Focus on banking units sets winners apart from losers

Perhaps one of the most striking moves in top ten rankings by assets was Alpha Bank's landing on the fourth place this year before the active Banca Transilvania and the relatively freshly-formed UniCredit-Tiriac Bank. What might have been a bank who has difficulties in switching to a new management eventually proved to be one which managed to get on track rapidly and outdo the dynamic BT, who has been constantly in the eye of the media this year as an innovative, well-to-do player and the corporate-focused UniCredit Tiriac.

Alpha Bank invested heavily in opening up new branches, going from 70 branches in March to about 105 units at present and will reach 125 at the end of the year. Its focus on retail banking upped its assets and market share considerably, propelling it from the eighth position in 2006 to the fourth at the end of September, corresponding to assets worth of EUR 3.7 billion.
The Greeks at Alpha Bank plan to expand even further and acquire a 13-percent market share in three years time, which is a significant step up from the current estimated 5.8 percent. Contenders Banca Transilvania say they are content with the results they have been getting so far, namely EUR 40 million in net profits and total assets of EUR 3.4 billion. The results are viewed enthusiastically by the bank's management who considers them to be the accomplishment of BT's annual targets three months before yearend.
The bank's gross profits at the end of 2007 represents more than 97 percent of what the bank has set out to achieve in 2007, while net profits are 58 percent higher than profits corresponding to the first three quarters of 2006.
“The targeted profits and activity level this year are going to be substantially exceeded, while continuing to support investments and the banks' development,” said BT general manager Robert C. Rekkers.
“Among the banks' important projects launched at the beginning of the forth quarter I will mention the opening of the first banking unit outside Romania – the Cyprus unit – and the launch of the Doctors' Division. Our objective for it is to grant doctors total loans amounting to EUR 1 billion in the next three years,” said Rekkers.
Alpha Bank is not alone in its expansion, BT also opened 69 new units since the beginning of the year, thus reaching a total of 410 branches, which have definitely helped in keeping the bank high up in asset charts in the sixth position.
The second climbing in this quarter's rankings comes from Volksbank, a lender which was not even part of top ten at the beginning of the year. However, its fast-paced growth and focus on individual clients have taken it first to the tenth position and now to the eighth. The Austrians are still climbing, aiming to get to the fifth place in the coming three years. All in all, the bank has had the sharpest growth this year, upping its assets 166 percent against the corresponding period of last year, to EUR 2.7 billion.
While Volksbank and Alpha Bank are 3Q winners this year, UniCredit-Tiriac Bank, Bancpost and ING Bank are the three players which have seen their shares shrinking this year; more dramatically for some, less abruptly for others.
For instance, Bancpost received mixed blessings this year. The lender fell from the sixth position last year to the seventh currently, but managed to multiply its net profits five times, to EUR 14.5 million.

The bank is held by the Greece-based Eurobank EFG, who announced it holds total assets on the local market amounting to EUR four billion. This amount, however, also comprises of loans that have been outsourced by Bancpost to curb the central bank's minimum reserves requirements.
UniCredit Tiriac went from the fourth position it held as HVB Tiriac at the beginning of the year to the sixth after the merger in July took its toll on the new banks' cash-ins.
The bank's total revenues went from RON 564 million in Q3 2006 to RON 631 million in Q3 2007, while assets grew 1.5 percent, from RON 11,132 million last year to RON 11,294 this year.
The bank has taken a cautious approach to growth and refused to set off in the race for the speediest organic growth on the market. Its officials have repeatedly stated that they would not join “the hunt for market share,” preferring to focus on corporate lending and real estate transactions.
However, starting next year the bank plans to step in the footsteps of its predecessors and start expanding, catering to individuals and launching products for small and medium enterprises.
The sharpest plunge in 3Q rankings belongs to ING Bank, which fell three positions this year, reaching to the tenth place at the end of September. The bank went through a rebranding process at the beginning of the year, meant to transform its somewhat elitist profile into a more down-to-earth one. Consequently, the bank has grown organically this year and aims to go from its 110 units, plus self-banks at the beginning of 2007 to an estimated total of 280-300 units by the end of 2008.
Aside from climbers and losers, 3Q bank rankings comprise of five players that have managed to maintain their previous positions. Three of them present no surprise, as their places are safely separated by the rest of the lenders' crowd by significant market share differences: leader Banca Comerciala Romana (BCR), second-runner BRD-SocGen and third in line Raiffeisen Bank.
Restructure-stricken BCR increased its net profits by 21 percent compared to 3Q 2006, reaching to EUR 220 million. Parent bank Erste considers the results to be “satisfactory,” but expects the growth rate to reach 40 percent by yearend.
Second-runner BRD-SocGen upped its 3Q profits by 43 percent against 2006 third quarter results, thus reaching to EUR 207 million. Assets grew 33 percent compared to the same interval, amounting to more than EUR 10 billion.
“We will continue with the same growth strategy based on durable profitability and offer a full range of financial services directly or through our specialized branches,” said BRD-SocGen president Patrick Gelin.
Third-placed Raiffeisen Bank increased its assets by 9.8 percent this year, to EUR 5.097 billion. Its unit network is nearing 390 offices, 45 of which have been opened during the third quarter alone.
All three top players have multiplied their branches and their focus on retail customers considerably in the past years, thus managing to keep up and sometimes outgrow the market.
Aside from these three players, state-owned CEC has also managed to preserve its ninth position in asset charts. The bank announced it has grown its assets 45 percent this year, thus amounting to EUR 2.6 billion, and has doubled its profits.
CEC benefits from the wider unit network in the local banking system, of about 1,400 offices, which is why the bank did not have to invest heavily in organic growth as most of the other players have done.
Others chose a more conservative approach toward growth and plunged down the charts like ING Bank or UniCredit Tiriac, and some were even ousted from top ten rankings by assets, as it was the case of ABN Amro.

Ana-Maria David