In July this year OTP Bank Albania, the Albanian banking subsidiary of Hungary’s OTP Group, achieved a couple of notable successes that reflected not just how far the bank has come in a short time, but its ambitions for the future.
The first success was completing the €55 million acquisition of Alpha Bank Albania, the subsidiary of Greece’s Alpha Bank, at a stroke making it the fifth largest bank in the country by total assets and third largest by value of its loan portfolio.
The second was winning Euromoney’s Best Bank in Albania 2022 - the third successive year it has won the award - marking deserved recognition for the stellar year the bank had, which included outstanding financial results, as well as impressive business and operational development.
Our goal is to be the leading bank in the Albanian market, and this will be achieved through organic growth and potential future purchases if the opportunity arises.
While the award recognises past performance, the acquisition signifies the bank’s future growth ambitions in the country together with its “long-term and serious commitment to the Albanian banking market,” said László Wolf, deputy CEO of OTP Bank.
OTP Group first moved into Albania in 2019 by acquiring Société Générale’s Albanian banking subsidiary, creating a launch pad for the bank’s expansion plans in the country.
For Shella, who became OTP Bank Albania CEO as part of the 2019 acquisition, the merger of the two banks this year “will allow us to achieve things that we could not achieve separately and will give us the right size to be even more efficient and to offer better products and terms to our customers.”
He adds: “Our goal is to be the leading bank in the Albanian market, and this will be achieved through organic growth and potential future purchases if the opportunity arises.”
The acquisition is expected to legally complete at the end of this year, with its integration to be progressed and completed through 2023.
It’s a demanding job which Shella says will be one of the key focus areas for the bank next year, together with sustaining its impressive growth and development over the past couple of years.
For example, the bank’s net profit in 2021 more than doubled to L1,912 million ($17 million), thanks in part to lower provisions. Other banks – including Raiffeisen Bank Albania – saw similar increases, but OTP Bank Albania remains the more profitable lender, with a return on equity (RoE) of 18.5%.
In addition, the bank saw its cost-to-income ratio fall by 212 basis points to 46.6% during the year thanks to rising net banking income. And while other top-tier banks in Albania still have a larger share of local banking assets than OTP, its market share in loans grew by 71bp to 11.5%.
Despite this, its non-performing loan ratio remains relatively low at 5.2%.
Growth momentum
These are some handsome financial performance metrics, which Shella is focused on protecting and improving where possible over the next year.
As part of that, one of the key strategic priorities for the bank is optimising processes across its banking operations together with increasing focus and investment in digitalisation, which it is now the right time to do, according to Shella.
The bank has already upgraded its mobile banking platform, but the broader aim is to develop and launch a greater suite of digital banking products and services for customers across its business lines, including its securities brokerage business, especially for high-net worth and corporate clients.
“We want to create a full-service digital platform for our customers, a one-stop shop offering, where they can find everything they need in advice, products and services,” says Shella.
This customer-focus is important, with their satisfaction of the banking experience, products and services that OTP Bank Albania provides, a key differentiator and advantage over other banks.
“A big difference we can make is through driving higher customer satisfaction. Products and prices are quite similar between banks, so where we can have impact and become the market-leader is in how we treat our customers, which is powerful in any market, but especially in Albania,” says Shella.
He adds that the bank’s efforts to drive higher customer satisfaction is paying-off, with it recording the highest such scores in the country this year and among the highest within the OTP banking group, which spans central and eastern Europe.
Such a focus on customer satisfaction is an important growth driver. But it’s the strength and use of balance sheet that can really drive growth and market-share. For OTP Bank Albania, Shella says its loan book is growing significantly, and it is gaining market-share year-on-year in large corporate lending, retail mortgage lending, and in loans to small and medium sized companies.
Importantly, the bank’s deposit base is also expanding substantially, which Shella says, together with tight cost control, enables the bank to “manage its balance sheet in a prudent and optimal way.”
It’s a combination of these elements and others which has enabled the bank to sustain a sub-50% cost-to-income ratio and generate a juicy RoE – hitting 27% in the first seven months of this year.
This is the type of performance and momentum that helps propel banks from being one of the leaders, to market-leading. On this form, OTP Bank Albania may soon realise its ambition.