Goldman Sachs: Too Small Margins at Austrian Banks in CEE
The U.S. investment bank is optimistic that the CEE region recovers in 2013. The write-offs made by Austrian banks were “correct”.
With the early write-offs made by Austrian banks, Erste Group and RBI (Raiffeisen Bank International) made „right steps“. Especially in Hungary, the two major Austrian banks registered massive write-offs. Last year, Erste Group recorded losses of € 719m which is due to write-offs totaling € 1.8bn. By contrast, RBI could record profits of € 1.4bn last year.
Nevertheless, margins between lending rates and own capital lent are too low, Goldman Sachs said. Hungary is still seen critically by Goldman Sachs. The outlook in the Czech Republic is substantially better. Goldman Sachs is optimistic that lending is on the rise in the Czech market. Moreover, the high capital provision of Austrian banks in the Czech Republic offers further security, Goldman Sachs says.
In 2013, Poland, the Czech Republic and Hungary may benefit from the expected recovery in Western Europe, the investment bank says. Risks are still very different in these countries, though. The most stable development is observed in the Czech Republic, which is expected to record economic growth of 2.5% next year.
Because of its indebtedness, the situation is more severe, Goldman Sachs argues. After a negative growth rate of 0.5% this year, the Hungarian GDP should rise by 1.8% in 2013. Poland would have the biggest potential among CEE countries. Goldman Sachs forecasts economic growth rates of 2.5% in 2012 and 3.3% in 2013.