Corpbank blip aside, SEE banking sector remains stable

by Doinita Dolapchieva

Most of the lenders in the SEE TOP 100 banks ranking closed 2014 in the black and the overall result of the sector would have been slightly positive if it hadn’t been for bankrupt Bulgarian lender Corporate Commercial Bank, Corpbank, which booked a staggering loss of 2.18 billion euro. The combined loss of the region’s largest 100 banks thus widened to 2.13 billion euro. The same banks reported a combined loss of 2.05 billion euro in 2013. Croatia’s Zagrebacka Banka climbed to the top spot in the ranking after being the runner-up the previous year. Banca Comerciala Romana (BCR) fell to the second spot, as its assets declined faster than Zagrebacka Banka’s.

With the exception of Corpbank, the banking system in Southeast Europe (SEE) managed to stay stable, but struggled to tackle high non-performing loan (NPL) ratios, weak lending activity and subdued economic growth. The ranking was again dominated by Romanian lenders, which accounted for nearly a third of the total assets of the largest 100 banks in the region.

As many as 74 of the entrants in the SEE TOP 100 banks ranking ended 2014 in the black, reporting a combined net profit of 1.8 billion euro. A total of 35 banks included in the ranking saw their assets decline in 2014, with Corpbank recording the sharpest drop, by 72.8%, followed by Romania’s Banca Comerciala Carpatica with a 20% fall.

Corpbank fell to the 74th spot from the 22nd after its assets sank to less than one third. In June 2014, the Bulgarian National Bank placed the bank under special supervision over risk of insolvency and appointed two conservators after
Corpbank notified the central bank it had run out of liquidity. Payments and all types of banking operations were suspended. In November, the central bank revoked Corpbank’s licence. In April Corpbank was declared insolvent.

Romania had 21 entries in the ranking with assets worth 77.1 billion euro at the end of 2014. Bulgaria, whose population is roughly one third that of Romania, had 18 banks in the chart with total assets of 41.8 billion euro.Serbia and Slovenia followed with 15 lenders each. Ten Croatian, six Bosnian and six Albanian banks made it into the ranking. Moldova and Macedonia had five and three representatives, respectively, and Montenegro had just one.

Zagrebacka Banka, a unit of UniCredit Group, topped the ranking despite a slight fall in assets. It saw its assets shrink by 3.8% to 13.4 billion euro while net profit more than doubled to 152.2 million euro mainly as a result of lower impairment and operating costs and stable income. Zagrebacka Banka managed to cut its NPL ratio to 17% at end-2014 from 15.7% a year earlier.

The Croatian bank was also the top SEE lender in terms of net profit, followed by Bulgaria’s UniCredit Bulbank which booked 123.6 million euro in net earnings.

BCR, a unit of Austria’s Erste, slid to second place in the ranking after posting a 7% drop in assets to 13.2 billion euro. The bank switched to a net loss of 586.7 million euro last year. The loss came mainly on the back of a surge in risk provisions, which doubled to 4.4 billion lei, or about 1 billion euro, driven by efforts to reduce NPLs, including portfolio sales and write-offs. Following these measures, its NPL ratio decreased to 25.7% at end-2014.

The assets of the top 100 banks in the region totalled 248.3 billion euro at the end of 2014.

Moldova’s Banca Sociala posted the strongest growth in assets among the top 100 SEE banks, nearly fourfold, entering the ranking directly at number 78. However, Banca Sociala together with two other Moldovan banks – Banca de Economii and Unibank – have been placed under special supervision after about 1 billion U.S. dollars went missing from them in November 2014. Moldova plans to liquidate the banks by October 9.
The top 10 featured the same banks as in the previous year, albeit not all kept the same positions. The 10 largest banks had assets worth a combined 90.7 billion euro, or 37% of the total assets of the 100 lenders included in the ranking.