Key Takeaways:
- Against the backdrop of the most aggressive interest rate hiking cycle in recent history and yet positive GDP growth, bank profitability rose to record-high levels in SEE-5, continuing to outperform EU standards
- Slowly adjusting NIMs, following the forthcoming initiation of regional central banks’ cautious monetary policy easing cycle, and gradually reviving credit growth, together with modest cost of risk, should keep bank profitability in SEE-5 at record-high levels in 2024. A moderation (to still above historical average) levels is expected from 2025 onwards
- SEE-5 banks’ strong fundamentals limit downside risks
- Banking penetration in SEE-5 is low, in line with the region’s lagging income in relative terms, suggesting that there is scope for strong expansion
SEE-5 Banking Sector Overview 2023 & Outlook