The strategic case for banks to remain in central and eastern Europe remains intact: that is the official line from Scope Ratings at least. The agency found that faster growth and higher interest rates in CEE have, overall, boosted the profitability of western European banks present in the region.
This outperformance in CEE banking has been particularly evident over the past year, despite the war in Ukraine. Profitability at western banks’ CEE subsidiaries reached record highs in 2023 thanks to higher interest rates and low costs of risk, according to Scope – even if there are challenges, including the prospect of rate cuts, windfall taxes and the need to issue subordinated debt at high cost.
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