CEE economies move forward to more sustainable growth model - UniCredit Group

In 2015, CEE economies have shown resilience against shifts in investors' sentiment towards emerging markets, which was in good part related to their deep integration with the euro area and the solid macroeconomic fundamentals, UniCredit Group said in a statement summarizing a CEE Banking Study which covers 13 different countries.

Banking sectors in most countries have remained profitable, with future economic recovery expected to further support lending, especially in countries which have been lagging behind so far, the lender said.

Non-performing loans ratios, which are currently high in various countries should decline. Moreover positive GDP growth in combination with accommodative monetary policies and clean-up activities in countries such as Romania, Slovenia and Hungary should ease the strain from NPLs, while profitability is expected to remain above Western European levels, UniCredit noted.

"A more sustainable funding model is moving forward in CEE, with local deposits becoming a more important funding source. Nevertheless banks need to be attentive towards the low interest environment, regulatory pressures, the development of emerging markets, geopolitical tensions and the effects from migration," Carlo Vivaldi, Head of CEE Division at UniCredit, was quoted in the statement as saying.

With GDP growth rates ranging from 0.6% in Serbia to 4.3% in the Czech Republic in 2015, most CEE countries have shown a more dynamic performance compared to previous years. The only exceptions are Russia, which had to cope with a sharp drop in the oil price and the EU-US sanctions, and Ukraine, UniCredit said.

On the other hand, EU-members in Central Europe (EU-CEE) have proved more resilient to the shift in investors' sentiment towards emerging markets in the second half 2015. "In doing so, EU-CEE benefitted from current account surpluses or small deficits due to strong exports into the euro area, low commodity prices and large capital account surpluses due to EU fund inflows," it commented.

In terms of UniCredit's placement in the CEE region, the bank added that in spite of some challenges, it considers itself a long-term, strategic investor in Central and Eastern Europe.

"In 2015 the banking group has acquired over 1.2 million new customers across all CEE countries, where it has a presence, and it intends to grow its customer base by another 1 million customers each year until 2018," the lender said.

The banking group operates an extensive network of almost 3,100 branches in 13 countries, which generates roughly one quarter of its total revenues.