Fitch: CEE banks to see marginal improvement

According to rating agency Fitch, the banking sector in the CEE region, particularly in Poland, Romania, and Czechia should see a marginal improvement in overall profitability, as funding, assets quality, and capitalization metrics should remain healthy. “We expect faster credit expansion in 2018 on the back of strong GDP growth across the region and low or only slowly rising interest rates. Credit growth does not appear excessive given the still tentative recovery in corporate demand,” Fitch said in its report. Profitability will likely benefit from interest rate hikes, which are expected to come in Poland in 2018, the agency wrote. “We expect pressures on profitability will be alleviated by loan growth, with impairment charges contained, and funding and liquidity comfortable. Margins have largely stabilized, except in Bulgaria, where further contraction is likely. Margins would benefit from gradually rising interest rates. Rate rises began in Czechia in H2 2017 and are likely in 2018 in Poland and Romania,” the report said.