banking Member News Research and Analysis

The CEE opportunity: supporting growth in the region

At the EBRD 2019 Annual Meeting and Business Forum, UniCredit confirmed its dedication to the CEE region as an essential growth engine.

Macro-Economic Outlook: CEE Possible Outperform in Emerging Market

Growth in the CEE region will probably stay at a wholesome tempo in 2019 in most nations

Exterior setting: A cyclical slowdown of worldwide growth is predicted in 2019 and 2020, mainly on account of an expected technical recession in the US, the place the current recovery interval will doubtless be the longest on report. The slowdown in international trade has already materialised, with a short-term restoration expected this summer time because of a probable rebound in German manufacturing, a potential trade deal between the US and China and looser international financial circumstances as soon as the Fed and the ECB have turn out to be extra dovish. Later in 2019 and in 2020, the international slowdown will mainly be driven by the finish of the cycle in the US. The euro area is predicted to see economic growth slowing to 1.zero per cent in 2019 and 2020.

CEE doubtless outperformer in emerging markets: like the rest of the world, CEE shall be affected by the international slowdown, nevertheless the region could be better positioned than different emerging markets to face exterior headwinds because of the power of domestic demand, supportive monetary policy and decrease reliance on short-term risky external funding. The economic setting is predicted to remain beneficial in 2019. After a peak in 2018, GDP in the EU-member CEE nations is predicted to continue to grow above expected long-term charges with Poland, Hungary, Bulgaria, Slovakia, Serbia and Slovenia all above three.2 per cent YoY. Russia is predicted to grow close to 1 per cent while Turkey is present process its first recession since the international financial disaster but might return to growth in 2020.

Corporate and SMEs: Confirming Growth Potential

UniCredit to leverage on anticipated CEE GDP growth in 2019 with the region reaping the benefits of being an open financial system and Overseas Direct Investments and EU Funds enjoying a relevant position for the financial system and making certain growth potential for company sector and SMEs.

Company sector and M&A market: The CEE corporate sector remains conservative in terms of financing, focusing mostly on traditional bank lending. There’s still room for growth in terms of debt and fairness financing, though largely dependent on every nation’s particular elements. M&A in the region has seen the highest deal worth of the last 5 years in 2018, although far under historical highs. There have been 222 transactions in 2018 (254 in 2017), with the shopper sector being the most lively, with 48 offers followed, by TMT and FIG. In 2018, UniCredit was concerned in 20 transactions in the CEE region – greater than some other funding bank. This positions UniCredit as the leader in M&A league tables in phrases of number of transactions for the fifth consecutive yr.

CEE exhibits dynamic corporates and SMEs supporting the economic growth: UniCredit presents a full vary of banking services to Corporates and SMEs and is concentrated on further enhancing its supply, in order to anticipate and meet shoppers’ wants. The CEE SME sector employs 11.four million individuals in 3.2 million enterprises, creating EUR 195 million of financial added worth. It is largely impacted by developments imposed by the quick altering setting, which might be creating new needs to be addressed by banks – regulatory impacts, capital markets and digitalisation. Among other initiatives, in the SME sector UniCredit supplies help via the dedicated UniCredit CEE Lounge – an unique partnership with the London Inventory Trade Group’s ELITE initiative, serving to them better perceive the numerous funding choices out there, in addition to prepare them to work together with buyers, which could be required to help their future growth. Up to now, the UniCredit CEE Lounge has admitted more than 60 corporations from 11 nations throughout UniCredit’s CEE network. UniCredit also continues to facilitate entry to EU fund alternatives, that play an important position in CEE (approx. 90 billion EUR in 2014-2017, 18% of EU finances).

Andrea Diamanti, Head of CEE Corporate and Investment Banking and Personal Banking, UniCredit said:

“As the largest lender in the region and a strong partner of our clients and the communities in which we operate, we strive to support their development and growth. Our strength lies in our deep knowledge of local markets, our strong international network and our continued investments in digitalisation to meet and anticipate clients’ needs.”

Retail Banking: Human and Digital Capital Driving Growth

Human capital, digital readiness and the technological footprint are the options that make CEE geographies the splendid ground for digitalisation, growth and improvement.

CEE Banking sector effectivity: CEE and Western European markets have comparable populations of approximately 150 million residents where convergence is happening, pushing up incomes and nominal GDP to the ranges of EU common. Nevertheless, CEE markets in the Retail Banking business have room to develop because of:

  • lower banking costs of CEE Banks that may serve comparable populations with contained operative costs and larger efficiency in terms of staff, branches and ATMs
  • much less penetration in terms of volumes/GDP Retail loans market measurement (ca. 9 per cent vs ca. 14 per cent)
  • a quicker digitalisation fee, as a consequence of smaller technological legacy, ensuing in greater velocity of broadband protection and in quicker on-line  penetration growth (76,3 per cent)

Ivan Vlaho, Head of CEE Retail in UniCredit commented: “UniCredit serves more than 15 per cent of the CEE banking population with one in every of the largest networks in the region and a very multichannel strategy. We leverage on knowledge analytics to actually know our clients and to offer them with the greatest buyer experience via each channel, because of our greatest apply sharing and competence facilities, while simplifying our processes at the similar time. This commitment is having constructive results.

The measurement of our customer base is growing and the variety of cellular banking users additionally increased from 13 per cent in 2015 to 40 per cent right now”.

Green, Social and Sustainability Bonds: Growing Commitment to Ethics

The growing interest to Green financing sources, like Inexperienced Bonds, exhibits proof of businesses appreciating sustainability values and its dedication to being good company residents.

Market improvement by outstanding volume: Issuance volumes are growing apace. Inexperienced bond issuance reached a peak of USD 167 billion in 2018 (growing by 5.eight% yoy) regardless of lower issuance quantity in the international bond market. For 2019, we anticipate inexperienced bond issuance to extend further, to USD 170 billion (up by 1.7% yoy). Issuance volumes in Europe reached USD 66 billion in 2018, contributing 40 per cent to complete new issuance in 2018. We anticipate European issuers to convey USD 72 billion into the main market in 2019 (comprising 42 per cent of complete new issuance of inexperienced bonds).

UniCredit a pioneer to convey inexperienced bonds to the market: UniCredit has been lively in the market for Green, Social and Sustainability Bonds from the begin, being the Joint Lead Manager in the European Funding Financial institution’s local weather Consciousness Bond in 2007. UniCredit has since underlined its experience via numerous mandates in landmark Green Bonds. In CEE Slovenia’s promotional and improvement bank SID Banka successfully priced in 2018 its inaugural Green Bond transaction (EUR 75 million) being the first Inexperienced Bond from an issuer in Slovenia. UniCredit acted as sole bookrunner & inexperienced bond structuring financial institution.

CEE region confirmed as an essential growth engine for UniCredit

CEE continues to be an necessary growth engine for the Group with an extra strengthened leadership place and continued robust shopper growth in 2018. UniCredit is the largest lender in the CEE region (EUR 65.33 billion[1]) with 11.6 per cent market share in lending and strong growth in the final 5 years[2]. UniCredit is ranked as #1 in CEE general in terms of complete belongings[3], and in the prime 5 in most individual CEE nations[4].

UniCredit’s buyer base in CEE is consistently rising in the direction of the target of two.6 million internet new clients by the finish of 2019. The high quality of the portfolio can also be enhancing, with the ratio of gross NPEs lowered by 152 basis factors (from 7.9 to six.four per cent) in FY18 when in comparison with FY17.

In consequence, the return on allocated capital stood at 15.7 per cent in 2018, once once more underlining the robust profitability of the CEE division.

UniCredit’s success in the region is predicated on its strong franchise – considered one of the largest and most diversified in CEE, 1663 branches in 11 nations – with robust native coverage and relationship administration and the means to leverage international product strains, “best-in-class” providers and the know-how of the Group to greatest serve its clients. UniCredit’s market position in CEE offers local banks with a substantial aggressive advantage because of robust model recognition, entry to international markets, sharing of greatest follow and vital economies of scale.


About UniCredit

UniCredit is an easy profitable pan-European Business Financial institution, with a totally plugged in CIB, delivering a singular Western, Central and Japanese European community to its in depth shopper franchise: 26 million shoppers.

UniCredit provides both local and international expertise to its shoppers, offering them with unparalleled entry to leading banks in its 14 core markets by means of its European banking community: Italy, Germany, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey. Leveraging on a world community of representative workplaces and branches, UniCredit serves shoppers in another 18 nations worldwide.

For extra info, please go to www.unicreditgroup.eu/en

Enquiries:

UniCredit Media Relations

[email protected]

[1] As of December 2018
[2] as of September 2018, excl. Turkey, incl. Russia
[3] as of September 2018, incl. Turkey
[4] as of September 2018