Bank of the Year Awards 2020 – central and eastern Europe
The best banks of the past 12 months from central and eastern Europe.
Banka Kombëtare Tregtare
Albania’s economic growth has been hit hard in recent years, as falling electricity production and a major earthquake dented the country’s trajectory in 2019. Annual gross domestic product (GDP) growth hit 2.2% for the year, according to the Bank of Albania, down from the 4.1% registered in 2018. The impact of the Covid-19 pandemic in 2020 has been even more damaging, with the World Bank anticipating a contraction in GDP of -8.4% for the year. Nevertheless, the winner of the 2020 Bank of the Year country award, Banka Kombëtare Tregtare (BKT), has successfully pursued a digital-first strategy to secure a path to growth.
“We want to be a 100-year-old fintech company with a banking license and a large depositor base,” says Seyhan Pencabligil, chief executive and board member of BKT.
BKT’s mobile application, BKT Smart, received a comprehensive update in 2019 with the introduction of a range of new services including tax payments, a customer complaints management function, improved international transfers and domestic payments via mobile phone number, among other offerings. In addition, the mobile applications user experience interfaces were also updated.
Over the course of 2019, BKT’s total assets increased by 9.8%, while its Tier 1 capital position expanded by 12.5%. This was accompanied by the bank’s return on equity rising from 18.7% to 19.7%, just as its ratio of non-performing loans (NPLs) fell from 4.4% to 3.2%. Indeed, the bank’s strong NPL numbers are better than those of many domestic peers, while it has faced the Covid-19 pandemic with a strong liquidity position thanks in part to the lender’s decision to pursue a more conservative lending approach in the wake of Albania’s economic woes in 2019.
Ameriabank
Ameriabank emerged as the clear winner in the Armenia country category, thanks to the robust growth it enjoyed over the 2019 review period, as well as its commitment to launching digitally-enabled services for its clients. By most key indicators, the lender enjoyed positive results: net profits increased by 15.4% for the year, while total assets and Tier 1 capital both expanded by 24.2% and 5.9%, respectively. The lender’s return on equity, meanwhile, remained relatively stable at 12.8%, as did its ratio of non-performing loans which stayed at 3.3%. Nevertheless, its cost-to-income ratio increased from 38% to 42%.
In a demonstration of Ameriabank’s commitment to serving small and medium-sized enterprises (SMEs) in the country, as well as the ongoing digitalisation of its products and services, the lender launched online-only loan applications and authorisations for this business segment in 2019. Under the first phase of this strategy, Ameriabank permitted online-only loans for SMEs up to a value of 10m dram ($20,200). By the end of 2019, under the second phase of this strategy, the bank expanded the loan limit and, by using a more advanced scoring module, ensured that customers could receive a response within just a few minutes. The bank achieved this through the use of machine learning tools.
In addition, Ameriabank has launched online applications for mortgages and auto facilities, while the introduction of e-signatures for individual clients has cut the cost of new account openings by about 40%. An agreement reached between Zangi, a messaging application, and Ameriabank also permits customers to message the bank free of charge from anywhere in the world, irrespective of the mobile operator they are using.
AccessBank
As the leading provider of microfinance in Azerbaijan, sustainability is in AccessBank’s DNA. Indeed, the lender’s innovative mix of financing options for the country’s households and micro, small and medium-sized businesses, coupled with its commitments to financial inclusion and an impressive set of financial results, all ensured it secured the Azerbaijan country award for 2020.
Given the crucial role that AccessBank plays in the economy – servicing more than 70,000 business clients, as of August 2020 – it has played an outsized role in supporting Azerbaijan’s most vulnerable groups through the crisis of the Covid-19 pandemic. This includes deferring payments, reducing loan instalments and increasing loan terms for many of its customers. As a result, the bank restructured more than 10,000 loans for its customers between March and August 2020. Moreover, AccessBank has continued to lend through the pandemic, issuing 20,000 new loans, mainly to the agribusiness sector, 18,000 of which were issued with no collateral.
“Many sectors of the Azerbaijani economy experienced a decrease in businesses activity due to the pandemic and the related quarantine regime. Some customers of AccessBank, working in the affected industries were in need of debt restructuring, and our bank met these requirements,” says Anar Hasanov, general manager and chairman of the board at AccessBank.
Meanwhile, the bank has continued on its path to digitalisation and has seen a significant increase in the use of digital only products and services by its customers of the course of 2020. “Our bank accelerated the installation of digital infrastructure and its introduction to customers, so that they can access the maximum number of our banking services without leaving home. In addition, digitalisation has allowed our employees to work remotely – and this changed our corporate culture a lot,” says Mr Hasanov.
Belarusbank
The winner of the Belarus Bank of the Year award in 2020, Belarusbank, impressed the judges by its strong financial performance and an ambitious growth strategy centred on international expansion. By the end of 2019, the bank’s return on equity was 9.4%, while its cost-to-income ratio came in at 48.3%. Notably, Belarusbank’s ratio of non-performing loans was low at just 1.4%. Buoyed by healthy asset quality, the bank is in a good position to weather the coming challenges linked to the economic stress imposed by the Covid-19 pandemic across much of the central and eastern European region.
In line with its 2018-2020 development strategy, Belarusbank is pursuing business diversification through exposure to foreign markets. To this end, the lender opened ASB RusLeasing, a leasing company, in the Russian market. The new entity is focusing on the export of Belarussian items and equipment to Russia through attractive leasing terms. In doing so, Belarusbank is also meeting national level objectives by promoting export-oriented activity.
Meanwhile, Belarusbank has stepped in to offer considerable support to its clients as the country has grappled with the Covid-19 pandemic. It was the first bank in the country to initiate a medical insurance programme for children focused on Covid-19. By late 2020, about 11,800 of these insurance policies had been purchased by the bank’s clients. A similar offer has since been introduced to cover adults.
In addition, the bank has provided more than 200 retail clients with a credit vacation for long-term loans, most of which are home loans. Similarly, Belarusbank is providing loan restructuring options for clients whose financial situation has been hit by the pandemic. The bank had responded positively to about 85% of these applications in the closing months of 2020.
UniCredit Bank
By any measure, UniCredit Bank enjoyed a stellar year over the 2019 review period. This included a jump in net profits, of 4%, while total assets expanded by 10% and Tier 1 capital grew by 3.9%. The lender’s return on equity, meanwhile, hit a healthy 12.3%, as its ratio of non-performing loans, although somewhat high at 6.1%, reduced from 7.3% in 2018. Nevertheless, in common with other banks in Bosnia and across the wider region, UniCredit Bank has endured a number of challenges linked to the onset of the Covid-19 pandemic.
“Covid-19 has brought new challenges to all of us. By focusing on the health and safety of our employees and clients, we have ensured business continuity, emphasising the benefits of digital services. As we continue to support our stakeholders as ‘part of the solution’ for the real economy, we have constantly optimised our product range to make it more appropriate, embedding technology in all our processes and client key touchpoints,” says Amina Mahmutovic, CEO of UniCredit Bank.
Indeed, the bank has handled the crisis with sensitivity. In particular, it has supported its most vulnerable clients by issuing new PIN codes and debit cards free of charge for senior customers who have faced movement restrictions, while offering new clients mobile banking services free of charge for six months and ensuring that all domestic online payments in 2020 are also free. In addition to these steps, and others, the bank purchased Ä50,000 worth of personal protective equipment for hospitals across the country.
“Our main goal in the coming years will be accelerating the road to digitalisation. We also believe seamless customer experience is another key pillar in retaining our position as the market leader,” says Ms Mahmutovic.
DSK Bank
Bulgaria’s economy has performed well in recent years, thanks to the implementation of much needed structural reforms in the preceding decades and a young, dynamic population. Gross domestic product expanded by 3.4% in 2019, driven in part by strong household consumption. In this environment, it is little surprise that the winner of the 2020 Bulgaria country award, DSK Bank, registered strong growth numbers over the 2019 review period. In particular, the lender saw its net profits increase by 13.2%, while total assets also grew by 10%. The bank’s return on equity, meanwhile, reached 8.8%, while its cost-to-income ratio was 50.4%.
On May 4, 2020, DSK Bank completed the merger with fellow Bulgarian lender Expressbank, the country’s seventh largest lender by assets, following a 20-month integration programme. The merger has positioned DSK Bank as Bulgaria’s leading lender by total customers (2.5 million), while it also boasts the largest branch and ATM network in the country. In addition, the bank has among the highest total assets, loans and deposits in Bulgaria’s banking system. The merger has enhanced the bank’s scale and operating efficiency at a time when Bulgaria’s economy, in common with other regional markets, is experiencing negative pressure as a consequence of the Covid-19 pandemic.
Meanwhile, DSK Bank is rolling out its ‘e-signature pad’ solution across its national network. This provides for the digital signing of documents by clients. The bank has invested heavily in the devices, as well as a back end system, to facilitate the e-signature technology. This system has also been integrated into DSK Bank’s core banking system which generates client-related documentation. The e-signature pad solution is highly secure and in line with European-level directives.
Privredna banka Zagreb
In a highly competitive country category, Privredna banka Zagreb (PBZ) emerged as the deserving winner of the Croatia country award. A strong response to the Covid-19 pandemic, coupled with an impressive set of financial results and a commitment to innovation, all ensured that the lender captured the judges’ attention. In 2019, the bank’s total assets and Tier 1 capital increased by 5.2% and 9.4%, respectively, while net profits grew by just over 1%. This was accompanied by a return on equity of 9.8%.
Meanwhile, in response to the Covid-19 pandemic, PBZ introduced an online loan payment deferral application for its retail customers covering a three-month period, with the possibility of extending it to a further three months. “At PBZ we have taken all necessary measures to support our clients, employees and community and to ensure smooth operations and the continuity of all business processes,” says Dinko Lucic, president of the management board at PBZ.
In terms of its commitment to innovation, PBZ has launched an online-only loan application for specific customer segments. This fully automated process also makes use of digital signatures, meaning that both the loan assessment and authorisation can be granted quickly and in a fully secure way. The bank also launched a digital banking solution for its business customers.
“In the next period we will again pursue the path of innovation, focusing on continuous improvement of services and customer relations and further transformation and digitalisation of our business, which proved to be crucial during the pandemic. PBZ is a highly liquid and capitalised bank, well above the regulatory requirements, and it continuously provides strong support to the country, also by making unrivalled donations to hospitals and social care institutions,” says Mr Lucic.
Ceská sporitelna
Innovation is at the heart of Ceská sporitelna’s growth story. In recent years, the bank has introduced a number of cutting-edge product and service offerings to the Czech Republic’s banking market, underscoring its capacity to meet the needs of its diverse customer base. The launch of the ‘My Healthy Finances’ personal financial advisory service is a case in point. Available to all customers, the service assists individuals in maintaining a healthy personal budget, tailored to their current financial situation, and is based on the concept of a personal banker. By the end of 2020, more than a million of the bank’s clients had made use of the service.
Beyond this, Ceská sporitelna, which is part of the Erste Group, has also made impressive strides with respect to its digitalisation strategy. Over the course of 2019, 1.6 million customers were migrated from the bank’s old internet banking system to its state-of-the-art digital platform, known as George, which includes online and mobile banking. Through George, a range of new functionalities have been developed, from online trading to the ability of entrepreneurs and businesses to connect their accounting systems and business accounts. As a result of these changes, the bank is migrating its corporate clients to George, a process that it expects to complete by the end of 2020.
“Changes in customer behaviour put pressure on both the business model and working with data. The transformation of bank branches, which are shifting from conducting transactional operations to providing comprehensive advisory services, as well as an increasingly rich portfolio of digital services, is already evident. Equally important, however, will be effective ‘behind-the-scenes’ digitisation – the ability to automate routine internal processes, the ability to evaluate data on a daily basis,” says Frantisek Bouc, director of external communications at Ceská sporitelna.
LHV Bank
Estonia’s LHV Bank has gone from strength to strength in recent years. Net profits, total assets and Tier 1 capital all increased substantially over the 2019 review period, while the lender’s return on equity reached 13.8%. Its cost-to-income ratio was 53.2%, while most notably its ratio of non-performing loans was just 0.4%, down from 1.1% in 2018. This impressive financial performance was accompanied by the acquisition of Danske Bank’s Estonian private customer loan portfolio in 2019, followed by the June 2020 acquisition of the same lender’s corporate and public sector credit portfolios.
“LHV is a rapidly growing bank and we are keeping our foot on the accelerator. For the past 18 months we have continued on the road of expanding our business. Some examples of this are growing our customer base by 40%, more than doubling our loan portfolio and establishing ourselves as a partner for international fintechs,” says Erki Kilu, chief executive of LHV Bank.
As LHV’s growth story continues, the bank has embedded a focus on sustainability as a core component of its development strategy. This includes, among other measures, signing up to the UN’s Principles for Responsible Banking in March 2020, supporting the goal of achieving a climate neutral economy in Estonia by 2050 and carbon dioxide neutral bank offices by 2022. The bank has already started issuing green loans to its customers.
“Our plans for the future include growing our business more sustainably, keeping in mind the Paris climate agreement, as we are taking the initiative in striving for greener finance solutions. We are also looking to innovate financial services for both our retail customers, as well as businesses and fintech companies,” says Mr Kilu.
Bank of Georgia
The winner of the 2020 Georgia country award, Bank of Georgia, has enjoyed successive years of mostly double-digit growth in recent times. This is, in part, a product of the bank’s innovative suite of customer-centric products and service offerings, as well as its strong support of Georgia’s dynamic business community.
As Georgia looks to position itself as a regional start-up hub, the Bank of Georgia partnered in February 2020 with the country’s innovation and technology agency, as well as international accelerator 500 Startups, to launch the country’s first international accelerator programme. Bank of Georgia’s co-operation on this project is expected to strengthen the country’s dynamic micro, small and medium-sized enterprise (MSME) ecosystem.
Bank of Georgia has taken notable steps to improve its payments offerings for customers. This includes the launch of Apple Pay in 2019, which also permits customers to withdraw cash using their Apple Wallets. In addition, the bank has partnered with Visa to offer payments on Tbilisi’s subway system using facial recognition technology. Customers can also make withdrawals from Bank of Georgia ATMs using the same technology.
Meanwhile, the lender’s response to the Covid-19 pandemic has also been commendable. “Bank of Georgia has demonstrated resilience amid a tough operating environment this year. We’ve focused our efforts on ensuring operational continuity, ample liquidity and strength of capital, while implementing extensive safety measures in our branches. [Our branches] remained open during lockdown, shifting back office employees to work remotely, and [are] supporting our customers and communities, including helping MSMEs with digital transformation and offering three-month payment holidays to our retail customers during lockdown,” says Archil Gache-chiladze, CEO of Bank of Georgia.
OTP Bank
Hungary’s economy has ticked along at a steady clip over the past couple of years, as employment levels have pushed higher and consumption has remained strong. A number of headline EU-backed projects in the country have similarly helped to stimulate activity, alongside domestic infrastructure development schemes. Taken together, these factors and others contributed to gross domestic product growth of 4.9% in 2019, well above regional norms. Amid these generally positive conditions, it is little surprise that the winner of the 2020 Hungary country award, OTP Bank, has performed so well.
The lender’s net profits have expanded over the past three years and posted a 6% increase in 2019. In tandem, OTP Bank’s total assets and Tier 1 capital position have followed a similar trajectory. In 2019 they rose by 13% and 31%, respectively. Meanwhile, its return on equity over the same period came in at 11.7%, while its cost-to-income ratio and ratio of non-performing loans hit 59.7% and 3.2%.
Beyond these performance figures, the bank also registered a strong increase in its market share across different services and products. This includes a 19% increase in its mortgage portfolio in 2019, with the bank’s market share in new mortgage loan origination hitting 32.6% in 2019. Similarly, the lender’s market share of outstanding loans to Hungarian companies reached 15.7% in 2019, up from 7.5% in 2008.
Meanwhile, in response to the Covid-19 pandemic, OTP Bank has provided more than €2.6m in financial aid to hospitals, charities and other causes in Hungary, as well as markets in which it has international subsidiaries. The bank has also sponsored Covid-19 linked hackathons, to solve challenges associated with the pandemic.
Banka Kombëtare Tregtare Kosova
Banka Kombëtare Tregtare (BKT) Kosova’s work to update its digital banking offerings has paid handsome rewards. Over the 2019 review period, BKT Kosova’s net profits, total assets and Tier 1 capital all expanded by double digits. This success is the product of hard work: in 2019 the bank revamped its mobile banking application, along with its e-banking channels, while launching an interactive voice response module to augment its customer service capabilities.
These achievements are the product of a new department within the bank, known as ‘payment systems and digital banking’, alongside colleagues in an enhanced customer relationship management team.
“BKT Kosova has been heavily focused on digitalising services throughout the past two years, serving us and our customers a great deal, as soon as the pandemic emerged,” says Suat Bakkal, CEO and board member of BKT Kosova. “The bank moved forward [in] introducing new digital service channels which has made banking possible to everyone, wherever they are. As a consequence, customers can now bank at the convenience of their home or office, which constitutes their immediate requirement during this time.”
Another outcome of the bank’s digital drive was the launch of its Smart Invest platform in December 2019. A first of its kind in Kosovo, the platform permits users to invest in a range of financial markets and asset classes, including foreign exchange, commodities and stocks across a multitude of developed and emerging markets.
“Bringing innovation and technology into the market will be our footprint and signature. Beyond providing regular digital banking services, our aim is to focus on establishing a fintech company, which will offer other technological financial services in the form of state-of-the-art apps. This will help us expand not only locally, but regionally and globally as well,” says Mr Bakkal.
Komercijalna Banka
Komercijalna Banka’s results from the 2019 review period were strong: its net profits and total assets increased by 1.1% and 7.6%, respectively, while Tier 1 capital also grew by 7.5%. This performance was underpinned by an impressive 13.7% return on equity and a cost-to-income ratio of 40.9%. The bank’s asset quality, meanwhile, continued to improve with its non-performing loan ratio decreased to 6.3%, from 10.7% in 2018. Much of this success can be attributed to the lender’s commitment to technological innovation both at the front and back end of its business.
In February 2020, Komercijalna Bank became the first lender in North Macedonia to launch a fully digitalised city branch, in the heart of Skopje. The branch is equipped with ATMs and the latest digital cashless payment kiosks. Clients – along with any cardholder from a domestic or international bank – can withdraw or deposit cash at any time and exchange euros for dinars, among other services. The timing of the branch’s launch could not have been better: the onset of the Covid-19 pandemic has underscored the importance of digital banking during a health crisis. Indeed, Komercijalna Banka, like its market peers, has not been free from the pandemic’s fallout.
“Covid-19 has impacted our business mostly through lower levels of activity from our clients, thus influencing their payment operations as well as their capability to service loans. We have been focused on rescheduling and refinancing loans to the affected clients in order to mitigate the pandemic’s impact on their liquidity and to support their survival,” says Hari Kostov, chief executive of Komercijalna Banka.
Looking ahead, Komercijalna Banka will continue to prioritise innovation and digital banking options through its fully integrated ICT infrastructure, including independent and secure data centres.
Moldova Agroindbank
Over the past two years, Moldova’s economy has outperformed many regional peers in terms of gross domestic product growth. In 2019, it reached 3.6% thanks to strong public spending initiatives and robust household consumption. As a result of the Covid-19 pandemic, the country’s economy is likely to contract by about 3% in 2020, according to the International Monetary Fund, before rebounding to 4.1% growth in 2021.
Despite this relatively rosy picture, Moldova is saddled by a range of pressing economic challenges, including a lack of good quality public infrastructure and high levels of corruption. Developing the country’s private sector, therefore, will be paramount if Moldova is to advance to the next stage of its development.
The winner of the 2020 country award, Moldova Agroindbank, is focusing on this very objective. The lender has established specialised divisions in order to cater to the country’s larger corporates, on the one hand, and small and medium-sized enterprises (SMEs) on the other. This targeted approach to lending has helped the bank to secure a strong market share with respect to Moldova’s business community. Meanwhile, the bank has adopted a case by case approach in terms of providing relief to SMEs during the Covid-19 pandemic, adopting a range of supportive measures including the rescheduling of loan payments.
Beyond business banking, Moldova Agroindbank has also launched an attractive proposition for its retail customers in the form of LiberCard. Customers using the card can pay for goods in interest free instalments by shopping with more than 3000 participating merchants. Notably, the card is available to order through the bank’s website or mobile application. The bank’s app even permits customers to monitor activity on the card and keep track of payment schedules.
Erste Bank Montenegro
In 2019, Erste Bank Montenegro celebrated its first decade of banking in the country. It has good reason to be proud: the lender has made a huge impact on the country’s banking sector and today is among the most profitable and successful institutions in the market.
Over the 2019 review period, its net profits jumped by a massive 33.8%, while total assets and Tier 1 capital expanded by 16.2% and 14.5%, respectively. These impressive numbers were underscored by a return on equity that increased to 14.6% from 12.7% in 2018, while effective cost control measures reduced the cost-to-income ratio to 57.5% from 60.3% over the same period.
Beyond these bigger picture performance figures, the bank also made significant progress in terms of its market share. Its share in total loans expanded by 1.5% in 2019, to 14.28%, driven by strong take up from corporate and small and medium-sized enterprise clients. Similarly, the bank’s share of total deposits hit 10.7%, marking an increase of 1% over the year. Meanwhile, Erste Bank’s solvency ratio is at 20%, which is double the regulatory requirement of 10%, while 87% of its total capital stems from retained earnings.
To support its clients during the height of the Covid-19 pandemic, Erste Bank waived fees for internal retail bank transactions, while cash withdrawals were made free of charge, even using other banks’ machines.
“Erste Bank stayed close to and supported its clients in immediate liquidity needs during the spring lockdown. As we shift focus to beyond immediate impact of the Covid-19 crisis, we continue to provide sustainable support, establishing tailored restructuring mechanisms to targeted industries and clients,” says Aleksa Lukić, CEO of Erste Bank Montenegro.
PKO Bank Polski
PKO Bank Polski has once again secured the Poland country award, in a highly competitive country category. This decision was based on the bank’s excellent performance over the 2019 review period, coupled with its commitment to continuous innovation in order to better serve its customers. The bank’s latest suite of digitally-oriented products and services, in particular, captured the attention of the judges.
In 2019, PKO Bank Polski registered an increase in net profits of 7.8%, as total assets and Tier 1 capital both grew by 7.3% and 10.2% respectively. Its return on equity remained flat, at a strong 10%, while its cost-to-income ratio moved in the right direction by falling to 41.9% from 44.2% in 2018.
Beyond the numbers, however, the bank has furnished its clients with a range of new and exciting services built on digital platforms over the past 18 months. This includes an e-accounting service, which is targeted at businesses and entrepreneurs and allows for quick and convenient invoicing, the management of corporate finances and quick access to payments, among many other features. Similarly, the development of an e-lawyer service, targeting the same business segment, has been a standout success. Through the service, businesses can find a lawyer to perform a specific function at a pre-agreed price.
Meanwhile, the bank’s mobile app has been upgraded to include a new voice assistant function that understands client instructions and is even able to interpret colloquial terms. The voice assistant service allows customers to make payments, check their balance and top up their mobile telephone balance. A range of other functionalities have also been added to the app, including the ability to pay parking fees and purchase tickets on public transport.
BRD – Groupe Société Générale
Before the onset of the Covid-19 pandemic, Romania’s economy was in good health. Growth in 2019, though lower than previous years, hit 3.9% thanks to strong private consumption stemming from high employment and wage increases. In addition, sound investment figures, largely a result of construction activity, also helped to propel the national economy forward. In these conditions the winner of the 2020 Romania country award, BRD – Groupe Société Générale, impressed the judges with its strong financial performance, as well as its innovative, diversified growth strategy.
“Over the past three years, our bank has been undergoing a complex transformation plan,” says François Bloch, chief executive of BRD – Groupe Société Générale. “Our strategic approach aims to transform it into a more digital and efficient customer-oriented bank. We are considering an omnichannel business model that combines human expertise and digital efficiency. We want to improve the time and quality of processes. In terms of operations, we strive to simplify the organisation and optimisation of processes to increase the volumes delivered and their quality.”
For its business customers, the bank launched a new mobile application for its BRD@ffice platform, which is the primary e-channel for corporates. Through BRD@ffice, the bank captures more than one million business payments per month and is experiencing 30% growth every year on this metric alone. In addition, a new factoring software that incorporates a full front-to-back end digital solution, that automates the factoring process, has been launched making it easier for clients to access the products they need.
Similarly, BRD has created a digital trade finance solution that facilitates letters of credit and collections, among other features, for its users. The use of electronic signatures has also been launched by the bank for its corporate customers.
VTB Bank
VTB Bank’s response to the Covid-19 pandemic, from the protection of its staff to the support it has provided to its customers, has been exemplary. Through a range of initiatives, the lender has softened the blow from the economic fallout for clients across its business lines, while using the opportunity to accelerate its pre-existing plans for digital transformation. This includes, among other measures, the launch of a robot to process government-backed soft loans for small and medium-sized enterprises, ensuring that the loan application processing time was reduced by a factor of five.
“As the pandemic came to Russia, we focused on protection of our clients and employees,” says Yuri Soloviev, first deputy president and chairman of VTB management board. “We undertook all the necessary sanitary measurements in our offices, reduced the traffic and accelerated the switch to distant banking procedures. Secondly, we actively channelled the state support measures to our corporate and retail clients. Finally, when the situation was the most uncertain, we created a substantial cushion in our provisions and capital against possible losses.”
In July 2020, the bank launched a robotisation programme across its key functions with the goal of accelerating the speed of its internal processes in order to improve the customer experience. With existing staff identifying aspects of the bank’s functions suitable for automation, the goal is to have 250 fully digital employees in place by 2022. Some of VTB Bank’s human staff are also being trained in the domain of robotic process automation to facilitate this wider programme.
In terms of VTB Bank’s recent performance, the lender registered an increase in net profits of 11% in 2019, while total assets and Tier 1 capital expanded by 5% and 12%, respectively.
Banca Intesa Beograd
By the end of 2019, Serbia had joined an elite group of the world’s fastest growing economies, as the Balkan nation’s gross domestic product expanded by 4.1% over the year. This impressive feat stemmed, in part, from the massive levels of government-backed investment being poured into the economy over the preceding 18 months. It also owes much to the sound fiscal and monetary policies put in place by the country’s finance ministry and central bank, which have together shepherded the economy into a position of strength and stability relative to its standing just a decade ago.
In light of this operating environment, Serbia’s banks have also prospered. But the winner of the 2020 Serbia country award, Banca Intesa Beograd, stands apart from the competition. By the end of 2019 its return on equity had increased to 13.4%, while its asset quality had also improved over the same period, with its non-performing loan ratio dropping to 3% from 5.3% in 2018. In tandem, the bank’s total assets increased by 14.3% while its Tier 1 capital position jumped by 13.6%.
These numbers were underpinned by other notable achievements, not least the completed upgrade of the lender’s core banking system. In 2019, Banca Intesa Beograd finalised the migration to its new IT platform, the Oracle Flexcube Universal Banking solution. In doing so, it has laid a modern foundation from which the lender will be able to develop a range of cutting edge digital products and services.
Beyond its technology investments, Banca Intesa Beograd partnered with the US Agency for International Development and the Serbian Ministry of Agriculture to launch the market’s first agricultural guarantee programme, an initiative that will drastically ease farmers’ access to finance in the country.
Tatra banka
Tatra banka’s response to the Covid-19 pandemic was swift: it was among the first commercial institutions in the country to funnel much needed support to medical agencies and specialists, as well as community groups, to help fight the spread of the disease. In total, the bank allocated Ä500,000 to combat the pandemic in Slovakia.
It also went above and beyond for its clients by implementing a loan moratorium for all of its customers, while suspending administrative fees and other costs associated with payments and account maintenance, among other measures. This impressive response stands the bank apart not only on a domestic level but places it among the most active and engaged lenders in the region.
“The areas we’ve seen most impact [from the pandemic] are in the interactions between the bank and our customers, and in co-operation within the bank, which both became more digital than ever. Luckily, we could build on our digital maturity and turn it to our advantage,” says Michal Liday, chairman of the board of directors and general director at Tatra banka.
Beyond the pandemic, however, the bank enjoyed a sound stretch of growth over the 2019 review period. This includes a 23% expansion of its net profits, coupled with 10.7% growth in total assets and an 8.9% increase in its Tier 1 capital position. Notably, these figures were achieved despite the array of headwinds that have hit banks in the euro area in recent years.
“The long-term trend impacting banking in the euro area is the constant decrease of interest margins. On top of that, there is increased competition from non-banks, such as fintech companies. We feel the need to think hard about what banking should be in the future to be profitable as an enterprise,” says Mr Liday.
SKB Banka
After enjoying relatively robust economic growth in 2019, with gross domestic product expanding by 2.4%, Slovenia has been hit hard by the Covid-19 pandemic. Estimates from the Organisation for Economic Co-operation and Development point to a contraction of about 7.8% in 2020, coupled with an increase in the unemployment rate to 6.4% from 4.4% in 2019.
For Slovenia’s banks, navigating these challenges will not be easy. But the winner of the 2020 country award, SKB Banka, has once again demonstrated the right mix of a customer-centric development strategy, alongside the development of innovative products and services, to retain its crown.
By the end of 2019, the bank’s return on equity was a healthy 14.7%, while its cost-to-income ratio was 47.9%. Asset quality, meanwhile, drastically improved as the ratio of non-performing loans fell to 1.8% from 3.4% over the same period. Though SKB Banka’s net profits fell slightly, its total assets grew by 2.2% and its Tier 1 capital position expanded by 5.3%. Taken together, the bank is in a good position to weather the uncertainties of a domestic and regional economy that is looking to post a recovery over the next 12 months.
In addition, SKB Banka’s work to improve its internal functions, through the launch of its Business Process Management tool and Document Management System, point to an organisational culture that is both adaptable and forward thinking. Both of these tools will help the bank to establish relationships with new customers more easily by performing know your customer (KYC) onboarding, along with periodic KYC reviews, as well as facilitate the retail credit allocation process. The primary advantages of these tools are a reduction in the ‘time to yes’ for new customers.
Raiffeisen Bank Aval
Raiffeisen Bank Aval has performed well in recent years, backed by solid growth numbers and a core strategic development agenda that has served the lender well. In 2019, its return on equity before tax was 51.1%, while its cost-to-income ratio and ratio of non-performing loans were 47.4% and 5.5%, respectively. In addition, the bank registered an increase in total assets of 12.4% and a boost to its Tier 1 capital position of 16.5%, despite the fact that Ukraine’s economy enjoyed relatively modest growth over the period.
“Our business strategy remains largely intact,” says Oleksandr Pysaruk, chief executive of Raiffeisen Bank Aval. “We obviously had to adjust to the Covid-triggered recession but have never stopped supporting our clients. The coronavirus crisis has further accelerated digitalisation trends in the financial services industry. The central bank adopted new regulations on remote client verification and online service, which should help improve the efficiency of the Ukrainian financial sector. We accelerated our digital transformation programme, to capture the benefits of these trends.”
Beyond its digital development, the bank has also made strides in updating its branch network through its branch transformation project. The aim here is to modernise each space and improve the customer experience, employ modern devices to ease the acquisition of new customers and increase the number of sales executed at each branch.
“We plan to become a technological and innovation leader in the Ukrainian financial sector by 2025. We will reinforce our leading position in corporate and SME [small and medium-sized enterprises] segments and gain market share in servicing retail clients. We will build on our solid foundation of being the safest and most reliable bank in Ukraine, a part of a well-known European banking group,” says Mr Pysaruk.
