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18. Januar 2012 
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Banking Study 2012: CEE banking sector still to generate above-EU average growth
Over the medium to long term there is still potential for the CEE banking sector to generate above-EU average growth in banking volumes and profitability, as the financial penetration gap still exists and economic convergence prospects remain broadly intact. This is one of the key findings of the latest CEE Banking Study, conducted by UniCredit´s CEE Strategic Analysis department. Although total loans in the CEE region should have approached € 1.5 trn at the end of 2011, which is an increase by roughly 9% yoy, loans to GDP stood finally at an estimated 49% for CEE compared to 120% in the Euro area. Market potential is in place especially for corporate loans and mortgage financing, whereas this is hardly the case for consumer lending. Large divergences remain also by geographies, with Russia and Turkey expected to contribute the most in terms of lending growth over the 2011-2015 period.
CEE: A region of two halves
“Future economic growth will likely be structurally lower on average and growth differentials within the region wider than in the past”, said Gianni Franco Papa, Head of CEE Division at UniCredit, “CEE should remain a region of two halves with larger economies likely to keep growing almost at full steam while others may suffer from their structural weaknesses and high correlation with the performance of peripheral Europe.” Over the medium term UniCredit researchers continue to see decent catch-up potential, underpinned by improving productivity and convergence of income levels, something that is echoed by their long-term GDP growth forecasts averaging above 4% for the CEE region. In the long run regional convergence should be pursued through broader economic diversification and an increasing role for tradable sectors. In this context bank lending will be decisive and should support this switch.
A more balanced funding structure should clearly prevail
During last year, lending activity continued expanding in CEE region, although at a slower pace than in 2010 and with growth slowly dissipating in 2H on the back of the continuing turmoil in the financial markets and a rapidly deteriorating funding environment. Lending was driven by the corporate segment, which profited from the cyclical recovery in the economy posted in 2010 and 1H 2011. “At the beginning of last year, following the restoration of better liquidity conditions and increasing evidence that competition for deposits (visible in 2010) was starting to be detrimental to banks’ profitability, the focus on deposits became less acute with some re-leveraging taking place”, stated Fabio Mucci, Head of CEE & Poland Strategic Planning at UniCredit. “In 2H 2011, however, banks have reversed tack, as liquidity substantially tightened on the back of the Euro area crisis and the fight for deposits again became the name of the game.” To some extent, the tightening of liquidity came as a result of weaker funding inflows from abroad, compounded in some cases by restrictive central banks’ policies in an attempt to stem local currencies weakening.
CEE: A region of two halves
“Future economic growth will likely be structurally lower on average and growth differentials within the region wider than in the past”, said Gianni Franco Papa, Head of CEE Division at UniCredit, “CEE should remain a region of two halves with larger economies likely to keep growing almost at full steam while others may suffer from their structural weaknesses and high correlation with the performance of peripheral Europe.” Over the medium term UniCredit researchers continue to see decent catch-up potential, underpinned by improving productivity and convergence of income levels, something that is echoed by their long-term GDP growth forecasts averaging above 4% for the CEE region. In the long run regional convergence should be pursued through broader economic diversification and an increasing role for tradable sectors. In this context bank lending will be decisive and should support this switch.
A more balanced funding structure should clearly prevail
During last year, lending activity continued expanding in CEE region, although at a slower pace than in 2010 and with growth slowly dissipating in 2H on the back of the continuing turmoil in the financial markets and a rapidly deteriorating funding environment. Lending was driven by the corporate segment, which profited from the cyclical recovery in the economy posted in 2010 and 1H 2011. “At the beginning of last year, following the restoration of better liquidity conditions and increasing evidence that competition for deposits (visible in 2010) was starting to be detrimental to banks’ profitability, the focus on deposits became less acute with some re-leveraging taking place”, stated Fabio Mucci, Head of CEE & Poland Strategic Planning at UniCredit. “In 2H 2011, however, banks have reversed tack, as liquidity substantially tightened on the back of the Euro area crisis and the fight for deposits again became the name of the game.” To some extent, the tightening of liquidity came as a result of weaker funding inflows from abroad, compounded in some cases by restrictive central banks’ policies in an attempt to stem local currencies weakening.
