COUNTRY INDEX
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ALBANIA |
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Best Bank: OTP Bank Albania |
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Robust growth, best-in-class profitability and a commitment to digital development earn OTP Bank Albania the award as Albania’s best bank for a second year in succession. Despite a challenging operating environment, the Hungarian subsidiary – led by chief executive Bledar Shella – posted a return on equity of 17.1% last year on the back of a 10.7% expansion in the loan portfolio that boosted its share of the market by 40 basis points.
Combined with a tight focus on efficiency, this made for a sector beating cost-to-income ratio of 48.7% despite continued investment in digitalization, which included holistic upgrades of the bank’s mobile and online platforms, as well as the introduction of multifunctional ATMs. A prudent approach to risk management kept non-performing loans (NPLs) to below 6% of the total at the end of 2020. Coverage remained healthy at 77.1%, while a capital adequacy ratio of 17.1% provided protection against further economic turmoil.
This strong performance continued into the first quarter of 2021, when returning consumer and business confidence boosted OTP Bank Albania’s new loan production by 63% year on year, contributing to an annualized return on equity of 18%.
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ARMENIA |
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Best Bank: Ameriabank |
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The pandemic took its toll on Armenia’s economy last year, with GDP declining by 7.6%. Against this unpromising backdrop, Ameriabank continued to demonstrate the resilience and reliability that has made it the country’s leading lender.
Robust loan growth in the retail and small and medium-sized enterprise segments – of 31% and 24% respectively – was balanced by a 19% increase in retail deposits, as well as by a 9.8% expansion of the large corporate loan portfolio. In a first for the Armenian banking sector, this helped take Ameriabank’s balance sheet past the Dram1 trillion ($1.94 billion) mark.
Profitability was inevitably impacted by the pandemic. Net income fell by 25.7% to Dram9 billion – however, a return on equity of 8.5% was more than respectable in challenging operating conditions and a highly competitive banking market. Asset quality also remained a key strength. A NPL ratio of 4.2% at the end of December was 1.3 percentage points up on a year earlier but well below the sector average of 6.6%, while proactive provisioning made for a comfortable coverage ratio of 77.7%.
Despite a stringent approach to efficiency that slashed the cost-to-income ratio by 6.9 percentage points to 35%, Ameriabank maintained its commitment to digital development last year. Notable achievements included the introduction of an online SME scoring-based lending system, the launch of a new brokerage platform and the expansion of digital ecosystems for mortgages and auto lending.
The bank also maintained a strong track record of debt capital markets issuance and marked itself out as a local leader in sustainability with the issuance in November of Armenia’s first green bond.
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BELARUS |
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Best Bank: Alfa-Bank Belarus |
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Healthy profitability, outstanding technological prowess and a robust response to the Covid crisis earn Alfa-Bank Belarus the award for Belarus’s best bank again this year. Faced with the Belarusian authorities’ refusal to provide relief to households and businesses, the lender – which is owned by Luxembourg-based ABH Holdings, part of Mikhail Fridman’s Alfa-Group – introduced a comprehensive package of support for borrowers, including deferral of principal and interest payments, reductions in rates and term extensions.
Under the leadership of chief executive Alexis Lacroix, Alfa-Bank Belarus also took the opportunity to improve its reach among Belarus’s smaller businesses, leveraging its digital expertise to introduce fully online sales for SMEs. This helped the bank expand its client base in the segment by 25% versus 4% for the overall banking sector and boost its share of the market to 10.6%, two percentage points up on a year earlier.
Overall, Alfa-Bank Belarus’s loan portfolio expanded by 31% last year, which in turn helped to mitigate the impact of the negative operating environment on profitability. Return on equity was down 5.7 percentage points from 2019 but still came in at a healthy 15.5%, while a cost-to-income ratio of 48% was well below the sector average. Meanwhile a non-performing loan ratio of 1.8% and a coverage ratio of 175% spoke to a prudent approach to risk management.
Best Bank: UniCredit Bosnia
A resilient performance under challenging operating conditions makes UniCredit Bosnia a worthy winner of the award for best bank in Bosnia and Herzegovina for a second year running.
Provisioning took its toll on the Italian subsidiary’s profitability, pushing net income down by 26.5% to KM74.2 million ($45.3 million), but a return on equity of 8.4% for 2020 was still above that of closest rival Raiffeisen Bank.
A focus on efficiency also limited the increase in the cost-to-income ratio to 3.3 percentage points. Meanwhile, continuing work on the bank’s loan portfolio contributed to an overall contraction of 12.4% but also slashed the non-performing loan ratio by 2.2 percentage points to a sector-beating 3.8% at the end of December. Coverage was comfortable at 80.9%, while a capital adequacy ratio of 20.1% provided an ample cushion against further economic shocks.
Other landmarks last year included the migration of all card products to contactless technology, the opening of a new head office building in Mostar – complete with a surveillance room for real-time monitoring of all customer touch points – and the launch of a redesigned mobile banking platform. The latter helped boost uptake of mobile banking services to close to 40% of individual clients by the end of 2020.
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BULGARIA |
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Best Bank: DSK Bank |
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The award for Bulgaria’s best bank this year goes to DSK Bank, in recognition of its sound fundamentals, consistent progress on digitalization and successful completion of a major merger in the first months of the pandemic. The integration of Expressbank, which was bought by DSK Bank’s Hungarian parent, OTP Group, in 2019 – was finalized on schedule in May last year.
The combined entity, which is led by Tamas Hak-Kovacs following the departure of long-standing chief executive Violina Marinova last year, is now the clear leader in retail banking in Bulgaria and second only to UniCredit Bulbank in corporate banking.
In other respects, DSK Bank was not immune to the effects of the Covid crisis. Net income fell by 36.7%, making for a reduced return on equity of 6.4%, however, this was still ahead of the 6.2% posted by its larger rival and comfortably above the sector average of 5.5%. A cost-to-income ratio of 47%, which was achieved despite ongoing investment in digitalization and expenses related to the integration of Expressbank, spoke to impressive efficiency.
An unfavourable operating environment put a dampener on lending growth in Bulgaria last year. Nevertheless, DSK Bank managed to expand its household loan portfolio by 5.5%, boosting its market share to 30.9% by the end of the year. Asset quality remained stable, with bad debts accounting for just 3.5% of the total at year end, while coverage was ample at 158%.
In terms of innovation, achievements in the awards period included the launch of new mobile banking apps for retail and corporate clients, as well as the introduction of a fully automated digital onboarding process for new-to-bank clients.
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CROATIA |
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Best Bank: Privredna Banka Zagreb |
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Robust growth, above-market profitability and continuing investment in digitalization earn Privredna Banka Zagreb (PBZ) the award for Croatia’s best bank again this year. The number two player, a subsidiary of Italy’s Intesa Sanpaolo, gained market share on both sides of its balance sheet in 2020 despite the difficult operating environment.
Total loans increased by 6.4% and deposits by 10.7%, well above the levels recorded by market leader Zagrebacka Banka. PBZ also had the edge over its larger rival on profitability, with a return on equity of 5.4% for the full year compared with Zagrebacka’s 4.4%. A cost-to-income ratio of 45.9% was also well below the sector average.
The expansion of the loan portfolio allowed PBZ to post a non-performing loan ratio of 5.6% at the end of December, unchanged from a year earlier, while a capital adequacy ratio of more than 20% was well above regulatory requirements.
Meanwhile, notable innovations during the awards period included a major overhaul of PBZ’s multichannel platform – an initiative that was aligned with the adoption of a new distribution model in branch offices – as well as the launch of online account opening and loan products for small businesses.
Best Bank: Ceska Sporitelna
The Czech Republic’s long run as one of central and eastern Europe’s most profitable banking markets was temporarily curtailed last year as capital investment and consumer spending were put on hold due to the pandemic and a 200 basis point cut in base interest rates compressed margins.
Ceska Sporitelna’s ability to maintain healthy growth in key segments, sound fundamentals and an impressive rate of technological progress despite these headwinds make the number two lender – part of Erste Group – a worthy winner of this year’s award for the Czech Republic’s best bank.
While net profit was inevitably hit last year, falling by 43.5% to Kc10.0 billion ($466 million), a decline of just 6.7% in operating income pointed to a resilient business model. Meanwhile a sharp fall in its return on equity to 7% – from 14.5% in 2019 – was partly due to a jump in the bank’s capital adequacy ratio to a conservative 25.6%.
Liquidity also remained strong, thanks to above-sector growth of 10.4% in the deposit base. By contrast, loan growth was relatively modest at 3.9%. However, an increase of 9% in outstanding retail mortgages took the total past Kc300 billion for the first time and made Ceska Sporitelna the market leader in a highly competitive segment.
Notable achievements in the awards period also included the acquisition of the Czech subsidiary of Austria’s Waldviertler Sparkasse, which was completed in the fourth quarter of 2020, and the launch of Seed Starter, a new programme to support innovation. Ceska Sporitelna also joined the we.trade digital blockchain platform and was one of three banks to introduce a scheme allowing clients to use their bank identity for government services. Ceska Sporitelna is led by Tomas Salomon, who celebrates five years as chief executive this year.
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ESTONIA |
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Best Bank: LHV Pank |
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Another year of barnstorming growth and outstanding profitability earn LHV Pank the award for best bank in Estonia for the fourth year in succession. Despite proactive provisioning at the start of the Covid crisis, the leading locally-owned lender saw net income increase last year by 57% to €34.6 million – equating to a return on equity of 17.3% – on the back of a 31% expansion of its loan portfolio.
Corporate lending led the way, with total loans outstanding up by 40% – boosted by the acquisition of Danske Bank’s Estonian corporate and public-sector credit portfolio in October – but retail lending also grew by a healthy 22%. Deposit growth was even stronger, topping 50% for the year, while LHV Pank’s client base expanded by 28%.
The bank now counts nearly 275,000 of Estonia’s 1.3 million citizens as customers and is the third largest by total assets behind long-term Swedish market leaders Swedbank and SEB.
Nevertheless, LHV Pank’s business model remains digitally focused. The lender has only two offices in Estonia – although plans to open a third in Pärnu have been announced – and technological innovation remains a key part of its offering. In the current awards period, developments included the introduction of an array of digital payment services, from Google Pay and contactless payment via Fitbit and Garmin smart devices to a service that allows users to send payments based solely on a mobile phone number. LHV Pank also broke new ground in June 2020 with an inaugural sale of covered bonds backed by mortgage loans.
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GEORGIA |
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Best Bank: Bank of Georgia |
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Banking in Georgia remains a two horse race, with Bank of Georgia and TBC Bank accounting for nearly 80% of the market. Both lenders saw returns and asset quality impacted by the pandemic during the awards period but nonetheless managed to maintain healthy growth and an impressive pace of digital innovation. The results were close, but Bank of Georgia had the edge on several key metrics, making it a worthy winner of this year’s award for Georgia’s best bank.
Despite a 40.4% fall in net income, the number two player posted a return on average equity of 13.9% for 2020 and a sector-beating cost-to-income ratio of 37.6%. Net loans grew by a robust 18.9% in the 12 months to December, helping to limit the NPL ratio to a respectable 3.8% by the year end, while deposits increased by 39.1%.
Part of this growth can be attributed to Bank of Georgia’s recent investments in technology under the leadership of new chief executive Archil Gachechiladze, which enhanced the lender’s ability to weather the Covid crisis and repeated lockdowns. The number of transactions executed via the bank’s mobile and online platforms increased by 62% over the course of last year, while a range of new digital products for SMEs – including digital onboarding and Georgia’s first digital factoring solution – increased its traction in the segment.
Other innovative products introduced last year included a digital card, peer-to-peer payments, a fully digital consumer lending process, embedded online chat and a fully redesigned iBank. In addition, following an investment in customer experience management platform Medallia in 2019, Bank of Georgia saw a sharp increase in satisfaction scores last year across all its physical and remote platforms.
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HUNGARY |
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Best Bank: OTP Bank |
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Robust growth, resilient profitability and a commitment to digital development earn OTP Bank the best bank award for a second year in succession. Against a difficult operating backdrop, and despite a 17% decline in net profit, the market leader notched a return on equity of 9.3% on the back of a 17% expansion of its loan book.
Government-subsidized lending accounted for the majority of this growth, with OTP Bank playing a leading role in state-sponsored schemes including baby loans, FGS Go and the CSOK housing subsidy for families. The lender accounted for 41.7% of all baby loans issued in 2020 and saw outstanding mortgages increase by 11% year on year.
Deposit growth was even more robust at 18%. A non-performing loan ratio of 3.1% at the end of December spoke to prudent risk management and a proactive approach to bad debt sales and workout, and a common equity tier-1 (CET1) ratio of 22.5% provided an ample capital buffer against future economic shocks.
Meanwhile, OTP Bank’s digital transformation strategy, initiated in 2015, proceeded at pace. Last year saw the launch of new internet and mobile platforms, as well as a multiphase renewal of OTP Bank’s online customer support via the implementation of a new chat platform serving all channels, including popular social messaging apps.
The bank was also the first in Hungary to provide customers with the opportunity to withdraw from the country’s opt-out payment moratorium online, a functionality that was created within three days at the start of the Covid crisis. OTP Mobil, the group’s Hungarian e-wallet subsidiary, also broke new ground with the launch – under its Simple brand – of a smartphone application to provide digital payments without the need for a point-of-sale (POS) terminal.
Best Bank: ForteBank
Halyk Bank retained its long-standing position as a strong performer in the Kazakh bank market last year, thanks to its market dominance and tried-and-tested business model. This year, however, the award for Kazakhstan’s best bank recognizes the achievements of number four player ForteBank, which – under the leadership of chief executive Guram Andronikashvili – is earning a reputation for prudent management while at the same time positioning itself at the cutting edge of digital innovation.
Despite a challenging operating environment, the lender grew net income by 25% last year to KZT53 billion ($124 million), making for a return on equity of 20.8% and a cost-to-income ratio of just 32.1%. A conservative approach to lending, combined with the proactive workout of legacy bad loans, resulted in a 7.7% contraction of the overall loan portfolio in the 12 months to the end of March.
Deposits increased by 7.8% over the same period, however, making for a comfortable liquidity cushion, while a 15% rise in bank capital also spoke to sound fundamentals. These achievements earned ForteBank a one notch upgrade from Moody’s in December to Ba3. Asset quality remained a concern, but a non-performing loan ratio of 7.2% at the end of 2020 was respectable by local standards.
Meanwhile, following the launch in 2019 of ForteBank’s new digital banking strategy, last year saw a flurry of technological innovation. In April the bank launched a new mobile and internet banking application, and this was followed rapidly by a suite of ecosystem products including a forex trading platform, a digital marketplace, an automated point-of-sale product, a digital identification system and an online food delivery platform. ForteBank also became the first lender in Kazakhstan to launch its own mobile network.
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KOSOVO |
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Best Bank: Banka Kombetare Tregtare Kosova |
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Robust growth, impressive profitability and consistent progress in digitalization earn Banka Kombetare Tregtare Kosova (BKT Kosova) the award for Kosovo’s best bank. The lender, part of Turkish-owned Albanian group Banka Kombetare Tregtare, last year expanded its deposit base by 20% and its loan book by 15%, marking a third year of above-market growth and making it the number four player in Kosovo by total assets. This contributed to a sector-beating return on equity of 17.7% and a cost-to-income ratio of 42.4%.
Meanwhile, a non-performing loan ratio of 2.0% at the end of December and a coverage ratio of 171% demonstrated that BKT Kosova’s rapid growth had not been achieved at the expense of prudent risk management. A capital adequacy ratio of 14.7% was below that of larger rivals but comfortably above regulatory requirements. On the digital side, last year saw BKT Kosova introduce online account opening to support customers affected by the pandemic, as well as fully automated loans via mobile.
Best Bank: DemirBank
DemirBank again leveraged its market-leading position to win the award for best bank in Kyrgyzstan this year. Against a challenging operating backdrop, the Turkish-owned lender managed to post net income of Som389 million ($4.6 million), just 5.6% down from 2019 and equating to a return on equity of 12.6%.
Growth was slower than in previous years, but a 13.2% expansion of the loan portfolio, partly driven by a major push into the mortgage segment, helped boost DemirBank’s share of the overall market to 6.4%. Deposit growth was also healthy at 10.8%.
Asset quality remained relatively stable in 2020, with the non-performing loan ratio rising 2.5 percentage points to 4% by the end of the year. Further deterioration in the first quarter of this year, however, and the erosion of coverage suggest that provisioning could take a toll on this year’s profits.
Meanwhile, under the guidance of long-standing chief executive Sevki Sarilar, DemirBank continues to lead the Kyrgyz market in technological innovation. Digital developments last year included the launch of a new fast mobile payments system and the introduction of QR technology for cash withdrawal at ATMs and instant mobile payments. The bank also saw increasing take-up of its e-commerce services.
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LATVIA |
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Best Bank: SEB Banka |
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Latvia’s economy proved more resilient than that of many of its fellow eurozone members last year, with GDP contracting by just 3.6%. Nevertheless, the Covid crisis inevitably affected the banking sector, eroding profitability and putting a dampener on growth. Against this backdrop, SEB Banka’s combination of prudent provisioning, proactive support for clients and commitment to digital innovation make the Swedish-owned lender a worthy winner of this year’s award for Latvia’s best bank.
Despite a 21% decline in net income, the number-two lender managed to post a return on average equity of 9.5% for 2020. Overall loan growth was modest at 1% but new lending was up 29% from 2019. Companies accounted for three-quarters of loans issued during the year, while housing loans comprised a further 17.1%.
SEB Banka also provided assistance to existing borrowers affected by the pandemic, helping more than 2,000 individuals and 400 businesses last year. A surge in deposits of more than 13% boosted the bank’s liquidity coverage ratio to more than 400% and reduced its loan-to-deposit ratio to 88%, while a 4.5 percentage point increase in the CET1 ratio to 21.8% provided a comfortable cushion against further economic shocks.
On the digital side, SEB Banka expanded its retail offering with the introduction of payments to phone numbers, as well as new mobile options for savings and investment. Meanwhile business customers benefited from the launch of Baltic Gateway, a new regional platform allowing entrepreneurs to exchange financial data with the bank quickly and securely, as well as the introduction of a cutting-edge e-commerce system.
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LITHUANIA |
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Best Bank: Swedbank |
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Lithuania fared even better than its Baltic neighbours during the Covid crisis. A high share of manufacturing in the economy and a tiny tourism sector, combined with an aggressive counter-cyclical fiscal policy, ensured a rapid recovery in consumer confidence from the third quarter of 2020 and limited annual GDP contraction to 0.9%.
As a result, both of the country’s leading lenders were able to post double-digit returns on equity. It is Swedbank that takes the award for Lithuania’s best bank, however, by virtue of its superior lending growth and impressive digital innovation.
Last year saw the Swedish-owned market leader achieve an 18% increase in lending volumes, maintaining its overall loan portfolio at 2020 levels. As a result, net interest income was down only 5% year on year, despite a rise in interest payments to the Lithuanian central bank, which in turn contributed to a return on equity of 10.6% and a cost-to-income ratio of 50%. Asset quality remained healthy, with impairments falling year on year and a credit impairment ratio at the end of December of 0.08%, while a capital adequacy ratio of 28.2% was well above the sector average.
In addition to restructuring loans for thousands of clients during the Covid crisis, Swedbank also supported merchants by lowering the cost of POS terminals, upgrading its e-commerce solutions and offering advisory services for businesses transitioning to online sales. Other digital launches last year included Google Pay, payments to phone numbers, remote client onboarding and biometric functionality. The bank also continued its drive to improve sustainability, launching a renewable energy loan and a green mortgage, as well as expanding its sustainable leasing offering.
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MOLDOVA |
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Best Bank: Moldova Agroindbank |
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Resilient returns and a commitment to digitalization earn Moldova Agroindbank (MAIB) the award for Moldova’s best bank this year. Despite the Covid crisis and a 25.6% drop in net income, the local market leader last year boosted its share of overall banking sector profits and posted a return on tangible common equity of 11.2%.
The bank’s cost-to-income ratio was unchanged year on year at 54.9% and the non-performing loan ratio rose just six basis points to 5.01% at the end of December, reflecting a focus on efficiency and prudent risk management. A tier-1 ratio of 19.5% at the end of the year was also more than adequate.
Digital innovations included the launch of currency exchange ATMs and the introduction of Moldova’s first contactless public transport payment functionality, in partnership with local authorities in Chisinau. These achievements reflect the implementation of a new strategy, implemented after the acquisition of a 41.1% stake in MAIB in 2019 by a consortium of foreign investors led by the European Bank for Reconstruction and Development (EBRD).
The shares had been confiscated from the bank’s previous shareholders as part of the clean-up of the sector by the Moldovan authorities that followed the closure of three of the country’s largest banks. MAIB, which saw TBC Bank’s Giorgi Shagidze take over as chief executive this year from Serghei Cebotari, serves nearly a third of Moldova’s population of 3.5 million and accounts for 34.2% of outstanding banking sector loans.
Best Bank: Crnogorska Komercijalna Banka
Montenegro’s tourism-dependent economy was hit hard by the Covid crisis, with GDP contracting by 15.2%. The impact was inevitably reflected across the banking sector in the form of impaired profitability and reduced appetite for lending.
Against this unpromising backdrop, the winner of this year’s best bank award, Crnogorska Komercijalna Banka (CKB), not only posted a sector-beating return on equity of 6% but also managed to complete the integration of smaller rival Podgoricka Banka – formerly part of Société Générale – seamlessly and on schedule.
The acquisition cemented CKB’s position as the Montenegrin market leader, giving it a market share of 28.4% by total assets and 32.8% of outstanding loans. The bank also reinforced its reputation as a local digital pioneer with the launch of a range of products and services including QR code payments, CKB GO e-banking and a digital branch model.
These achievements were underpinned by solid fundamentals. Non-performing loans accounted for 7.2% of the portfolio at the end of December, down 0.1 percentage point from a year earlier, while CKB’s capital adequacy ratio rose by 2.3 percentage points to 20.1%.
Best Bank: Komercijalna Banka AD Skopje
The pandemic-induced downturn in North Macedonia’s economy failed to put a dampener on the profitability of the country’s largest bank. Komercijalna Banka AD Skopje, the winner of this year’s award for North Macedonia’s best bank, saw net income rise by 5.8% to MD1.9 billion ($36.7 million) in 2020, equating to a return on equity of 13.8%.
The retention of a sizeable chunk of the previous year’s profits also resulted in an improvement of 0.9 percentage points in the capital adequacy ratio to 17.5%, while a proactive approach to bad debt workouts reduced the proportion of severely impaired loans in the bank’s portfolio to 1.7% of the total versus 2.6% at the end of 2019. Overall loan growth was minimal, but deposits jumped by 8.8% on the back of government assistance to individuals and the closing of Eurostandard Bank.
Other achievements in the current awards period include the introduction of new loan products – including smart loans with built-in insurance against non-payment – and the agreement of new credit lines with the EBRD for SMEs and green economy financing.
The complete digitalization of a city branch in Skopje, the initial rollout of cash-in ATMs across Komercijalna Banka’s network and the addition of a range of new functionalities to its online and mobile banking platforms also highlighted a continued commitment to technological development.
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POLAND |
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Best Bank: ING Bank Slaski |
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Best Investment Bank: Citi |
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Healthy growth, sector-beating profitability and cutting-edge technology once again earn ING Bank Slaski the award as Poland’s best bank. Despite the squeeze on margins caused by plunging base rates and a sharp increase in deposits from corporate clients, the number-four lender last year limited the decline in net income to 19.4% and posted a respectable return on equity of 7.6%.
Much of this outperformance can be traced to the continuing growth in ING Bank Slaski’s client base – an impressive achievement in the highly competitive Polish banking market. In 2020 the Dutch subsidiary attracted 359,000 new retail and 76,800 business customers, taking the total to 4.7 million by the end of December, up 3.4% from a year earlier. This translated into an increase in business volumes and market share.
Gross loans were up 6.5% year on year to Zl126 billion ($32.9 billion) – including a 15% increase in green loans – while deposits were up 15.9% to Zl149 billion. Asset quality remained stable, with NPLs accounting for 3.3% of the portfolio at the end of the year, just 0.3 percentage points up from a year earlier. Provisioning for Swiss franc mortgages was also increased substantially, while a capital adequacy ratio of 18.7% at end-December was well above the regulatory requirements.
A long-standing record of digital leadership under chief executive Brunon Bartkiewicz also meant ING Bank Slaski was ideally positioned to take advantage of the move to remote banking during the pandemic. Further innovations during the awards period included the launch of a new ING Business Mobile application, the introduction of biometrics for remote account opening and remote account opening for business customers.
Consistent performance across product lines and a pivotal role in a blockbuster IPO earn Citi the award for Poland’s best investment bank. The US house was the only international investment bank in the 12 months to March with a top-three position in each of debt capital markets, equity capital markets, M&A, and loan and acquisition finance.
The standout transaction of the period was the $3.4 billion listing of Polish parcel locker provider InPost in Amsterdam in January, which was the largest ever from central and south-eastern Europe, and featured cornerstone demand from BlackRock, Capital World and GIC. Citi was the only bank to act on both the IPO and M&A sides of the dual-track process and it also led the Zl2.75 billion pre-IPO financing, as well as acting as sole FX hedging provider.
The listing was the second record breaker from Poland in less than six months, following Allegro’s $2.7 billion IPO in September. Citi was also mandated as joint bookrunner on that transaction, as well as on a $121 million capital raise from footwear retailer CCC that reopened the European primary equity markets in April 2020 after the pandemic shutdown.
On the M&A side, Citi acted as financial adviser to PKN Orlen on its $2.9 billion tender offer for 100% of Energa last year and was also tapped by InPost to advise on its $674 million acquisition of France’s Modail Relay in March, speaking to the depth of the client relationship. DCM mandates included a high-yield dual-currency benchmark for debut borrower Canpack in October.
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ROMANIA |
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Best Bank: Banca Transilvania |
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Another year of outstanding profitability and robust growth make Banca Transilvania the worthy winner of the best bank award. The locally owned market leader saw net income eroded by low interest rates and proactive provisioning last year, but nonetheless it managed to post a return on equity of 13.7% and an improved cost-to-income ratio of 45.3%.
Robust loan growth across all segments contributed to these impressive results. Total loans to large corporates and SMEs – Banca Transilvania’s traditional core market – were up by 12% year on year, while the mid corporate and micro portfolios saw high single-digit growth. A drive to target micro businesses, including through the bank’s subsidiary BT Mic, also paid dividends in the form of a 10.6% expansion of the bank’s client base and a 31% increase in deposits from the segment.
Overall deposit growth reached 19%, well above the sector-wide level of 14%, boosting liquidity and slashing the loan-to-deposit ratio to 49.3%. Asset quality improved substantially in 2020, with the non-performing loan ratio dropping by 79 basis points to 2% at the end of December, while coverage remained ample at 128%.
Investments in technology also contributed to Banca Transilvania’s resilience during the pandemic as the lockdown accelerated the switch to digital banking. Last year saw the number of customers using the bank’s internet and mobile banking platforms increase by 8% and 20% respectively, while take-up of its digital wallet, BT Pay, doubled over the same period. Other highlights last year included the introduction of Google Pay, the creation of a new green loan product and the launch of chatbot Raul de la BT.
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RUSSIA |
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Best Bank: Alfa-Bank |
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Best Investment Bank: Citi |
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Russia’s leading private-sector banks showed remarkable resilience in the first year of the Covid crisis. Credit Bank of Moscow, Sovcombank and the local subsidiaries of Raiffeisen Bank International and UniCredit all recorded healthy growth, particularly in the booming mortgage segment, and robust profitability.
The award for Russia’s best bank, however, recognizes the financial and technological turnaround of Alfa-Bank over the past three years. Under the leadership of Vladimir Verkhoshinskiy, who was appointed chief executive in August 2018, Russia’s largest privately owned lender – part of Mikhail Fridman’s Alfa Group – has rediscovered its appetite for innovation and expansion.
In the awards period, the overhaul of Alfa-Bank’s multichannel offering saw the incorporation of artificial intelligence, biometrics and messenger services such as WhatsApp and Viber across its product range, as well as the opening of the first ‘phygital’ branches, which combine physical service with cutting-edge technology.
This digital progress underpinned a major push into retail that saw Alfa-Bank attract around one million new active individual customers last year, boosting its client base by 15.9% year on year. The bank’s share of the retail lending market jumped by 0.6 percentage points to 4.3%, while in credit cards its market share rose from 10.9% to 11.4%. In the SME segment, traditionally a key focus, Alfa-Bank expanded its customer base by 16.1% in the 12 months to end December.
Increasing demand for retail investment products in Russia also played to Alfa-Bank’s strengths. The number of clients for its Alfa-Direct brokerage platform grew by 3.5 times, contributing to robust 18.9% growth in net fee and commission income. This in turn translated into impressive profitability. Return on equity came in at 16% for 2020, up 6.8 percentage points year on year, which, combined with a tight focus on efficiency, delivered a cost-to-income ratio of 36.7%. An improvement in the tier-1 ratio to 17.8% provided a comfortable cushion against further economic shocks.
These financial achievements have been recognized by international credit rating agencies. In April, Fitch upgraded its rating on Alfa-Bank to investment grade, while Standard & Poor’s raised the outlook on its BB+ rating to positive.
Citi wins this year’s best investment bank award by virtue of its unrivalled IPO coverage and continued dominance in the advisory space. The US bank participated in every conventional listing from the country in the awards period, acting as joint global coordinator on Sovcomflot’s $550 million IPO in October and Fix Price’s blockbuster $1.8 billion listing in March – the largest ever from the Russian retail sector – and was active on Ozon’s $1.1 billion transaction in November.
Other Russian mandates included the Kismet II and III special purpose acquisition companies, which raised a total of $518 million for targets in the internet and technology sectors, and two chunky block trades for Polymetal last summer.
On the M&A side, Citi easily outpaced its rivals last year, with $3.9 billion of announced deals to its credit versus $2.3 billion for second-ranked VTB Capital, according to Dealogic. The bank acted as exclusive financial adviser to Highland Gold on the $1.7 billion acquisition of a 40.1% stake by Fortiana Holdings and advised Andrey Komarov on the sale of a 86.5% stake in steel pipe manufacturer Chelpipe to TMK for $2.1 billion.
It also acted for Evraz on the consolidation of its metallurgical coal businesses under Raspadskaya. Citi was slightly weaker in DCM but nonetheless notched mandates from leading Russian private-sector borrowers Lukoil, Norilsk Nickel, Veon and Credit Bank of Moscow.
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SERBIA |
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Best Bank: Raiffeisen Banka |
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Consistent profitability, robust growth and outstanding innovation earn Raiffeisen Banka this year’s best bank award. Under the leadership of chief executive Zoran Petrovic, the number-four player shrugged off the impact of the pandemic to post a pre-tax return on equity of 10.6% in 2020, just 2.3 percentage points down year on year, on the back of a 14% expansion in lending and a surge in uptake of digital banking services.
A focus on the small business segment proved particularly fruitful, with customer numbers increasing by 10.4% and outstanding loans by 17.1%. The corporate segment remained a key driver of growth and profitability, with assets increasing by 10% year on year, boosting the bank’s market share to 8.7%.
Raiffeisen Banka retained its leading position in credit cards and increased its penetration in e-commerce, expanding its acceptance network by 88% year on year, and made inroads in the premium and private banking segment.
Last year saw the Austrian group launch private banking in Serbia under the Friedrich Wilhelm Raiffeisen brand, which contributed to a 13% increase in assets under management and a 14% increase in mortgage lending to the segment. Combined with prudent risk management, the overall expansion of the bank’s loan portfolio resulted in a slight decline in the non-performing loan ratio to 2.9% at the end of December.
Meanwhile, the pace of digital innovation remained characteristically brisk. Notable launches in the awards period included a mobile payments solution, a fully automated online personal loan, an e-commerce loan payable in up to 24 instalments, biometric identification, a QR instant payments service and an online factoring platform. As a result, the number of active users of the bank’s digital services grew 40% year on year.
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SLOVAKIA |
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Best Bank: Tatra Banka |
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Another year of best-in-class profitability and cutting-edge innovation make Tatra Banka a worthy winner of the award for Slovakia’s best bank. Despite a sharp increase in provisioning, the Raiffeisen subsidiary posted a return on tangible common equity of 9.9% for 2020, well ahead of market rivals.
This outperformance in a difficult market spoke to the success of Tatra Banka’s two-brand strategy. Since 2012, the lender has targeted the Slovak mass market via its Raiffeisen Banka brand, preserving Tatra Banka as a primarily premium and corporate banking brand. Raiffeisen Banka gained increasing traction during the pandemic, growing its client base by 21% in the 12 months to the end of March and positioning itself as a rival to number-two retail player VUB Banka.
Tatra Banka’s long-standing digital leadership also worked to its advantage during the Covid crisis. The lender was well positioned to deal with the surge in uptake of digital banking services and further supported self-employed clients through the introduction of Slovakia’s first facilities for remote account opening and remote disbursal of term loans.
Other notable innovations during the awards period included the launch of Premium API, which offers easy-to-use payment reconciliation with nine other Slovak banks, and the development of an app-based virtual reality financial literacy programme for use in schools. This digital sophistication is complemented by a prudent approach to risk management. Tatra Banka’s non-performing loan ratio of 2% at the end of December was lower than that of leading rivals, while coverage was ample at 96.1%.
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SLOVENIA |
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Best Bank: Nova KBM |
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The award for Slovenia’s best bank this year recognizes the achievements of Nova KBM in successfully and seamlessly completing the integration of two of the country’s largest lenders during the Covid crisis while also maintaining an impressive pace of digital development.
The merger – the largest ever in Slovenia’s banking sector – began in June 2019 when number-two player Nova KBM announced the acquisition of third-ranked Abanka. Both lenders had been nationalized in 2013 in the wake of the Slovenian banking crisis. Nova KBM was bought by private equity group Apollo in 2015, in partnership with the EBRD, and in turn purchased Abanka from the state four years later.
The combined entity, which retains the Nova KBM brand, had total assets of €9.2 billion at the end of 2020, making it a serious competitor for long-standing market leader NLB, which has a balance sheet in Slovenia of €11.0 billion.
Nova KBM also confirmed its digital leadership ambitions last year with the launch of new services including a mobile wallet, online chat and a virtual business unit. Meanwhile a solid set of results set the stage for future growth under new owner OTP Group, which announced the acquisition of Nova KBM in June. Last year saw the Slovenian lender post a return on equity of 21.4%, while non-performing loans amounted to just 2.5% of the total at the end of December and the CET1 ratio stood at 18.8%.
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TURKEY |
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Best Bank: Akbank |
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Best Investment Bank: Citi |
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Robust growth, resilient profitability and leading-edge innovation once again earn Akbank the best bank award in Turkey. Despite the negative impact of the Covid crisis and renewed lira volatility, the locally owned lender – part of the Sabanci Group – posted a respectable return on equity of 10.9% last year on the back of 24% balance sheet expansion.
Local currency loans were the main driver of growth, with outstanding lending rising by 27.8% year on year. Combined with effective risk management, this helped to reduce Akbank’s NPL ratio from 6.7% at the start of the awards period to 5.8% by the end. A CET1 ratio of 15.5% at end-March also provided a substantial buffer against further market turbulence.
Meanwhile, in digital banking Akbank maintained the impressive pace of innovation set in recent years under chief executive Hakan Binbasgil. Last year more than 50 new functions were added to the bank’s market-leading mobile app, while a new digital payments drive saw the launch of Turkey’s first digital credit card and the introduction of a new app-based POS solution for small businesses.
Simplifying processes also remained a key focus for Akbank, resulting in heavy investment in analytics talent and technology, as well as enhanced cooperation with global fintechs. In the awards period, the group’s innovation centre, Akbank Lab, worked with external partners on projects related to machine learning, improvement of credit scoring processes and text analytics. Akbank also enhanced its focus on sustainability, expanding a programme of green lending and borrowing and establishing a sustainability committee in January.
Erratic policymaking and currency market turmoil put a dampener on investor confidence in Turkey during the awards period, depressing M&A activity and preventing local firms from capitalizing on surging demand for primary equity issuance. Nevertheless, the winner of this year’s award for best investment bank, Citi, once again leveraged its on-the-ground presence and local penetration to notch key advisory mandates as well as a clutch of DCM deals.
The bank acted as sole financial adviser to Russian investment group Letter One on its acquisition, in partnership with Turkey’s sovereign wealth fund, of a controlling stake in Turkcell via the buyout of minority shareholders Teliasonera, Cukurova Telecom and Ziraat Bank.
Citi also helped Turkish pension fund Oyak, a long-standing client, with its acquisition of Likitgaz, as well as acting as exclusive financial adviser to STFA Yatirim Holding and Partners Group on the sale of their stake in the parent company of Turkey’s second-largest privately owned gas distributor, Enerya.
DCM mandates included Akbank’s $500 million senior deal, which reopened the international bond markets for Turkish borrowers after the Covid crisis, as well as $6 billion of sovereign issues and sustainable bonds for TSKB, Ziraat Bank and Vakifbank.
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UKRAINE |
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Best Bank: Raiffeisen Bank Aval |
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The pandemic failed to put a significant dent in the profitability of Ukraine’s banking sector last year, with all the leading players posting returns on equity well into double digits. Once again, however, Raiffeisen Bank Aval’s ability to combine sector-beating profitability with cutting-edge innovation and prudent risk management earns the Austrian subsidiary the best bank award.
A return on equity of 35.3% was second only to state-owned Privatbank, which still derives a substantial chunk of its revenues from government bond holdings used to recapitalize the bank after its nationalization, while a non-performing loan ratio of 3.5% was well below that of leading rivals.
Total assets were up by 29.6%, boosted by Raiffeisen Bank Aval’s participation in Covid relief programmes sponsored by the Ukrainian government and leading development banks, as well strong growth in lending to the core SME segment.
The pandemic also accelerated the implementation of the lender’s digital transformation programme. This included the launch of a digital banking solution for entrepreneurs and businesses, as well as a virtual branch, a cutting-edge cloud platform and functionality for transferring account opening documentation via Viber.
Last year also saw Raiffeisen Bank Aval join the national BankID system and become one of the first banks in Ukraine to enable clients to make interbank payments via the extended central bank payment system.
