Finansije TOP: Potential drop of inflation not to reduce prices of financial products, golden era for bankers

According to the ranking list published in the latest annual edition Finansije TOP, issued by the economic monthly Biznis i finansije, Raiffeisen Bank was the most profitable bank in Serbia in 2023, with a profit of RSD 21.4 billion. Dunav Osiguranje is first on the list of insurers, with a premium which exceeded RSD 40 billion last year.

Representatives of the financial sector project that the inflation in Serbia is most probably to be reined in relatively soon, but that it is not realistic to expect a reduction in any consumer prices, including the prices of financial products, the announcement says.

Raiffeisen Bank was the most profitable bank in Serbia in 2023, with a realized profit of RSD 21.4 billion. This result, however, is partially a consequence of short-term effects after the acquisition of Credit Agricole Bank by Raiffeisen Bank, as shown by the ranking list published in the annual edition Finansije TOP 2023/24, issued by the economic monthly Biznis i finansije.

Banca Intesa is second with a profit of RSD 21 billion, the third place belongs to UniCredit Bank with a profit of RSD 18.5 billion, OTP Bank had a profit of RSD 16.7 billion, placing fourth, whereas NLB Komercijalna Banka is fifth with a profit of RSD 15.1 billion.

On the ranking list of the monthly Biznis i finansije, the biggest bank by assets, with a share of 15.6%, is still Banca Intesa, followed by OTP Bank (13.9%), AIK Bank (13.1%), Raiffeisen Bank (11.2%) and UniCredit Bank (10.7%).

Golden era for bankers

According to the data in the June annual edition of the monthly Biznis i finansije, the net profit of banks in 2023 reached RSD 122.2 billion, after the majority of the players in the market realized personal record-breaking results, and the average return on capital of the baking sector amounted to around 15%. The main reason for last year’s profit increase was the net income from interest rates, which increased 52% to RSD 227.6 billion.

In addition to the sudden rise of the credit interest rates and the modest price of deposits, a fair contribution to the end result, with RSD 77.3 billion, was made by net revenues based on fees and commissions, which increased 11% compared to 2022.

In the first quarter of 2024, the banks realized a profit of RSD 43.3 billion, which is a 29% increase compared to the previous year, but it is hard to expect that kind of a growth pace to continue until the end of the year, it is estimated in the edition Finansije TOP.

Net revenues from interests, due to the more expensive sources of finance (a growth of interests on deposits), grew “only” 28% to RSD 62.4 billion, whereas the net income for fees and commissions accelerated 17% to RSD 20 billion.

Western banks more profitable here than at home

The banks from Western Europe which operate in Central and Eastern Europe (CEE), including Serbia, realize a bigger return on capital compared to the Western European market and consequently increase the profitability for the parent banks as well.

Despite the slower credit activity, the profitability of the branch offices of the Western European banks in the CEE reached record levels in 2023, and Romania, Serbia, Bosnia and Herzegovina and Albania have the biggest potential for the further growth of the banking sector.

At the same, the further consolidation of the banking sector in the region is expected, which is currently the most pronounced in Hungary, Romania and Serbia, it is said in the edition Finansije TOP.

Voluntary health insurance leader in premium growth, but also damages

Last year, Dunav Osiguranje was first in the market with a premium of slightly over RSD 40 billion, that is, a market share of 26%. Generali Osiguranje Srbije is second with a premium of close to RSD 29 billion and a market share of 18.7%, whereas the third place belongs to Wiener Städtische Osiguranje with a premium of RSD 17.4 billion and a market share of 11.3%. It is followed by DDOR Novi Sad, which collected a premium of RSD 16.9 billion and has a market share of 10.9%, and Triglav Osiguranje is fifth with a premium of RSD 11.3 billion and a market share of 7.3%, as shown by the ranking list of the economic monthly Biznis i finansije.

In 2023, the insurance companies in Serbia realized a total premium of RSD 155.25 billion, which is 22 billion more than in 2022. This result was mostly down to the growth of the price of mandatory motor vehicle liability insurance, where, in a year, the premium grew from RSD 38.9 billion to 46.2 billion, and then mandatory health insurance, which realized a premium of RSD 14.58 billion, with 4.68 billion more than in 2022. Mandatory health insurance is also the fastest growing type of insurance, with a growth of 47%.

Last year, over EUR 700 million in damages was liquidated, and the majority, over 520 million, pertained to non-life insurance. In addition to the growth of the premium, mandatory health insurance was also the leader last year when it comes to the growth of the damages, which amounted to as much as 57%, says the edition Finansije TOP.

Leasing grows, inflation slows down recovery of funds

The value of the newly signed financial leasing agreements in Serbia in 2023 amounted to EUR 773 million, which is an annual growth of 10.6%. The positive trend continued in the first three months of the current year, with the value of the newly signed agreements higher by 20% compared to the same period last year. Passenger vehicles are the most represented, with a 47% share in the total financing of the first quarter. The most numerous users of financial leasing in 2023 were transport and information companies, which invested EUR 205.5 million in the economy of Serbia that way.

The net property of the pension funds amounted to RSD 53.8 billion at the end of the fourth quarter of 2023, which is a nominal annual growth of 11.5%, but the high inflation reduced the growth to the real 3.9%. In the property of the voluntary pension funds, the biggest share, of 70.1%, belonged to government bonds, 17.8% consisted of term deposits and assets on the banks’ custody accounts, 10.8% was invested in shares of companies on the stock exchange, and 0.9% in investment units of open investment funds. Receivables comprised 0.4% of the total property of the voluntary pension funds.

The net property of investment funds in 2023 amounted to close to RSD 104 billion and was 66% higher compared to 2022, whereas the number of new members increase by around 40%. All the funds realized returns of 2.49% to 21.16% in 2023. However, due to the high annual inflation, which amounted to 12.1% last year, only four funds managed to save the money of their investors, because their return was higher than the inflation.

NIP BIF Press d.o.o. Beograd

Raiffeisen banka a.d. Beograd

Banca Intesa a.d. Beograd

UniCredit Bank Srbija a.d. Beograd

OTP banka Srbija a.d. Novi Sad

NLB Komercijalna banka AD Beograd

AIK Banka a.d. Beograd

Dunav osiguranje a.d.o. Beograd

Generali Osiguranje Srbija a.d.o. Beograd

Wiener Städtische osiguranje a.d.o. Beograd

DDOR NOVI SAD a.d.o

Triglav osiguranje a.d.o. Beograd

Finansije TOP

Biznis i finansije

inflation in Serbia

profit of banks

voluntary health insurance

leasing

pension funds

investment funds