03. Jan 2022

How the trend of bank consolidation will affect the financial market in Serbia, how much the new balance of power in the banking market will encourage the development of investment lending, and why private banking is becoming an increasingly attractive segment of financial services – we spoke with Marija Popović, Member of the Executive Board, Director of the Corporate sector of OTP Bank Serbia, and President of the Board of Directors of OTP Leasing Serbia, who points out that their strategic goal is to maintain a leading position in the markets where they operate and contribute to the development of the entire region, which they believe has great potential.

The banking market recorded significant consolidation this year. Instead of 24, Serbia will end the year with 21 banks. What impact will this change have on the financial market?

The Serbian banking sector has a high number of banks, with the top five accounting for more than 60% of the market. Almost all banks are universal banks, and there is fierce competition, particularly in the field of cash loans, on which banks concentrate their efforts, while larger banks face stiffer competition in the corporate banking sector. I believe that banking sector consolidation will provide clients with more options for quality products at competitive rates, better service, and a faster and more efficient service, where each bank prioritizes the requirements and satisfaction of its customers. On the other hand, there are enough banks to ensure healthy competition and client acquisition.

Experts foresee that the consolidation trend will continue, because the world standard is one bank per million people, and we have far more than that. How do you see the Serbian banking market in the future?

 Although the consolidation process of the banking sector in Serbia is underway, there are still a large number of banks on the market, and it is almost certain that this trend will continue in the future. When interest rates are low and competition is fierce, the market is the greatest arbiter of what number of banks is realistic and optimal. We are concluding this year with 21 banks on the Serbian market, following various integrations in the previous time, including ours between Vojvodjanska Bank and OTP Bank. At the same time, profit concentration is on the rise, with the top ten banks by asset size accounting for 80% of market share and generating 93 percent of total profit. Banks that aren't in the top ten, on the other hand, are completely natural and expected to adjust and change their business strategies in pursuit of new opportunities. With favorable macroeconomic trends and GDP growth, there is clearly potential for more consolidation, resulting in higher profitability, company optimization, and product and service enhancement.


According to analysts, one of the reasons for bank consolidation is that Serbia is a small market, and banks tend to expand in the region by competing for the leading position. In this regard, what is the experience and long-term goals of OTP Bank, which bought Societe Generale Bank in Serbia two years ago and integrated with Vojvodjanska Bank this year?

The OTP Group's growth strategy is focused on looking for new acquisitions that can be combined with organic growth to provide us the best chance of achieving optimal business volume in the countries where our bank operates. At the same time, our strategic goal is to preserve our dominant and leading position as Central and Eastern Europe's most successful banking group. We also want to play a role in the overall growth of the region, which we believe has a lot of potential. We've acquired 11 banks from nine countries in the last seven years, two of which are in Serbia. With this business venture, we have played a crucial role in consolidating not only the domestic but also the regional banking market. Thanks to the excellent position of OTP Group's liquidity and capital, we are constantly looking for new acquisitions, which is a path and way to additionally reinforce our position in the region.

Many consider OTP Bank's actions in the banking sector during the last five or six years to be a true offensive. What is OTP Bank's current position in Serbia, but also in the region, with its enlarged capital and extensive network?

 OTP Group is a leading banking group in Central and Eastern Europe, with a profit of EUR 1 billion in the third quarter of this year, assets of EUR 66.8 billion, and a market capitalization of EUR 12.6 billion. We have become the dominant banking group in the region as a result of recent acquisitions and organic growth, and we are among the market leaders in all 11 countries where we operate. Today, OTP Bank is the first on the Serbian market in terms of corporate and retail lending, with nearly EUR 4 billion in disbursed loans. At the same time, we have EUR 5.3 billion in assets and a net profit of EUR 54 million for the third quarter of this year. In comparison to the same period last year, the Bank's profitability has increased significantly, with several improvements and optimizations made during the year.

Larger banks have a higher creditworthiness and can finance larger projects. Will this new balance of power in the banking market now encourage the expansion of investment lending, which is still struggling to keep up with Serbia's investment boom?

The demand for loans in Serbia is increasing, and this trend is projected to continue in the future. Investment lending is increasing in both the retail and corporate sectors, indicating that banks are keeping up with market demands. The consolidation of banks has generally allowed them to fund significantly larger projects than they could previously. Furthermore, banks' expertise has increased significantly as a result of the previous period's experience, and banks are now much more willing to consider a variety of investment profiles, ranging from construction lending to production capacity to investments in energy efficiency and renewable energy sources. It is important to note that banks' ability to operate is heavily reliant on their ability to obtain long-term financing, so that the financing period corresponds to the investment's economic life.

To what extent will OTP Bank now be more open to project financing opportunities, among others in the construction and real estate sector?

As the largest creditor of the corporate and retail sector in Serbia, one of the strategic goals of OTP Bank is to be even more active in the segment of project financing with a special focus on the real estate construction sector. For this purpose, a special department was established that deals exclusively with this type of project and has participated in a significant number of transactions in the market. We will continue to monitor and support the activities of investors in Serbia using local and regional expertise with a "tailor-made" approach that meets the requirements of specific projects.

OTP Bank is presently number one in terms of loan market share in Serbia, and you plan to remain the leader in the retail housing loans segment. How did you acquire such high confidence of clients who chose to buy real estate through your bank?

We are the market leader in housing loans with a market share of 21.69 percent, which means every fifth housing loan is taken in our bank and these are indeed results that we are proud of. Such success did not happen suddenly; it is the product of years of building client confidence as well as our employees' expertise. It is critical for us to understand and feel our clients' needs, since this allows us to provide the best solution for their financial needs and expectations. I'd also like to highlight our excellent, years-long collaboration with real estate agencies and the real estate cluster, which provides us with additional support almost daily in implementing numerous loan requests.

Your ambition is to remain the leader in crediting small and medium-sized companies and in financing agriculture. What benefits and novelties do you offer to this corporate crediting sector?

OTP Bank played a significant role in lending to the economy through the Guarantee scheme this year and last year, helping companies in overcoming the challenges caused by the pandemic. Our branch network and presence throughout Serbia ensures that our products and services are available to all companies, as well as quick and efficient service and offers tailored to each client's specific needs. OTP Bank is now a market leader in factoring services, allowing small and medium enterprises to quickly access liquid assets. We're also a market leader in leasing, with OTP Leasing allowing clients to buy equipment and vehicles. The bank is also recognized as a reliable partner for farmers with a very efficient process and favorable lending conditions in this agro segment. We continue to monitor customer needs and actively work on process optimization in order to continuously improve the user experience, which is what we want to differentiate in the market.

Private banking is a particularly attractive and successful segment of your services. OTP Group was also recently awarded another prize from Global Finance magazine, as the best private banking bank in Central and Eastern Europe. What do you offer to clients through this service?

This is one of several awards given to OTP Group by Global Finance, and we are really proud of it. The fact that private banking customers are very specific and have high expectations of their institutions adds to the prize's value. The backdrop to this success is that we recognized it early on and have been providing clients with a wide range of tailored services, our expert knowledge in asset management within our Eminent package, as well as financial and investment advices, for the past few years. Our understanding of the local market was crucial, as was the ability to combine several areas of expertise, such as corporate business, leasing, and insurance.


Prestigious magazine Global Finance recently awarded OTP Bank as the best bank for small and medium enterprises in Central and Eastern Europe. “This award validated our efforts to become a leading bank in this market, and the fact that we were recognized for our achievements throughout the epidemic and the integration of the two banks adds even more significance”, saya Marija Popović.



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