Published: May 2, 2019
The Balkan banking sector is ripe for consolidation at all levels, but the region is facing tough reforms and deep demographic change that hinders the region’s growth. Optimism lies in the EU accession process, making the most of foreign direct investment and keeping its young skilled workers engaged at home.
Balkan banks returned to profitability in the last few years after a rocky half decade following the global financial crisis.
“In the banking sector all of the imbalances have been by and large corrected,” Gunter Deuber, head of economics, fixed income and FX research at Raiffeisen Bank International (RBI), told EMEA Finance. “What is maybe a little bit overlooked is that western banks are aware that the profitability in the banking sector recovered nicely in 2018, and 2019 looks relatively okay in all of the markets.”
The small size of the sector helps, particularly for the significant foreign bank ownership in the region, as banks do not have to commit all that much to a small part of their businesses to remain viable.