Emerging Europe

Central and Eastern Europe regional and country Awards for excellence are now live. See the winners now.

Kazkommertsbank (KKB) has more than double its assets and Bank TuranAlem (BTA) has a far superior net income but Halyk Bank takes the award for best bank in Kazakhstan thanks to its resilience in the face of global financial troubles. First-quarter net income fell by nearly 10% on the 2007 equivalent because of such issues as growing average rates on customer deposits and higher impairment charges on its loan portfolio, but other Kazakh banks have fared far worse. During the roadshow for Halyk’s successful $500 million benchmark Eurobond in April, the first for a Kazakh bank since July 2007, investors noted its "strong liquidity, low exposure to foreign debt, and its perception as the best bank in Kazakhstan". And there is ample evidence to support that sentiment. Halyk’s branches have reportedly remained busy, while KKB’s and BTA’s are much quieter. Credit lines have been shortened and cut at rival banks that have liquidity problems, which has pushed more business Halyk’s way. Between July and December last year, Halyk’s share of the domestic retail market grew from 19% to 21%, overtaking both KKB and BTA, which both lost market share over the same period. In the fourth quarter last year, Halyk’s deposits rose by 21.4%; KKB’s grew just 8.8%, and BTA’s grew not at all.

Privredna Banka Zagreb continues to be the leader of the banking pack in Croatia thanks to its popular combination of core banking services allied with specialist leasing, real estate and fund management capabilities. Its 230-strong branch network and extensive electronic distribution channels give it the leading position in the credit and debit card market and more than 77.5% of total transactions were carried out electronically.

Ansher Capital is the leading investment bank in Uzbekistan, and the flagship of its parent, Singapore-based Ansher Holding group. Ansher has pioneered a number of new instruments and transactions in Uzbekistan, including corporate bonds, M&A and equity private placements. The bank now holds leadership positions in all three. In 2007, Ansher played a leading role in attracting international investors to the Uzbek securities market, from such countries as Germany, the UK, Sweden, Russia and the US. Ansher also advised on the establishment of hedge funds with a focus on the central Asian region, such as the Central Asia Property Fund, which are entering the region thanks to improved conditions in the traditionally difficult, closed economies of Uzbekistan and other central Asian countries. The shareholders of Ansher Holding group are keen to facilitate further growth by going public in the near future, and Ansher Capital will have a key role to play in accomplishing that.

The Ukranian economy has been coping well under the pressures of domestic political uncertainty and global financial turmoil. In 2007, GDP grew by 7.3%, while retail sales increased by 28.8%. And Ukrsibbank has continued along its own growth curve. Majority owned by BNP Paribas since April 2006, the bank is the third largest in the Ukraine in terms of assets, shareholders equity and loan portfolio. Although PrivatBank and Raiffeisen Bank Aval are bigger, they cannot match Ukrsibbank’s dynamism.

In a year when the virtues of retail and corporate banking have come to the fore, Ceska Sporitelna secures the best bank title again in the Czech Republic. With support from its parent, Erste Bank, it has transformed itself into a banking powerhouse. Through 640 branches Ceska Sporitelna serves more than 5.3 million customers. In the past year it put in another strong performance with net interest income growing from Kc18.37 billion in 2006 to reach Kc21.2 billion ($1.37 billion), while operating profit rose to Kc18.37 billion in 2007 from Kc15.15 billion in 2006. As a result the bank’s return on equity edged up from 23% to 23.8% and the cost-income ratio improved from 53% in 2006 to 50% in 2007.

Azerbaijan is one of the more productive of the smaller central Asian countries, with a population of 8.4 million and a GDP of $31 billion. Comfortably leading the country’s banking industry is International Bank of Azerbaijan, with about half of the country’s banking assets and loans. This year, following a $15 million loan for Bank Respublica and a $30 million loan for Unibank, IBA came to market in May for its own loan, to the amount of $173.5 million, the largest in the country’s history and a graphic reminder of the levels IBA operates at compared with its domestic peers. The deal was originally planned for $80 million but was increased on the back of strong investor interest.

The tricky completion of a triple merger in 2007 failed to dim the financial performance of UniCredit Bulbank, which was the number one bank in Bulgaria as measured by assets, loans and profits last year. With more than a million customers, the new entity is the leading universal bank in Bulgaria, with strong positions in corporate, investment and retail banking. The overall strength of the franchise was recognized by Standard & Poor’s last year, when it reaffirmed its BBB+ credit rating – the highest for any bank in Bulgaria. Despite the demands of merging Bulbank, HVB Bank and Hebros Bank, the new improved UniCredit Bulbank outperformed the rest of the banking sector, with net income rising by 25% and operating profit by 89.9%. Total assets grew by 21.1% to reach Lev9.06 billion ($7.2 billion) by year end 2007.

With a population of just 5.21 million people producing a GDP of a mere $3.7 billion, Kyrgyzstan is not going to be home to any really large financial institutions. The biggest bank in Kyrgyzstan, with $130 million in deposits accounting for a 22.1 % market share, is Asia Universal. It is also the best performer. It is Kyrgyzstan’s fastest-growing mortgage provider and is the only Kyrgyz entity to have received an international credit rating. Total shareholders’ equity rose 212% to $36.5 million in the past year, while net income climbed 246% to $2.7 million. In both of those measures, as in total assets and customer accounts, Asia Universal is by far the country’s leader. It is also the first bank to offer internet banking services, and the only one to establish a dedicated control and compliance department. It is also competitive regionally, with branches in the Ukraine, Kazakhstan and Latvia, as well as a representative office planned for China later this year.

Despite increasing competition, Raiffeisen banka maintains its top billing in Serbia. On the retail front it boosted its customer base by 20% in 2007 to just short of 500,000, while growing its retail deposit and loan volumes by 32% and 26% respectively. There was a similarly strong performance in the corporate banking segment, with corporate lending rising by 24% to reach almost $1.2 billion, while deposits rose to $830 million. Raiffeisen banka was particularly successful in boosting its business with small and micro-sized enterprises, increasing its client base by 36% and its lending by 47% to reach $312 million. The bank also has a leading market position in the treasury business, accounting for a 19% share of foreign exchange trading for retail customers and 13.68% for banking clients. As a result of all these advances in 2007, the bank boosted its net profit by 60% and its return on equity climbed to 21.4% from 16.6% in 2006.

Despite difficult economic conditions in 2007, Moldova-Agroindbank still managed to boost its net profit by a healthy 30% margin to MLei235.5 million ($23.6 million). The bank remains the country’s largest by assets, with a 21% market share and plays a key role in the economy, providing roughly 23% of all loans and accounting for 22% of total deposits. The bank continues to attract new investors, with Slovenian textile manufacturer Tkanina joining fellow Slovene outfits Factor Banka and asset managers Poteza, Activa Invest and Druga Penzija as shareholders.

BRD remains the bank to watch in Romania, having reported the highest net profit of any Romanian bank in 2007. Net profit rose by 43% to €279 million-equivalent. Despite sizeable investments in technology, network expansion and staff recruitment and training, which helped it to attract 300,000 new customers in 2007, BRD still maintained its position as the most profitable bank in Romania, with a return on equity of 35.4%. On the retail side, the bank boosted lending by 45% as well as launching a new life insurance arm, BRD Fond de Pensii. In corporate banking, the bank provides a comprehensive range of products and services spanning small businesses through to multinational corporations. With regard to investment banking, BRD has continued to build its corporate finance, brokerage and asset management operations, which should ensure that fee income helps mitigate any slowdown in interest income resulting from a drop.

Russia is one of the most fiercely competitive banking markets in the central and eastern European region thanks to the continued strength of the domestic economy. State-owned banks such as Sberbank and VTB performed well over the past year as did foreign banks such as Raiffeisen and UniCredit. But Alfa Bank retains its best bank crown as a result of having the best-balanced universal banking franchise. Alfa is a force to be reckoned with right across the retail, corporate and investment banking spectrum, which means it is well placed to take full advantage of the buoyant economic conditions in Russia.

Nova Ljubljanska Banka remains streets ahead of the competition, with the bank maintaining its number one position thanks to a 30%-plus market share in terms of total banking assets, loans and deposits in Slovenia.

After winning this award in 2006 and 2007, Bank of Georgia continues to affirm its position as Georgia’s leading financial institution with yet another year of stellar performance. Deposits grew 142.2% to $851.6 million, and outstanding mortgages rose 103.5% to 4,230, an increase in the value of those mortgages of 187.2%, to nearly $150 million. In the retail division, revenue per employee rose by a half.

Raiffeisen Bank maintains its position at the top of the banking pile in Bosnia & Herzegovina. It is able to serve all sections of the community throughout both the Srpska Republika and the Croat-Muslim Federation and is the largest individual bank in the entire country. In 2007, it increased its corporate customer base by 13%, and retail clients rose by 17%. These increases allowed Raiffeisen to grow its assets by 18.8% in 2007, thanks to strong loan growth, especially in the corporate sector, where it increased by 43%, far above the market average. Thanks to its 99 branches the bank also performed strongly on the retail side, accounting for 21.43% of lending, while it maintained its number one position in the card issuance business on the back of the expansion of its ATM and point-of-sales network.

Based on Bank Pekao’s 2007 results, parent UniCredit has succeeded in turning it into the leading bank in Poland by total assets, client savings and equity. It was also the second-biggest lender. Despite the distraction of a merger with part of Bank BPH, Bank Pekao reported strong financial figures for 2007, proving it is both big and clever. Net income rose by 20.9% compared with 2006, while return on equity was a creditable 23.7%. The bank also cut its cost-income ratio to 47.1%. Despite market pressure on the mutual funds industry in the fourth quarter of 2007, Bank Pekao still managed to boost its net fee and commission income by 12.7% year on year.

Raiffeisen Bank managed to extend its market leadership in Albania, despite increased competition from such rivals as Banka Kombetare Tregtare and American Bank of Albania. Raiffeisen Bank Albania is firmly ranked as the number one bank by assets, deposits and loans, on both a corporate and retail basis. The bank continues to extend its client coverage and now has 97 branches, almost three times those of its nearest rival; 154 ATMs, double its closest competitor’s; and more than 400 point-of-sales terminals. The bank also extended its mobile banking team, reaching out to previously unbanked sections of the population. Thanks to this expansion, Raiffeisen Bank managed to grow its customer base by 14% in 2007, which helped it double its retail lending, while corporate loans rose by 45%. Growth did not come at the cost of profitability, however. The bank reported a cost-income ratio of 40% and a pre-tax return on equity of 58%.

Political relations between Greece and former Yugoslav Republic of Macedonia are strained but the strong financial and management support from owner National Bank of Greece has helped to ensure that Stopanska Banka Skopje remains the leading force in FYROM’s banking sector. In 2007, the bank posted a 24% return on equity on the back of gross profit of €19.6 million equivalent, according to International Accounting Standards. The bank’s total assets rose to €897.2 million at year-end 2007, up 31% on 2006. Total deposits reached €707.1 million, up 31.2% on 2006. At the end of 2007, about a million Macedonian citizens had accounts with Stopanska Banka Skopje, more than half of the country’s population.

Despite a challenging political and economic environment in Hungary, OTP Bank continues to perform well, registering a net profit of Ft141.7 billion ($907.5 million) in 2007, up more than 11% on 2006. OTP dominates all segments of the Hungarian banking market, accounting for more than 50% of municipal loans and deposits, more than 30% of retail deposits and loans as well as 10% of the corporate segment. With more than 400 branches, it is by far the largest retail bank in Hungary, with almost 4.6 million customers, but also services more than 200,000 corporate clients. The bank has invested heavily in technology with the result that its award-winning OTPdirekt internet banking channel was used by more than 1.5 million customers in 2007, giving it a best-in-class 38% market share. Its telephone banking services have also proved a hit, servicing more than 50% of all Hungarians using mobile phones. In corporate banking, the bank offers an extensive range of services spanning leasing, forfaiting, factoring, project finance and syndicated loans in both forint and foreign currencies. The bank also has a highly successful asset management arm, OTP Fund Management, that manages building society, health fund and insurance portfolios as the portfolio of the National Deposit Insurance Fund, Investor Protection Fund and Guarantee Fund of Pension Funds, which were established by the Hungarian state to protect investors’ interests. OTP Fund Management has a 32.4% market share, with assets under management growing by 25% in 2007 to Ft815.1 billion.