A dramatic year for Europe and a controversial year for CEE banking yielded a mixed bag of results. Bold rate hikes have lent a great deal of support to banks' profitability in CE/SEE markets, while the war and sanctions impact caused significant hardship for EE economies and banks. The year ahead does not offer a smooth sailing either, as the economic slowdown, rising funding costs and additional government levies/interventions will likely temper earnings for banks. Despite drastic exposure reductions and/or market exits, some Western CEE banks are still directly exposed to the war and sanctions in Ukraine and Russia. That said, we find core CE/SEE banking sectors well-positioned to traverse a more challenging landscape in the forthcoming quarters. |