Retail pushes CEE banks over EUR 1 trillion level

After the extraordinarily high growth rates for the year 2005, when the market for loans to private households in the Ukraine went up by 175 percent and by 111 percent in Russia, growth has slightly slowed down, in relative terms. In 2006 the volume of loans to private households in the Ukraine increased by 110 percent over the year before, in Romania by 100 percent and in Russia by 73 percent (always euro-based).
In absolute figures, though, growth continues unabated at a high level.
The booming lending activity has led the balance-sheet total of all banks in CEE to grow 28 percent in 2006 and amount to more than EUR 1 trillion, according to Raiffeisen analysts.
The surge comes after an even bigger one in 2005, when the balance sheet total went up 31.2 percent.
“After the record year 2005, this is the second-biggest annual growth for this region. At present, we see no indications of a significant slackening of the long-term growth trend,” said Walter Demel, senior analyst at Raiffeisen Zentralbank Osterreich AG.
From a regional perspective, the banking markets of the Community of Independent States (Belarus, Russia and the Ukraine for the purpose of the study), with a 41.7 percent growth, and of Southeastern Europe, showing an increase of 36.7 percent, were the main growth drivers.
The banking markets of Central Europe, which are more advanced in terms of banking market development, grew by 15.8 percent. Individually, Serbia (plus 51 percent), Romania (plus 47 percent), Ukraine and Russia, the largest banking markets in the region (each plus 42 percent), as well as Bulgaria and Belarus (each plus 28 percent), achieved above-average growth dynamics in 2006 on a euro basis. Slovakia recorded the lowest increase, which still amounted to a notable 10 percent.
Researchers expect CEE banking markets to more than double by yearend 2011, i.e. from an aggregated balance-sheet total of EUR 1,087 billion in 2006 to about EUR 2,500 billion by the end of 2011.

Ana-Maria David