Household consumption to fuel lending in CEE region, says UniCredit
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Lending will probably slow down in countries with the highest growth rates in the last two years, while accelerating in countries which have lagged behind in GDP growth, such as Hungary, says a report on the CEE regional banking market compiled by UniCredit.
Lending may further accelerate if the rate of non-performing loans (NPLs) continues to decrease at the current rate, which at UniCredit has fallen to 8.9%, from 10.3% two years ago, business news portal vg.hu reported. The bank attributed this to a combination of sales of NPLs, more efficient debt collection and the economic upswing, particularly in Romania, Hungary, Serbia and Slovenia.
The 1.4% return on assets (ROA) of the regional banking sector – based on UniCreditʼs sample – is considerably higher than the 0.4% of a corresponding West European sample, the report noted. It added, however, that in a comparatively low interest rate environment, the role of cost control and emphasis on the quality of assets will continue to be of central importance.
Banks must take advantage of the inflow of EU funds amounting to 1.5-3% of regional countriesʼ GDP and offer targeted banking products and services which can be connected to these funds, observed UniCredit. The report noted that householdsʼ assets have doubled since 2006 in the region, which also offers opportunities for retail and private banking.
For its own part, UniCredit said that the CEE region provides it with continuous organic growth and sustainable profitability.
UniCredit has almost 1,000 branches in 11 countries in Central and Eastern Europe, providing around one quarter of its total income. According to the bankʼs plans, its customer numbers in the region will reach 2.6 million by 2019.
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