Page 44 - BNE_magazine_bne_September 2019

44 I Central Europe bne September 2019
COMMENT: Southeast Europe the growth star in CEE banking, but the profit pool is elsewhere
Gunter Deuber of Raiffeisen Research in Vienna
As part of one of the most commit- ted players in the region, analysts from Raiffeisen Bank Internation- al's Raiffeisen Research unit once again worked intensively on documenting and analysing trends in the banking sector throughout the CEE region. The results can be found in the flagship publication CEE Banking Sector Report 2019.
The core message for bankers and investors active in the CEE region should be: close to old records, poten- tial for more but watch out for late cycle phenomena!
For the first time in several years, no single market in CEE was loss-making
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on aggregate in 2018. Moreover, there were also no major shocks (economic and/or political) in 2018. Profitabil-
ity ratios reached their highest level
in the last five to six years in 2018 in CEE banking, a situation that contin- ued in 2019. The CEE return on equity (ROE) surpassed the 12% threshold. Particularly noteworthy is the broad- based nature of the profit recovery. All core regions of Central Europe (CE), Southeast Europe (SEE) and Eastern Europe (EE) recorded double-digit ROE ratios in 2018. The respective ratios are at 11.2% (CE), 13.5% (SEE) and 12.7% (EE). The banking markets in Russia and Ukraine recovered nicely. The positive earnings situation was supported by
further improvements in credit quality, the highest credit growth since 2011 and a stabilisation of the net interest margin (NIM) in important markets. There
were successes on the non-performing loan (NPL) front in CEE in 2018 almost everywhere. The overall CEE NPL ratio reached its lowest level since 2010 in 2018 at 7.7%. In the CE/SEE region
the regional NPL ratio (5.2%) fell to its lowest level since 2008. Therefore, we would estimate the total amount of NPLs in CE/SEE markets at around €35bn currently, down from some €60bn
some years ago.
Overall, Southeast Europe is currently the star in CEE when it comes to