European banks struggled to gain traction in 2013. The region battled continuing recession or, at best, slow growth, a tightening regulatory environment and country-specific banking taxes or fines for past misdemeanors. Continuing pressure for banks to strengthen their capital buffers and reduce risk often called for a combination of constrained lending, shrinking rather than growing the asset base, and raising new capital. All of which is necessary ahead of this year’s asset quality review, the first to be conducted under new powers accorded to the European Central Bank. Naturally, the further stripping out of noncore assets and write-downs of “legacy” bad debts did not translate into stellar profits or improved returns on equity. But Europe’s banks are slowly working their way back to something approaching health, and this has been reflected in often-sharp rises in their share prices over the year. Many of those who have gone farthest down this road, focusing on their core banking business and adapting to new customer behaviors by offering more user-friendly electronic solutions, happen to be those very same banks that hit the buffers hardest during the financial crisis—either as a result of overaggressively seeking growth through acquisitions or of being forced by governments into taking over the assets and liabilities of stricken rivals. After five years in work-out mode, they are now approaching the exit from taxpayer-funding and proving that, in operational terms, they are among the world’s best.    









Last year ING’s performance improved across the board. Net interest and commission income rose to €11.8 billion ($16.3 billion) and €2.2 billion respectively, operating costs were held down, and even though loan loss provisions were up slightly, the bank’s underlying pre-tax profit was nearly €1 billion better, at €4.2 billion. Interest margins improved by 10bp to 1.4%, the cost/income ratio fell substantially, and return on interest (ROE), based on 10% core Tier 1 capital, improved from 8.8% to 11.7%. Outside its Benelux home markets, ING-DiBa is the fastest-growing bank in Germany and now third by number of customers. In commercial banking, ING enjoys a market leading franchise in the Benelux where it is leading MLA and bookrunner by both number of deals and value. ING is ahead of the curve in responding to the switch among customers to online and mobile channels, while its Groenbank and sustainable lending team help identify and support sustainable investments throughout the world. CEO Ralph Hamers says: “We are seeing a transformation in customer interaction, sparked by the growth of online services, and this is just the beginning.” Divestments and simplification continue apace, with last year’s successful IPO for its US business likely to be followed by a far larger offering for its insurance and investment management arm later in 2014.

Ralph Hamers, CEO


Private banking rules the roost in this tiny Pyrenean principality, and MoraBanc, which retains the name of its founding family, combines a conservative, long-term approach with discreet efficiency and an exceptional 76% liquidity ratio. Its most recent figures reveal steady increases in both net interest and operating income. MoraBanc’s long-term debt was rated A- by Fitch, which highlighted its low (3%) payments default rate. CEO Gilles Serra points to its high solvency ratio (32%) and sound financial basics. “In a world of turmoil, Andorra’s stability, solidity and independence are major assets, and opening new markets has been one of our major challenges.”

Gilles Serra, CEO

Erste Bank

With its banking and transaction taxes, tightened regulatory regime and capital constraints, Austria presents a tough environment for bankers. Erste Group Bank managed a net profit of €61 million last year after operating profits fell by 4.7% to €3.3 billion, largely owing to prevailing low interest rates and subdued credit demand, resulting in a 7.2% drop in net interest income, to €4.86 billion. The NPL ratio was stable at 9.6% in the second half of the year, the core Tier 1 ratio improved to 11.4%, and the group’s common equity Tier 1 ratio stood at 10.8%. Total assets shrank by 6.5% to just under €200 billion. The Austrian operations performed well, with operating results at the retail and SME arm, Erste Bank Oesterreich, increasing by 8.8% to €367.7 million. CEO Andreas Treichl notes: “After a successful capital increase, in 2013 we were the first Austrian bank to repay the entire participation capital that had been provided by the Austrian government and private investors, and closed the year with a solid capital buffer.”

Andreas Treichl, CEO


ING Belgium went from strength to strength. Underlying income rose by 5.8% to €2.3 billion on the back of higher interest results from further growth in customer balances. CEO Rik Vandenberghe notes: “Our customer base grew again in 2013, for the fifth year in a row—in total by more than 20%.” Customers are strong promoters of ING, which enjoys a high net promoter score and positive feedback on the new “Smart Banking” and other apps for tablets introduced last year. “All of this,” says Vandenberghe, “has led to three years of very strong and healthy financial results.” The retail bank’s underlying pre-tax profit increased 10.3% in 2013 to €663 million.

Rik Vandenberghe, CEO

BNP Paribas

Overall operating revenues at France’s largest bank were down by 0.6% to €38.8 billion, partly due to the regulatory squeeze on fixed income trading. Cost cutting continued, with operating expenses down 1.5%.  French retail banking grew customer deposits by 4.6%, outstanding loans declined by 2.3% amid weak demand, and operating expenses were down by 0.7%. Gross operating income was stable at €6.9 billion. The cost of risk remained low, resulting in a pre-tax income of €1.93 billion after allocating a third of the income from private banking to the group’s Investment Solutions division. Mobile service users increased by 30% after a sales and marketing drive and customer service innovations. The bank is continuing efforts to simplify its organization and recently announced the creation of a stand-alone derivatives clearing operation aimed at grabbing market share and boosting earnings at its fixed-income business.

CEO Jean-Laurent Bonnafé states: “Thanks to its diversified business model committed to servicing needs of clients, BNP Paribas showed good operating resilience in a lackluster economic environment in Europe.” Pointing to a “rock-solid balance sheet, high solvency and very large liquidity reserves,” he said the bank is targeting ROE of at least 10% by 2016, compared to 6.1% last year.

Jean-Laurent Bonnafé, CEO


Commerzbank’s ill-timed merger with Dresdner in 2008 was soon followed by the combined bank’s near-collapse during the financial crisis and an €18.2 billion government bailout. Since then Germany’s second-largest lender has been in work-out mode, cutting costs and selling assets to rebuild its balance sheet. CEO Martin Blessing says 2013 was the “year of transition,” that having achieved a solid operating profit of €725 million, the bank was turning around ahead of schedule and could now progress more rapidly in strengthening its capital base through disposals of noncore assets rather than by raising fresh capital. The disposal of noncore assets is ahead of schedule, a 23% drop in the portfolio having been achieved in one year. Net profit increased to €78 million, despite €493 million of restructuring costs. “We have increased the core capital ratio pursuant to Basel III to 9% one year earlier than planned,” says Blessing, “and have repaid in full the silent participations of the German government and Allianz and further strengthened our
capital base.”

Martin Blessing, CEO

Piraeus Bank

“2013 was a landmark year for Piraeus Group, as the integration of six acquired banks was successfully concluded in a very short period of time,” says Stavros Lekkakos, managing director and CEO. Negative goodwill from acquiring Greek domestic operations of Cypriot banks, plus ATEbank and Millennium Bank in Greece, amounted to €3.8 billion, and nonrecurring integration costs were €233 billion. Stripping these out, profitability before taxes and provisions came to €721 million. Net revenues amounted to just over €2.1 billion, mostly from €1.7 billion of net interest income. Pre-tax profit came in at €498 million. The bank’s share capital is to be increased by €1.8 billion euros, prior to which its EBA core Tier 1 capital ratio was 13.9%.

Stavros Lekkakos, managing director and CEO

Bank of Ireland

Bank of Ireland is farther down the road to full recovery than any of its peers, having regained access to capital markets and safely managed the expiry of bailout funding. Its underlying performance in 2013 improved by €1 billion before still-high impairment charges of €1.66 billion, resulting in a pre-tax profit of €569 million, compared with €1.5 billion in 2012. Total income grew by 48%, thanks to a rise in net interest margins to 2% and continued cost cutting; staff costs fell by 10% and other costs by 5%. Defaulted loans were reduced by €1.2 billion from June 2013. As of January 2014 the Basel III transitional core Tier 1 capital ratio was 12.3%, and the Group expects to maintain a buffer above a required 10% ratio. Restructuring of the balance sheet is now complete, with wholesale funding reduced by €43 billion since 2010 and €25 billion repaid to the monetary authorities.

Richie Boucher, CEO

Intesa Sanpaolo

Italy’s second-largest and most strongly capitalized banking group continued to build up its capital and liquidity buffers. Its pro-forma common equity ratio stood at 12.3%, the core Tier 1 ratio at 11.3% at year-end. Intesa Sanpaolo has now fully repaid ECB funding and is already fully compliant with Basel III requirements. It has also increased its cash coverage ratio for nonperforming loans to 46% and logged a €5.8 billion impairment of goodwill or intangible assets. Stripping these out, net income was €1.2 billion, with fee and commission income up by 12.8%. Previously declining net interest income is now stable. Operating costs were slashed by 6.3%, but economic headwinds and lower margins reduced group income by 8.9% to €16.3 billion. But what makes Intesa Sanpaolo stand out among Italian banks is that it is ahead of the curve on cautious provisioning and strengthening its capital base.

Carlo Messina, CEO and managing director

Banque et Caisse d’Épargne de l’État

Net profits at Luxembourg’s largest bank rose 14.3% to €146 million in the year to last June. Net income increased by nearly 80%. Banking income rose by 12.8% to €330 millions, income from securities grew by more than a quarter on an annual basis, and commission income rose by 4.4%. Interest income declined by 15.3%, reflecting intense competition and the general reduction in rates. BCEE is the clear market leader in the Grand Duchy, with 72% of all Luxembourg residents having a banking relationship with BCEE, while it also acts as domiciliation or custodian bank for funds launched by international promoters. Over the financial year, BCEE reduced its balance sheet by €2 billion, or 4.9%.  Its Tier 1 capital ratio improved from 14.4% to 16.7%.

Jean-Claude Finck, president and CEO

Bank of Valletta

Bank of Valletta continued to gain market share in retail banking, strengthening its position as the leading bank in Malta for both customer deposits and advances. Total deposits grew by 7% during 2013, while in trade finance the volume of guarantees increased by 33%. The bank beefed up its investment advisory service and extended its mobile banking offering—the BoV mobile app is the only one in Malta providing secure person-to-person payments. Net operating profits were up 5% year-on-year to €115.8 million on the back of a 12% increase in net commission and trading income.

Charles Borg, CEO


Despite strong economic headwinds—rising unemployment, a weak housing market and a record number of corporate bankruptcies—ING’s Dutch retail operations increased underlying income by 4.7% to a shade over €4 billion. Such gains were partly offset by extra restructuring charges and higher risk costs, following the transfer and sale of €8.3 billion of assets and €3.7 billion of liabilities to comply with EU conditionality terms for Dutch government assistance to ING during the financial crisis. CEO Nick Jue notes: “We are operating in a landscape that has been challenging” and sees it as the bank’s responsibility to “steer our almost nine million customers through these challenging times.”

Nick Jue, CEO

Banco Santander Totta

Although net profits in 2013 were €102 million, compared with the previous year’s €250 million, the bank posted better profits than any of the other five major banks in recession-hit Portugal. ROE was down to 3.1%, compared with 12.9% in 2012, as the bank built up its capital cushion. Its core capital ratio improved from 12.3% to 15.2%. The Tier 1 capital ratio stood at 16%—a good sign for the only major bank in Portugal not to need state assistance. Executive chairman António Vieira Monteiro comments: “In 2013, the third consecutive year of recession in Portugal, the bank once again earned a positive net income, … which shows the recurring profitability of its business activity and the efficiency of its operations.”

António Vieira Monteiro, executive chairman


Santander nearly doubled its 2013 profits to €4.37 billion, largely as a result of lower charges against impaired real estate loans. Its global loan-to-deposit ratio stood at 109%, compared with 150% at the start of 2009, but the biggest improvement came in Spain, where Santander now has more deposits than loans, with a loan/deposit ratio of 87%. Although the bank’s bad debts as a percentage of total credit crept upward to 7.5% in the final quarter, this is still close to half the average level for Spanish banks. With the economy finally coming out of recession, Santander intends to grow its lending in Spain in 2014 and focus on lending to SMEs, where it expects to grow volumes by 10%. Chairman Emilio Botín forecasts that Santander’s Spanish profits will grow rapidly from last year’s €478million to €1 billion in the current year and triple that by 2016.

Emilio Botín, chairman


The overhaul at Switzerland’s largest lender, following rogue-dealer trading losses and fines for rate rigging, seems to have worked. Adjusted pre-tax profit in 2013 increased by 44% to SFr4.1 billion ($4.7 billion), producing a net profit of Sfr3.2 billion and allowing a 67% dividend hike. The wealth management division raised pre-tax profit by 17% to SFr2.4 billion and attracted strong inflows of net new money. Profits from retail and corporate business were stable at SFr1.5 billion, and the investment bank achieved adjusted ROE of 30.6%, well ahead of its 15% target. Deleveraging continued, the group balance sheet contracting by SFr250 billion to just over SFr1 trillion, and UBS strengthened it capital ratios, including a 38% reduction of its noncore and legacy risk weighted assets. Its fully applied core equity Tier 1 ratio was up 300 basis points to 12.8%, well above the 11.5% target.

Sergio Ermotti, group CEO

Lloyds Banking Group

Ever since its shotgun merger with HBOS, which resulted in a state bailout for the combined group, Lloyds has been writing down bad loans, selling noncore businesses, cutting costs and rebuilding its capital cushion. All this pain has paid off. Group CEO António Horta-Osório notes that “underlying profit more than doubled to £6.2 billion ($10.4 billion)” and this “confirms the Group is returning to robust health.” The bank lowered risk by reducing noncore assets. The core Tier 1 ratio is 14%, the fully loaded common equity Tier 1 ratio improved by 1.9% to 10%, and even after discounting £3.5 billion of legacy provisions, Lloyds produced a pre-tax profit of £415 million, against a £606 million loss in 2012. “We have a strong business model,” says Horta-Osório, “and have made significant progress, despite our legacy issues, in improving our capital position in a sustainable way. As a result, the UK government started the process of returning the Group to full private ownership.” A second tranche of government-held shares was sold in March, thereby reducing its stake below 25% and opening the way to reinstating the dividend and a public offering.

António Horta-Osório, CEO




As the largest and most diversified bank in the Nordic region—where it is market leader or runner-up in both retail and corporate banking in all four main economies—Nordea has again turned in a strong and, crucially, consistent performance. Against a background of the region’s low growth and falling interest rates, last year’s total operating profit of €9.9 billion ($13.8 billion) was flat in local currencies and just 1% lower than that of 2012, when restated in euros. CEO Christian Clausen foresees “a prolonged period of low-growth environment and lower-than-normal interest rates.” His response to lower customer activity is to “expand and accelerate our existing cost efficiency program,” thereby “enabling us to adjust our capacity and maintain our position as a strong bank.” Efficiency initiatives launched in 2012 are already ahead of schedule, and Nordea has now doubled cost savings targets to €900 million by 2015. Although net interest and total operating income were down 1%, there was an 18% drop in net loan losses, which fed through to the bottom line. Clausen notes: “The bank strengthened its capital base by another €0.8 billion during 2013, which means that we have doubled the capital base since 2006. The group’s Basel 2.5 core Tier 1 ratio rose by 180 basis points to 14.9%.” 

Christian Clausen, president and group CEO


The bank posted an operating profit of €392 million for 2013, a 48% increase over the previous year. Much of this comes down to its success in reducing loan losses, which, at €310 million, were down 30% on the previous year. Net interest income and total income declined by 1%, but the latter increased during the final quarter, thanks to higher commission income. Nordea enhanced online offerings through new apps integrated into its highly successful Mobile Bank. Total lending to consumers and corporates was flat—at €64.7 billion—while deposits rose by 5% to €32.3 billion. Risk-weighted assets were down by 4% over the year, mainly owing to improved capital efficiency.

Peter Nyegaard, country senior executive


While Finland struggled to exit from recession, the bank raised its operating profit by 22% in 2013. The main driver of this was higher net-interest income, up 10%, to €659 million, on the back of only marginally increased lending to corporates and consumers. Total deposits were down 5% over the year, though a rise in short-term interest rates improved earnings on deposits in the fourth quarter. While continuing to invest in digital and other customer-facing services to meet the rapidly growing use of online services in Finland—which should, in turn, allow further cost savings—Nordea entered into new partnerships in selling insurance products and expanded its debit card cash-back services through major retailers. Net loan losses, mainly from lending to businesses, rose to €57 million. The bank’s cost-to-income ratio improved by 4 percentage points to 59%, and operating profit rose from €330 million
to €404 million.

Ari Kaperi, country senior executive


Icelandic banks have been reborn, freed of their bankrupt predecessors’ overseas obligations. Understandably, they are focused on their domestic market and generally risk-averse. Currently, the most successful is Landsbankinn, whose profit after tax rose to IKr28.8 billion ($300 million), compared with IKr25.5 billion the previous year. The increase derived largely from a 19% increase in commission income and value changes in lending and equities, while operating expenses fell in real terms by more than 10%. The bank’s equity increased by 7%, and the capital adequacy ratio stood at 26.7% at year-end. Return on equity (ROE) increased to 12.4%. CEO Steinþór Pálsson commented that “future developments are underway, including in branch operations and electronic payment services, and significant cost efficiencies have been achieved.” He said the bank had used its high foreign-currency liquidity position to pay a large installment off legacy liabilities and had paid IKr10 billion in dividends with a further IKr20 billion now authorized.

Steinþór Pálsson, CEO


Group profits for 2013 at Norway’s largest bank were NKr17.5 billion ($3 billion), up by NKr3.7 billion over the previous year. Gains in profitability were recorded across all business areas, though key drivers were higher net-interest income, lower impairment losses on loans, and strict cost controls. Retained earnings and improved risk management contributed to the strengthening of DnB’s common equity Tier 1 capital ratio to 11.8%, compared with 10.7% in 2012. ROE rose from 11.7% in 2012 to 13.2%.

Rune Bjerke, Group CEO, observes: “The year was characterized by extensive restructuring, new requirements from the authorities and tough competition in the market. DnB is well capitalized, but we need to build additional capacity organically in order to meet the authorities requirements.” DnB is the only Nordic bank that qualifies for inclusion in the Dow Jones Sustainability Index.

Rune Bjerke, CEO


Operating profit for SEB Sweden surged by 48% last year to above SKr10 billion ($1.5 billion), thereby making a strong contribution to overall group profits—which rose by 27% to SKr18.1 billion. The Swedish bank’s performance was built around higher income from both corporate activity and the retail segment. Total operating income rose by 11% to SKr 24.7 billion, while employee numbers shrank, allowing for a 5% drop in operating expenses. In retail banking, SEB increased the number of its full-service customers in both private individuals and SME corporate segments, partly though new offerings such as a smartphone app for corporate customers and the launch of an upgraded Internet bank. SEB’s mortgage portfolio in Sweden grew, as did household deposits, and margins improved slightly. CEO Annika Falkengren notes: “Asset quality remained strong: Nonperforming loans fell by 32% and now constitute 0.7% of total lending.” She adds: “We continued to generate capital and, on a common equity Tier 1 ratio (Basel III) of 15%, return on equity reached 13.1%.”  

Annika Falkengren, president CEO



Raiffeisen Bank International

RBI’s consolidated profit of €557 million ($770 million) was built around a 7.4% increase in net interest income and an underlying 8.2% rise in operating income. CEO Karl Sevelda notes that the “significant increase in our operating result again proved the strength of our business model.” Stripping out one-off benefits from bond sales and the buyback of hybrid capital booked in 2012, RBI’s operating result of €351 million in 2013 reflected a 17% improvement over the previous year. Total assets declined slightly in euro terms, the loan book shrank by 3% on weaker corporate demand, and the loan/deposit ratio stood at 120.7%. Sevelda says that “going forward, we will optimize our business model by focusing on the most attractive markets in the CEE (Czech Republic, Poland, Romania, Russia and Slovakia) and by improving our efficiency.” RBI’s Tier 1 capital ratio relating to total risk remained unchanged at 11.2%.

Karl Sevelda, CEO

Intesa Sanpaolo

Net interest income was slightly lower at 4.8 billion lek ($47 million), though this was partly offset by higher fee and commission income. Both deposits and current accounts grew substantially. Overall operating income was down 4.5%. Although provisions were boosted to 511 billion lek, a combination of reduced costs and lower impairment losses fed through to a 34% increase in pre-tax income when restated in euros.

Silvio Pedrazzi, CEO


Priorbank produced another strong result in 2013. Operating income rose to 56.4% to  €149 million, driven largely by a 36% increase in net interest income, improved margins and sharply reduced costs. Total assets grew by 6.8% to nearly €1.5 billion, and the bank’s cost/income ratio fell by close to 50%. Profit before tax was up by nearly 90% to €87 million, and return on equity (ROE) improved by 19 percentage points to 44.7%.  The ratio of nonperforming loans shrank by 45 basis points to 0.5% with a coverage ratio of 341.6%.

Sergey Kostyuchenko, chairman

Raiffeissen Bank dd Bosnia i Hercegovina

Profit before tax rose by nearly 26% to €29 million in 2013 as Raiffeisen shrank its overall loan book by 3% and switched the mix from corporates toward more-profitable retail lending. Operating income rose by 3.6% to €109 million. Net interest margins strengthened, while fee and commission income was nearly 5% higher than in 2012. Total assets grew by 2% to a shade above €2 billion. Customer deposits increased by 2.7% to €1.6 billion. The bank was able to reduce provisioning for impairment losses through improved risk management, and its cost/income ratio declined by 0.7 percentage points to 59.4%.  ROE was 12%, a 2.4% improvement on 2012.

Karlheinz Dobnigg, vice chair of the management board

UniCredit Bulbank

With total assets of 12.7 billion lev ($9 billion), UniCredit Bulbank is the country’s largest bank, with a 14.8% market share. It holds pole position in both deposits and loans, which during 2013 increased by 3% and 10.6% respectively, and is market leader in fast-expanding mobile banking. Cost cutting continued, with the bank’s cost/income ratio reduced by 1.1% to 38.5%. Gross operating profit increased by 0.2%, compared with a decline of 5.9% for the market as a whole. In order to strengthen coverage of nonperforming corporate exposures, the bank increased impairment losses on financial assets by 40.9% to 218 million lev, driving net profit down by 33% to 143.6 million lev. ROE declined to 6.9%, which compares favorably with the 4.8% market average.

Levon Hampartzoumian, CEO and chairman

Privredna banka Zagreb

Majority-owned by Intesa Sanpaolo, PBZ is the second-largest bank in Croatia, with a market share of 16.6% by assets (€9.2 billion). Net profits for 2013 were €108 million and ROE came through at 6.4%. Around 90% of all payment transactions in Croatia now take place electronically, and the bank has introduced its mPBZ mobile banking service, whose functions are constantly being upgraded.  It is also a leader in credit card operations, its market share now exceeding 30%. PBZ provides specific credit lines aimed at the SME segment, the development of which is one of the bank’s priorities. At the end of 2013 its capital adequacy ratio stood at 23.9%.

Božo Prka, president of the management board


Operating only within the Czech Republic, ČSOB is country leader in its core products of mortgages, building savings loans and mutual funds. The bank’s loan/deposit ratio rose by 2.5% to 77%, largely as a result of the 7% expansion of its loan portfolio during 2013 to 508.5 billion Czech koruna ($25.6 billion). Deposits grew by 5% year-on-year.  Amid weak market conditions and narrowing margins, net profits declined by 3% after adjustments for the sale of ČSOB Pojišt’ovna in 2012. ROE was down 4.6% to 18.2%, owing to a capital injection of 8 billion Czech lev in the third quarter in anticipation of new regulatory requirements. As a result, the bank’s core Tier 1 ratio improved by 2.8% to 15.9% through a combination of retained profit and capital structure strengthening.

Pavel Kavanek, CEO and chairman

Nordea Bank Estonia

“Our focus on relationship banking has increased customer loyalty in our target segments,” says Andreas Laane, head of Nordea Estonia. Despite slow economic recovery and weak corporate demand last year, total operating income grew by 8%, and profits increased by 15% as the bank expanded its customer base by 4.7% year-on-year. The volume of savings and investment products grew by 9%, and private deposits leapt by 22%. The private loan and leasing portfolio increased by 2%; Nordea Leasing became market leader with a 29% share and extended its customer base by 8% during 2013. Nordea Bank Estonia’s loan loss ratio improved, and the bank again strengthened its capital cushion, the core Tier 1 capital ratio rising to 14.9% as against 13.1% at the end of 2012.

Andreas Laane, country head

OTP Bank

Hungary’s largest bank, OTP is a national champion in a market otherwise dominated by foreign-owned banks. OTP has its own subsidiaries across the Central & Eastern European region and within Hungary is leader in all major banking segments apart from corporate banking—and even here it gained market share. But with the government again imposing special taxes on financial institutions and transactions, both the macroeconomic and operating environment remained challenging.

Even so, OTP Group turned in strong underlying profits of 135 billion Hungarian forints ($600 million) in the first nine moths of 2013. The profit post-tax, including one-off payments and 29 billion forints goodwill write-off for its Ukrainian subsidiary, came in at 63 billion forints. Its core Hungarian business improved its net result by 18% year-on-year, mainly thanks to lower risk costs. OTP continued to strengthen its capital base, the core Tier 1 ratio reaching 15.9% while the group’s net liquidity buffer stood at the equivalent of $7.6 billion.

Sándor Csányi, CEO

Raiffeisen Bank Kosovo

Raiffeisen produced another good result. Pre-tax profit rose by 21% to €18 million on the back of an 11% larger asset base. Net interest income increased by 1.6%, while fee and commission income rose by 1.6% and 1.9% respectively. Overall operating income was up by just 1.1%, but a 5% reduction in costs combined with slightly lower provisioning for impairment losses strengthened the bank’s profitability. The net interest margin improved by 10 basis points to just over 6%, and the cost/income ratio fell 3.5% to 54.4%. ROE of 19.6% was almost 3% stronger than in 2012.

Robert Wright, CEO

Nordea Bank Latvia

Last year Nordea addressed its bad or impaired loans—many of them dating from the financial crisis, when Latvia’s economy contracted by a third—by increasing its bad debt reserves by 83% to €28 million. On the operational level Nordea performed well. Total revenue increased by 3% to €65 million, deposits were up by 15% to a record €1.3 billion, and ROE improved by 200 basis points. And while the bank shrank its overall credit portfolio by 5% to €2.6 billion, it achieved 3% growth in corporate revenue, increased the number of its private banking customers and continued to grow its franchise by concluding 9% more business deals. Cautious provisions against bad debts shrank operational profits to €5.3 million but also helped to reduce the bank’s risk-adjusted assets by 10% to €826 million.

Janis Buks, president 


SEB’s operating profit doubled to 543 million Lithuanian litas ($217 million)—a rise of 103%, when restated in local currency terms—on the back of Lithuania’s economic growth and low inflation. Total operating income increased by 4%, to 1.5 billion litas, so that Lithuanian operations now generate 40% of all SEB’s income across the three Baltic states. Cost reductions pared total operating expenses by 26% to fewer than 800 million litas. The volume of deposits grew to nearly 27 billion litas as SEB continued to gain market share. While nonperforming loans fell sharply, an adjustment made to reflect a less-liquid real estate market in Lithuania generated higher credit losses over the year. As the switch to electronic banking gathers pace, SEB has launched an improved array of mobile banking services for smartphones and tablets. And while the bank will experience one-off costs this year as Lithuania prepares to join the eurozone, in the long term this should reduce financial risk and permit more-streamlined operations.

David Teare, head of Baltic division 

Komercijalna banka AD Skopje

Net interest income increased by 4.8% in 2013. Total assets grew by 4.9% to 86.8 billion Macedonian denars ($2 billion), owing to increased investment in securities, real estate and equipment. Investments in Treasury bills and government securities also increased. Customer deposits rose 5.7% to 73.1 billion denars. Net profits were sharply down to 78.9 million denars from 562.1 million denars in 2012, largely because the bank was ordered by the national regulator to recognize impairment losses—from foreclosed properties dating back to the beginning of 2010.

Hari Kostov, CEO


Total income for Moldindconbank was up 18.2% to the equivalent of $89.9 million, and net profit surged by 61.6% to $8.8 million. With assets of $981.9 million (up 38%), Moldindconbank ranked second among the country’s 14 commercial banks and was leader for total deposits, up 17.8% to $277.6 million. It also held first place for growth in total equity, up 22.9%. The bank grew its loan portfolio in 2013 by 18.2% through its broad range  of credit products.  Both the retail and corporate customer base increased significantly. The bank plans to continue to develop its regional network to ensure a presence across the country by the end of 2014 and is introducing new technology to improve its customer relationship

Svetlana Banari, chairperson

Alior Bank

Newly established in 2008, Alior Bank already has the fourth-largest banking distribution network in Poland, with 2.1 million customers—a 42% increase year-on-year. Alior Sync, which provides all traditional banking services virtually, was launched in 2012 and now has over 324,000 clients. Loan growth has been rapid, and 2013 saw a 21% increase in assets to nearly $8.4 billion. The total value of loans granted was equivalent to $6.5 billion, up 38%, producing a 94% loan/deposit ratio. Net profits improved from $20 million to $74.8 million (compared with an average 0.3% decline across the Polish banking market). CEO Wojciech Sobieraj reflected that “in spite of economic slowdown, the bank not only achieved satisfactory results but has also increased scale of its operations and market share.”

Wojciech Sobieraj, CEO

Banca Transilvania

Gross profits in 2013 at locally listed Banca Transilvania leapt by 30% to 443.1 million Romanian leu ($137.1 million) on the back of a 27.3% surge in net interest income. Total assets grew by 8.4% to above 3.2 billion leu. The loan book expanded by 9%, and deposits grew by 11%—in both cases ahead of target. With operating income up 11.8% and personnel expenses down 6.1%, the bank posted net profits of 375 million leu, a 17% gain on 2012. The loan/deposit ratio was 74.3%. Nonperforming loans at 12.6% of the portfolio were well below the average of Romanian banks. The last quarter of 2013 saw a record-breaking 256,000 new loans granted to companies and individuals. CEO Őmer Tetik stated that “the bank’s major objective for 2014 resides in increasing the bank’s revenues and boosting efficiency.”

Őmer Tetik, CEO


Russia’s largest bank had a good year in 2013. Net interest income—which accounts for close to 80% of all revenues—rose by 22.3% to 862 billion rubles ($24 billion) on the back of Sberbank’s fast-expanding loan book and its acquisition of Denizbank. Net fee and commission income increased by 29.4% to 220.3 billion rubles, the main driver being a 47.6% rise in income from bankcard operations. Loans and advances grew by 23% to nearly 1.3 trillion rubles, while customer deposits increased by 18.5% to just over 1.2 trillion rubles.  Operating expenses were up 14% year-on-year and the bank’s cost/income ratio improved to 46.6%. Group operating income before provisions increased by nearly 20% to 1.1 trillion rubles, but there was a massive rise in provisioning for loan impairments to 135.5 billion rubles as against 21.5 billion rubles a year ago. As a result, net profit increased by just 4.1 billion rubles to to 362 billion rubles. Capital adequacy under Basel 1 rules declined slightly to 13.4%, while the bank’s core capital adequacy ratio improved by 22 basis points to 10.6.%. Last year Sberbank increased its borrowings from other banks under sale and repurchase agreements by 51.4%, leaving it more vulnerable to market shocks, and the outlook for 2014 is less stable owing to Western sanctions and broader weaknesses in Russia’s economy. CEO and chairman, Herman Gref noted that capital flight reached $35 billion to end February, and warned that should it touch $100 billion the economy might descend into zero growth.

Herman Gref, CEO and chairman

Raiffeisen Bank Serbia

Raiffeisen’s operating profit advanced by 14.3% to €150 million, despite a marginal contraction in overall assets to below €1.8 billion. Net interest income surged by 22% on the back of 6%-plus margins, and as the bank reduced its total loan portfolio by 8.2%, the ratio of deposits to loans rose to 98.8%. Cost cutting continued, with a 4.1% reduction in administrative expenses, which helped to pull the cost/income ratio below 50%.  The ratio of nonperforming loans rose by 63 basis points to 13.1%, and the bank accordingly strengthened its provisions for loan impairment losses, its provisioning ratio rising 75 basis points to 2%. Profit before tax was up 5.5% to €54 million.

Zoran Petrović, chairman

VÚB banka

Intesa Sanpaolo’s Slovakian bank turned in sparkling results, with assets increased to €11.6 billion, operating income sharply up at €530 million and operating profit up by €31 million to €265 million. Of the total net interest income of €412.7 million, 67% derived from retail banking and 19.3% from corporate banking. 

The bank’s operating margin improved by nearly 20%, and net profit was up in 2013 to €135.1 million from the previous year’s €119.7 million. As of year-end, VÚB’s Tier 1 capital ratio stood at 15.9%, up from 15.1% in 2012.

Alexander Resch, CEO

SKB Bank

With a Tier 1 capital ratio of 13.6%, SKB is one of the safest and most stable banks in Slovenia, which in 2013 experienced a severe economic downturn and came close to a banking crisis. In a difficult market, net interest income fell by 6%. Cost cutting shaved 5% off overhead expenses, and total operating income was down slightly at €39.9 million. But after a drastic 89% increase in the net cost of risks to €78.3 million, the bank reported a net loss of €31.5 million. Market share of deposits increased to 7.7%, and market share of loans to 8%. SKB Leasing had a good year, with profit before tax up 16% to €4.6 million. CEO François Turcot comments, “We are planning our business to grow, leveraging on the quality of our products, the dynamism of our commercial teams, our reputation in the market and our excellent capital base and liquidity.”

François Turcot, CEO


Amid turbulent market conditions, Akbank delivered a strong result and quality earnings. Total assets increased by 19.6% to 19.5 billion Turkish lira ($9.2 billion). The bank gained a market share of 10.4% in both loans and deposits, these growing by 27.8% and 24.0%, respectively. Fee income grew by 25%. CEO Hakan Binbaşgil noted that Akbank “successfully secured the lowest all-in-cost syndicated loan of the past 15 years in the Turkish banking sector in the first quarter. We completed the first ever Turkish-lira-denominated eurobond issuance.” Net profits were up 2.4% to just over 3 million lira (an underlying improvement of 15.7%, when excluding a competition board penalty of 129 million lira and provisions of 270 million lira). Return on equity at Akbank was 15.8%, the capital adequacy ratio improved to a healthy 14.7%, and the bank continued with its 100% coverage policy of nonperforming loans. Akbank’s considerable investment in digital banking is paying off, with 70% of its customers now completing their transactions using alternative delivery methods.

Hakan Binbaşgil, CEO


Despite economic headwinds and the serious political upheaval now plaguing the country, Ukraine’s largest privately owned bank remains profitable. Net profit for the first nine months of 2013 was 1.7 billion Ukrainian hryvnia ($100 million), up 57% year-on-year. Total assets increased over the same period by 17.5% to 203 billion hryvnia.

Moody’s rating as of February was Caa1, a notch above the sovereign rating of government bonds, while ratings agency Standard & Poor’s put its stand-alone credit profile at B-, three notches higher than Ukraine’s sovereign rating of CCC. PrivatBank’s co-owner, Igor Kolomoisky, recently pledged to support the defense of the country.

Alexander Dubilet, chairman


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