Share the article
twitter-iconcopy-link-iconprint-icon
share-icon
Best-performing banksJanuary 2 2020

Kazakhstan leads CIS ranking while Ukraine enjoys boom year

The Banker’s Top 100 Commonwealth of Independent States Banks ranking shows the region's banks are performing steadily. Though Tier 1 capital growth slowed, return on both assets and capital are on an upward trend, as Kit Gillet reports.
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

After a modest recovery in 2016, following the sharp decline in assets and capital in 2015, banks in the Commonwealth of Independent States (CIS) have continued to see solid growth, with 2018 building on the positive trends seen in 2017. While top-line figures were not as impressive as in 2017, other metrics showed further promising signs.

The Top 100 CIS banks’ assets as a whole grew by 2.21% in 2018, markedly down from the 6.82% growth rate a year earlier. Aggregate Tier 1 capital growth was also down considerably, with a growth rate of 1.39%, compared with 16.07% in 2017. However, the aggregate return on assets (ROA) across the banks continued to rise, reaching 1.82% versus 1.28% in 2017 and 0.61% in 2016. Return on capital (ROC) was also up, at 17.51%, compared with 12.14% in 2017. 

Overall, the assets of the 100 banks that made the list reached $202.8bn, with Tier 1 capital standing at $21.13bn. (The figures do not include Russian banks, which The Banker ranks separately.) 

Regional powerhouses

Kazakhstan retains the biggest weighting of any country in the Top 100. However, with three fewer banks on the list compared with 2017, the country sees its overall share of assets drop from 33.15% to 26.77%. Second placed Ukraine, with 18 banks, and third placed Belarus, with 13, are almost stable, with 21.07% and 14.78% of total assets, respectively. Combined, the three countries represent more than 60% of assets on the list, with none of the other eight countries surpassing 10%. 

Even so, Uzbekistan (20.9%), Armenia (13.47%), Turkmenistan (13.26%) and Georgia (11.86%) all experienced double-digit growth in assets in 2018, the highest in the region, with only Tajikistan (-12.14%) and Kazakhstan (-9.67%) seeing a drop in overall assets among the banks listed.

Kazakhstan’s banking sector was badly affected by the global drop in oil prices and the subsequent devaluation of the tenge in 2015, and while its economy grew a respectable 4.1% in 2018, up from 4% in 2017, and oil prices have largely stabilised, economic growth is still a source of concern. 

When it comes to Tier 1 capital growth, Uzbek and Ukrainian banks dominate the list, accounting for nine of the top 10 lenders. Uzbekistan’s Uzpromstroybank is top with a growth rate of 86.13%. Agrobank, also from Uzbekistan, comes second with a growth rate of 57.2% – the bank also more than doubled its asset base, up 105% to $1.24bn, the highest growth in the region. Meanwhile ProCredit Bank Ukraine comes third, with growth of 49.84%.

Uzbekistan has embarked on significant market reforms under Shavkat Mirziyoyev, who became president in 2016, and saw its gross domestic product grow 5% in 2018. The seven Uzbek banks on the list account for 8.39% of total assets, up from 7.06% in 2017. 

Ukraine booms

Ukraine’s banking sector had a particularly strong year in 2018, and accounts for 18 of the Top 100 banks in the region, the highest number on the list, with the aggregate pre-tax profit of the banks growing 285.5% year on year to hit $917m. Total assets of the Ukrainian banks grew by 3.58% in 2018, to $42.7bn, second in size only to Kazakhstan, even as aggregative Tier 1 capital dropped 6.42%. This coincided with the Ukrainian economy growing by 3.3%, despite continued unrest in the east of the country.

When it comes to ROA, the top 10 banks in the region feature seven lenders from Ukraine, led by Raiffeisen Bank Aval, which experienced a 6.94% ROA of $2.62bn in 2018. Ukrainian banks also dominate when it comes to ROC, accounting for six of the top 10. Citibank Ukraine, with Tier 1 capital of $31m, had an ROC of 163.14% in 2018, more than double the next highest bank, UkrSibbank (79.83%), also from Ukraine.

When it comes to individual honours, Kazakhstan’s Halyk Bank retains the top spot, with Tier 1 capital of $2.68bn, almost double that of second placed Belarusbank. However, Halyk’s Tier 1 capital actually dropped year on year by 2.22% in 2018, and overall the bank saw its assets fall by 12.51% to $23.3bn. Despite this, Halyk Bank recorded a pre-tax profit of $875m, up 46% year on year, after a rise of almost 30% in 2017, with ROA at 2.83% and ROC at 24.64%. 

Belarusbank saw its Tier 1 capital fall by 4% to $1.43bn in 2018, with its asset base down by 0.75% to $12.14bn. In a positive sign, however, pre-tax profits rose to $293m, up 85.33%, with an ROC of 17.57% and ROA at 2.07%.

Bad news for Belarus

Overall, Belarusian banks had a largely forgettable year in 2018, with the 13 banks featured seeing an aggregate asset growth of just 0.15% and Tier 1 capital dropping by 0.04%. At the same time, the banks experienced a 38.81% increase in pre-tax profits, hitting $716m, with ROA at 1.97% (the fourth highest in the CIS region) and ROC at 14.75% (the sixth largest). The Belarusian economy grew by 3% in 2018, building on the 2.4% growth it experienced in 2017, the first year of positive growth since 2014.

Ukraine’s PrivatBank has risen one place to finish third in the overall list, with Tier 1 capital of $1.11bn, up 28.54% year on year. The bank’s assets also grew, by 9.71%, with an ROA and ROC of 4.62% and 41.42%, respectively, and a pre-tax profit of $459m.

Meanwhile, International Bank of Azerbaijan is the highest new entrant on the list, at fourth overall for Tier 1 capital, after failing to make the Top 100 in The Banker's 2019 ranking. The bank saw its Tier 1 capital increase 23.48% to $906m even as overall assets dropped 8.82% to $4.87bn. The state-run bank announced that it had completed its financial recovery in 2017, following the restructuring of $3.3bn in international debt after receiving approval from its creditors, with a privatisation in the pipeline. 

CIS rankings

Was this article helpful?

Thank you for your feedback!