong capital base, liquidity and funding positions preparing us for potential market uncertainties and for tighter regulation,” 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.”

Mr Prka, who has announced that he will step down in February 2018 to spend more time with his family, has led PBZ for 20 years and oversaw its privatisation in 1999.

Czech Republic, Československá obchodní banka

Despite operating in a stable and liquid banking sector, Czech lenders are feeling pressure on profits from prolonged low interest rates and margin compression and the fast pace of technology development. Despite that backdrop, Československá obchodní banka (ČSOB) again improved its profits and achieved balanced growth of loans, deposits and assets under management.

In 2016, return on equity increased by nearly 1 percentage point to 17.3%, thanks to solid growth in business volumes, good loan quality and stable costs, as well as the sale of a stake in Visa Europe, while both its cost-to-income ratio and non-performing loans fell. 

“In the past year, we have strengthened our focus on innovation and digitalisation,” says John Arthur Hollows, chairman of the board of directors at ČSOB. “Our clients now have a range of investment offers from all over the world at their fingertips in [our] investment portal.”

The new portal allows clients to manage and monitor their investment products from smartphones, tablets or desktops in a one-stop-shop digital environment. 

ČSOB has also introduced a mobile wallet, ČSOB NaNákupy, the first mobile wallet app in Czech Republic, which instantly virtualises cards issued by MasterCard or Visa for host card emulation-based near-field communication mobile payments, and launched other innovations such as a new electronic environment for corporate and small and medium-sized enterprise clients.

“Our ultimate goal is to provide the best to our clients and enhance their experience,” says Mr Hollows.

Apart from concentrating on responsible lending, ČSOB also engages in efforts to improve financial literacy. ČSOB’s financial education for schools is a unique initiative in the Czech banking market, which saw 160 ambassadors teach 63 hours of financial literacy in 15 schools in 2016 – a project ČSOB seeks to extend to other target groups

Estonia, SEB Pank

Solid financials in a sluggish market environment and a strong innovation drive make SEB Pank our Bank of the Year in Estonia.

The bank’s net profits increased by 12.9% on the year to €84.7m in 2016, returning 8.83% on equity, and lowering the cost-to-income ratio by three percentage points to 40.8%.

SEB increased its customer base across large corporations (loans up 7%, deposits 29%), small and medium-sized enterprises (SMEs) – both loans and deposits were up 0.8% – and private customers, where loans were up 7% and deposits 10%. 

SEB is at the forefront of innovation in Estonia, through projects such as the recently inaugurated Innovation Centre in SEB’s Tallinn headquarters, where businesses are able to test new growth models that will help them grow faster than their competitors.

“SEB has been a leader in digitising banking services and thus creating a new way for clients and banks to interact,” says Allan Parik, chief executive at SEB Pank. “For example, companies can now open a bank account at SEB without visiting a branch. This and other remote channels are part of SEB’s efforts in innovation.” 

In early 2017, SEB launched e-Academy, the first free e-learning platform, which is designed for people interested in business, and a mobile ‘smart terminal’ that works both on a smartphone or tablet, allowing card payments anywhere with data communication facilities. 

“On the corporate side, our principal opportunity is to grow with the clients who are pursuing innovation,” says Mr Parik, who adds that both large corporations and SMEs have a crucial role in this area. Going forward he sees private clients expecting the “further progress of e-channels, especially mobile banking, where many opportunities lie. SEB will keep developing remote advisory that enables us to service customers not only in Estonia, but around the world.” 

Georgia, TBC Bank

Following a strong financial performance in the past few years, TBC Bank again stood out in Georgia, with profit growth of more than 36% and return on equity of 22.4% in 2016. The lender’s assets more than doubled throughout the financial year, thanks in part to the successful integration of Bank Republic, the third largest bank in the country by loans. 

“We are extremely proud that we successfully completed the merger with Bank Republic just in six months, well ahead of schedule, while growing the business and increasing the market share of Bank Republic on a standalone basis,” says Vakhtang Butskhrikidze, chief executive at TBC Bank.

TBC further grew its operations through the acquisition of insurance company Kopenbur and by further developing its brokerage and investment banking arm.

“Integrating all these units, while maintaining a superior customer experience, was one of the most challenging tasks,” says Mr Butskhrikidze.

Further milestones for TBC were the inclusion of its shares in the FTSE 250 index and TBC’s move to a premium listing on the London Stock Exchange. Both allowed the bank to broaden its investor base, enhance its public profile and reduce its cost of equity.

A pioneer in digitalisation, in March 2017 TBC implemented a Georgian-speaking chatbot available through Facebook messenger. Ti-Bot understands questions and provides answers about currency exchange rates, product offerings as well as branch and ATM locations, and will in future be able to conduct some transactions.

“Having achieved our vision of becoming the largest bank in Georgia, we have embarked on a new journey to become the best digital financial services company in the region,” says Mr Butskhrikidze, who adds that it is TBC’s ambition to become “the best among all financial service providers, not only banks and not only among Georgian companies”.

Hungary, K&H Bank

Following legislative and regulatory pressures in recent years, in 2016 the headwinds for the Hungarian banking sector were largely related to a slowdown in economic growth to 1.95%, compared with growth rates in excess of 3% and 4% in the previous two years. In this environment, K&H Bank reported solid results, with a 3.5% reduction in non-performing loans and slight increase in net profits. 

Following regulatory changes, which allowed a wider range of institutions set up mortgage banks, K&H has launched its own separate mortgage bank. The institution was granted a permit from the local authority in September 2016, paving the way to K&H’s first mortgage bond issue of Ft64bn ($241.5m) in March 2017 – a new source of income and a clear commitment to operating in Hungary.

K&H, the subsidiary of Belgium’s KBC Bank, follows a four-pronged approach of simplification, digitalisation, ‘distribution 2.0’ and fast execution. In line with these targets, the lender renewed its mobile banking app in early 2016 and added new functions such as utility bill payments by scanning, FX account handling and fingerprint authentication for Android users in late 2016.

Other innovations included the new K&H Mobilguard, which checks apps on a mobile phone for malware and alerts the user if the phone is infected, as well as the bank’s launch of a mobile app for corporate clients in which company executives can keep track of the incoming and outgoing transfers and account balances – a unique service in Hungary.

K&H also aims to play a positive role in Hungarian society by promoting financial literacy, especially among the youth, through animations and competitions, stimulating entrepreneurship and supporting the Hungarian Paralympic Team, as well as hospitals. It is also seeking to decrease its ecological footprint.

Kosovo, TEB

With another set of solid financial results, TEB is Bank of the Year in Kosovo. The BNP Paribas-owned lender added more than 35% to its capitalisation in 2016, and improved assets and net profits. The bank’s success is rooted in its strategy of tailoring products and services to support economic stability, as well as serve its customers.

“We [are offering] to our customers cutting-edge digital banking services by applying the latest technologies,” says Orcun Ozdemir, managing director at TEB. He adds that this had several positive effects for TEB, given that it improves “the banking experience for our customers, increases the bank’s productivity, and continues to drive innovation to increase convenience for our customers by offering high-quality and faster services, and new banking products”.

As well as banking services, TEB is also providing non-financial support to small and medium-sized enterprise (SME) customers through its Business Academy concept. The academy aims to help SMEs grow their businesses and enhance their competencies, as well as allowing participants opportunities to exchange experiences with prominent local and international professors and consultants. It has proved to be a successful way in which to attract more clients in the competitive SME sector. 

The lender is also involved in promoting women’s participation in economic activity through its women entrepreneurship programme, which offers financial and non-financial support, an area upon which TEB is keen to focus.

“We are committed to increasing our contribution to Kosovo’s economy and will continue to rely on innovation and customised solutions to increase our market share and profitability,” says Mr Ozdemir, who adds that this will mean providing a secure, highly reliable technology infrastructure along with customer-oriented services and support to meet the changing needs of its customers.

Latvia, SEB Latvia

Despite operating in the eurozone’s low-interest-rate environment, SEB Latvia has reported a strong increase in profits for the second year in a row, making it Bank of the Year in Latvia. 

Net profits were up 49% to €52.3m in 2016, increasing return on equity from 7.99% in 2015 to 12.02%. 

SEB Latvia, owned by one of Sweden’s leading banks, further lowered its cost-to-income ratio by more than four percentage points in 2016 and non-performing loans by nearly two percentage points to 3.65%.

In 2016, SEB launched a new IT system and internet bank – a project it worked on for three years. 

“From the end of 2016 until the first half of this year, we were concentrating all our efforts on the system change and customer communication regarding upcoming changes,” says Ieva Tetere, chief executive at SEB Latvia.

“With the introduction of the new internet bank, we moved forward with several new products,” she says. These include Smart-ID, a separate mobile app to make online banking more secure by, for example, authenticating online banking transactions. 

“By launching Smart-ID we not only followed the demands from the supervisor, but mainly improved the authorisation [procedure] in our internet bank as well as creating the foundation to use Smart-ID as the e-signature.” 

In 2016, a number of SEB’s branches were converted to cashless consultation centres, while others were optimised in terms of size and location. By end of 2017, SEB aims to replace 80% of its cashpoints with modern machines.

Going forward, SEB will “allocate more resources to automation and digitalisation”, says Ms Tetere, and will “proceed with the innovation centre projects in Latvia, supporting young entrepreneurs”.

Lithuania, SEB bankas Lithuania

Lithuania’s economy improved from its subdued growth rates to increase its gross domestic product (GDP) growth by 2.3% in 2016. The pick-up in GDP growth, especially due to a rise in domestic demand and exports, also filtered through positively into the banking sector. With a focus on digital innovations and having posted strong financials, SEB bankas Lithuania stood out as Bank of the Year for Lithuania.

In 2016, SEB boosted its net profits by 58% to €93.1m, raising the lender’s return on equity to 12.1%. SEB’s non-performing loan and cost-to-income ratios both fell (to 2.9% in 2016 from 4.5% in 2015, and 45.1% in 2016 from 51.4% in 2015, respectively).

At the end of 2016, SEB upgraded its mobile app and included additional features such as fast payments to other app users through a user’s contact list. 

To simplify internet banking for its customers, SEB further implemented its Smart-ID, an innovative way to identify customers, allowing for a quicker, easier and more secure connection to SEB’s online banking platform.

The new tool, as well as the upgraded mobile app contributed to a surge in mobile and online banking customers. At the end of 2016 the number of registered SEB online banking users reached 1.24 million (up 3% on the year), while the number of customers accessing SEB banking services through its mobile service increased by 28%.

Private individuals are now able to obtain a consumer loan online and receive financial advice through online video conferencing.

In an effort to streamline and simplify its processes, SEB shortened its financial services contracts with customers significantly – for example, for a consumer loan from a length of 12 pages to one page and for a private leasing contract from 25 pages to two – measures that SEB aims to extend to additional areas going forward. 

Montenegro, Societe Generale Montenegro

After a strong performance in 2015, Societe Generale Montenegro again improved its results in 2016 to report the best financials in the bank’s history. 

The lender’s net profits improved by 23.5%, leaving return on equity marginally below 14% – a 1.3 percentage point increase from 2015 – all despite regulatory pressures, decreasing interest rates and a digitalisation push.

Still, the engagement of Societe Generale Montenegro’s employees as well as the bank’s commercial and financial results have never been better, according to Milorad Katnić, president of the board of directors at Societe Generale Montenegro. 

“We are the most efficient bank on the market with the lowest cost-to-income ratio, with steadily growing net banking income and net results,” he says.

The cost-to-income fell from 52.6% at the end of 2015 to 49% in 2016, while non-performing loans also contracted to just under 7%.

The bank’s gross loans portfolio increased by 1.55% in 2016, giving Societe Generale Montenegro a market share of 14.79% in total (17.8% among retail customers and 12.1% among corporates). According to Mr Katnić, clients’ satisfaction levels are constantly improving.

Societe Generale Montenegro has introduced several innovative services, products and programmes in recent years, such as a Visa business debit payment card, mobile services for retail clients, and loyalty programmes allowing customers to receive discounts at points of sale. 

The lender aims to support companies in the tourism, culture and clean energy industries, according to Mr Katnić, which are growing sectors in the country. “At the same time, we will work on extending our relation with existing clients, providing new services and more value for them,” he says.

Poland, Alior Bank

Alior Bank’s solid 2016 results, its takeover of Bank BPH’s core assets and the launch of its ‘Digital Disruptor’ strategy make it Poland’s Bank of the Year. 

The lender reported a more than 3 percentage point increase in return on equity in 2016 to 12.7% and a falling cost-to-income ratio of 49.1%

“In 2016, Alior Bank achieved very good financial results, completing simultaneously the merger with core Bank BPH,” says Micha Jan Chyczewski, deputy chief executive at Alior Bank, who adds that as a result of this merger, Alior Bank is now one of Poland’s 10 largest banks.

The merger (excluding BPH’s mortgage loan portfolio and investment fund TFI) increased Alior’s total balance sheet by more than 30%. Additionally, Alior expects to achieve annual synergies of about 300m zloty ($83.2m) before tax, not accounting for about 160m zloty of synergies from implementing the business transformation plan. 

One of the country’s most digital-savvy banks, Alior further launched products such as mobile banking application HAIZ, which is targeted at young customers and their parents, allowing users to send money quickly and easily, while parents can set limits for mobile transfers or debit card payments. 

But Alior is seeking to go further, with its 2017-2020 Digital Disruptor strategy, aiming to become a top five innovative bank in Europe while remaining “a Polish innovation leader in order to meet customer expectation in the digital world”, according to Mr Chyczewski.

The strategy aims to maintain the highest net interest margin in the Polish banking sector (4.5%), reduce Alior’s cost-to-income ratio to 39%, and provide the shareholders with return on equity rising from 8% in 2016 to 14% in 2020. Alior plans to invest 400m zloty in innovative technological projects in the next four years.

Romania, UniCredit Bank Romania

Innovative products and services as well as solid financial results make UniCredit Bank Romania the Bank of the Year in the country. 

UniCredit Bank Romania achieved a strong increase in deposits in 2016, of some 22.5%, and also increased its lending rates by 8.1% on 2015 figures. Net profits increased by 30% compared with 2015, gradually improving the bank’s return on equity and lowering its cost-to-income ratio to 43.88%.

“Among our most notable performances we would highlight the good business results and customer satisfaction,” says Rasvan Radu, chief executive at UniCredit Bank Romania. He adds that the bank also showed strong growth in its retail business and “consolidation” of its position in the corporate segment.

To make its corporate customers’ lives easier, UniCredit Bank Romania launched mPOS, an innovative device for accepting payments. The product comes with a wide range of advantages for the company using it – such as flexibility and mobility, the easy administration of devices and easy implementation – as well as for the bank. 

The bank’s Card Menu is a unique product replacing state-funded printed meal tickets for all Romanian employees, offering clients increased cost efficiency and simplification of the benefits distribution process.

Further innovation came from its transaction banking division. UniCredit Bank Romania completed the first ever bank payment obligation transaction carried out in the country, for the payment of a commercial operation between a Romanian company and its German supplier. 

“We aim to further strengthen our position through the solid and resilient organic growth of our customer base and revenues,” says Mr Radu, who adds that the bank will do this in line with the Transform 2019 strategic plan of the UniCredit group. “Digitalisation, innovation and continuous simplification of operations are the key opportunities we plan to incorporate as drivers of our future growth.”

Russia, Tinkoff Bank

In recent years, the Russian economy has been heavily hit by the drop in oil prices, which caused a 2.8% contraction in gross domestic product in 2015 and a smaller reduction of 0.2% in 2016. Despite the feeble operating environment, Tinkoff Bank demonstrated that its new financial supermarket strategy is a success story. 

Counteracting the impact of the Russian consumer downturn in 2014 and 2015, Tinkoff revamped its business model and diversified its income sources. While maintaining its lead and high returns in the core credit card segment, Tinkoff started developing new business lines under its Tinkoff.ru financial supermarket, which are now increasingly contributing to the bank’s top line.

“We set ourselves the goal to build new fee-and-commission business lines – such as current accounts, small and medium-sized enterprise [SME] services and brokerage,” says Oliver Hughes, chief executive at Tinkoff Bank. “This is to diversify our top line and to move into new segments.” 

As a result, net profits surged from Rbs1.9bn ($31.5m) in 2015 to Rbs11bn in 2016 and a return on equity of 42.5%. Tinkoff improved its performance across most metrics, including non-performing loans (2.2 percentage points lower) and capitalisation (29% higher). 

Through Tinkoff.ru, the lender now offers partner products such as mortgages, retail securities trading, insurance, cash loans and travel products, and proprietary products such as current accounts and products built around them (debit cards, deposits), credit cards, acquiring, insurance, mobile and payments and SME services. 

Tinkoff.ru’s services are available to its own customers and those of other banks, and Tinkoff aims to build out its distribution platform and move into additional segments.

In 2017, these new business lines will break even, according to Mr Hughes, who adds that Tinkoff expects non-credit products to account for about 30% of its net income by the end of 2019.

Serbia, Banca Intesa Beograd

Serbia’s largest bank by assets and capital, Banca Intesa Beograd has demonstrated a drive towards innovation, while working on further extending its leadership in the country.

Banca Intesa Beograd’s total assets, loans and deposits increased in 2016, giving it market shares of 17%, 15.5% and 17.4%, respectively. The lender further posted a healthy capital adequacy ratio of 22%, while also enhancing loan portfolio quality.

“In a still fragile economy, we focused on supporting its most sensitive segments – entrepreneurs and small and medium-sized enterprises – and became the first bank in Serbia to implement the EU’s Competitiveness of Enterprises and Small and Medium-sized Enterprises [Cosme] programme for bolstering competitiveness through relaxed collateral requirements,” says Draginja urić, president of Banca Intesa Beograd’s executive board. “We also reinvented the customer experience by launching Serbia’s first mobile wallet and introducing the most technologically advanced branch concept in the market.”

Under the Cosme programme, Banca Intesa Beograd signed a guarantee agreement with the European Investment Fund, enabling it to support SMEs and entrepreneurs in Serbia with credits totalling Ä60m at better-than-market conditions – an initiative that was taken up by about 1300 SMEs and entrepreneurs within less than six months. The success of the programme saw Banca Intesa Beograd sign an additional agreement for a further Ä100m, which it estimates will benefit a further 2200 SMEs and entrepreneurs.

Banca Intesa Beograd further pioneered the first mobile wallet in Serbia and enabled an online cash loan application, providing customers with more convenience and flexibility in banking. 

“Looking ahead, digital transformation and further portfolio expansion will remain the top priorities on our business agenda in order to meet evolving customer needs,” says Ms urić. 

Slovakia, Slovenská sporiteľňa

A strong financial performance in 2016 sees Slovenská sporiteľňa take the award for Bank of the Year in Slovakia. The bank, majority owned by Austria’s Erste Group, posted 15% higher net profits, amounting to return on equity of 14.13%. 

Non-performing loans fell by 1.1 percentage points to 4.5%, a figure that further contracted during the first half of 2017.

“Even in a tough competitive market, Slovenská sporiteľňa is able to confirm its leading position in deposits and loans,” says tefan Máj, chairman of the board of directors and chief executive of Slovenská sporiteľňa. “We are focusing on an improvement of customer experience with an emphasis on digitalisation and an improvement of efficiency and responsible cost management.”

In 2016, Slovenská sporiteľňa redesigned savings products for retail customers and made them tablet-ready. Following the successful rollout of the savings platform, the lender used a similar process to redesign its consumer loans sales process for tablets. Both of these innovations contributed to higher loans and deposits at Slovenská sporiteľňa. The bank increased its volume of loans by Ä1.4bn from June 2016 to June 2017 to Ä11bn, while deposits reached Ä12.1bn (a 10.8% increase, year on year).

“The situation with low interest rates is tough for banks and I hope that unexpected legislative surprises won’t make matters even worse,” says Mr Máj. Various legislative changes have already had a negative impact on the profitability of Slovakia’s banking sector, which also caused Slovenská sporiteľňa’s performance in the first six months of 2017 to decline. 

Still, Mr Máj says that he is pleased that his bank “will continue to come up with useful products for clients, which will make their lives easier. The main focus remains on digitalisation and improving customer experience throughout all channels.”

Slovenia, SKB banka, Ljubljana

In a competitive banking sector, SKB banka achieved a strong increase in profitability and market share in 2016, making it Bank of the Year in Slovenia. 

In both loan and deposit products, SKB improved its market share among individuals and corporate clients in 2016 and intensified its monitoring of overhead expenses, which saw the lender’s cost-to-income ratio fall to 47.8% from 53% in 2015.

A more than 7 percentage points boost to return on equity, which reached 16.88% in 2016, and net profits of €63.7m underlined the bank’s strong performance, as well as a significant reduction in non-performing loans from 15.1% in 2015 to 9.3% in 2016. 

“With a commitment to clients and [a strong] team spirit, [our] employees provide quality products and services, strive to be innovative in performing their tasks and [are] responsible for managing risks and operating costs,” says François Turcot, SKB’s chief executive. “SKB Group, composed of SKB banka and its two subsidiaries, SKB Leasing and SKB Leasing Select, has again achieved excellent commercial and financial results in the first half of 2017.”

In 2016 SKB, majority owned by France’s Société Générale Group, also saw growth in market share for its SKB Leasing business and facilitated the integration of the acquired financing company for Peugeot and Citroën car dealers BPF Financiranje Slovenija.

“SKB Group has the necessary foundation for the further development of its mission to finance the Slovene economy and to continue supporting its clients’ development, while strengthening its position in the Slovenian banking market,” says Mr Turcot, who adds that this is thanks to the bank’s ability to capitalise on its strengths and on its diversified portfolio of businesses, and by focusing on the SKB’s conservative risk management and operational efficiency.

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