The time of low interest rates is over, but the time of high bank profits seems to be returning.
The banking sector in Serbia last year, according to the banks’ financial reports, earned a record 742.4 million euros, which is almost twice as much as the year before, when the profit of all banks was around 383 million euros.
The picture of banks’ profits is somewhat distorted by the extraordinary net profit (after tax paid) of AIK Bank, which last year amounted to an incredible 222.8 million euros. Of the pre-tax profit of about 260 million euros, about 220 million euros is shown in other income, which is a consequence of the takeover of Sberbank by AIK bank. The paid tax on the profit of this bank was 35 million euros.
On March 1, 2022, AIK banka received permission to take over Sberbank, which was immediately renamed Naša AIK banka, to be merged with AIK banka on September 8.
Behind AIK in terms of profit is Inteza with 108 million euros last year, and in the top six in terms of net profit are OTP with 92.6 million euros, Raiffeisen Bank with 82.6 million euros, while NLB Komercijalna and Unikredit banka had net profit of 71.4 million euros each.
Unlike 2021, last year no bank recorded a loss.
The rise in interest rates that started last summer brought a significant increase in income for banks.
Net interest income (when the interest paid by banks, primarily for deposits and savings, is subtracted from the interest charged by the banks) reached 1.25 billion euros, which is 14 percent more than in 2021.
The relative growth In income from fees and commissions was even higher. In the name of net fees and commissions, the banks collected 573 million euros last year, which is more than a fifth better than in 2021.
At the same time, bank assets increased by about 15 percent last year to a total of 45 billion euros.
Consolidation in the banking sector, which has been going on for several years, led to a reduction in the number of banks to 20, and when the integration of Eurobanka Direktna in AIk is completed to 19, it also led to a large stratification into large and small.
Namely, the six largest banks control 75 percent of the assets of the entire sector. In the case of profits, the concentration is even greater. The first six banks achieved 87 percent of the total profit of the sector last year.
The largest bank In Serbia at the end of last year was Inteza with assets of seven billion euros, which was enough for 15.6 percent of the market. The second largest was the Hungarian OTP Bank, which was created by taking over primarily Société Général and Vojvođanska Banka with 14 percent.
AIK banka, owned by Miodrag Kostić, also completed a major takeover this year, Eurobanka Direktna banka. Together, these two banks had a 13.5 percent market share at the end of last year.
Behind them are three banks with around 10 percent participation, Unikredit with 11 percent, NLB Kombank with 10.4 percent and Raiffeisen Bank, which increased its market share to 10.1 percent by taking over Kreid Agricol Bank last year.
In the category of medium-sized banks, only the state-owned Poštanska štedionica with a 7.5 percent share and Erste banka with a 6.6 percent market share remained.
Below are eleven small banks, some of which are specialized, such as the state-owned Serbian bank, which is a dedicated industry bank, or the Bank of China, which services Chinese investments, primarily through payment transactions, not lending, since this bank last year had a larger revenues from commissions rather than from interest. Also, the assets of this bank more than doubled last year.
Other banks can be included under the “targets” of subsequent takeovers and further consolidation of the banking sector, since analysts agree that this trend will continue in the coming years.
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