Central and Eastern Europe Awards for Excellence 2013: By country

Albania

Best Bank: Banka Kombetare Tregare

For the second year in succession, Banka Kombetare Tregtare (BKT) takes the top spot in Albania ahead of local market leader Raiffeisen by virtue of its superior commitment to expansion and strong profitability.

The number-two lender, a subsidiary of non-financial Turkish conglomerate Calik Holding, grew its balance sheet by more than 25% in 2012 to $2.3 billion and its deposit base by 19.2% to $1.9 billion.

Meanwhile, a focus on cross-selling produced substantial increases in both mortgage and retail overdraft lending, boosting BKT’s total loan portfolio by 9.8% to $854 million and taking its share of Albania’s retail market to a sector-best 18%.

The lender also added three branches to its countrywide network, taking the total to 59. Despite the rapid expansion, however, profitability remained healthy, with the pre-tax figure for full-year 2012 coming in at $34.7 million, up 5.5% on the previous year.

That strong performance looked set to continue through 2013, after first-quarter numbers showed a return on equity of 18.1% despite a 2.9 percentage point increase in the bank’s capital adequacy ratio.

Deteriorating asset quality through 2012 was a disappointment, but BKT’s non-performing loan ratio of 8.1% at end-December was well below both Raiffeisen’s 11.2% and the sector average of more than 23%.

back to top

Armenia

Best Bank: HSBC Armenia

GDP growth of more than 7% provided a strong backdrop for Armenia’s banking sector last year, resulting in stellar balance-sheet growth for all the country’s main lenders.

In terms of profitability, however, HSBC Armenia – the number-four player by total assets – trounced larger rivals ACBA Crédit Agricole, Ameriabank and VTB Bank Armenia with a full-year 2012 pre-tax result of $23 million, giving a sector-best return on equity of 22%.

Loan portfolio expansion of 18% was also ahead of the sector average and boosted HSBC’s overall market share by nearly two percentage points to 11%. Deposit base growth was slightly lower at 13%, but nonetheless left the bank with a conservative deposit-to-loan ratio of 107% at end-December.

The corporate franchise remained the primary driver of expansion, but HSBC also gained ground in the valuable premium retail sector via initiatives including the opening of a dedicated branch for HSBC Status customers in Yerevan, the launch of a new HSBC Plus package and the introduction of the MasterCard World Black Edition card.

NPLs remained low by regional standards at 5.7% by end-March, while pre-tax profit of $5.9 million in the first quarter pointed to another strong result in 2013.

For the majority of Azerbaijan’s banks, 2012 was marked by weak profitability and deteriorating asset quality as growth slowed in the wider economy.

AccessBank, however, continued to buck the trend, expanding its balance sheet by 43.2% to $699.5 million in the 12 months to end-March and its loan portfolio by an even more impressive 45.6%, taking total outstanding lending past the $500 million mark for the first time.

The SME and microfinance specialist also notched up sector-best pre-tax profits of $25.9 million for full-year 2012 – up 13.5% year on year – and a return on equity of 18.6%, as well as Azerbaijan’s lowest impaired loan ratio of just 0.86% at end-March.

Product innovation remained a key focus for AccessBank, with new offerings in the credit card and insurance sectors being rolled out in 2012, while the growth of the retail mortgage portfolio to $10.9 million by end-March testified to the success of the bank’s efforts to develop the segment.

AccessBank currently serves more than 129,000 customers from its 36 branches and has a 30% share of Azerbaijan’s growing microfinance market.

Best Bank: Priorbank

After a testing 2011, Priorbank – part of the Raiffeisen network – last year leveraged its strong corporate franchise to produce an impressive combination of profitability and growth.

Pre-tax profits more than doubled year on year to BR783 billion ($89.7 million), giving a return on equity of 23.5%, while the lender’s asset base had increased by just under 10% by end-December.

Priorbank’s extensive corporate offering – including a range of innovative factoring services – proved particularly popular with Belarus’s expanding SME sector, with total loans to the segment growing by 40% over the year.

On the retail side the bank scored notable successes with packages tailored for pensioners and premium customers. Expansion was backed by solid fundamentals, as a continued focus on risk management ensured non-performing loans remained at a negligible 1% while tier 1 capital was boosted by more than 40% to BR2.62 billion.

The strong performance also continued into 2013, with first-quarter results showing a further 8.6% balance-sheet growth and a 33% increase in net interest income on the back of a 1.4 percentage point rise in net interest margin to 6.39%.

Best Bank: UniCredit Mostar

Two lenders continue to battle it out for dominance in Bosnia’s banking market, but whereas Raiffeisen’s local subsidiary’s balance sheet shrank by more than 8% in 2012, UniCredit Mostar maintained a healthy rate of growth.

An expansion of 6% took the latter’s asset base past that of its Austrian-owned rival to KM3.74 billion ($2.5 billion) by end-December, while an even greater increase in equity boosted overall capital adequacy to 18.3%.

Funding remained on a stable and self-sufficient footing thanks to a 7.7% rise in deposits to KM2.81 billion that made for a highly conservative ratio to loans of 110.1%.

Non-performing loans remained relatively high at 12.7% of the total at end-December, but appeared to have stabilized, and a slight weakness in that area was made up for by improved profitability.

UniCredit Mostar recorded a full-year pre-tax result of KM59.9 million, nearly double that posted by Raiffeisen Bank, while overall return on equity came in at a respectable 10.7%.

Both growth and profitability were maintained in the first quarter of 2013, and an emphasis on innovation – particularly in mobile banking and credit cards – looked set to ensure another strong result in 2013.

Bulgaria is home to one of the most diverse banking markets in CEE, with a clutch of domestic and international players jostling for position. Despite intense competition from local and international rivals, however, market leaders UniCredit Bulbank and DSK Bank continued to expand their balance sheets in 2012. UniCredit’s local arm recorded faster growth, increasing its asset base by 6.3% compared with 2% for second-ranked DSK Bank, but the latter takes the award in recognition of its superior profitability.

Part of Hungary’s OTP Group, DSK Bank was a big contributor to the profitability of its parent in 2012, thanks to a pre-tax result of Lev213.4 million ($144.5 million) that was more than double the previous year’s figure.

That made for a return on equity of 13.9%, 3.6 percentage points higher than at UniCredit Bulbank, while in the first quarter of 2013 DSK Bank’s ratio improved again to 16.8% on the back of a 25 basis point improvement in net interest margin.

Asset quality remained a weak point, with non-performing loans coming in at 14.6% at end-December, but this was in line with the majority of Bulgaria’s top-tier banks, and coverage stood at a respectable 86% by end-March.

The lender’s deposit-to-loans ratio had improved by 5.4 percentage points to reach 89.2% by end-2012, following a 2.9% growth of deposits.

With the widest branch network and largest customer base, DSK Bank boasts Bulgaria’s strongest retail banking franchise and is the undisputed leader in consumer and mortgage loans provided to households, with market shares of 31.4% and 25.8% respectively.

Another year of economic contraction and weak credit demand stymied growth across Croatia’s banking sector in 2012. A focus on risk management and cost control enabled all the country’s leading lenders to remain in the black, but profitability was inevitably impaired, with return on equity failing to reach double digits.

Under the circumstances, the achievement of Privredna Banka Zagreb (PBZ) in restricting the decline in full-year pre-tax profit to 19.5% caught the eye, particularly as the number-two ranked bank’s sector-best result of K1.27 billion ($223.3 billion) was more than 15% higher than that of much larger market leader Zagrebacka Banka. However, on a standalone basis PBZ made pre-tax profit of  K1.028 billion while Zagrebacka Banka made a slightly larger K1.104 billion.

Part of Intesa Sanpaolo’s CEE network, PBZ is a full-service universal lender with leasing, real estate and asset management offerings alongside its core banking business. A network of more than 200 branches – the most extensive in Croatia – gives the bank an edge in the retail market that it continued to leverage last year with the introduction of products including loans targeted at younger customers.

PBZ has also established a strong position in credit cards, with a market share of more than 30%, while a focus on technology saw the launch last year of the lender’s full-service mobile banking product mPBZ to complement its popular internet offering, as well as the country’s first online platform for trading domestic equities.

CEE’s most mature banking market remained highly profitable for all the leading lenders in 2012, making for another close-run awards race. Of the top-three lenders, Ceskaslovenska Obchodni Banka (CSOB) and Komercni Banka both boosted full-year pre-tax profits by more than a third, while Ceska Sporitelna posted a more modest 11.6% increase.

The award, however, goes to the latter in recognition of its superior growth and a sector-best first-quarter result. In the 12 months to end-March, the Erste subsidiary expanded its asset base by 9.4% to Kc992 billion ($50.5 billion), to take the number-one spot in balance-sheet terms from CSOB for the first time.

Pre-tax profit of Kc5.4 billion in Q1 2013 was more than a third higher than that posted by closest rival Komercni Banka. Qualitative achievements include winning a government mandate to administer welfare payments and operate the new social systems card, the expansion of Ceska Sporitelna’s credit card range and the development of its pension arm to take advantage of reforms to the pension system.

The award also reflects Erste’s status as the leading debt capital markets house in the Czech Republic. The Austrian bank acted on four out of 12 global transactions from the jurisdiction in the awards period, giving it a 19.1% market share.

Best Bank: Bank of Georgia

Both of Georgia’s top banks put in another year of strong profitability and relentless expansion in 2012 but the momentum was with market leader Bank of Georgia. In June, the lender became the first Georgian company to be listed on the premium segment of the London Stock Exchange through its UK-incorporated holding company, and it followed this up with a well-received return to the global bond markets.

The $250 million five-year deal remains the largest from a privately held Georgian borrower to date, and both extended Bank of Georgia’s maturity profile and lowered its cost of funding. That helped boost the lender’s full-year pre-tax profit for 2012 by 23.7% to a record GeL213 million ($128.7 million) and return on equity to 19.1%, a strong performance that was continued into the first quarter of 2013.

In the retail segment, Bank of Georgia strengthened its franchise through the roll-out of cost-efficient small-sized express banking branches, which – along with continued investment in technology – again helped the lender achieve client base expansion while maintaining a cost-income ratio of below 45%.

Non-performing loans increased slightly to 3.9% by end-2012, but coverage remained high at 87.5%; increases in equity kept overall capital adequacy at 23.2%.

Best Bank: K&H Bank

Economic stagnation and crisis taxes continued to take a heavy toll on Hungary’s banks last year, and of the leading lenders only three – OTP Bank, K&H Bank and UniCredit’s local subsidiary – were able to deliver a positive bottom-line full-year result.

OTP again leveraged its market dominance to produce respectable profitability and minimize the loan portfolio contraction experienced across the sector as a result of weak credit demand and the Hungarian government’s imposition of an early repayment scheme for foreign-currency-denominated mortgages.

Nevertheless, net income at the national champion was down by 17% in 2012, whereas K&H Bank bounced back from barely scraping a profit in 2011 to post a Ft20.5 billion ($90.6 million) bottom-line result last year.

Asset quality at the KBC subsidiary was also among the best in the sector, with non-performing loans standing at 12% of the total at end-December against more than 16% at OTP, while a loan-to-deposit ratio of 70% made for a balanced funding profile.

K&H Group comprises insurance, leasing, factoring and asset management arms in addition to its core banking franchise, and of these the insurance subsidiary notably maintained its leading position and achieved a strong full-year result in a challenging market.

Best Bank: Tsesnabank

Last year’s winner, Eurasian Bank, put in another strong showing in 2012, expanding its balance sheet by 27.4% and increasing pre-tax profits by 62.1%, but the award this time goes to an even faster-growing and more profitable lender.

Tsesnabank not only grew its balance sheet by more than 40% last year to KT621 billion ($4.1 billion), it also boosted its share of the deposit and loans markets to 6% and 2.8%, an increase of 1.6 percentage points and 1 percentage point respectively.

The bank has more than tripled its share of the Kazakh markets by assets in each of the past three years and now ranks as the seventh-largest lender in the country.

The break-neck pace of growth, however, has been matched by a tight focus on risk management. More than 75% of loans in Tsesnabank’s portfolio have a maturity of less than three years, and trading and service companies make up the majority of its corporate client base, with exposure to higher-risk sectors such as construction and real estate kept to a minimum.

This conservative approach to lending helped earn Tsesnabank two upgrades to the outlook on its B rating from Standard & Poor’s in less than 12 months, with the agency also citing the lender’s increasing systemic importance in the Kazakh banking system thanks to its active involvement in initiatives such as the government’s Business Road Map 2020 economic development programme.

Tsesnabank has also successfully leveraged its position as the only big bank to be headquartered in the Kazakh capital, Astana, growing its share of retail deposits in the city to 19%.

Best Bank: TEB

Kosovo’s two largest lenders, ProCredit Bank and Raiffeisen, both reduced loan portfolios last year in the face of poor asset quality and weak credit demand. That left the field open for smaller players such as TEB to take the lead on growth.

A joint venture between BNP Paribas and Turk Economi Bankasi, TEB was set up in Kosovo in 2008 and has expanded rapidly, achieving a customer base of 175,000 and a balance sheet of €300.2 million – up 41.2% on the previous year – by end-December.

At the same date, the bank boasted shares of the overall loans and deposits market of 14% and 11.7% respectively, while non-performing loans were well below the sector average at 5% and on a declining trajectory.

This responsible approach to expansion has translated into strong profitability. In 2012, TEB made a pre-tax profit of €4.8 million, more than double the previous year’s total, while overall return on equity came in at 25.6%.

Last year also saw the latest in a succession of innovative initiatives by the bank, including the introduction of several new credit card products and a facility for making tax payments via e-banking, a first for Kosovo.

Disruptions in the production of gold caused Kyrgyzstan’s economy to slide into recession in 2012, adding to the challenges for the country’s banks.

Nevertheless, last year’s winner, DemirBank, was once again able to leverage its countrywide reach and strong funding base to produce a year-on-year increase in pre-tax profits of 38%.

Net fee and commission income was up 9%, but the main boost to profitability came from net interest income, which increased 41.9% to Som415.8 million ($8.8 million) despite a rise in impairment charges and operating expenses.

Demir also posted another year of impressive expansion, growing its balance sheet by 44.3% to Som9.41 billion and its loan book by 54.2% to Som3.5 billion.

The lender is 100% foreign-owned, with shareholders including multilaterals the European Bank for Reconstruction and Development and the International Finance Corporation.

back to top

Despite contraction in the wider economy, FYR Macedonia’s leading lenders all turned a profit in 2012. In the first quarter, however, market leader Komercijalna Banka slid into the red, leaving the field open for last year’s winner, Tutunska Banka, and Stopanska Banka.

Of the two, Stopanska put in an appreciably better performance last year, boosting pre-tax profit by 27.8% to MD1.01 billion ($21.7 million), nearly double Tutunska’s total.

Similarly, while Slovenian-owned Tutunska suffered shrinkage in its asset base and loan portfolio year on year, Stopanska expanded its balance sheet by 7.7% and increased its lending by 3.4%.

Stopanska is a subsidiary of National Bank of Greece, but has very limited exposure to its troubled parent, being primarily funded by domestic deposits totalling MD59.3 billion at end-December.

Funding from NBG comprised just 4.3% of the total at end-2012 and consists of two subordinated loans, the first of which comes due in 2016, and neither of which can be withdrawn without the permission of Macedonia’s central bank.

A capital adequacy ratio of 19.4% also provides an effective cushion against further stresses in either the local economy or neighbouring Greece.

back to top

From Mexico to Russia, and from South Africa to Poland, an array of innovative and technology-oriented consumer finance-focused new banks has come to the fore in emerging markets in recent years.

There are increasing doubts about the sustainability of the growth of some of those lenders, particularly in South Africa. But it is a tribute to the winner of this award that analysts still look favourably on its chances to outperform traditional banks.

Over the past year, most Polish banks’ growth has begun to slow. The two biggest banks, PKO BP and UniCredit-owned Pekao, both posted only low single-digit profit growth in 2012.

In this context, last year’s winner, Bank Zachodni WBK, now merged with former KBC unit Kredyt Bank, did extremely well to grow profit by 19.2% in 2012 (it also completed a successful rights issue).

Wojciech Sobieraj, Alior. Innovation gives the bank an edge

It is Alior’s focus on innovation that gives it the edge: for example, targeting online loans for online shoppers, where a contract with the Polish equivalent of eBay helped the bank source some 185,000 customers in just six months.

Alior also launched an online currency exchange platform last year, offering real-time exchange in 14 currencies and allowing clients to confirm agreements by SMS. It also launched Alior Trader, for retail investors in a range of products.

The bank further enhanced its network over the period via Alior Bank Express: a new scheme for basic branches offering core services, located in malls and superstores, and with longer opening hours, including over the weekend.

Finally, Alior’s achievements up to now were demonstrated in its IPO in Warsaw on December 14, raising the equivalent of $773 million. This was Poland’s largest-ever IPO outside the privatization programme.

The IPO also points to the continued relevance of the Polish stock market: the most important part of the investment banking game in Poland, and indeed in central Europe.

The winner in investment banking combined a strong position in the local equity market with an ability to hoover up a high proportion of deal flow in debt and M&A too.

Deutsche Bank, in fact, was the only bank to have a top-three position in the league tables in all three of the core investment banking products over the period.

In debt capital markets, it was bookrunner on two issues from the Republic of Poland, a core regional issuer, with both deals breaking record low yields in the dollar market for the sovereign.

In the equity markets, Deutsche Bank managed billion dollar-plus follow-on issues for Zachodni WBK and PKO BP (a part privatization). It also managed the privatization of property holding company PHN.

In M&A, Deutsche advised on Zachodni WBK’s Kredyt Bank purchase, on Raiffeisen’s takeover of Polbank, and on the merger of the TVN and Canal+ Polish pay television platforms.

Meanwhile, taking equities alone, a local platform, Ipopema Securities, deserves recognition. Ipopema was one of the bookrunners on the Alior deal – perhaps the most important deal of the year.

Ipopema also acted on the PKO BP privatization (the biggest equity deal in Poland since 2011) and on the $217 million IPO and part privatization of electricity firm ZE PAK.

back to top

For a second year in succession, losses at market leaders Banca Comerciala Romana and BRD meant the Romania award was a two-way contest between the number-three and number-four players.

Local lender Banca Transilvania again posted impressive balance-sheet growth in 2012, increasing its asset base by 14.2% on the previous year, but this was accompanied by a deterioration in asset quality: non-performing loans rose to 11.9% by end-December despite a 10% increase in the overall loan portfolio.

By contrast, a historically cautious approach to risk management and the introduction of even more stringent procedures over the past two years kept non-performing loans at Raiffeisen Bank to 7.2%, while overall lending remained flat on the previous year.

Similarly, a recent efficiency drive by the Austrian bank subsidiary paid dividends in the form of a 7% decrease in operational costs in 2012, helping to boost pre-tax profits to a sector-best €103 million.

This strong performance was continued in the first quarter of 2013, when Raiffeisen Bank posted a pre-tax result of €30 million and saw a return of balance-sheet growth thanks to a 5.7% increase in customer deposits.

The increase in profitability was enhanced by a focus on promoting capital-light products to Raiffeisen Bank’s corporate client base, but the lender also made big gains in retail banking, growing its overall market share to 15.5% year on year.

back to top

The first quarter of 2013 showed the effect of a more difficult rate environment for Russia’s biggest bank. But in 2012 Sberbank proved that it could continue to increase its profit, even after spectacular rises in 2011 and 2010.

Sberbank’s return on equity has remained well above 20%. This is a figure Alfa Bank, the country’s biggest privately owned lender, can also boast. Alfa had a good year, with a lower cost-to-income ratio and upgrades from the ratings agencies.

Yet few will disagree that the much larger state-owned lender – and the changes enacted there by CEO German Gref since 2007 – is still the standout story in Russia, by some distance.

Over the period of this year’s award, Sberbank completed a $5.2 billion part privatization and secondary offering in London and Moscow in September, its first international listing.

The bank’s international expansion also gathered pace, most importantly with the acquisition of a top-five lender in Turkey, DenizBank, and the beginning of the integration of an eight-country network in central and southeastern Europe.

Yet reform has been most impressive in Russia. Where it had a reputation for huge queues trailing out into the snow, for example, the bank now reckons 90% of clients in 90% of branches wait less than 10 minutes to be served.

The time it takes to make credit decisions has also halved and improvements have been made in such areas as cash management and trade finance (its trade portfolio increased by 50% in 2012).

Sberbank’s domestic market share of loans is increasing, both in corporate and retail: particularly retail, where the market as a whole has seen rapid growth.

Take Sberbank’s acquisition of Yandex.Money and BNP Paribas’ Russia consumer finance business, Cetelem. Mobile banking customers almost doubled to 10 million and its market share in credit cards grew from 17.5% to 22.4% in 2012.

Market valuations relative to its size have been flattering to Sberbank in comparison to its most direct rival, VTB, the second-largest bank, and similarly state-owned.

Sberbank has grown in investment banking since 2011, yet in investment banking VTB Capital has first-mover advantage. This was evident this year particularly in Russia’s debt and M&A league tables.

VTB Capital’s franchise got off to a good start five years ago, after Yuri Soloviev came over from Deutsche Bank’s Russia franchise, bringing a team of bankers at one of the best investment banks in the country along.

This year, VTB Capital was top of the debt league table in Russia with a market share of 17.5%, compared with 12% at its nearest rival in terms of volume, and with 105 deals, compared with 81 at its nearest rival.

It managed the biggest bond of the year: the $3 billion debut from state-owned oil and gas firm Rosneft, and also ran third-party bank capital bonds, high-yield deals such as the Brunswick Rail deal, and bonds in Swiss francs and Euroroubles.

VTB Capital further managed the two biggest IPOs of the year, for telecoms firm Megafon (which despite initial doubts was, by the spring, trading some 40% above its issue price) and for the local stock exchange, Micex.

It was top of the league tables in M&A, where former Bank of America Merrill Lynch banker Riccardo Orcel has led a franchise boasting deals in energy, telecoms, mining, transport and other sectors during the period.

Looking at debt specifically, Citi can claim an impressive share of deals that defined an outstanding year for the market. Examples include the Rosneft debut and VTB’s own perpetual bond (the first in Russia) in the summer.

Citi was instrumental in the Nomos Bank subordinated bond, paving the way for the flurry of sub-debt deals, and the Eurorouble bond for sub-investment-grade Vimpelcom: a deal that showed how far the Eurorouble market could go.

In equity, Morgan Stanley was top of the league table by some distance. It managed all the key deals, including the Micex IPO, and was global coordinator on Megafon’s IPO and Sberbank’s follow-on, a Euromoney deal of the year.

Finally, in M&A, Deutsche Bank combines a position near the top of the league table with, more importantly, a presence on the best and most important deals of the year.

Along with Rothschild, Deutsche Bank was perhaps the key external adviser in Sberbank’s DenizBank takeover: the standout deal. It advised the Russian state in the acquisition of local energy firm TNK BP by Rosneft, the biggest deal.

Deutsche Bank’s other M&A advisory work included the $1.6 billion privatization of Freight One, a division of Russian Railways, as well as key deals in the telecoms sector for firms including Megafon and others.

back to top

In a slightly subdued year for banking in Serbia, a solid if unspectacular performance from Banca Intesa Beograd was sufficient to earn the market leader the award yet again.

The lender, a subsidiary of Italy’s Intesa Sanpaolo, experienced mild asset-quality deterioration during 2012, but a year-end non-performing loan ratio of 11.8% was still well below the sector average.

Meanwhile, a substantial boost to the bank’s deposit base – 11.1% – made for a 6 percentage point improvement in the deposit-to-loan ratio to 90.8% by end-December.

Nevertheless, profitability remained stable through the year and into the first quarter of 2013, with pre-tax results coming in at SD10.3 billion ($118 million) and SD2.2 billion respectively. Combined with a tight focus on efficiency, that in turn translated into a sector-beating cost-income ratio of 43.4%.

An overall emphasis on stability in a difficult market, however, did not preclude innovation, and initiatives for 2012 included the introduction of a loan package designed to finance medical services, upgrades to the bank’s internet and mobile banking offerings, and new products targeted at its growing premium customer base.

back to top

An extraordinary levy on financial institutions – consisting of a one-off tax of 0.1% on profits plus 0.4% on deposits – hit all Slovakia’s top lenders last year, but the country’s status as a rare haven of regional growth nevertheless made for healthy profitability and credit demand.

The two market leaders both posted stable results, but the consistently stronger performance at Slovenska Sporitelna across all metrics earns it the nod ahead of VUB Banka for the third year in succession.

The Erste subsidiary managed to restrict the impact on pre-tax profits to below 2%, notching up a sector-best full-year result of €237 million, while a return on equity of 16.9% also easily surpassed that of its closest rivals.

Unlike VUB and number-three player Tatra Banka, Slovenska Sporitelna also succeeded in growing its balance sheet and loan portfolio. Despite a 5.8% increase in the latter, a year-end loan-to-deposit ratio of 84.3% was again among the lowest in the country. Non-performing loans of 6.3% at end-December were marginally higher than at VUB and Tatra Banka, but coverage of 84.3% was above the level allocated by either of those lenders. Similarly, Slovenska Sporitelna’s cost-income ratio of 42.3% and capital adequacy of 20.2% gave the bank an edge over its competitors.

The anti-government protests that first erupted in Istanbul have swiftly spread from the financial capital to Ankara, Izmir and beyond, shaking prime minister Tayip Erdogan’s rule and his country.

For Turkey’s robust banks, the envy of their beleaguered western peers, this internal instability is something they have not endured in a decade or more. In the past year, Turkey’s biggest banks yet again went from strength to strength. Profitability, capitalization and asset growth are all at record levels.

All three of Turkey’s biggest banks – Isbank, Garanti and Akbank – reported more than TL3 billion ($1.55 billion) in net income for 2012, attractive return on equity above 15%, consolidated capital adequacy ratios of over 16%, and double-digit growth in total assets.

Looking at 2012 net income alone, Garanti reported the highest, at TL3.36 billion, while Isbank’s 24% year-on-year rise to TL3.31 billion was the most impressive. But Akbank’s 18.5% year-on-year growth to TL3 billion is also noteworthy.

In the past year, though, the bank that not only reported a stellar performance for its banking businesses, but also pioneered a new and important funding market for Turkish banks, is Akbank.

It has a history of pioneering new capital markets funding channels for Turkish banks and in January this year did so again, selling a TL1 billion Turkish lira-denominated Eurobond – the first of its kind.

With loan-to-deposit ratios breaching 100%, Turkish banks have had to be more creative in how they fund their explosive asset growth.

Akbank’s Eurolira bond was a resounding success, attracting TL3 billion of orders from investors keen to participate in a five-year transaction paying 7.5%.

Other Turkish banks will follow Akbank’s lead into this market, and perhaps another – covered bonds backed by Turkish residential mortgage assets. In April, Akbank had been marketing Turkey’s inaugural covered bond backed by such collateral.

In addition to this, and on almost every important financial measure, Akbank’s performance in 2012 was better than in 2011.

Total assets rose 17% to TL163.5 billion, partly supported by total lending rocketing 24.4% to TL92.4 billion and deposits hitting TL91 billion – up 12.3%. Furthermore, its cost-income ratio dropped to 40.6% and its non-performing loan ratio was lower at 1.2%.

In investment banking, Is Investment has impressed most in the past year. It has not only been at the forefront of the disintermediation trend, supporting the development of Turkey’s nascent domestic capital markets, but maintained its trading dominance in equities, derivatives, bonds and FX.

It was this strong performance across its core markets that helped Is Investment generate record full-year net profits in 2012 of TL69 billion – up 31% on 2011.

In Turkish domestic DCM, Is Investment completed 42 transactions worth TL9.65 billion in the past year – including Turkey’s first corporate sukuk offering – giving it a leading 19% market share.

Across equities, derivatives, bonds and FX trading, Is Investment remains the Turkish bank to beat.

In 2012, it maintained its dominance as the top bank by market share in equity trading, on Turkdex (the Turkish derivative exchange), bills and bonds, and FX margin trading.

Citi takes the award this year for best debt house in Turkey. It was not only the leading underwriter of international bonds, but worked on most of the landmark deals too, including Akbank’s Eurolira bond, the Turkish treasury’s debut $1.5 billion sukuk and Halkbank’s first $750 million Eurobond.

It wasn’t just Citi’s work for the sovereign and financial institutions that stood out. In the past year it was also active among blue-chip corporates, and in particular for Türkiye Petrol Rafinerileri (Tüpras).

The Tüpras transaction – a $750 million 5.5-year Eurobond – was the largest bond issue from a Turkish corporate.

In advisory, Goldman Sachs is Euromoney’s best M&A house in Turkey.

Of the 149 completed advisory deals in the past year, worth $9.94 billion, Goldman Sachs advised on six, together worth $4.42 billion.

At the top end of its transactions, Goldman advised DenizBank on its $3.77 billion equivalent acquisition by Russia’s Sberbank – the biggest M&A deal in Turkey during the awards period and one of the biggest in Europe.

Further down the dial, Goldman advised Greece’s Eurobank EFG on selling its Turkish business, Eurobank Tekfen, to Burgan Bank of Kuwait for $356 million; and advised French cosmetics group Yves Rocher on its 51% stake acquisition in Turkish cosmetics company Flormar.

Goldman also lead advised Cinven on its LBO of security firm Pronet Security Services, and advised Turkey’s Actera Group on its LBO of automotive part manufacturer Standard Profil.