Efficiency of State Banks in the Economy of Poland and Ukraine
Keywords:efficiency of the banking system, foreign investors, net interest margin, average return on equity, average return on assets, cost-to-income ratio
The purpose of the research is to analyze and compare the efficiency of public, private and foreign banks in Poland and Ukraine for the period 2014-2020. To achieve the goal of the study, a quantitative approach based on the calculation of financial ratios such as net interest margin (NIM), average return on equity (ROAE), average return on assets (ROAA) and cost-to-income ratio (CIR) is used. The best performance indicators and the best efficiency in terms of criteria such as NIM, ROAE, ROAA and CIR in the period 2014-2019 were demonstrated in Poland by state-owned banking groups; however, in 2020, according to ROAE and ROAA, the best results showed banks with foreign capital (in particular, the banking group BNP Paribas Polska). The private bank Getin Noble was the worst in all evaluation criteria.
The largest share of net assets in the banking system of Ukraine, as in Poland, is occupied by state-owned banks, while the share of foreign banks continued to decline, and the share of private banks was the smallest in the banking system. However, the best indicators of NIM, ROAE, ROAA, and CIR in the last three years were demonstrated in Ukraine by foreign banks.
The result of the analysis shows that in the crisis situation caused by the COVID-19 pandemic, both in Ukraine and Poland, banks with foreign capital showed the highest efficiency in their activities, and the least - banks fully controlled by national capital.
Modeling of the efficiency of state-owned banks in Ukraine showed that state-owned banks are mostly inefficient; this requires their privatization with the mandatory participation of foreign investors.
Alfa-Bank Ukraine. (2022). Financial Statements. Available at: https://alfabank.ua/ru/investor-relations.
Alior Bank. (2022). Financial results. Available at: https://www.aliorbank.pl/en/investor-relations/financial-results.html.
Bank Pekao. (2022). Reports. Available at: https://www.pekao.com.pl/en/investors-relations/reports/reports.html.
Black Sea Trade and Development Bank (BSTDB). (2021). Overview of the financial sector in Ukraine. Available at: https://www.bstdb.org/BSTDB_Overview%20of%20the%20financial%20sector_UKRAINE.pdf.
Bloomenthal, A. (2021). Net Interest Margin. Available at: https://www.investopedia.com/terms/n/netinterestmargin.asp.
BNP Paribas Bank Polska. (2022). Periodic Reports. Available at: https://www.bnpparibas.pl/en/investor-relations/stock-exchange-reports/periodic-reports.
Chumachenko D., Derkach T., Babenko V. (2021). Development Prospects of Banking Sector in Central and Eastern European Countries in Terms of Financial Integration. Studies of Applied Economics, 39(7). https://doi.org/10.25115/eea.v39i7.4949
Dominese G., Yakubovskiy S., Tsevukh J. (2020). Impact of International Migration Flows on the European Union and Ukraine. Journal Transition Studies Review, 27(2), 83-98. https://doi.org/10.14665/1614-4007-27-2-007.
Dominese G., Rodionova T., Tsviakh A. (2020). Comparative Analysis of the Return on Foreign Investments of the United States, Germany and Japan. Journal Global Policy and Governance, 9(2), 17-27. https://doi.org/10.14666/2194-7759-9-2-002
Dominese, G., Yakubovskiy, S., Rodionova, T. (2021). Determinants of the government bond yields of Italy, Spain, Portugal and Greece. Journal Global Policy and Governance, 10(1), 23–34. Doi: https://doi.org/10.14666/2194-7759-10-1-002
European Banking Federation. (2020). Banking in Europe: EBF Facts & Figures 2020. Available at: https://www.ebf.eu/wp-content/uploads/2020/11/EBF_043537-Banking-in-Europe-EBF-Facts-and-Figures-2020.pdf.
European Banking Federation. (2022). Poland’s banking sector: Facts & Figures. Available at: https://www.ebf.eu/poland/.
Getin Noble Bank. (2022). Periodic reports. Available at: https://www.gnb.pl/en/reports/periodic-reports/page,3.html?0=page&1=2.
Getin Noble Bank S.A. (2021). Activities of the Bank and the Group in 2020. Available at: https://www.gnb.pl/storage/file/core_files/2021/6/2/9f7520c810257ba387d973d38eb64ef1/Sprawozdanie%20Zarz%C4%85du_2020_eng.pdf.
Hersugondo, H., Anjani, N., Pamungkas, I. (2021). The Role of Non-Performing Asset, Capital, Adequacy and Insolvency Risk on Bank Performance: A Case Study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(3). https://doi.org/10.13106/jafeb.2021.vol8.no3.0319.
Kahkonen, S. (2017). Competitive and Well-Governed State Banks that Serve Everyone – a Prerequisite for Stronger Growth in Ukraine. Available at: https://www.worldbank.org/en/news/opinion/2017/12/14/ukraine-state-banks.
Kenton, W. (2021). Return On Average Equity (ROAE). Available at: https://www.investopedia.com/terms/r/roae.asp.
Kenton, W. (2021). Return on Average Assets – ROAA Definition. Available at: https://www.investopedia.com/terms/r/roaa.asp.
Lomachynska I., Babenko V., Yemets O. (2020). Impact of the Foreign Direct Investment Inflow on the Export Growth of the Visegrad Group Countries. Studies of Applied Economics, 38(4). http://dx.doi.org/10.25115/eea.v38i4.4007
Malyarenko, T. (2021). China’s Belt and Road Initiative in the Contested Eastern Neighborhood: A Case Study of Ukraine. Lex Portus, 7(2), 39-63. https://doi.org/10.26886/2524-101X.7.2.2021.3
Malyarenko, T., Wolff, S. (2021). Introduction “Belt and Road Initiative in the South Caucasus and Eastern Europe: Trade, Policy, Regulations”. Lex Portus, 7(2), 7-10. https://doi.org/10.26886/2524-101X.7.2.2021.1
mBank. (2022). Annual reports. Available at: https://www.mbank.pl/en/investor-relations/financial-results/
Maslii, N., Zakharchenko, N., Butenko, V., Savastieieva, O., Butenko, T., Shyriaieva, L. (2018). Modern technologies of detection and prevention of corruption in emerging information society. Problems and Perspectives in Management, 16(1). https://doi.org/10.21511/ppm.16(1).2018.06.
Maslii, N., Demianchuk, М., Skribans, V. (2019). Bifurcation Points Analysis Application in Economic Studies. ICIBE, September 27–29, 359-364. Hong Kong, China. https://doi.org/10. 1145/3364335. 3364405.
Minfin. (2022). Number of banks in Ukraine. Available at: https://index.minfin.com.ua/banks/stat/count/.
Narodowy Bank Polski. (2022). Financial System, Financial System Development Reports. Available at: https://www.nbp.pl/homen.aspx?f=/en/systemfinansowy/rozwoj.html.
NBA. (2020). Ukraine unblocks NPL sales by state banks. Available at: https://eba.com.ua/en/uryad-zaprovadyv-protseduru-prodazhu-nepratsyuyuchyh-kredytiv-derzhavnymy-bankamy/.
NBU. (2020). Annual Report 2019. Available at: https://bank.gov.ua/admin_uploads/article/annual_report_2019_final-eng.pdf?v=4.
NBU. (2021). Annual Report 2020. Available at: https://bank.gov.ua/en/news/all/richniy-zvit-natsionalnogo-banku-ukrayini-za-2020-rik.
NBU. (2021). Banking Sector Review, August 2021. Available at: https://bank.gov.ua/admin_uploads/article/Banking_Sector_Review_2021-08_eng.pdf?v=4.
Oschadbank. (2022). Financial Reporting. Available at: https://www.oschadbank.ua/ua/about/financial-reporting.
OTP Bank. (2022). Reports and Publications. Available at: https://en.otpbank.com.ua/about/informations/annual-reports/.
PKO Bank Polski. (2022) Financial Results & Presentations. Available at: https://www.pkobp.pl/investor-relations/financial-results-presentations/#subcategory=178691.
Privatebank. (2022). Financial statements. Available at: https://en.privatbank.ua/about/financial-statements.
Protsenko, V., Ivantsova, A. (2019). From Oschadbank To PrivatBank: How Ukraine Got Its State-Owned Banks And Why Wants To Sell Them. Available at: https://voxukraine.org/en/from-oschadbank-to-privatbank-how-ukraine-got-its-state-owned-banks-and-why-wants-to-sell-them/.
PUMB. (2022). Annual reports. Available at: https://about.pumb.ua/en/finance/annual_reports.
Rakhmatillaev, N. (2018). Determinants of profitability of state-owned banks in Uzbekistan. Available at SSRN: https://ssrn.com/abstract=4016064
Raiffeisen Bank Aval. (2022). Financial Statements. Available at: https://raiffeisen.ua/storage/files/20-rba-separate-ukr-financial-statements-1-1-1-1-1-1.pdf.
Santander Bank Polska. (2022). Financial statement. Available at: https://www.santander.pl/en/investor-relations/financial-statement.
Tascombank. (2022). Annual Reporting and Audit. Available at: https://tascombank.ua/docs/#5c272fa2fe1924094ca51d12.
Thompson, J. (2021). How to Calculate a Cost-to-Income Ratio. Available at: https://bizfluent.com/how-6398870-calculate-cost-to-income-ratio.html.
Tustanovskyi, Y., Denys, O., Plieshakova, N. (2019). The Corporate Governance Reforms of the State-Owned Banks of Ukraine. Available at: http://we.clmconsulting.pl/index.php/we/article/view/463.
Ukreximbank. (2022). IFRS Financials. Available at: https://www.eximb.com/eng/menu/profile-ukreximbank/financial-statements/ifrs-financials.html.
Ukrgasbank. (2022). Annual Financial Statements. Available at: https://www.ukrgasbank.com/en/about/fin_results/rishfin/auditors_report/.
UkrSibbank. (2022). Financial Statements. Available at: https://my.ukrsibbank.com/ua/about-bank/financial-reports/.
How to Cite
The author gives permission to Transition Academia Press to publish the article in print and/or electronic format.
If/when an article is accepted for publication, Author will be asked to transfer copyright of the article to Transition Academia Press. Transition Academia Press will retain copyright of all published material and reserves the right to re-use any such material in any print and/or electronic format. Author willing to retain their copyright from the Editors might request a fair condition, on the base of a bilateral agreement.