By Dragana Petrushevska
As social life returned to normalcy and economic activity picked up, banks in Southeast Europe saw their profits rise and their assets expand on the back of sustained growth in both lending and deposits. Like their global peers, the local lenders continued to play a major role in the redistribution of massive resources aimed to cushion the blow of the Covid-19 pandemic on businesses and clients. At the same time, pressure on interest margins and changing consumer habits strengthened the banks’ focus on efficiency and digitalisation. M&A deals picked up, with most of the action taking place in Serbia.
The region’s biggest lenders reported rising profits in 2021 after a grim year of restrictions which affected their performance. All but 12 banks among the top one hundred in the region boosted their net profit in 2021. Only two banks turned to net loss in 2021.
The combined net profit of SEE’s one hundred largest banks came in at 4.567 billion in 2021, still short of the record-high 4.673 billion euro generated in 2019. The region’s largest lenders recorded a combined net profit of 2.967 billion euro in 2020. Higher profits allowed lenders to return to dividend distribution in 2021, after holding off on payouts a year earlier to comply with central bank bans.
SEE’s largest lenders managed to grow their assets in 2021 even faster than the year before, when government measures to support the business sector led to increased lending. The combined assets of the top one hundred lenders grew 12% to 384.3 billion euro in 2021, after expanding by 8.7% in 2020. Only eight banks in the ranking saw their assets fall last year, compared with ten in 2020.
Romanian banks held the top two positions and the country remained best represented in the 2021 ranking with 19 entrants. Bulgaria and Serbia followed with 15 and 14 banks, respectively. Romanian banks held combined assets of 125.9 billion euro, or 33.1% of the total assets of the region’s largest banks. They generated 1.672 billion euro of net profits, or 37% of the total.
Romania’s Banca Transilvania remained at the top of the ranking of SEE’s largest banks, a position it has held since 2018. The bank saw its assets grow 21% on the year, reaching 25.4 billion euro, as both loans and deposits increased amid a strong post-Covid recovery of the economy. Its net profit rose to 362.3 million euro from 245.9 million euro, mainly due to higher operating income. Dutch-based insurer NN Group is the largest single shareholder of Banca Transilvania, holding a 10.29% stake as of end-2021. The European Bank for Reconstruction and Development (EBRD) follows with a 6.87% shareholding interest.
Romania’s Banca Comerciala Romana, a unit of Austria’s Erste, traded places with Croatia’s Zagrebacka Banka, a unit of Italy’s Unicredit Group, and came second in the chart, with assets of 18.1 billion euro, 12% higher than a year earlier. The Croatian lender closed the year with 17.6 billion euro in assets, up 6.36% year-on-year.
The top three lenders are also leaders in terms of profit. Banca Transilvania is the winner with a net profit of 362.3 million euro, up from 245.9 million euro a year earlier and well ahead of second-placed Banca Comerciala Romana with a net profit of 280 million euro in 2021 and Croatia’s Zagrebacka Banka with 266.9 million euro. In terms of assets increase, Serbia’s OTP Banka (OTP) posted the biggest jump – to the 20th position in 2021 from the 46th place in 2020. In the beginning of the year, the Hungarian banking group OTP completed the integration of OTP Banka Srbija (former Societe Generale Srbija) and Vojvodjanska banka, which it bought in 2019, creating the biggest bank in the country. The Serbian bank swung to a net profit of 49 million euro in 2021 after recording a net loss of 10.1 million euro in 2020.
M&A activity in banking sector remains resilient
The year was also marked by big M&A deals in the banking sector. Hungary’s OTP Group continued its consolidation in Albania, signing a deal to buy Alpha Bank SH.A., the Albanian unit of Greece’s Alpha Bank Group. In 2019, OTP Group bought the Albanian unit of France’s Societe Generale, which was renamed to Banka OTP Albania.
In Serbia, Greece’s Eurobank completed the merger of its Serbian unit Eurobank Beograd with local lender Direktna Banka. Serbia’s state-run Banka Postanska Stedionica acquired the unit of another Serbian lender, Komercijalna Banka, in Bosnia and Herzegovina. Furthermore, the Serbian unit of Raiffeisen Bank International (RBI) agreed to acquire the entire capital of the Serbian subsidiary of France’s Credit Agricole. For its part, Credit Agricole sold its Romanian unit to Vista Bank Romania.
Belgium-based financial group KBC inked a deal to take over Raiffeisenbank Bulgaria, the Bulgarian unit of Austria-based Raiffeisen Bank International. At the same time, Greek businessman Petros Stathis reached an agreement for the sale of Montenegro’s Universal Capital Bank (UCB) to an Italian an undisclosed Italian investor.