financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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Number 3 Financial Stability Report from 10.6 percent in the last quarter of 2011 to 11.3 percent in the second quarter of 2012. Spain, Greece, and Portugal besides leading the list regarding unemployment rate, are also the countries in which unemployment has increased mostly in the first half of 2012 compared to 2011 (Figure 2). On the other hand countries like Germany and Austria in addition to having the lowest level of unemployment rate are among the countries that have managed to further decrease the unemployment rate in the first half of 2012. The slowdown in export growth in the global level in 2012 is expected to result in the deterioration of the current account. Export of goods in the global level is expected to grow by 7.3 percent in 2012 compared with the growth rate of 7.9 percent in 2011. The increase of exports is expected to experience a larger slowdown in the eurozone countries (from 6.1 percent in 2011 to 1.4 percent in 2012) and in the U.S. (from 7.4 percent in 2011 to 4.2 percent in 2012), while the average growth rate of exports in all other countries of the world is expected to have a slight decrease (from 8.0 percent in 2011 to 7.8 percent in 2012). Despite this, the eurozone is expected to increase the level of the current account surplus from 0.4 percent in 2011 to 1.1 percent of GDP in 2012, and the United States is expected to have the same degree of current account deficit as in the previous year 3.1 percent of GDP, while the current account surplus is expected to decline in developing countries from 1.9 percent in 2011 to 1.3 percent of GDP in 2012. Box 1. The performance of the foreign banking groups operating in Kosovo 1 ProCredit Holding – PCH (Germany) ProCredit Holding’s main financial indicators marked a significant increase in 2011, despite the fact that the growth rate in the global economy declined, and most of the Eurozone countries experienced recession. The value of total assets at the end of 2011 amounted to euro 5.49 billion, marking an increase of 5.9 percent compared to 2010. Gross loans to non-financial sector, which account for the largest share of PCH’s assets, reached a value of euro 4 billion as a result of 10.3 percent annual growth, while the value of deposits amounted to euro 3.4 billion, recording growth of 5.9 percent compared with the previous year. Figure 3. Cost-to income ratio for banking groups, in percent 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 ProCredit Holding Raiffeisen International NLB Group Source: Annual Reports of appropriate banking groups The cost to income ratio has also improved. In 2011, this ratio dropped to 74.6 percent, recording a decline of 6.7 percentage points (Figure 3). This improvement was due to the increased business volume, and the measures taken to improve efficiency which in the one hand resulted in 7.11 percent increase in operating income (euro 405.9 million), and on the other hand lead to a 2.11 percent decline in operating expenditures (euro 348.6 million). 1 Analysis will include only the banking groups of the three largest banks operating in Kosovo. 20 |
Financial Stability Report Number 3 Consolidated net profit for 2011 improved significantly, amounting to euro 46.8 million compared with euro 12.5 million in the previous year. Consequently, the Return on Equity (ROE) indicator improved, increasing to 10.35 percent from 3.79 percent recorded in 2010 (Figure 4). Despite the increase in profitability, Capital Adequacy Ratio (CAR) declined to 15 percent, down 1.5 percentage points from the previous year (Figure 5). Nevetheless, the recorded CAR remained above the minimum required, ensuring a satisfactory capitalization of PCH. PCH ended year 2011 with credit rating of BBB by Fitch agency, same as in the previous year. The growth trend of the PCH’s financial indicators was maintained in the first half of 2012 as well. The value of total assets at the end of June 2012 amounted to euro 5.8 billion (an increase of 4.8 percent compared to June 2011). The cost to income ratio marked a decrease of 4.1 percentage points, and the consolidated net profit increased significantly by 54.2 percent compared to the same period of the previous year, reaching a value of euro 27.6 million. However, CAR continued its slight decline; by June 2012 the CAR decreased to 14.8 percent from 15 percent in June 2011. The assets of the ProCredit Bank in Kosovo amounted euro 766.9 million at the end of June 2012, comprising 13.3 percent of PCH’s total asstes. Raiffeisen International –RBI (Austria) At the end of 2011, assets of Raiffeisen Bank International reached a value of euro 146.9 billion, marking an increase of 12.1 percent compared to the end of 2010. The value of loans to non-financial sector amounted to euro 81.6 billion (an annual increase of 7.8 percent), while the value of customer deposits amounted to euro 66.7 billion (an annual growth of 15.8 percent). Figure 4. Return on capital for banking groups, in percent 20% 15% 10% 5% 0% -5% 2008 2009 2010 2011 During 2011, operating income -10% increased by 1.3 percent, reaching euro -15% 5.5 million. However, operating -20% expenditures increased at a higher -25% rate, namely by 4.7 percent (a total amount of euro 3.12 million), thus ProCredit Holding Raiffeisen International NLB Group increasing the cost to income ratio to Source: Annual Reports of appropriate banking groups 57 percent from 55.2 percent in 2010 (Figure 3). This increase was primarily a result of the increased staff costs, and the depreciation of intangible assets. RBI ended year 2011 with a net consolidated profit of euro 968 million, marking a decrease of 11 percent compared to 2010. The profit decline was reflected in the ROE indicator which dropped at 9.7 percent, down 2.8 percentage points from the previos period (Figure 4). However, the Capital Adequacy Ratio (CAR) increased slightly. At the end of 2011, CAR reached 13.5 percent, compared to 13.3 percent in 2010 (Figure 5). RBI is the only banking group, out of the three analysed in this section, that trades its shares on the stock exchange. At the end of 2011, RBI share price in Vienna Stock Exchange was 20.07 euro, marking an annual decline of 51 percent. 2 RBI ended year 2011 with credti rating of A (Fitch Agency), the same as in the previous year. RBI assets continued with the upward growth trend in the first half of 2012. In June 2012, total assets amounted to euro 152.7 billion, marking an increase of 11 percent compared to the same period 2 ATX and EURO STOXX Banks indexes, in which RBI is involved, marked a decline of 35 and 38 percent, respectively. | 21
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financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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