Looking for sound growth, CEE banks rebalance their business models
- The CEE banking sector keeps showing good profitability with revenues margins softening but still above Western European levels
- Total assets and lending have grown continuously since 2008, even though at a milder pace than pre-crisis and with a stronger focus on domestic funding sources
- Foreign players have an important role in the local markets and increased the share of CEE assets within their groups? total assets over the last years
Although still in the grips of an uncertain global economic environment and EMU turbulences, the Central and Eastern Europe banking sector keeps showing good profitability. With an average Return on Equity expected at 10.9 per cent in the years 2012 – 2015, the region will reveal an attractive and more sustainable double-digit profitability ratio than Western Europe. This is one of the key findings of the latest CEE Banking Study, which was conducted by UniCredit?s CEE Strategic Analysis department and which covers 17 different countries. Revenues margins are softening in CEE, nevertheless they are double of those seen in Western Europe. Cost efficiency and risk management will remain the distinctive factors for the banks? performance in the region. Across CEE countries there is a clear differentiation visible, with Turkey and Russia over-performing, while the profitability of the banking sectors in the Balkans and Ukraine is subdued. Asset quality is a source of risk, at least until 2014.