Russia’s economic growth has stimulated consumer demand and business confidence as well as providing a better climate for foreign investment. The country’s real gross domestic product (GDP) growth was 6.7% in 2006, picking up from 6.4% in 2005.
The Russian banking sector has continued to expand on the back of this growth and, despite continued systemic weaknesses, is likely to continue to do so.
The group leader is still Sberbank, which improved its capital strength by 49% year on year, reaching more than $11bn in Tier 1 capital. The Russian lender also grew its assets by 38% to $131.66bn and its pre-tax profits by 24% to $4.14bn. Its profit levels are more than 10 times the average profits of $385m for the other 24 Russian banks present in the Top 1000 listing.
Such good results have fuelled Sberbank’s advancement in the Top 1000 world banks ranking, too – from 82nd place in last year’s listing to 66th this year – and this is indicative of the continuous growth that the bank has enjoyed over the past years.
The leading three places in the Top 25 ranking this year are occupied by Russian banks, thanks to Gazprombank’s jump from fifth to third place, pushing Hungary’s National Savings and Commercial Bank into fourth position. As in previous years, VTB Bank came in second place with $6.2bn in Tier 1 capital, up 26% from last year, which shows the benefit of the consolidation under it of the former Central Bank of Russia’s overseas subsidiaries.
There are even fewer non-Russian players in the Top 25 CEE banks as a consequence of foreign acquisitions in the region. Romania’s Banca Comerciala Romana does not appear in this year’s listing following its acquisition by Austria’s Erste Bank.
The average return on capital of individual banks in Russia increased to 25.16% from 23.07% for the fiscal year that ended in 2005. Hungarian and Polish banks, the highest scorers after the Russian lenders, had a declining average of profits to capital ratios compared with the previous year. The average Tier 1 capital to assets ratios has remained constant or declined in all the sampled groups.TOP 25: CENTRAL AND EASTERN EUROPE ($M)
