SEE banking sector’s losses widen sharply on Slovenian woes

Most of the lenders in the SEE TOP 100 banks ranking closed 2013 in the black but the overall loss of the sector widened to 2.18 billion euro, due to the heavy losses booked by Slovenian banks. With the exception of Slovenia, the banking system in Southeast Europe (SEE), however, managed to stay stable, although continuing to struggle with high non-performing loan (NPL) ratios, weak lending growth and subdued economic growth. The ranking was dominated by Romanian lenders, which accounted for nearly a quarter of the total assets of the banks in the region.

As many as 70 of the entrants in the SEE TOP 100 banks ranking reported a profit in 2013 but the overall result of the biggest banks in the region was a negative 2.18 billion euro, due to the heavy losses reported by Slovenian banks. The banks in the 2013 edition reported a combined loss of 2.1 million euro in 2012, ac­cording to revised data.

In late 2013 Slovenia recapitalised and fully nationalised three banks: Nova Ljubljanska Banka (NLB), Nova Kreditna Banka Maribor (NKBM) and Abanka, injecting a total of 3.012 billion euro in them as part of a 4.8 billion euro rescue plan for the country’s banking sector. Slovenia’s banks ended 2013 with a combined pre-tax loss of 3.2 billion euro. As part of the programme, NLB and NKBM transferred a large portion of their non-performing loans to a government-owned “bad bank”.

A total of 38 banks included in the ranking lend­ saw their assets decline in 2013, with Serbia’s Hypo Alpe-Adria-Bank AD, a unit of nation­alised Austrian banking group Hypo-Alpe Adria, recording the sharpest drop, by 26%. Not surprisingly, almost all Slovenian banks in­cluded in the TOP 100 banks saw their assets shrink last year and slid lower in the ranking.

Despite a 10% drop in assets to 14.16 billion euro, Romania’s Banca Comerciala Romana (BCR), a unit of Austria’s Erste, topped the ranking for the fourth year in a row. The bank posted a net profit of 74.8 million euro in 2013 after recording a hefty loss a year earlier, when its business was hit by the adverse economic environment, high provisioning require­ments that prompted an increase in risk cov­erage costs and a rise in NPLs coverage ratio.

The runner-up, Croatia’s Zagrebacka Banka, came breathing down BCR’s neck after achiev­ing a nearly 3.0% rise in assets. The difference between the top two banks’ asset value was reduced considerably – to 216 million euro from 2.125 billion euro.

Zagrebacka Banka, a unit of UniCredit Bank Austria, boosted its assets to 13.95 billion euro at end-2013 as its net profit halved to 60.9 million euro. Romania’s BRD – Groupe Societe Gen­erale ranked third, its assets edging down 1.8% while its net loss widened to 86 mil­lion euro. The bank consolidated its level of NPLs coverage with provisions to 68.9% from 51.9% at end-2012, an effort translat­ing into a high cost of risk on SMEs portfolio.

The assets of the top 100 banks in the region totalled 246.9 billlion euro at the end of 2013. The total assets of the entrants in the 2012 ranking was 235.8 billion euro.
Moldova’s Moldindconbank post­ed the strongest growth in assets among the top 100 SEE banks, of near­ly 50%, climbing to the 86th position.

The top ten banks had assets worth a com­bined 90.3 billion euro, or 37% of the total as­sets of the 100 lenders included in the rank­ing. Six of last year’s top 10 banks retained their positions in the ranking, a few switched places and Romania’s CEC Bank exited the top 10 after falling two spots to the 11th place. Another Romanian lender, Raiffeisen Bank, entered the top 10 by climbing up one spot from the 11th place.

Romania, the largest country in SEE with a population of some 20.1 million people, domi­nated the ranking, with 22 entries. Bulgaria, whose population is roughly one third that of Romania, had 18 banks in the chart, fol­lowed by Serbia and Slovenia with 15 lenders each. Ten Croatian, seven Bosnian and six Al­banian banks made it into the ranking. Mac­edonia and Moldova had three representa­tives each, and Montenegro had just one.

Looking at the Bulgarian entrants in the rank­ing, the 2013 financial results of the country’s fourth-biggest lender, Corporate Commercial Bank, still show little sign that in June 2014 it would be placed under special supervision over risk of insolvency after running out of liquidity. The lender recorded a 19.6% annual rise in assets to 3.45 billion euro at the end of 2013 and a hefty 26% increase in profit during the year.

The largest net profit among SEE banks in 2013, of 107.7 million euro, was again posted by a Romania-based bank, the lo­cal unit of Austria’s Raiffeisen. Its as­sets rose by 12.2% to 6.0 billion euro. It comes as little surprise that the big­gest loser was a Slovenian bank – NLB, whose net loss widened five times from a year earlier to 1.54 billion euro. Slovenia aside, the banking system in SEE was rather stable in 2013, although it continued to struggle with high NPL ratios, weak lend­ ing growth and subdued economic growth. For example, the share of NPLs in the credit portfolio of Romanian banks rose to 21.9% at the end of 2013 while in Bulgaria it climbed to 16.9% and in Croatia it grew to 15.4%.

The top three banks in terms of loans value at the end of 2013 were Zagrebacka Banka, BCR and BRD – Groupe Societe Generale, with loan portfolios of 9.5 billion euro, 8.4 billion euro an d 6.2 billion euro, respectively. Among them, only Zagrebacka Banka experi­enced an increase in loans, by a meager 1.2%, while the other two lenders’ credit portfo­lios shrank by 15.4% and 11.8%, respectively. The same three banks topped the deposit ranking, with BCR grabbing the top spot, with 10.8 billion euro in deposits at the end of 2013, down 12.4% on the year. Zagrebacka Banka and BRD followed, with 9.9 billion euro and 8.4 billion, respectively.