OTP Bank Albania: The dynamic player in the country’s banking sector
In July this year, OTP Bank Albania, the Albanian banking subsidiary of the Hungarian OTP Group, achieved some notable successes which reflect not only how far the bank has come in a short time, but also its ambitions for the future.
The first success was the finalization of the acquisition for 55 million euros of Alpha Bank Albania, the subsidiary of the Greek bank Alpha, which suddenly made it the fifth bank in the country in terms of total assets. and the third largest in its loan portfolio.
The runner-up won Euromoney’s Best Bank in Albania 2022 award – the third consecutive year it has won the award – marking deserved recognition for the bank’s outstanding year, which included outstanding financial results, as well as an impressive commercial and operational development.
Our goal is to be the first bank in the Albanian market, and this goal will be achieved through organic growth and potential future purchases if the opportunity arises.
Bledar Shella, CEO
While the award recognizes past performance, the acquisition signifies the bank’s future growth ambitions in the country as well as its “serious and long-term commitment to the Albanian banking market”, said László Wolf, Deputy Managing Director of ‘OTP Bank.
OTP Group first gained a foothold in Albania in 2019 by acquiring the Albanian banking subsidiary of Societe Generale, creating a launch pad for the bank’s expansion plans in the country.
For Shella, who became CEO of OTP Bank Albania as part of the acquisition in 2019, the merger of the two banks this year “will allow us to achieve things that we could not achieve separately and will give us the right size to be even more efficient and effective”. to offer better products and conditions to our customers.
He adds: “Our goal is to be the leading bank in the Albanian market, and this will be achieved through organic growth and potential future purchases if the opportunity arises.
The acquisition is expected to be legally finalized at the end of this year, with its integration to be continued and completed through 2023.
It’s demanding work which Shella says will be one of the bank’s main areas of focus next year, while supporting its impressive growth and development over the past two years.
For example, the bank’s net profit in 2021 more than doubled to 1,912 million lira ($17 million), partly thanks to lower provisions. Other banks, including Raiffeisen Bank Albania, saw similar increases, but OTP Bank Albania remains the most profitable lender, with a return on equity (RoE) of 18.5%.
In addition, the bank saw its cost/income ratio fall by 212 basis points to 46.6% during the year thanks to the increase in net banking income. And while other top-tier banks in Albania still hold a larger share of local banking assets than OTP, its market share in loans increased by 71 bps to 11.5%.
Despite this, its non-performing loan ratio remains relatively low at 5.2%.
These are great measures of financial performance, which Shella is working to protect and improve wherever possible over the next year.
In this context, one of the main strategic priorities of the bank is to optimize processes in all of its banking operations, as well as to focus and invest more in digitalization, which is now the right time. to do so, according to Shella.
The bank has already upgraded its mobile banking platform, but the broader goal is to develop and launch a greater range of digital banking products and services for customers across its lines of business, including its business securities brokerage, especially for high net worth and corporate clients. .
“We want to create a full-service digital platform for our customers, a one-stop-shop offering, where they can find everything they need in terms of advice, products and services,” says Shella.
This customer focus is important, with their satisfaction with the banking experience, products and services provided by OTP Bank Albania a key differentiator and advantage over other banks.
“One big difference we can make is to increase customer satisfaction. Products and prices are quite similar between banks, so where we can make an impact and become the market leader is in the way we treat our customers, which is powerful in any market, but especially in Albania,” says Shella.
He adds that the bank’s efforts to increase customer satisfaction are bearing fruit, registering the highest scores in the country this year and among the highest in the OTP banking group, which covers Central and Eastern Europe.
Such a focus on customer satisfaction is an important driver of growth. But it’s the strength and use of the balance sheet that can really drive growth and market share. For OTP Bank Albania, Shella claims that its loan portfolio is growing significantly and that it is gaining market share year on year in large corporate loans, retail mortgage loans and small and medium business loans .
Importantly, the bank’s deposit base is also growing significantly, which Shella says, together with tight cost control, allows the bank to “manage its balance sheet prudently and optimally.”
It is a combination of these and other elements that has enabled the bank to maintain a cost/income ratio below 50% and generate a juicy ROE – reaching 27% in the first seven months of this year.
It’s the kind of performance and momentum that helps banks grow from leader to market leader. In this form, OTP Bank Albania could soon realize its ambition.