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Rankings & dataMay 1 2016

Top 100 central and eastern Europe EU banks ranking: Tier 1 capital ebbs as dollar strengthens

Bulgarian lenders bucked the trend as Tier 1 capital contracted in most of central and eastern Europe, while Czech institutions retained their status as most profitable banks in the region.
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Although economic growth picked up in the EU countries of the central and eastern Europe (CEE) region in 2014 after a sluggish 2013, their banking assets and capital shrunk throughout the year in this year’s Top 100 CEE EU Banks ranking.

For most countries, this happened as the depreciation of the local currency against the dollar outmatched the growth of assets and capital. However, while every single country in the ranking posted a decline in dollar terms in aggregate assets relative to 2013, this was not the case with Tier 1 capital – one country, Bulgaria, posted a Tier 1 capital increase in dollar terms, 5.49%.

The banking landscape has not changed much in terms of profitability. As with last year's ranking, the Czech Republic boasts the highest return on capital (ROC) and Estonia the highest return on assets (ROA). Slovenia and Hungary are still in the red, but Slovenia is showing signs of improvement.

Top 10 banks CEE Tier 1 growth

Bulgaria bucks the trend

Bulgarian banks managed to build up more Tier 1 capital than any other country in the ranking, although the local banks responsible for the largest increases have balance sheets weighed down by bad loans.

United Bulgarian Bank (UBB) led the capital raising charge. It posted a Tier 1 capital increase of 51.59%, the largest in the ranking. UBB is a subsidiary of the ailing National Bank of Greece, however Fitch views the bank as sufficiently independent from its parent in terms of funding and credit exposure. The bank is also sitting on a considerable amount of impaired loans, 35.09% at the end of 2014.

Investbank was another Bulgarian institution that posted a large capital increase, of 46.9%, along with Piraeus Bank Bulgaria, which increased its Tier 1 capital by 24.94%. Both of these lenders had large amounts of loans in arrears, 24.23% and 24.9% respectively. Like UBB, Piraeus Bank Bulgaria is Greek-owned and could be soon folded into UBB – in mid-2015 its parent, Piraeus Bank, was in talks with National Bank of Greece over a merger of the Bulgarian operations.

Poland, which was last year’s best-performing country in terms of asset and capital growth, did not fare as well this year. However, while total banking assets shrunk for every country in the ranking, Poland managed the smallest decrease, of -2.37%. Several of its banks were among those to achieve the highest asset growth in the ranking, including the bank that tops this year’s ranking, PKO Bank Polski. In addition to growing its balance sheet by 7.21%, PKO saw a relatively small change of its Tier 1 capital, of only -2.13%, which was enough to elevate it one position to first place in the overall ranking.   

Czechs grow 

In last year’s ranking, Czech banks managed to be most profitable in terms of ROC, despite operating through a recession. They have performed even better in this year's ranking, and the country's economy is back on track, recording 2% gross domestic product growth in 2014.

At the aggregate level, Czech lenders earned an ROC of 21.48%, an improvement of more than 20.57% on the year before. But while Czech banks are most profitable when it comes to aggregate scores, individually they are outperformed by two Latvian institutions, ABLV Bank and Rietumu Banka. These two banks showed the highest ROCs in the ranking, of 33.66% and 33.62%, respectively.

As was the case last year, Czech banks were second in terms of ROA to lenders from Estonia, who earned the highest aggregate return in the ranking, of 2.04%. Also like in the last year, it was a Czech bank that earned the highest individual ROA in the ranking – GE Money Bank Czech Republic, with a return of 3.86%. 

The Banker’s Top central and eastern Europe EU banks ranking, 2016 originally appeared in the MaY 2016 issue of the magazine. The full results of the ranking are available on The Banker DatabaseFind out more about the database, register for a free trial or subscribe today.

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