2022-05-31-科尔尼-European_retail_banks_show_spectacular_COVID_recovery_and_record_profits,_rescued_by_a_large_provision_release_11页_734kb

European Retail Banking Recovery and Profit Trends

Core Content

The 2022 Retail Banking Radar report highlights a remarkable recovery in European retail banking, with the sector reporting its second-highest profits in 15 years. This recovery was largely driven by a significant reduction in risk provisions and a rebound in revenues after the pandemic's initial impact.

Main Points

1. Profit Recovery

• European retail banks achieved their second-highest profits in 15 years in 2021.
• Profit per customer rose by 43% to €214, the highest since 2016.
• Italy and the UK were the top performers, while Poland saw a drop in profit per customer.
• The recovery was attributed to a sharp decline in risk provisions and a rebound in customer income.

2. Risk Provisions and Cost-to-Income Ratio (CIR)

• Risk provisions fell significantly in all 21 countries analyzed.
• Italy saw a 19.5 percentage point drop, the second-largest, and the UK a 21.1 percentage point drop, the largest.
• The CIR dropped slightly in 14 out of 21 countries.
• Western Europe had the largest drop in CIR (-1.9 percentage points), while Southern Europe saw a smaller decline (-3.1 percentage points).

3. Business Volume Growth

• Loan and deposit volumes grew consistently over the past 15 years, peaking in 2020 and 2021.
• Loan volumes increased by 4.3% overall, with Eastern Europe leading at 9.6%.
• Deposits surged by 6.6%, driven by pandemic-related savings.
• Eastern Europe outperformed with 13.3% savings growth, followed by Southern Europe at 10.9%.

4. Productivity Improvements

• Despite reduced branch networks and headcounts, productivity improved across all regions.
• The Nordics and Switzerland saw the highest growth in business volume per employee (54%).
• Eastern Europe followed with 28%, while Southern Europe had a 11% increase.
• The UK led with a 16.6% increase in income per employee, and Spain led Southern Europe with a 10.3% increase.

5. Cost Management Challenges

• Only Southern Europe managed to cut costs in 2021; costs rose in other regions.
• Western Europe: +2.1%
• The Nordics and Switzerland: +5.5%
• Eastern Europe: +1.1%
• The main reasons for rising costs were wage inflation, digitalization investments, and increased compliance spending.
• Most of the cost savings from branch and headcount reductions have already been realized.
• Further cost reductions will require structural changes in operating models.

6. Future Outlook

• A looming recession across Europe raises concerns for 2022.
• Inflation is at multi-decade highs, with Germany hitting a four-decade high in February.
• Consumer confidence and spending are declining, potentially impacting demand for banking products and increasing risk costs.
• Interest rate rises could improve net interest margins, but the uncertain outlook requires banks to make tough decisions.
• Structural transformation is essential to achieve sustainable efficiency gains.

Key Information

• Profit per customer: Increased by 43% in 2021, reaching €214.
• Branch reduction: 25% since 2016, with Eastern Europe and Southern Europe seeing the highest declines.
• Employee reduction: 12% over five years.
• Cost trends: Only Southern Europe reduced costs; others saw increases.
• Operating model transformation: Necessary for long-term cost efficiency and profitability.
• Regional performance: The Nordics and Switzerland led in productivity, while the UK and Austria were top in CIR improvement.

Conclusion

European retail banks have shown resilience in the face of multiple crises, including the pandemic, by reducing costs and managing risk effectively. However, the path to sustained profitability is becoming more challenging as the easy cost savings are exhausted and economic headwinds persist. A digital-first approach and structural transformation of operating models are now crucial for the sector to maintain its performance and adapt to future uncertainties.