A Brief Analysis of The Serbian Banking Sector 2022: Current Trends and Perspectives
At the end of 2021, the total number of active banks in the Serbian market was 23. The consolidation trend continued and financial results on the sector level in 2021 indicate the same trend for the next years.
Total assets on a sector level on 31 December 2021 were EUR 42.9bn. The concentration is increasing. The top 10 banks have assets of EUR 36.4bn, which is 84.8% of the total assets. The top 5 banks have assets of EUR 24.4bn, which is 56.9% of the total assets in the Serbian banking sector.
The number of systematically important banks, meaning banks that participate with at least 5% of the total assets is 9.
A very similar situation is on the deposit side, hence top 10 banks participate with 85.5% of the total deposit level on a sector level.
In terms of size measured by the number of employees, over 2000 employees on 31 December 2021, have: Intesa (3059), OTP (2916), Komercijalna (2350), and Postanska (2557). This data is mostly in close correlation with the number of branches. Over 100 branches have the following banks: Intesa (178), Komercijalna (206), and Postanska (236).
Only the top 9 banks by assets on 31 December 2021 realized net interest income above EUR 50m.
Regarding profits on 31 December 2021, the results for the top 10 are the following.
The situation here is the most extreme because only one of the banks below the top 10 by assets made a profit above EUR 10m. The total profit for the top 10 banks made EUR 417.9m, which is 91.2% of the total sector in 2021.
The profitability of the whole sector analyzed through the ROAE ratio is as follows.
As we can see 12 banks has this ratio above 5%, and 5 banks have 10% or more.
When it comes to CIR (cost/income) ratio, the status among the top 10 is very different.
The years 2021 and 2022 are still significantly marked by M&A activities. Some of the processes have come to an end, and some are still ongoing. After acquiring Vojvodjanska bank, Hungarian OTP subsequently acquired the Serbian branch of the Societe Generale Bank. On 1st July 2021, the state-owned Banka Poštanska štedionica concluded the acquisition of MTS Banka. In April 2022 the merger of the Komercijalna bank and the Slovenian NLB bank took place. One more french banking group abandoned the Serbian market. Raiffeisen acquired in April 2022 the Serbian branch of Credit Agricole banking group. Eurobank and Direktna bank merged into one bank in December 2021. Russian Sberbank sold its branch to the Serbian AIK bank in March 2022.
Currently, at least 3 banks in Serbia are up for sale. The exit of the 2 global banking groups already happened. A huge part of the market is now in the hands of the regional banking groups NLB and OTP, while Austria and Italy still traditionally keep their significant influence on the market. There are 2 Serbian banks among the top 10. The state still has the opportunity to support and develop Postanska bank, while AIK bank confidently keeps its momentum and position.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
Contact:
Miloš Velimirović , Managing Partner
milos.velimirovic@sog.rs