Retail banking trends in Central and Eastern Europe:
live now, pay later

  • Strong increase in demand for loans, decline in savings products
  • Growth in market penetration with banking products

The volume of personal loans in the countries in Central and Eastern Europe (CEE) has increased tenfold since 2000. In the general process of catching up, demand for loans is growing strongly. In terms of the number of bank customers, Romania is experiencing the fastest growth: 16 per cent of the population over 15 have a personal loan, compared with three per cent four years ago. Besides Romania, the strongest increase is seen in Croatia, where the number of people who have raised a loan has doubled to 22 per cent since 2001. Equally sharp increases in loan utilisation rates have been recorded in Serbia and Montenegro (from 3 per cent in 2001 to 9 per cent in 2005) and Bulgaria (from 3 per cent to 7 per cent in 2005). At the same time, the use of savings products is falling in almost all CEE countries, with the strongest declines being seen in Croatia (from 38 per cent in 2001 to 26 per cent in 2005), in Slovakia (from 67 per cent to 56 per cent) and in the Czech Republic (from 62 per cent to 56 per cent).

These are some of the results of market research recently conducted in CEE countries by Fessel&GfK, RmPLUS, TNS MODUS and SMG_KRC, and initiated by Bank Austria Creditanstalt (BA-CA). "The reasons for this trend are simple: as in Western Europe, people want to enjoy life, they focus on consumption and want to buy things – here and now. Therefore wages and salaries remain in bank accounts for daily availability instead of being transferred to savings accounts as in the past. If there are not sufficient funds in the account, people take out small loans to buy TV sets or personal computers. Demand for such types of loans is growing steadily," says Martin Mayr, CEE market research expert at BA-CA.

Market penetration with banking products is on the increase
The general rate of utilisation of banking products in the region continues to increase, although there are still considerable differences to be observed. Slovenia is the country with the highest degree of market penetration with banking products, with 99 per cent of people over 15 maintaining business relations with a bank. At the other end of the scale are Bosnia and Herzegovina as well as Bulgaria, where 37 per cent of the population have a banking connection.

"This shows the large potential available in the region. About 150 million people in Central and Eastern Europe do not yet have business relations with a bank. This fact offers excellent opportunities for growth to providers of financial services active in this region," says Andrea Moneta, BA-CA Managing Board member responsible for operations in Central and Eastern Europe.

The number of account-holders in CEE, though growing steadily, is still very low in some countries compared with Austria. In Austria, 93 per cent of the population hold bank accounts. This compares with levels of around 35 per cent or less in Romania, Bulgaria, and Bosnia and Herzegovina. In the new EU countries, the figure ranges between 48 per cent in Poland and 89 per cent in Slovenia, which has a leading position in this context. Over the past few years, the fastest catching-up process has been seen in Serbia and Montenegro, where the account-holding rate rose from 38 per cent in 2001 to 60 per cent in 2005. The runner-up in the same period was Romania, advancing from 16 per cent to 35 per cent. The inhabitants of the new EU countries are also increasingly using bank accounts: in Slovakia, the number of account-holders rose by 11 percentage points (63 per cent), in Poland by 9 percentage points (48 per cent), and an increase of 8 percentage points was seen in Hungary (56 per cent) and Slovenia (89 per cent).

The account-holding rate is closely related to bank card ownership. Slovenia, where 86 per cent of the population hold bank cards, has already overtaken Austria (78 per cent) in this respect; on the other hand, in Bosnia and Herzegovina, only 15 per cent of the population hold bank cards. "In the area of credit cards we expect strong innovation and growth in the coming years," says Andrea Moneta.

Borrowers versus savers
Cash loans to retail customers are booming in the region. "We are offering excellent, yet simple, products and we use innovative sales channels. To give you an example: In Romania, our mobile sales forces currently account for 40 per cent of monthly new business in the personal lending sector. We aim to further expand this business in the future," says Andrea Moneta.

In addition to classic types of personal loans, overdraft facilities are used as bridging loans, which are particularly popular in Slovenia (51 per cent of the population) and Croatia (46 per cent). People in the Czech Republic and in Slovakia are the leading savers in the region, with 56 per cent of the population holding savings deposits, compared with only nine per cent in Serbia and Montenegro and five per cent in Bosnia and Herzegovina. This division into "borrowers" and "savers" is also reflected in the financing methods for planned investments. People in the new EU countries, above all in the Czech Republic, Slovenia, Slovakia and partly also in Hungary, tend to use savings to finance their holidays and health care. On the other hand, people in South-East Europe, especially the inhabitants of Serbia, Bosnia and Romania, are more likely to use loans.

Overall, holidays and sport activities are at the top of the list of investments planned by people in Central and Eastern Europe, followed by education (one's own education and that of children), household equipment and health care. An analysis of regional differences shows that in Bosnia and Herzegovina, Bulgaria, Romania and partly also in Serbia and Montenegro, investments in education and health are planned more frequently than investments in leisure activities. In Slovenia and the Czech Republic, on the other hand, people tend to spend more money on their holidays. “If we know more about the wishes and needs of our customers, we can offer them better, tailor-made products. In my eyes, customer satisfaction is the winning strategy in banking. This is why we put all our efforts on being close to our customers and service them in the best possible way”, says Andrea Moneta. “The development processes in CEE are a lot faster than in the “old” EU markets. We have to keep watching them closely and react quickly to new trends”, he adds. 

UniCredit Group operates the largest international banking network in Central and Eastern Europe. More than 60,000 employees serve about 17 million customers at over 2,900 branches. BA-CA is the sub-holding company responsible for CEE operations of UniCredit Group.

 Charts (PDF, 585 KB)


Ildiko Füredi-Kolarik
Bank Austria Creditanstalt, International Press Relations
Tel: +43-50505-56102, e-mail: ildiko.fueredi-kolarik@ba-ca.com