Central and Eastern Europe Awards for Excellence 2012: By country

Awards for Excellence 2012
Regional Awards for Excellence 2012: Central and Eastern Europe
All regions and countries

Albania

Best Bank: Banka Kombetare Tregare

Both of Albania’s biggest banks recorded another year of solid results in 2011, building their balance sheets and boosting profitability. Despite market leader Raiffeisen’s impressive achievement in increasing net income by 27.3%, Banka Kombetare Tregtare (BKT) earns this year’s award by virtue of its superior asset quality and more rapid expansion.

BKT’s non-performing loan ratio stood at just 5.6% at end-2011, compared with Raiffeisen’s 10.8%, and its asset base growth of 24% outpaced that of its larger rival by eight percentage points. Furthermore, thanks to a 41% increase in lending, BKT finally pulled clear of the chasing pack in 2011 and is now number two in Albania by assets, deposits and loans. The strong performance continued into the first quarter of 2012 when, despite increasing its capital adequacy ratio by eight percentage points to 13.7%, BKT’s return on equity came in at 46.9%.

BKT was privatized in 2000 and has been wholly owned by non-financial Turkish conglomerate Calik Holding since 2009, when Calik bought out minority shareholders the International Finance Corporation and the European Bank for Reconstruction and Development.

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Armenia

Best Bank: Ameriabank

The four-way battle between Armenia’s leading banks continued in 2011, with the top three – ACBA Crédit Agricole, Ameriabank and VTB Bank Armenia – all expanding their balance sheets by more than 30%, while the 44.5% increase in net income posted by HSBC’s local subsidiary compensated for the bank’s slip to fourth place by assets.

The award goes to Ameriabank, in recognition of its ability to set a scorching pace of growth while maintaining a firm grip on costs and asset quality. NPLs remained at a negligible 0.5% of total loans at end-2011 and the cost-income ratio fell by 6.4 percentage points to 49% year on year.

Profits were also healthy, with the pre-tax figure up 33.5% on the previous year at Dram5.16 billion ($12.4 million). A first-quarter number of Dram1.33 billion pointed to the likelihood of an equally strong result in 2012.

Part of Sberbank’s growing international portfolio since the takeover of majority shareholder Troika Dialog, Ameriabank has in the past five years successfully transformed itself from a small player into a full-service operation and one of Armenia’s leading innovators, with further expansion in 2011 of the bank’s already impressive range of specialist mortgage and loan products.

Despite some signs of recovery – as evidenced by Fitch’s March upgrade of Unibank and Demirbank – most of Azerbaijan’s bigger financial players once again struggled to get to grips with heavily impaired loan portfolios last year, leaving the way open for smaller and nimbler AccessBank to take the award again.

An SME and microfinance specialist, AccessBank is ranked eighth in Azerbaijan by total assets but easily outpaced its larger rivals in profitability last year, recording a return on equity of 20.2%, four times the sector average.

Asset quality also remains a key strength for AccessBank, with NPLs still well under 1% at end-2011, and substantial gains in market share in loans and deposits – 3.2% and 1.7% year on year, respectively.

Best Bank: Priorbank

Belarus’s banking sector took another beating last year, as lenders struggled to manage high levels of foreign-currency-denominated debt in the face of soaring inflation and a 56% devaluation of the Belarussian rubel in May.

In this extremely challenging operating environment, the ability of Priorbank to post a pre-tax profit of BR377.1 billion ($45.8 million) – even after the implementation of hyperinflationary accounting standards – is all the more impressive.

The country’s largest private bank – a member of the Raiffeisen group – managed to increase lending volumes by more than 10% despite an overall shrinking of demand. It nearly doubled the volume of funds attracted from private individuals, as well as boosting its SME active customer base by 12%.

In addition, Priorbank stands out among Belarussian lenders for its timely response to managing the foreign-currency exposure of individual customers. In June 2011, the bank implemented a programme in which $26.1 million-worth of loans, 40% of the total portfolio, were transferred from foreign-currency to rubel debt. At the same time, a conservative approach to risk management ensured that the bank’s other metrics remained stable, with NPLs dropping to below 2% by end-2011, the tier 1 ratio holding up at 17.1%, and the cost-income ratio for the year coming in at just 44.6%.

Best Bank: Raiffeisen Bank

As usual, Bosnia’s banking award was a two-horse race, but – in a reversal of last year’s result – this time it was Raiffeisen Bank that took the top spot ahead of UniCredit Mostar, by virtue of its superior asset quality and balance-sheet growth.

Not only did Raiffeisen’s subsidiary regain its position as the country’s largest lender, thanks to a 7.9% increase in total assets to €2.17 billion by end-2011, it also managed to keep NPL levels down to 8.4% – nearly five percentage points below those of its Italian-owned rival.

Raiffeisen Bank’s expansion covered both loans and deposits. But it was in attracting the latter that the lender proved particularly successful, building its market share by 11.8% and accounting for 68.3% of total deposit growth in the sector. Profitability was also improved, with pre-tax income up more than 500% to €25.2 million and return on equity jumping nearly 10 percentage points to 11.3%. Combined with wide-reaching expense consolidation measures, this kept the cost-income ratio down to 59.9%.

In both size and profitability, UniCredit Bulbank continued to dominate the Bulgarian banking market in 2011, accounting for 39.6% of the sector’s total net profit and growing its balance sheet by 5.6% to Lev12 billion ($7.7 billion).

Asset quality remains the market leader’s Achilles heel, however, with NPLs deteriorating sharply to 14.4% by the end of December. Although in line with sector averages, this was well above the 4.6% recorded by smaller rival Société Générale Expressbank.

Crucial to SGEB’s success in this respect has been its highly selective approach to lending: it has focused on larger corporates and steered clear of troubled sectors such as real estate, construction and tourism. SGEB’s refusal to participate in the deposit war waged between Bulgaria’s bigger banks last year also paid dividends in the form of an improved net interest margin that helped boost net income for 2011 by 66.7% to Lev51.6 million.

SGEB’s conservative strategy, however, proved no bar to expansion. It grew its asset base by 14.3% year on year to Lev3.47 billion, on the back of a 6.3% expansion of the overall loan portfolio and a 21% increase in customer deposits, boosting the bank’s market share by 0.24 percentage points to 3.84%.

Growth returned to the Croatian economy in 2011. However, a 0.2% rise in GDP failed to constitute the turnaround lenders had been hoping for, and this was reflected in another year of solid but unexciting results across the sector.

All of the country’s three biggest banks posted improved profitability. Intesa subsidiary Privedna Banka’s 24.1% increase in net income was impressive but it was market leader and UniCredit subsidiary Zagrebacka Banka that again turned in the most consistent performance.

At 8.85%, Zagrebacka Banka’s return on equity was respectable rather than stellar, although still more than two percentage points above the sector average. But an NPL ratio of just 5.4% and impairment coverage of 167% put the lender well ahead of peers in asset quality.

The bank’s growth was healthy across both loans and deposits, which were up 7.9% and 6.6% year on year respectively. Despite an increase in total assets of 8.2% to K104 billion ($17.3 billion), capitalization remained healthy, with the overall capital adequacy ratio increasing by 2.5 percentage points to 20.9% by end-2011.

Zagrebacka Banka’s leading position in Croatia’s still subdued capital markets also helped differentiate it from the chasing pack, as did a strong start to 2012. First-quarter net income came in at K375 million.

The Czech banking market remains one of the strongest in the region and in 2011 all the key players again posted strong results. The clear leader in profitability, however, was Erste subsidiary Ceska Sporitelna.

Ceska Sporitelna recorded the highest net income in the sector in both 2011 and Q1 2012 – Kc13.6 billion ($670.5 million) and Kc4.46 billion respectively – despite ranking only second by total assets. It was also the only one of the top three banks to show an improvement (13.2%) on the previous year’s result.

A sector-beating cost-to-income ratio of 41.8% also demonstrated a firm grip on expenditure, despite balance sheet growth of 12.5% to Kc13.6 billion. Although loan impairments were slightly higher than at close rivals Ceskoslovenská Obchodní Banka and Raiffeisen, in a regional context an NPL ratio of 5.3% at end-2011 gave little cause for concern.

Much of the growth came from Ceska Sporitelna’s focus on rebuilding the mortgage market. In 2011, the volume of new retail mortgages doubled to €1.1 billion and the overall portfolio expanded by 9% to €4.9 billion. The award also reflects Erste’s status as the number one debt capital markets and syndicated loans house in the Czech Republic, accounting for 28.5% and 17.9% respectively of all activity in the year to end-March 2012.

Best Bank: TBC Bank

All of Georgia’s biggest lenders grew at a breakneck rate in 2011. Once again, though, none could match the pace set by TBC Bank.

TBC, the country’s second-largest bank, expanded its asset base by 45.5% to GeL3.3 billion ($2 billion), with a 4.5% gain in market share by deposits and 2.3% by loans. Return on equity of 21.8% and a 90.6% increase in net income to GeL91.6 million were also sector bests. NPLs remained negligibly low at 0.6% of total lending.

TBC has a broad geographic reach, with 79 branches. Its branch efficiency consistently outperforms the market, with more than twice the portfolio per branch by assets, loans and deposits of any of its competitors.

TBC is also a market leader in technology, boasting the most advanced multi-channel banking platform in the region. The lender was the first in the Caucasus to introduce iPad and iPhone banking apps. The launch of a new internet bank at the start of 2012 helped boost take-up of the service by 461% year on year to the end of March.

TBC also widened the scope of its operations to include the fast-growing and lucrative microfinance sector with the acquisition in May 2011 of 83% of specialist lender Bank Constanta.

Best Bank: OTP Bank

Another disastrous year of political intervention by way of populist taxation and interference in the mortgage market, against a deteriorating economic backdrop, ended with most of Hungary’s biggest lenders posting substantial losses.

K&H Bank, a KBC subsidiary, managed to eke out a net profit of Ft4.4 billion ($19 million) but at the expense of a 10% balance-sheet shrinkage that lost it the number two ranking by total assets to BayernLB-owned MKB. The market dominance of OTP Bank, however, continued to stand it in good stead.

Even after allowing for the temporary bank tax and charges associated with the government-mandated early repayment of foreign-currency-denominated mortgages, the national champion’s core Hungarian operations returned a net profit of Ft53.4 billion in 2011 and accounted for half of all pre-tax profits in the sector. OTP is also well capitalized compared with its competitors, with an overall capital adequacy ratio of 17.9% at end-December compared with a sector average of 13.5%.

NPLs remained a weakness, reaching 13.6% of total lending by the year-end. This was exacerbated by a 7% reduction in the overall loan portfolio due in large part to the mortgage prepayment programme and the takeover of regional government debt by the state. Despite the deleveraging, OTP continued to gain market share in segments including new mortgages (up two percentage points to 29% in 2011) and personal loan disbursement (up one point to 50%).

Best Bank: Eurasian Bank

With Kazakhstan’s leading lenders still struggling to cope with large legacy portfolios of impaired loans, the way has been left open for smaller and less encumbered players to make their mark. Ranked tenth by total assets, Eurasian Bank nonetheless posted a sector-beating return on equity of 21% in 2011 after more than quadrupling net profit to KT6.05 billion ($40.6 million).

Impressive in its own right, the result also marks a turnaround in the fortunes of the bank, which was making a loss as recently as 2009. In that year, the bank’s shareholders – who also hold key stakes in Eurasian Natural Resources Corp – replaced existing management with an experienced, international team that promptly implemented a radical restructuring programme.

In the interests of achieving a more efficient use of funds, the new team focused on growing the loan portfolio rather than the overall balance sheet, boosting the net interest margin by 3.8 percentage points to 6.1% by end-2011, while keeping the loan-to-deposit ratio to a manageable 114.5%.

Stringent risk management procedures were also introduced, resulting in an NPL ratio of just 7.7% by the year-end – less than half the 19.8% recorded by the most successful of the lender’s larger rivals, Halyk Bank, and a long way below the sector average of 30.1%.

Eurasian Bank also gained market share on the lending side last year via a well-placed acquisition – taking over Société Générale’s local consumer finance arm, ProstoCredit.

Best Bank: ProCredit Bank

Despite a slight tick down in profitability, microfinance and SME specialist ProCredit Bank remained the biggest and the best of Kosovo’s lenders last year.

Net profit of €18.9 million was 15.7% down on 2010 but still produced a return on equity of 23.5%, well ahead of any of its competitors. Smaller rival Raiffeisen – number two in Kosovo – gets an honourable mention for boosting its bottom line result by 22% to €13 million and recording a 19% increase in lending year on year.

Raiffeisen’s NPL ratio of 9.2%, particularly when combined with the rapid expansion of the loan portfolio, looks high by comparison with ProCredit’s 2.6%. The latter is a product of the German-owned lender’s traditionally conservative risk management policies.

ProCredit also remains well capitalized, with a tier 1 ratio of 11.7% at end-2011, and management’s firm grip on expenses is demonstrated by a very modest increase in the cost-to-income ratio of eight basis points to 46.8% despite last year’s drop in income.

Another set of stellar results in 2011 ensures Demir Bank retains the title of best bank in Kyrgyzstan for the third year in succession. The 100% foreign-owned lender, whose shareholders include the European Bank for Reconstruction and Development and the International Finance Corporation, posted an increase in net profit of 150% to Som202.2 million ($4.3 million) on the back of a 59.8% rise in net interest income and an only slightly lower 44.7% increase in fee and commission income.

Demir also registered another year of expansion, growing its balance sheet by 7.9% to Som6.52 billion. Lending increased much faster than deposits – 59.8% year on year against 4.8%. But the loan-to-deposit ratio remained close to 50%, offering ample scope for further growth.

In addition, by opting to retain earnings, the bank’s multilateral shareholders increased its total equity by 32.5% to Som820 million at end-2011. Demir’s solid performance continued into 2012, with a net profit of Som57.1 million for the first quarter that was double the amount registered for the same period a year earlier.

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In marked contrast to the fortunes of its troubled Slovenian parent, state-owned Nova Ljubljanska Banka, Tutunska Banka had an excellent year in 2011, increasing its bottom-line profit by 40.1% to MD660 million ($13.6 million). Tutunska also easily outperformed its peers in Macedonia in terms of profitability.

Tutunska is ranked second by total assets but its return on equity of 15.6% was well ahead of the 11.5% recorded by the country’s largest lender, Komercijalna Banka, and the 7.5% managed by the number three, National Bank of Greece subsidiary Stopanska Banka.

A first-quarter net profit of MD112.8 million gave Tutunska a strong start to 2012 – unlike Komercijalna, which slipped into the red in the same period.

NPLs are a slight cause for concern at Tutunska, increasing 1.29 percentage points to 8% of total lending by end-2011. But a coverage ratio of 155.8% provides ample cushioning against further asset deterioration.

NLB is the majority shareholder in Tutunska, with an 87% stake, and the lender is also listed on the local stock exchange.

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Moldova’s banking award was a more closely fought contest than usual. But despite a strong showing by Banca de Economii, it is market leader Moldova Agroindbank (MAIB) that takes the title once again.

Both banks expanded in 2011, growing their balance sheets by around 10% apiece. But Banca de Economii’s net profit of MLei28.7 million ($2.4 million) – while more than three times the previous year’s result – paled beside MAIB’s MLei286 million bottom-line figure.

MAIB’s ability to boost its loan portfolio by 17.5% also impressed, as did the choice of growth sectors – manufacturing, energy and consumer all increased substantially, while higher-risk areas such as real estate and construction were de-emphasized.

At the same time, MAIB retained its status as one of the best-capitalized lenders in Moldova – a market known for its high levels of capitalization – with a capital adequacy ratio at end-2011 of more than 24%.

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After two years in the wilderness, Montenegro’s banking sector began to show signs of recovery last year, with many lenders returning to profitability. Overall asset quality was much improved, thanks to banks’ efforts in working out or offloading part of their large impaired loan portfolios, and returning confidence in the sector brought back much-needed deposit flows.

One of the key beneficiaries of this upturn was the lender formerly known as Podgoricka Banka. Rebranded in May last year as Société Générale Montenegro to emphasize its membership of the French group’s CEE network, the bank had already moved back into the black in 2010 and has since gone from strength to strength, boosting net profit by 57.9% to €4.3 million last year and matching that figure in the first quarter of 2012 alone.

Total assets were up 9.5% year on year to €284.6 million by end-2011 and, while NPLs increased slightly to 4.9% of total loans by the end of March, the figure was low by sector standards and coverage of 76.3% was adequate. Société Générale Montenegro has 20 branches and serves 66,800 clients.

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Nearly all of Poland’s largest lenders posted record profits last year. But with little to choose between the top two – PKO BP and Bank Pekao – the award goes to momentum player Bank Zachodni WBK.

Already a strong presence before its forced sale by Allied Irish Banks to Santander in March last year, BZ WBK is now reaping the benefits of its association with the big Spanish retail bank in the form of improved cost efficiency and risk management.

Net profit was up 26% in 2011 to Z1.16 billion ($342.2 million) – giving a return on equity of 21.2% – and remained at an expectation-beating Z314.2 million in the first quarter of 2012. A cost-to-income ratio of 48% for the full year was the lowest level ever achieved by the lender.

Balance-sheet expansion was also well ahead of peers at 13.7% in the year to end-December, with lending growth reaching 15.8%. But BZ WBK’s already low level of NPLs declined a further 1.3 percentage points, to 5.5%, and coverage was up five percentage points at 49%.

The lender’s market share is due to be further boosted by the end of the year, when a proposed merger with KBC’s Kredyt Bank is expected to be completed. With nearly 900 branches and 3.5 million customers, the merged lender will be Poland’s third largest on all key measures.

On the investment banking side, no single bank stood out across all sectors last year so there is no overall award. However, each individual category produced a clear winner.

The debt house award goes to Citi, whose table-topping performance over the awards period is all the more impressive given its complete absence from the top 10 in the previous year. The US house acted on five deals for a total value of $1.8 billion, more than $100 million ahead of closest rival HSBC, and accounted for 16.9% of total market share. Its four transactions for the Polish sovereign included a $2 billion, 10-year bond in October, which attracted $8 billion of demand at a time when markets were shut for most issuers. Citi was also mandated on Cyfrowy Polsat’s high-yield €350 million, seven non-call three in May.

In a relatively lean year for equity capital markets in Poland, UniCredit takes the award once again. The Italian bank headed the league tables by value thanks to its presence on the three biggest deals in the period. Unsurprisingly, given the difficult operating environment, all were part of the Polish treasury’s privatization programme.

The standout deal on the equity side was the Z5.4 billion primary listing of 33% of coking-coal producer JSW – a rare bright spot in the bleak market for European IPOs last year. Accelerated bookbuilds for insurer PZU and power company PGE were also well received, raising Z3.3 billion in June and Z2.5 billion in February respectively.

Deutsche Bank easily topped the league tables for M&A thanks to its involvement as one of only two global coordinators – along with Crédit Agricole – on the biggest deal of last year, the Z18.1 billion ($5.4 billion) leveraged buyout of mobile operator Polkomtel by Polish entrepreneur Zygmunt Solorz-Zak.

The German house also acted as adviser to Vattenfall on the disposal of its Polish assets, comprising the Z4.6 billion sale of electricity supplier GZE to Tauron and the Z3 billion acquisition of the Swedish firm’s Warsaw-based heat-and-power business by PGNiG. As well as a handful of smaller deals, Deutsche is also one of five banks advising Santander on its purchase of Kredyt Bank from KBC.

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With Romania’s two leading banks out of the running after making a loss in full-year 2011 (Banca Comerciala Romana) or first-quarter 2012 (BRD), the contest for this year’s award was between the number three and number four players. Although Raiffeisen’s local subsidiary posted the higher profit at €93 million, it is local lender Banca Transilvania that wins the best bank award for its combination of improved profitability and impressive expansion across all sectors.

Thanks to a traditionally conservative approach to lending, Romania’s largest domestically owned private bank has been well positioned to benefit from foreign subsidiaries’ deleveraging, and its strategy of focusing on larger SMEs, agriculture and the medical sector has so far proved highly successful.

In just three years, Banca Transilvania has moved from a position well down in the top 10 to become Romania’s number three lender by total assets, overtaking Raiffeisen last year thanks to a 19% increase in its asset base to €6 billion by end-December. Net profit for the year was up 120.4% to €70.1 million and the bank looks set for another good year in 2012 after recording a €20.5 million bottom-line result in the first quarter. NPLs are a slight weakness, deteriorating to 8.62% of the total by end-2011. But this is still well below the sector average thanks largely to Banca Transilvania’s low exposure to foreign-currency loans.

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Since the arrival of German Gref as chief executive of Sberbank in 2007, Russia’s biggest lender has commanded increasing respect at home and abroad. In Euromoney’s most recent survey of the best-managed companies in central and eastern Europe, respondents nominated Sberbank as the most improved firm, for example.

Sberbank, which is also expanding regionally, was the only brand from the Bric nations (Brazil, Russia, India, China) to be in the top 20 risers in the latest ranking of the world’s most valuable brands by US market research agency Millward Brown. It jumped 25 places to 74, a higher place than any other Russian firm.

Sberbank’s success is partly thanks to hires from international firms in 2007 and 2008, after Gref joined. Alexander Bazarov, for example, was hired from Deutsche Bank to head the corporate division. Anton Karamzin joined from Morgan Stanley as chief financial officer. Gref also hired the head of IT, Viktor Orlovky, from IBM. He hired the head of strategy, Denis Bugrov, from McKinsey.

In 2011, Sberbank posted record earnings: up 74% year on year to almost R316 billion ($10.9 billion), bringing return on equity of 28%. In the first quarter of 2012, earnings growth was 33% year on year. Sberbank grew its loan book by 46% over the period. Deposits were up 24%. The loans to deposits ratio is around 100%.

Oil prices and higher government spending helped spur average sector loan growth of around 25% in Russia last year. This was despite a resurgence in capital outflows and the political scares around the elections, even as some eurozone banks pulled liquidity to support their home operations.

But Sberbank has been making better use of the strong retail base and funding it inherited from its previous existence as the national savings bank. An improvement in customer service, new loan products and more vigorous marketing have contributed to higher than average loan growth.

According to research from local investment bank Metropol, Sberbank has risen to be the country’s number one provider of credit cards just two years after launching the product. With the acquisition of local investment bank Troika Dialog, Sberbank is beginning to use its balance sheet more intelligently – adding mandates in the capital markets to corporate lending.

Sberbank’s bad debt level declined from 7.2% to 4.9% over the period, with a coverage ratio of 151% at the end of the first quarter of 2012. In general, Sberbank’s main rival, fellow-state-owned lender VTB, has fared less well at group level, most evidently in its acquisition of Bank of Moscow, with asset-quality problems there entailing a R395 billion state bailout.

Nevertheless, in investment banking, VTB Capital has had something of a head start, and wins Euromoney’s best debt house award this year. This is partly thanks to hiring a team in 2008 from Deutsche Bank, headed by Yuri Solovyev and including VTB Capital’s head of DCM, Andrey Soloviev. At the same time, the bank gained international distribution capacity, hiring such names as George Niedringhaus, formerly head of emerging market syndicate at ABN Amro.

Over the awards period, VTB Capital was number two in Dealogic’s M&A adviser league table. But the bank took the top spot in debt and equity. VTB Capital’s lead over the league table number two is widest in debt and its work stretches across local-currency, dollar and even sterling issuance

Among VTB Capital’s deals this year was the $7 billion sovereign bond in March, which included a 30-year tranche. Shortly before the sovereign deal, VTB Capital also arranged a R25 billion seven-year bond for Russian Railways, breaking new ground in the growing Eurorouble market.

Among the deals VTB Capital arranged for debut issuers was a $1.3 billion Euro-commercial paper issuance of seven-, nine- and 12-month maturities, for state mining firm Alrosa. Among financials, it raised a rare subordinated bond note for Russian Agricultural Bank.

In the private sector, it was one of the joint lead managers on the $850 million 144a/RegS new issuance and tender for the outstanding 2013 bonds of steel group Evraz, for example. It was also bookrunner on a $750 million Eurobond for Alisher Usmanov’s mining group, Metalloinvest.

Even so, Deutsche Bank continues to be a strong player in Russia and nowhere is this more evident than in the equity markets, where it acted on landmark transactions in international and local markets across various sectors in the period.

Deutsche Bank was senior bookrunner on the $1.4 billion IPO in New York of Yandex, a Russian internet company, for example. It also arranged a $534 million IPO in London for port operator Global Ports, one of Euromoney’s deals of the year.

Deutsche Bank was joint global coordinator on a $491 million capital increase for Polymetal, a Russian gold and silver producer. It was also joint coordinator on the $808 million IPO of Nomos Bank, the largest Russian bank IPO since the global financial crisis.

Meanwhile, in M&A, the regional winner also comes up top in Russia. Goldman Sachs advised on Unilever’s $835 million buyout of personal-care firm Kalina and on a $1 billion investment by Russian energy firm TNK-BP in an exploration and production concession in Brazil.

Goldman also advised on the $1 billion merger of Russian telecoms firms MTS and Comstar. Finally, it advised on the merger of potash producers Uralkali and Silvinit, the latter via a stock swap and bond and loan-financing cash injection of some $900 million.

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Serbia’s three leading banks all reported an upsurge in profits last year as inflation moderated and demand slowly began to return to the economy.

Komercijalna Banka and Raiffeisen’s local subsidiary, second and third by total assets respectively, both posted substantial increases in net income – 39.3% for Komercijalna and 76.9% for Raiffeisen. But this nevertheless fell well short of the YD9.59 billion ($105 million) recorded by market leader Banca Intesa Beograd.

Intesa’s profit was 25.9% up on the previous year, mainly driven by a 13.2% rise in net interest income and a 39.2% increase in profits on trading. The country’s largest lender also eclipsed its closest rivals in balance-sheet growth, boosting total assets by 9.2% to YD392.3 billion by end-2011.

NPL ratios increased slightly over the period to 10% but remained well below both the sector average of 20.1% and levels recorded by Banca Intesa Beograd’s peers. One-off expenses associated with the installation of a new data centre mainly accounted for an increase of 8.6% in operating costs.

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Slovakia’s links to the German export sector stood it in good stead last year, driving annual GDP growth of 3.3%. The positive economic tone was reflected in the banking sector, where all three leading lenders turned in strong results.

The most impressive profitability for full-year 2011 was registered by Tatra Bank, the country’s number three, which boosted net profit by 64.6% to €98 million and recorded a return on equity of 22.5%. The Raiffeisen subsidiary’s first-quarter 2012 result was less impressive, however, and the award goes to market leader Slovenska Sporitelna in recognition of its consistent performance throughout the period – a net profit of €195 million for 2011 was 30% up on the previous year and a first-quarter result of €50 million made for a good start to 2012.

Part of Erste Group, Slovenska Sporitelna has traditionally focused on the retail and SME sectors. The bank serves around half of Slovakia’s 2.5 million inhabitants. This strategy stood it in good stead again in 2011. Net interest income across the two segments was up 4.4% on the back of a 16% increase in consumer lending, and the bank’s newly launched 30-year fixed-rate mortgage – a first in the Slovak market – proved particularly popular.

Slovenska Sporitelna’s efforts to boost market share in the corporate and public-sector segments also paid off, with the bank doubling its share of the public-sector loans market to 13% by the end of 2011.

An NPL ratio of 7.6% was higher than peers’ but at 80% coverage remained well above the sector average, and a cost-income ratio of 40.5% at end-2011 was unrivalled among Slovenska Sporitelna’s larger competitors.

Last year was relatively difficult in Turkish banking in terms of profitability, which was hit by declining interest margins. However, the growth of Turkey’s banks continues, and in this respect Isbank stands out above all the others.

Isbank posted a 42.6% growth in loans last year, more than any of its peers, giving it a market share of over 14%. Moreover, this was achieved without a drop in asset quality. Isbank’s NPL ratio dropped by 1.5 percentage points to just 2.1% – comfortably below the sector average of 2.6%. Isbank continues to be one of the only banks in its peer group to maintain a 100% NPL coverage ratio.

Isbank is the largest Turkish bank by deposits, and it grew its deposit base by 11.4% over the awards period, bringing total deposits to more than TL98 billion ($54.3 billion).

The growth in loans was funded partly through debt issuance, helping to diversify the bank away from deposits as a source of funding and to generate longer-term funding. This is particularly important given the Turkish public’s aversion to long-term deposits – a hangover from several years of hyperinflation.

The declining interest margins in Turkey have increased the importance of fees and commissions as a source of income, and for Isbank these revenue increased by 18% over 2011.

Last year Isbank also stepped up its international expansion with the completion of the acquisition of CJSC Bank Sofia in Russia and its subsequent renaming to Isbank Russia. Isbank’s German-based subsidiary Isbank GmbH has expanded into Bulgaria with a Sofia-based office.

In investment banking Garanti Securities impressed most. For example, it was the sole domestic bookrunner on the $250 million IPO of Bizim Toptan, Turkey’s largest cash-and-carry operation. The deal benefited from strong domestic interest, with the allotment of shares for retail investors being more than 18 times oversubscribed. The deal was the largest Turkish IPO of 2011.

Garanti Securities also acted as the sole international bookrunner on the $57 million IPO of electronics retailer Bimeks. Just under a third of shares were allocated to international institutional investors, resulting in an oversubscription rate of more than seven times.

In M&A, Garanti advised the Turkish Savings Deposit Insurance Fund on the $286 million sale of refractory products manufacturer Kütahya Manyezit to Turkish mining company Kobin Madencilik. The bank also advised the privatization administration on the sale of a 10.32% stake in Petkim Petrokimya Holding – Turkey’s largest petrochemicals company, and one that looks set to benefit from government policies encouraging reduced Turkish dependency on imports.

In other deals, Bank of America Merrill Lynch advised Denizbank and its Franco-Belgian parent Dexia on the sale for $230 million of Deniz Emeklilik, Denizbank’s life insurance and pension subsidiary, to US insurer MetLife. The bank also advised MIH Allegro, a subsidiary of South African media company Naspers, in its acquisition of a 70% stake in Turkish private shopping club Markafoni.

Perhaps BAML’s most noteworthy deal in M&A is the sale of a 75% stake in hospital operator Acibadem Saglik Yatirimlari to Integrated Healthcare Holdings Khazanah Nasional, the investment arm of the Malaysian government. BAML advised the Aydinlar family and Abraaj Capital on the sales of their stakes in a $1.6 billion deal.

In debt, HSBC acted as the joint lead manager and bookrunner of the $350 million sukuk issuance from Kuveyt Turk. The deal shows the growing prominence of Islamic finance in Turkey, being the first benchmark-size sukuk in the country.

HSBC also acted as the joint lead manager and bookrunner on a $500 million bond issuance from Finansbank, the Turkish subsidiary of National Bank of Greece. The bond yielded a competitive 5.6%.

HSBC’s biggest deal in Turkish DCM over the period was the $1 billion bond issue from the Turkish sovereign in October 2011. The issue of 10-year notes was three times oversubscribed. The issue was opportunistic, taking advantage of a successful $1.5 billion deal in the previous month.

HSBC also acted on $1.8 billion in syndicated loans, the largest of which was a $530 million loan for Turkish utility Zorlu Enerji, on which HSBC acted as coordinator, bookrunner and agent.