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CEE banks – at a high-water mark?

Banks in emerging Europe are riding high on the back of rampant retail credit growth – but how long can the party last?


For many years after the financial crisis, Raiffeisen Bank International’s annual summer report on the banking landscape of central and eastern Europe made for fairly dismal reading.

The gloom has gradually lifted, as restructuring and economic recovery have brought relief from the post-2009 pain. But the exuberance of this year’s report is unparalleled in recent years.

RBI’s analysts sound almost giddy with excitement as they catalogue the remarkable performance of banks across the region in 2018. Most metrics hit multi-year highs – or lows, in the case of non-performing loan (NPL) ratios. Several were back to pre-Lehman levels.

For the first time since 2008, none of the 14 markets covered by RBI was loss-making on aggregate. Total banking profits from central and southeastern Europe reached close to €14 billion, well above the highs of the early 2000s. Overall, return on equity for the region topped 12%.

As the RBI team note, this partly reflects the fact that a protracted sector-wide balance sheet clean-up is finally coming to an end. The overall NPL ratio for CEE fell to 7.7% last year, the lowest level since 2010.

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