bakai bank

The Covid-19 pandemic and widespread political turmoil in the region may have taken a toll on the profitability of the lenders included in The Banker’s 2021 Top 100 CIS Banks ranking, but they have managed to increase their assets. Joy Macknight reports. 

Banks operating in the Commonwealth of Independent States (CIS) have not only had the Covid-19 pandemic to contend with, but political turmoil and regional conflicts as well. Disputed presidential and parliamentary elections in 2020 fuelled unrest in Belarus, Georgia and Kyrgyzstan, while Armenia and Azerbaijan came to blows over the Caucasus territory of Nagorno–Karabakh and the armed conflict continued in eastern Ukraine.

Unsurprisingly, gross domestic product (GDP) fell in nine of the 11 countries included in The Banker’s 2021 Top 100 CIS Banks ranking. Kyrgyzstan saw the biggest drop in GDP (–10.5%), according to the World Bank, followed by Armenia (–7.8%) and Georgia (–6.0%). Only Tajikistan and Turkmenistan managed to expand their economies during 2020.

The challenging operating environment has stressed the region’s banking sector. The total Tier 1 capital of the top 100 CIS banks contracted by 3.8%, while pre-tax profits (PTP) plunged by almost 30%. On the bright side, however, the total asset base of the top 100 grew by 3.7%.

Just over half (55%) of the banks in the ranking experienced a year-on-year decline in Tier 1 capital. Ukraine’s Raiffeisen Bank Aval saw the biggest drop of almost 50%, whereas Bank Bakai of Kyrgyzstan saw the biggest increase, expanding its core capital by 190.3%. Bank Bakai also reported the largest growth (96.6%) in its asset base of the 67 banks that increased their total assets in 2020.

Only 22 banks recorded a percentage increase in profits, led by the State Savings Bank of Ukraine, which reported a more than 800% surge in PTP, Alfa Bank Belarus (112.1%) and Paritetbank of Belarus (108.3%). Nine CIS banks in the top 100 moved from profit to loss, while one — VTB Bank Armenia — moved from loss to profit.

Ukraine has the greatest number (22) of lenders in the ranking, followed by Armenia (16) and Kazakhstan (13). Only two of Armenia’s banks — Armenian Economy Development Bank and HSBC Bank Armenia — managed to increase profits, as did three Ukrainian banks. Kazakhstan commands the largest share of PTP in the ranking, making up almost 34% of total profits.

Kazakhstan’s Halyk Bank has come out on top of the main ranking yet again, with $3.48bn in Tier 1 capital. It increased its core capital by 4.7%, extending its lead on Ukraine’s PrivatBank, which maintains second place for the second year, despite a 19.1% drop in Tier 1 capital. Only four of the top 10 lenders improved their Tier 1 position. Sberbank Kazakhstan was the only bank in the elite group to see a double-digit increase (16.7%), which gave the boost it needed to enter the top 10.

We have also run our best-performing bank methodology against the largest five (or fewer) bank-holding companies (excluding foreign-owned subsidiaries) by Tier 1 capital in six CIS countries.

Converse Bank, which moved up six spots in the main ranking to 54, clinches the title of best-performing bank in Armenia, ousting ArmSwissBank. Converse Bank has bettered its four largest competitors in categories such as soundness, which assesses capital asset ratio, and leverage, which looks at liabilities to total assets and year-on-year change. All five are bunched close together in terms of overall score.

The best-performer in Azerbaijan is Kapital Bank, which placed third in the table last year. The universal bank, which is the third-largest in the country, significantly improved its overall score and topped the table in growth, profitability, operational efficiency and return on risk. It increased its Tier 1 capital by 17.0%, its asset base by 25.5% and its profits by 28.1%, and displays the second-highest return-on-capital ratios in the region. Last year’s performance leader, Unibank, has not been featured due to the lack of capital adequacy disclosure in 2020.

Minsk Transit Bank comes out on top again among its Belarusian peers; however, its overall performance score dipped slightly from 7.43 in the 2020 table to 5.97 in 2021. The commercial bank still managed to outperform its competitors in the soundness and leverage categories.

In Georgia, Basisbank, which placed third in last year’s table, has managed to come out on top, replacing TBC Bank as the best-performer in the country. Basisbank, a private commercial bank and the third-largest in the country, ranked first in profitability, asset quality, return on risk and liquidity.

Victoriabank has overtaken Moldindconbank to become the best-performing bank in Moldova. Victoriabank, which is controlled by a consortium formed by Romania’s Banca Transilvania and the European Bank for Reconstruction and Development, came first in return on risk, liquidity, soundness and leverage categories, ahead of two domestic peers.

State Savings Bank of Ukraine has topped the country performance table in five categories: profitability, operational efficiency, return on risk, soundness and leverage. Moving up from fourth position, it has taken the mantle of best-performing lender from the country’s largest bank, Privatbank, which drops down to third place. Impressively, Privatbank has the highest return on assets in the main ranking, 6.42%, which is well above the CIS regional aggregate average of 1.82%.


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