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Banks in Central Europe Have Resisted the Crisis. What Is Their Outlook for the Next Year?

Bratislava, 19 December 2012 – The global banking sector has faced a series of problems since 2008 that have decreased the overall net profit of the sector to just 10% of its previous level. Central European banks faced the same difficulties of decreasing profitability, but the nature of the process differed from country to country. The CE Banking Market Outlook 2012 issued by Deloitte focuses on the financial results of each sector and aims to describe the individual factors impacting the profitability of each country’s banking industry. It analyses the banking sectors in Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Serbia, Romania and Slovakia.

“The Polish, Czech and Slovak banking sectors managed to get through the crisis much more easily than those in the region’s southern countries, where sector-wide ROE is well below 10% and in some cases even negative,”

Martin Váross,
Director of Financial Sector Advisory, Deloitte Slovakia

Almost five years after the global turmoil of the financial crisis and the worst global economic downturn of recent times, banks in the region are striving for success in a continually changing industry.

Among the many factors contributing to the current state of affairs, one of the most important is the resilience of each market to economic slowdown, which highlights some differences between CE countries.

“The Polish, Czech and Slovak banking sectors managed to get through the crisis much more easily than those in the region’s southern countries, where sector-wide ROE is well below 10% and in some cases even negative.The key factors that have pushed national banking systems towards negative profitability are the new regulations and severe taxes introduced in Hungary and some other countries, including Slovakia,” commented Martin Váross, Director of Financial Sector Advisory.

The high concentration of the banking sector, where the top 10 banks hold more than 70% of the sector’s assets, is making cost effectiveness easier to achieve in countries like Croatia and Slovakia. Differences in the rates of unemployment growth are also causing variations in the level of credit risk and its impact on banks’ results.
While taking into account their disparities and similarities, the different banking sectors across the region face the same challenges and continue to offer considerable opportunities, which require careful analysis and prioritisation to leverage. The banks will have to find the way how to continue finding suitable business models that fit current circumstances on both a regional and a national level.  Whether they are looking to recover, restructure, comply, recapitalise or simply to grow, banks in the CE region face demanding expectations.

“The operational efficiency of banks in Slovakia remains their greatest strength compared to other countries. In 2011, the sector’s cost-to-revenue ratio amounted to 48.8% , which made the Slovak banks leaders in the region,“ adds Martin Váross.

The report seeks to identify the key individual revenue drivers and particular elements that influence the level of costs that banks have to contend with.  It also addresses the question of how heavily those provisions created to de-risk loans with a high probability of default are impacting upon each sector’s net profits. And it covers the impact of the new banking taxes and other regulations that have been introduced in some countries, including Slovakia.

Deloitte Centre for Financial Services in Central Europe 
The Centre’s research approach is industry-focused and collaborative, aiming to deliver an integrated view of the financial services landscape across Central Europe. Through research, executive dialogue and industry benchmarking, it aims to originate, develop and incubate leading practices surrounding the core financial challenges faced across the region.

The new strict regulatory realities, the demanding economic environment and the growing needs of customers are changing the landscape of the financial sector in a dramatic way. Outlining the real sources of competitive advantage in these rapidly changing times is of utmost importance. Key questions need to be addressed and challenged:

How are strategies and business models changing? How to address growing regulatory requirements? What are the challenges facing retail banking? In which direction is corporate banking heading? What is the future of the insurance industry? Where to look for new sources of revenue? How to invest wisely in new technologies? How to finance the activities of financial institutions in Central Europe?

The main areas dealt with by the Centre’s experts are industry trends, strategies, sources of competitive advantage, the impact of regulation on banks, the use of modern technologies and the analysis of customer needs and expectations. An important element of the Centre’s work is to collect and present examples of innovative and practical solutions for growth in rapidly changing times. The Centre will maintain databases about the market, products, customers, institutions and their financial and operational benchmarks, regulations and customers.

“The financial sector, more than ever, needs insights, reliable recommendations, independent opinion, high-quality industry data and a roadmap of its future direction,” concludes Martin Váross.

More information at:

In response to the growing need for information, Deloitte Central Europe has established the Deloitte Centre for Financial Services as an independent research unit and centre of specialist knowledge, the aim of which is to analyse the financial sector in Central Europe and to publish reports and opinions.


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© 2012 Deloitte Slovakia


Henrieta Kiššová
Deloitte Slovakia
Job Title:
Clients & Markets Leader
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