Euromoney publishes the article about OTP Bank Albania: ‘The best bank in Albania for 2023’ from the Euromoney Excellence Awards
The prestigious Euromoney classifies OTP Bank Albania as the rising star of banking sector. Even without the financial impact of Alpha Bank Albania (which was legally merged on December 1, 2022 and began to affect the results during the beginning of this year), the results of OTP Bank Albania for 2022 have been very encouraging.
Return on equity was 27.5% – up from 18.5% in 2021 – representing the highest return compared to any Albanian bank and any other bank part of OTP Group.
This performance has been achieved thanks to a number of factors, including cost efficiency, balance sheet optimization and the quality of the bank’s loan portfolio, despite a challenging operational environment.
The process of integration of the two banks consisted of a transparent recruitment process for key positions and KPMG made sure that there were no disruption to day-to-day operations. We also had the opportunity to review branch locations. The 73 branches, part of OTP Bank Albania and Alpha Bank Albania before the merger, were consolidated into 50 branches in prime locations within a very short time frame.
Attention to customer needs is reflected in the fact that OTP Bank Albania continues to record the highest customer satisfaction rating compared to any Albanian financial institution based on independent market research by Ipsos.
Shella says that he is particularly proud that the bank has continued to focus on customer support. “We have the highest ratio of net loans to total assets in the local banking system at 58%, which is much higher than any other bank in Albania,” he adds. “Further evidence of the quality of our loan portfolio can be found in our NPL ratio, which last year fell further to 4.5%.”
Seizing growth
OTP Bank Albania is already the third largest bank in the country in terms of lending with very little difference from the second largest bank.
“We are number one in mortgage loans and small business loans, number two in corporate loans and number three in personal loans,” says Shella. “Our market share for deposits has increased from 6% to 10%, bringing a lot of liquidity that will enable us to grow even further.”
In November 2022, the European Bank for Reconstruction and Development (EBRD) confirmed that had extended a total of €8 million in loans to OTP Bank Albania as part of its SME Competitiveness Program. This program offers new financing opportunities for local businesses looking to boost productivity, reduce operational costs, increase energy efficiency and align with EU standards.
“This financial program aims to increase the competitiveness of small and medium-sized Albanian enterprises by enabling the improvement and provision of European standards in the line of values that this giant market represents, specifically the improvement of environmental impacts, safety at work, the quality of the company’s environment, improvement of processes, as well as the quality and safety of products”, says Shella.
“The financial value of the program may not be huge, but it is important to show businesses that we will deploy all the available resources to help them grow and improve,” he adds.
As a modern bank, digitalization continues to be a key focus for OTP Bank Albania.
“We continue to invest in digital technology – last year we completed an upgrade of the Online Banking platform with a number of new features,” says Shella. “We have also implemented an online lending tool, first for mortgage loans and then for consumer loans.”
In addition, the merger with Alpha Bank gave OTP Bank Albania access to point-of-sale services for the first time and boosted its position as the bank with the highest level of ATM coverage.
The positive impact of these developments translated into a 75% increase in net profit in the first half of this year and a 30% increase in interest margin. There has also been a massive improvement in the cost-to-income ratio of the merged business.
“When we bought Alpha Bank, our cost-to-income ratio was 44% and Alpha Bank’s was 90%,” says Shella. “The combined business now has a cost-to-income ratio of 43%. The interest rate environment has definitely helped, but the re-indexing of loans, the quality of our portfolio and cost optimization have also contributed to our strong performance this year.”