CEE Strategic Analysis, presented at the EBRD Annual Meeting, 9-11 May, Cyprus

The economic environment in which banks operate in the region of Central and Eastern Europe (CEE) is developing in a positive direction.  In 2017, for the first time since the 2008-2009 crisis the gross domestic product (GDP) in most countries of the region is expected to have a stable growth rate (of 3% or above). This is evident from an analysis of the condition of the banking system in Central and Eastern Europe (CEE) - The CEE Banking Outlook for the region presented by UniCredit at the European Bank for Reconstruction and Development Annual Meeting, 9-11 May, Cyprus.

During this year an economic growth of around 3.9% is expected for Bulgaria and in terms of this indicator our country will get ahead of almost all countries in Central and Eastern Europe (CEE).  Thus, according to the report, our country, together with Romania (3.9%, too) will be ranked second in the entire region.  Hungary will take the first place with a forecast result of 4 per cent.

The report also makes it clear that the banking sector in the CEE region achieves better profitability in comparison with the one of Western Europe but it has a different structure of the risk, too. 

“The level of profitability of the banking sector varies among the countries in the region but as a whole 2017 is the first year when the sector will report a growth in all countries in the region.  Some of the weaknesses of the sector during the period before the 2008-2009 crisis have been addressed:  at the moment we are witnessing a more sustainable funding model, a better risk management and an ongoing improvement of asset quality,” said Carlo Vivaldi, Head of UniCredit for Central and Eastern Europe, during the presentation of the report. 

Digital banking is expected to play an important role in the region during this and next year.  Most of the countries from the CEE have a relatively high degree of digitalization and have been catching up with the levels of Western Europe.  The region is a good place for banks to develop more innovative ways of providing banking services.

At the moment Bulgaria is considerably falling behind in terms of usage of digital services but this trend is expected to change in the next couple of years. 

“The gradual improvement of lending is supposed to contribute to the reduction of NPL ratio. The profit of the sector increased a lot during last year supported by one-offs but a minimum decrease is expected in 2017 and no considerable change in 2018,” explained Mauro Marrano, Coordinator Strategy and Corporate Foresight for UniCredit in the CEE region.

Analysts believe that in macroeconomic terms the medium-term perspective for Bulgarian economy has improved since the elections in April which prepared the environment for a turn towards policies supporting the growth to a greater extent.

Additional media information:

Victoria Blajeva, tel +359 (0) 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

Beatris Nikolova, tel +359 (0) 2 9232 528, cfbusjt/ojlpmpwbAvojdsfejuhspvq/ch