The chip factory is part of the company’s long-term strategy to diversify beyond its base of Taiwan. The main focus of the factory, which is slated to launch operations in late 2027, will be to supply the continent’s automotive industry, which accounts for 5.7% of EU GDP and 12.9 million jobs, or 6.8%, of total EU employment as of 2021. Semiconductor chips are essential to engine performance, safety features, and infotainment in automobiles.

The new European venture also represents something of an insurance policy for TSMC. Taiwan is viewed by China as a breakaway province, and Beijing often strongly reiterates its long-term desire to bring the self-governing island back under the control of the mainland—with potentially serious consequences for Taiwan’s chip production. The Dresden plant deal will likely be a point of concern for China, which is Germany’s largest trade partner, and the German government has already gone to lengths to downplay the political ramifications of the venture, focusing instead on the business angle.

The EU, for its part, is also seeking to increase chip production, with an aim of doubling its share of global semiconductor chip manufacturing to 20% by 2030. A $33 billion facility planned by US chip giant Intel, which would be the largest European chips project, is still awaiting EU regulators’ approval, however.

Yet, for the region overall, economic growth remained solid. And, encouragingly, most banks saw rising demand for financial products, from vanilla savings accounts to more-sophisticated instruments. Global Finance’s Best Banks in CEE for 2024 are those financial institutions that persevered and prevailed in a challenging operating environment.

Hungary-based OTP Group has long been a centerpiece of the banking sector of CEE, and it repeats as our regional winner. The group has operations in 12 countries—11 in the region plus Uzbekistan, which was added in 2023—and its base remains Hungary (accounting for 36% of group assets). Its presence in Bulgaria, Croatia, Slovenia and Serbia accounts for a significant share of the group’s total assets.

For the group, 2023 was a banner year, as total assets surpassed the equivalent of €100 billion ($107 billion), thanks to continued organic growth and two significant acquisitions—in Uzbekistan and the group’s biggest ever, of Nova KBM in Slovenia. OTP profits increased nearly threefold to an all-time high of €2.6 billion, and return on equity (ROE) rose sharply to 27%. Supporting strong profit growth was strong cost control, as the group’s cost-income ratio dropped to a historic low of 43.3%.

And OTP is just getting started. With 11 acquisitions completed over the last seven years, OTP calls itself the regional consolidator in banking and anticipates continuing its growth throughout CEE. It will also continue implementing innovations throughout its network to better serve customers and drive profitability.

The winner for the Czech Republic—for the fifth year running—is market leader CSOB. With 4.3 million customers, the bank experienced steady growth, with net profit rising by 6%. Return on assets (ROA) and ROE rose to 0.79% and 14.4%, respectively, and total assets grew by 4%. The bank points to its success with implementing digital innovation, reporting that more than half of all CSOB mobile banking users used its virtual assistant during the fourth quarter of 2023. The bank was also the first in the country to pilot a fully digital mortgage process.

CSOB showed its strength in 2023 despite a tough environment, with a decline in GDP and double-digit inflation. Through it all, the bank witnessed its nonperforming loans decline by 27 basis points (bps) to just 1.42%.

Bank Millennium is a winner for the fourth time in a row as our Best Bank in Poland. Retail customers increased by 4% to three million, as customer deposits rose by 9%. That helped drive a 34% increase in adjusted net profit during the year, while adjusted ROE rose by 20 bps to 21.7%. Also supporting profitability growth was a sharp 670 bp drop during 2023 in the adjusted cost/income ratio, to 29.5%. The bank saw 7% growth in active users of its digital channel, while the share of products sold over digital channels rose sharply.

The reigning Best Bank in CEE, OTP Group, also features as Hungary’s repeat Best Bank winner. The bank’s operations in Hungary struggled with strong macroeconomic headwinds as the country slipped into its longest recession since records began in 1995, and inflation peaked at the start of 2023 at around 25.7%. As interest rate cuts began midway through the year, though, the environment improved dramatically, allowing for OTP to post for the year a solid adjusted ROE of 14.2%, up from 12.7% the previous year. Total assets rose 5% year on year, as net customer loans rose 1%.

Meanwhile, in neighboring Slovakia, VUB—part of Italy’s Intesa Sanpaolo banking group—wins the Best Bank award once again. With 125 retail and 32 corporate branches across the country, VUB posted a 55.6% jump in net profit last year, to reach €264 million, thanks partly to higher interest income than the previous year. The bank’s loan portfolio grew by 5.4%, resulting in a national market share of 20.4%. Total assets rose by 6.6%.

In 2023, VUB provided €725 million in sustainable loans, further underscoring the bank’s commitment to sustainability and to environmental and social responsibility. This supports Intesa Sanpaolo’s objective of becoming a climate-neutral bank by 2050 in terms of both its own emissions and its loan and investment portfolio.

Global Finance’s Best Bank in Croatia is OTP Group. With a 10.2% market share by total assets, OTP Bank is the fourth-largest financial institution in the country. Its ROA rose an impressive 30 bps to 1.8% during the year, while ROE jumped 280 bps to 14.2%. Adjusted post-tax profits jumped 72%.

Nova KBM, which became part of the OTP Group in February 2023, wins the Best Bank in Slovenia award. It is slated to merge with SKB banka, last year’s winner and also part of the OTP Group, sometime in 2024. For the year, Nova KBM posted a 3.8% increase in total assets to €10.8 billion and a sharp rise in return on post-tax average assets, from 1.1% to 1.8% in 2023. The bank has a significant focus on digital channels and e-services, with digital services increasing by 10% in 2023 as a range of upgrades and improvements were rolled out during the year.

Repeat winner UniCredit Bulbank takes the Best Bank in Bulgaria award again, this time against a backdrop of the most significant transformation it has ever experienced. Last year, the bank achieved record profits and rose to 18.7% market share based on total assets. The bank also posted above-market ROA and ROE while growing its market share in the loan market after hitting all-time high volumes of loans to corporate and retail customers.

The bank launched new digital offerings during the year, transforming its online channel from transactional to self-service. In 2023, more than 97% of all customer interactions with the bank were via the mobile banking app.

Banca Intesa Beograd returns as our Best Bank in Serbia. Part of the Italian banking group Intesa Sanpaolo, Banca Intesa Beograd has a 15% market share in net assets—which rose by 12.3% over the year—and a 15.4% share in customer deposits. Profits grew by 65.9%, ROA increased by 79 bps to 2.4%, and ROE rose by 850 bps to 20.2%. During the year, the bank continued to roll out its digitalization program. In 2023, it increased its retail digital banking client base by 25%; and it posted more than 24 million digital transactions, up 16%. Environmental, social and governance (ESG) concerns are front and center for the bank, as it disbursed more than €210 million in ESG loans and launched a new credit product, S-loan, which delivers pricing discounts provided that the customer meets specific ESG targets.

Raiffeisen Bank dd Bosnia i Hercegovina is a new winner as Best Bank in Bosnia and Herzegovina. The second-largest bank in the country, with an asset market share as of mid-2023 of 13.3% and a 13.8% share of total deposits, Raiffeisen Bank dd Bosnia i Hercegovina has 84 branches to service its 500,000 customers. As with other institutions in the region, advances in mobile banking and digitalization were particularly noteworthy during the year. The bank reports that upward of 40% of its clients use mobile banking, while 86% of total transactions are completed through electronic services.

Once again, Banka Kombetare Tregtare (BKT) takes home the awards as Best Bank in Albania and Kosovo. In Albania, BKT is the country’s largest bank, with a 2023 market share by net assets of 24.7%. Regarding deposits, BKT had a market share of 25.3% (compared to 17.4% for the second-biggest bank in the country). ROE and ROA posted record highs, 23.3% and 2.3%, respectively. Part of the backdrop was a cross-cutting technological effort. “2023 was a year of important milestones on BKT’s digital transformation journey,” explains CEO Seyhan Pencablıgil. “We understand that banking should not be a one-size-fits-all solution, but a unique experience tailored to each customer.”

In Kosovo, BKT’s market share of customer deposits increased to 15.7%, as its total assets rose to 16.3% (making it the third-largest in the country) on the back of growth of 15.9% and 17.4%, respectively. Net profits rose 28.4%, to €23.6 million, across the bank’s 21 branches in 14 cities. One particularly notable innovation at BKT Kosovo was the launch of its Green Deposit, which allows customers to invest the interest they earn in a range of eco-friendly products, a first in the local market.

Komercijalna banka becomes a three-peat winner as Best Bank in North Macedonia. With a total asset market share of 22.6%, as assets rose 8.4% to €2.7 billion, Komercijalna banka is the country’s largest bank. ROE jumped by 610 bps to 19.9%, while ROA increased by an impressive 80 bps to 2.2%. The bank was the first in the country to allow for entirely digital client onboarding—without requiring customers to go to one of its 57 branches nationwide.

OTP Bank subsidiary CKB banka (Crnogorska Komercijalna Banka) is a six-time repeat winner as Best Bank in Montenegro. CKB had a strong year in 2023, as adjusted profit took a 123% jump, ROA more than doubled to 3.5%, and ROE grew by just over 1,000 bps to 21%. These improvements stemmed partly from a sharp drop in the bank’s cost/income ratio to 38.6% despite net assets remaining flat during the year. CKB has the biggest loan book in the country’s banking sector, with a 33.9% market share, and is also the country’s largest bank by assets, with a market share of 25%.

To bolster its position as Montenegro’s largest retail bank, CKB is launching a new omnichannel mobile banking platform. This represents a fundamental shift from a brick-and-mortar model to a future-ready, mobile-centric model. CKB holds a 23.6% share of household assets in the country’s banking sector.

Our new winner as Best Bank in Turkey is Isbank, the country’s largest privately held bank and one of the largest financial institutions by total assets, with a market share of 11.4%. In the context of an exceptionally difficult macroeconomic environment in 2023, featuring inflation of 53.9% and a 37% collapse of the Turkish lira relative to the US dollar, Isbank grew total assets by 74.2% while the loan book jumped 51.1% and profits rose by 17.4%. A strong focus on ESG measures is at the top of Isbank’s agenda, with a long history of supporting sustainability efforts, including a 300 billion lira ($9.2 billion) sustainable loan pledge through 2026. Isbank also played an essential role in the aftermath of the earthquake that shook Turkey in early 2023, providing a large aid package and delivering comprehensive support to those affected.

Our winner for the second time as Best Bank in Estonia is LHV, the country’s biggest financial group. In 2023, the bank fared better than planned due to rising business volumes and interest rates, according to LHV’s annual report. During the year, net profit rose by 129% to a historic high of €141.9 million. The bank’s loan portfolio increased by 11%, and deposits grew by 17%. LHV’s retail customer base rose by just under 40,000, or 10%, and total assets rose by 16% to €7.1 billion. Going forward, the bank plans to be guided by the “fundamental belief that with the best people we can offer the best experiences to our customers.”

In neighboring Latvia, Citadele banka walks away with the Best Bank award for the fourth time in a row. During 2023, the bank posted a sharp increase in ROA, moving from 0.9% to 2.2%; while ROE also more than doubled to 23.6%. Net profits also rose from €45.2 million to €110.4 million. Catering to customers throughout the Baltics, Citadele has 378,000 active customers, up 1% from the previous year—with the bank’s digital channel reaching 96% of total customers. Citadele reports that despite ongoing economic and geopolitical volatility, it is evaluating strategic options, including a possible initial public offering.

Swedbank Lithuania returns as the winner for Best Bank in Lithuania. The consolidated group posted an ROE of 28.5% for 2023, more than double the previous year’s 14.1%. ROA also more than doubled; and the bank’s cost/income ratio fell sharply, from 42% to 23%. Net profits jumped to €361.4 million, compared to €143.3 in 2022. Lending also increased by 10%. Swedbank Lithuania points to a new customer communication platform to allow for improved coordination with financial advisers as an important development for the business during the year, as well as the launch of a new mobile terminal payment solution for corporate clients.

After a one-year hiatus, Raiffeisen Bank is back in the winner’s circle as Global Finance’s Best Bank in Romania. During the year, total assets rose by 13%, contributing to a 35% jump in net profit—thanks to higher interest and fee revenue. For 2023, the bank posted a cost/income ratio of 44% and an impressive ROE of 26%. The bank also launched its Banking 1:1, a personal financial planning service for customers who raised significant interest in investment plans, voluntary pensions, or life insurance.

The repeat winner as Best Bank in Moldova, MAIB benefited from a sharp decline in inflation during 2023, from a first-quarter level of 25% to 4.55% by January 2024. MAIB’s profits were up 10% during the year; while ROE declined slightly, from 18.7% in 2022 to 17.2% in 2023.

Moldova is on the cusp of change, as the European Council decided in December 2023 to formally open EU accession negotiations with the country.

Priorbank takes home the award as the new Best Bank in Belarus. Part of Raiffeisen Bank International (RBI), Priorbank is the only bank in Belarus with western capital. Belarus has been subject to numerous rounds of sanctions by the US and the EU, due to the country’s support for Russia’s war against Ukraine as well as to internal repression in Belarus. (RBI reported that over the first nine months of 2023, combined impairments stemming from the bank’s operations in Russia and Belarus amounted to €370 million.) In February 2024, RBI reported it was in “advanced negotiations” to sell its 87.7% stake in the bank (potentially to an investor from the United Arab Emirates). Nevertheless, over the first nine months of 2023, Priorbank posted a profit of €86 million, up €3 million from the same period of the previous year.

Ameriabank is the winner of the Best Bank in Armenia award for the fourth year in a row. During 2023, the bank saw assets grow by 12.6% and a market share of 15.3%. Ameriabank’s loan book increased by 33.9% (giving it a 19.6% share of total loans in Armenia), and profits rose by 4%. For the year, ROE came in at 25.6% and ROA at 3.5%. Significantly, in April 2024, the Bank of Georgia (see below) purchased a 90% stake in the bank (with the remaining 10% held by the European Bank for Reconstruction and Development).

Bank of Georgia wins as Best Bank in Georgia. Throughout 2023, the bank posted a 30 bps increase in ROA to 4.7%, while ROE dropped slightly to a still-impressive 29.9%. Profits fell by 3.2%. The bank continued to deepen its relationship with customers in digital channels, which saw 21% growth in monthly users to 1.4 million over the year. The bank also points to progress in its payments business, as volumes rose by 46.5% during the year.

Georgia is also in the EU’s sights. In December, it achieved candidacy status, a milestone that has defined the nation’s geopolitical direction.

The Russian invasion of Ukraine in early 2022 threw the business and investment environment of Central and Eastern Europe (CEE) into turmoil—while, like the rest of the global economy, it was still finding its post-Covid feet. The geopolitical, macroeconomic, business and investment uncertainty created by the invasion resulted in an exceptionally challenging environment. The ramifications of war and sanctions pressured growth, pinched supply chains, pushed up energy prices and forced regional companies to completely rethink their growth strategies.

Meanwhile, banks in the region were struggling with the interest rate cataclysm sparked across the ocean as the US Federal Reserve hiked rates aggressively to head off inflation. Global Finance’s Best Banks in CEE for 2023 are institutions that prevailed in this challenging operating environment, both regionally and globally.

Leading the pack is OTP Bank, our repeat CEE regional winner. The lender operates in 11 countries throughout the region, with its base and largest presence in Hungary (42% of group assets), followed by Bulgaria, Croatia and Serbia. In 2022—despite being buffeted by the enormous challenges that defined the year—adjusted after-tax profit for the group as a whole rose by 19%, while adjusted return on equity (ROE) rose by 30 basis points to 18.8% and performing loans grew by 12%. In addition, the net interest margin held steady at 3.5%.

And OTP isn’t done. In recent years, a string of savvy acquisitions throughout the region has bolstered its position and powered growth. Bank deputy CEO and board member Péter Csányi points to OTP Group’s “unique knowledge of the region and lasting commitment to it” and cites the anticipated launch of operations—via the acquisition of Ipoteka Bank—in the Central Asian country of Uzbekistan as additional evidence of the group’s growth mindset.

Central Europe

Market leader CSOB is our Best Bank winner in the Czech Republic for the fourth year in a row. Over the year, CSOB added another 115,000 customers—representing nearly 3% growth—while loan volumes rose 5% and deposits increased by 6%. Aleš Blaek, CSOB Group CEO and chairman, points to this as the reason behind the bank’s solid growth in profitability. Additionally, the bank’s overall capital position is strong, with a Tier-1 capital ratio of 19.9%.

CSOB views its concept of selling banking and insurance products under one roof as a key competitive advantage that helped solidify its market-leading position across various products. “Our clients feel that it is easy to deal with CSOB and that CSOB knows them,” a bank spokesperson explains.

Bank Millennium enjoys its third consecutive year as our Best Bank in Poland. Despite the regional macro headwinds, the bank’s adjusted net profit rose by 99% in 2022, while customer deposits increased by 7%. The bank’s ROE for the year nearly doubled to an impressive 21.5%. Digitalization continued to be a centerpiece of Bank Millennium’s strategy, as just over 87% of the bank’s customers are active on the company’s channel and the number of mobile banking users jumped by 22% in 2022.

Our Best Bank in CEE, OTP Bank, is also Hungary’s repeat Best Bank winner. During the year, OTP’s Hungarian operations income grew by 17% (accounting for 38% of the overall OTP Group income). Deposits rose 9% for the year, driven by a 15% jump in corporate deposits. The share of household savings in Hungary held at OTP Bank fell slightly during the year but stands at a dominating 32.1%.

Meanwhile, OTP Group—particularly the institution’s crown jewel operations in Hungary—is heavily focused on environmental, social and governance (ESG) matters via building a green credit portfolio, setting up dedicated local ESG organizations and reducing the bank’s carbon footprint. “The delivery of ESG obligations and goals set by the bank’s ESG strategy is on track according to schedule, with several new initiatives already in the field of green finance,” the bank reports in its 2022 annual results.

VUB, part of the Intesa Sanpaolo banking group, was named Global Finance’s Best Bank in Slovakia for the third year running. With 128 retail and 33 corporate branches across the country, VUB saw an increase in deposits of 10.4% in 2022, while its market share of retail lending clocked in at 20.9% and 19.5% for corporate borrowing. As a result, net profit jumped by 44%. The bank points to the continued development of green loans and the launch of an instant payments system as two of the year’s most significant achievements.

But “it will be difficult to sustain the commercial performance of the past years,” warns supervisory board chairman Ignacio Jaquotot in the bank’s annual report, noting the possibility of a recession, weakening asset quality and higher inflation as crucial headwinds.

OTP Bank, part of Hungary’s OTP Group, takes the title of Best Bank in Croatia. As of the first of January 2023, the country adopted the euro—though it had joined the European Union in 2013—and ensuring a smooth transition was a significant focus of the country’s banking sector during 2022. The fourth-biggest bank in Croatia by net profit, OTP Bank accounts for 9.9% of system assets and has a market share of 14.4% in retail lending.

SKB banka, also part of the OTP Group, is the winner of the Best Bank in Slovenia award for the fifth year in a row. Profit after tax jumped by 33% to an all-time high of €61 million (about $67 million), as market share in loans increased by 30 basis points to 10.8%, and rose by 36 basis points in deposits to reach 9.2%. ROE jumped by an impressive 312 basis points to 14%.

Digitalization has been a critical theme for the bank and part of SKB banka’s strategy to deliver value to customers. “To give our clients a superior experience, we are building on our strong technological and operational foundations to provide seamless digital services while keeping the money and their data safe and secure,” explains CEO Anita Stojevska.

In Romania also, OTP Bank takes home the Best Bank award. As of the end of 2022, the bank’s market share in total assets increased to 3% (making it the country’s ninth-largest bank), up from 2.9% a year before. The bank’s operating profit increased by 76% compared to 2021, thanks to a 29% jump in total income and a relatively modest 10% increase in operating expenses. In addition, net interest income grew by 35%, bolstered by higher loan volumes.

In 2023, OTP Bank in Romania anticipates heightening its focus on attracting assets and bolstering profitability while maintaining portfolio quality—aiming to consolidate the growth of recent years. As part of a multiyear transformation program launched in 2019, the bank has since then increased its market share by 71% while increasing total customers by 42%.

Repeat winner UniCredit Bulbank takes the Best Bank in Bulgaria award on the back of what CEO Tzvetanka Mintcheva, introducing the bank’s annual report, calls a “pivotal year.” She adds that the bank “increased its market shares in total assets, total loans and total deposits for the first time in the history of the bank; and both corporate and retail loans registered increasing market shares in four consecutive quarters,” resulting in net profit rising 48.5% year over year to a record level.

Mintcheva also points to two key trends in the country’s banking sector that, in part, mirror those around Europe and elsewhere: increasing capital requirements, which will tend to push banks toward consolidation, and continued digitalization of products and services. For example, last year, UniCredit Bulbank posted 60% growth in the number of payments processed via its mobile platform—and it forecasts continued growth as more customers move toward an increasingly digitalized banking environment.

Banca Intesa Beograd wins for the sixth consecutive year as our Best Bank in Serbia. With €7.1 billion in assets, it’s the country’s biggest bank on an asset basis, with 15% of total system assets, as well as in terms of total customer deposits, reportedly at 14.8%. As with much of the region, digitalization is a major focus on the front and back end of the bank’s operations. Also, in 2022 Intesa continued to focus on ESG strategies and finding the right balance between social, economic and environmental impacts and objectives, emphasizing green initiatives.

Bosnia and Herzegovina’s UniCredit Bank Mostar wins our Best Bank award again for the country, supported by a sharp increase in ROE of more than four percentage points, to 14.45%. Net profit rose 27.7%, and total assets increased by 3.7%. Green initiatives are increasingly at the center of the bank’s strategy. ESG is at the heart of all our decisions and actions: from the environment, through management, to the way it supports the communities in which it operates, according to the bank states.

Banka Kombetare Tregtare (BKT) is our winner for the fifth year in a row as Best Bank in Albania and the third as Best Bank in Kosovo. In Albania last year, BKT continued to consolidate its position as the country’s largest bank, with a market share of around 26.3% in total assets of $4.6 billion and a deposits market share of 25.8%. In addition, the bank posted record profits of $85.6 million for the year. Digitalization is a significant focus and “is not a one-time exercise or a reactive process, but a continuous journey that has become essential to stay relevant in today’s constantly changing nancial services landscape,” a BKT spokesperson explains.

In Kosovo, BKT saw its asset base grow in 2022 by a healthy 23%, driven by 20% growth in customer deposits and a 25% increase in customer loans. Thanks to continued strong growth, the bank’s market share of total national banking system assets stood at 15.6% as of 2022, compared to 11.8% in 2019. BKT’s share of total deposits rose from 11.7% to 14.5% over the same period.

Many banks are looking to upgrade their digital capabilities in the local market—a critical driver of BKT’s strategy. “Customers expect more convenient and personalized services, which require banks to invest in new technologies,” says Muharrem Inan, head of BKT’s Treasury, Financial Institutions and Private Banking group.

Our Best Bank in North Macedonia is Komercijalna banka for the second time. Results for 2022 were boosted by a 26.1% increase in net interest income and an 11.8% growth in loans. Looking forward, CFO Maja Stevkova Sterieva calls out two major themes that will shape the country’s small but vibrant banking sector: digitalizaton and the green energy transition.

She points to the introduction by Komercijalna banka of a platform for digital signing and the exchange of documents in digital form as a significant step to improve the technology platform for customers. And on the green front, she says, the sector has focused on solar, “both for building capacities for production and installation of solar systems, and for installation of solar systems for its own energy production.”

The Best Bank winner in Montenegro, for the fifth year running, is OTP Bank subsidiary CKB banka (Crnogorska Komercijalna Banka), the biggest bank in the country, with a market share of assets at 26.1%; and by far the country’s biggest loan portfolio, with 33.3% of the country’s total market. Moreover, as of the end of the third quarter of 2022, CKB Banka posted ROE of 12.24%, up from 9.4% a year prior.

Following an emphasis on digitalization during the pandemic, the bank continued to expand its digital offerings to “open up opportunities for products, services and business model innovations, as well as an enhanced customer experience,” CKB reports. Its launch of the CKB GO mobile and internet banking platform and application was a significant step in this direction.

Akbank is our winner again as Best Bank in Turkey. During the first nine months of the year, Akbank posted a return on assets of 5.6%, a sharp rise from 2021’s 2.1%. While Akbank has a far-reaching bricks-and-mortar presence, with 713 branches, it reports that a full one-third of all new customers are acquired via digital onboarding—and its 8.3 million digital customers are up strongly from 5.5 million in 2020. In addition, 54% of customers’ financial transactions are through Akbank’s mobile app, including 67% of money transfers.

Eastern Europe

Our winner as Best Bank in Estonia this year is LHV, the country’s biggest financial group. Net profit for 2022 rose 2% to €61.4 million, supported by a 32.7% year-on-year jump in net interest income. ROE for the year finished at a solid 16.4%, though down from the 21.1% of the previous year.

But 2023 is looking like a challenging year, and one unusually difficult to predict, reports managing director Madis Toomsalu. In a fourth-quarter statement to shareholders, he says, “A growth in the volume of loans must be forecast against the backdrop of the last decade’s intensively changing economy, employment and prices; while the increase in expenses is related to loan losses, an increase in salaries, deposit costs and regulative expenses.”

Next door in Latvia, Citadele banka is our third-time Best Bank winner. A pan-Baltic universal bank, Citadele boasts a presence throughout the region—though its biggest presence is in Latvia—and 375,000 customers. Operating income for 2022, €168.2 million reflected 12% growth over the previous year, driven by substantial net interest income (up 11%) and fee and commission income (up 10%). Citadele’s loan book grew by 10%, while nonperforming loans fell by 20 basis points to 2.7%.

The war in Ukraine is a source of concern for the Baltics, as is the global macro backdrop, but Citadele is optimistic. “Despite the lingering risks and uncertainties, such as the impact of rising interest rates on the real estate market and lending, the economic outlook for 2023 appears more positive than it did in the autumn of 2022,” bank economist Mrtiš boliš contends.

After a one-year hiatus, Siauliu Bankas is the winner as Best Bank in Lithuania. The bank—the largest homegrown financial institution—posted a 15% jump in net profit in 2022, to €63.6 million, as the bank’s net interest income rose by 32% and the loan portfolio grew by 25%. In addition, its ROE rose slightly to 15.2%.

“Despite external factors such as rising energy prices, volatility on the stock exchanges or increases in base interest rates, Siauliu Bankas was able to sustainably adhere to its strategic goals and be closer to its clients throughout the year,” said CEO Vytautas Sinius, in introducing 2022 results.

Belarusbank is our winner as Best Bank in Belarus for 2022. The biggest bank in the former Soviet republic, Belarusbank offers a range of services, including lending, leasing, factoring, international settlements and foreign exchange. The 4.7% contraction in the Belarus economy, due in part to a raft of sanctions imposed by the EU, the US and others due to the country’s alignment with Russia in the war in Ukraine, was a significant headwind for Belarusbank.

Our repeat winner as Best Bank in Moldova, MAIB, weathered an exceptionally challenging year at the fringes of the Russia-Ukraine conflict. The country’s GDP contracted by 5.6% and inflation spiked to 28.6%, as supply chains were disrupted and the reverberations of the global increase in interest rates hit Moldova. But MAIB saw profits rise by 66% as its net interest margin jumped 1.5 percentage points—while its market share in total assets climbed to just under one-third of the total market.

CEO Giorgi Shagidze points to increasing digitalization of the regional banking market as a long-term trend that will continue accelerating. And harmonization of Moldova’s regulatory and legal infrastructure with EU standards, following the country’s application for entry, “will shape life in the country for years to come,” he adds.

Ameriabank is our winner as Best Bank in Armenia for the third year in a row. The country’s largest bank in total loans grew by 10% in 2022 to reach a market share of 17.6%. The bank posted asset growth of 14.2% and saw total equity rise by 33.4%. In 2022, net profits increased by 128% to the highest in bank history. The bank has added two new branches—taking the total throughout the country to 25. In addition, last year Ameriabank became the first bank in Armenia to issue green bonds via a public offering as part of its market-leading efforts in green finance.

TBC Bank takes the crown as Best Bank in Georgia. The country’s biggest bank, TBC Bank accounts for 38.6% of total banking system assets and has a 40% market share of deposits. Over 2022, net profit grew by 24% to a record high, while ROE was a solid 27%, fueled by strong growth and the bank’s strong capital position.

TBC CEO Vakhtang Butskhrikidze points to digitalization, technology and increasingly high customer expectations as the main themes driving Georgia’s banking sector. “As customers are becoming more demanding, we see a greater need for digital banking services and artificial intelligence,” he says. “We are constantly fine-tuning our digital channels and offerings to stay ahead of the curve. At the same time, our advanced data analytics capabilities allow us to create more personalized solutions for our customers,” Butskhrikidze explains.

It’s official. By the middle of this year, according to a new report from the United Nations Population Fund, India will have more people than China: 1.4286 billion, compared to 1.4257 billion in its neighbor to the north and east, for a difference of three million people. (Coming in a distant third, with 340 million, is the US.) Last year, China lost one million people.

The opposite directions that China and India appear to be taking, population-wise, have huge implications for both countries, as well as for the global economy.

The critical factor in population growth is the fertility rate, which is the average number of children that a woman gives birth to during her lifetime. In 2020, India’s fertility rate stood at 2.05 births per woman, compared to 1.28 for China, which ended its one-child policy in 2015. (South Korea boasts the world’s lowest fertility rate, at just 0.78.) This means India’s population is going to continue to grow, likely until at least 2050, while China’s shrinks.

Economic growth is a function both of improvements in productivity and of growth—positive or negative—in a country’s working-age population. That’s where the real divergence shows up: Half of India’s population is under the age of 30, compared to just about one-third of China’s. That means India has a lot more working-age firepower to fuel future economic growth as well as to support its older people.

As a percentage of the population, China’s over-64 cohort is twice that of India. People of working age as a share of the total population in China have shrunk by eight percentage points over the past decade, to 62%. That trend is expected to continue; the UN forecasts that China’s total population will fall by around half by the end of this century.

Demography is destiny, the 19th century French sociologist Auguste Comte said. A declining population has its benefits, among them relief from overcrowding and less pressure on scarce natural resources. But the diverging demographic trends in the world’s two most populous countries suggest China will face escalating pressures as its population shrinks, while the Indian economy will have greater opportunity to expand. 

Foxconn, the Taiwanese contract manufacturer that is the world’s largest maker of electronic parts and servers, is looking to diversify production outside of China in an effort to hedge its bets in the face of rising tensions between Washington and Beijing.

In mid-March, Foxconn announced plans to build electric vehicle (EV)  batteries in Wisconsin and Ohio. The company makes phones, notebook computers, servers, networking gear and game consoles, for a who’s-who of the tech world, including Apple, Google, Amazon and HP.

Alongside geopolitical concerns, the move is a reaction to the Inflation Reduction Act, which uses tax credits and other measures to boost demand in the US for the local production of EV batteries and other components. Foxconn’s shift toward US production is also in line with the US government’s broader efforts to develop a supply chain that is more resilient and less reliant on other markets. 

Formally known as Hon Hai Precision Industry, Foxconn sharply boosted its focus on local production of EV batteries in 2019 as a way to counteract a slowdown in the smartphone industry, which was then its biggest business line.

Further underscoring the company’s determination to expand its capabilities outside China, a delegation led by Foxconn Chairman and CEO Young Liu visited India in early March and confirmed his commitment to build plants in the sourth Indian states of Karnataka and Telangana. The company is in search of sites to develop iPhone production facilities. State government officials say they anticipated that the Karnataka facility could create as many as 100,000 jobs as part of an investment by the company that could reach $500 million.

Continued deterioration in the relationship between the US and China has created stronger concern over the possibility of military conflict over Taiwan. This is likely to be a major motivation for Foxconn to look abroad. The company’s initial plans to expand its manufacturing capacity in India followed pandemic-related disruptions at its 200,000-worker Zhengzhou plant, which upended the supply chain of Apple’s iPhone. However, Foxconn still has a long way to go in decoupling its business from China, which still accounts for 70% of its total production capacity.

After months of negotiations, Sri Lanka received approval from the International Monetary Fund for a $3 billion bailout aimed at easing a social and economic crisis. But the hard work is only just beginning.

Sri Lanka’s perfect storm of economic disaster started with the Covid-19 pandemic, which hit tourism hard. Then, the Russian invasion of Ukraine kicked off a spiral of higher energy costs, shortages of basic goods, and inflation (running at around 59%). Coming atop years of government nepotism, corruption, and economic mismanagement, the country had little scope to deal with such setbacks.

The crisis came to a head last year when Sri Lanka defaulted on more than $50 billion in foreign loans. Then in July, President Gotabaya Rajapaksa fled the country and resigned after massive protests erupted over his government’s economic management.

The deal with the IMF was agreed upon in principle in September, was pending the approval of China. It is Sri Lanka’s single largest bilateral creditor, holding some 20% of its total public foreign debt. To secure the package, the government, now headed up in an uneasy caretaker arrangement by political veteran Ranil Wickremesinghe, had to—among other measures—agree to boost taxes, reduce energy subsidies, tackle corruption, recapitalize the banking sector, return to a more flexible exchange rate regime, and increase interest rates to keep inflation low.

Presaging years of austerity for the nation’s people, the deal caps a long, slow fall from grace for Sri Lanka, which this year is celebrating the 75th anniversary of its independence from Great Britain. Sri Lanka at one point enjoyed one of the highest standards of living in the region but has been losing ground fast. In the fourth quarter of 2022, the economy contracted by 12.4%; for the full year, it shrank by 7.8%. As a result, around 300,000 Sri Lankans, or to 1.4% of the population, left the country last year.

While the IMF lifeline gives the government breathing room, Sri Lanka has a long way to go. And its history with IMF programs is not reassuring; it has completed only nine of 16 previous of its IMF programs.

The dynamism of Africa’s banking sector owes much to the continent’s continued strong economic growth, which the International Monetary Fund puts at 3.8%  this year, ahead of the predicted global rate of 2.9%.

And the backdrop and driver of that economic acceleration is population growth. The United Nations estimates that the population of sub-Saharan Africa is growing at 2.5% per year, which is more than three times the global average. Moreover, women in sub-Saharan Africa have 4.6 births on average, double the global average of 2.3.

One of the most important reflections of this population and economic growth in the African financial sector is rapidly spreading digitization, which puts traditional banking under pressure. That’s according to Laura Berthout, payment director for Africa, Mediterranean & Overseas at Societe Generale, which is the winner for Africa of both the Best Bank for Cash Management and the Best Bank for Payments and Collections.

“Digitization of cash management processes improve organizational flexibility and day-to-day treasury and finance operations with automation,” she says. SocGen reports that it achieved 70% of digital transfers (as opposed to paper-based transfers) in 2022, reflecting its continued efforts to develop digital products for clients. 

With economic growth and the increasing integration of the African economy with the global economy, African corporate treasury and cash management needs have become increasingly complex in recent years. Moreover, in the wake of the changes spurred by the Covid-19 pandemic, these rising demands and requirements have pushed a more sophisticated, digital-centric response by banks. 

Standard Bank, the repeat winner of Global Finance’s Best Bank for Liquidity Management award for Africa, has been at the forefront of finding new ways to meet the rapidly evolving needs of its customers, through offering customized liquidity solutions and providing total transparency across jurisdictions.

Indeed, in addition to digital adoption, the growth of cross-border payments and collections has been a critical driving force of change in the African treasury and cash management market, says Isaac Kamuta, head of Payments, Cash Management and Client Access at Ecobank Group, winner of the Best Provider of Short-Term Investments/Money Market Funds for Africa.

A reason for that, he says, is the development of the Africa Continental Free Trade Area’s (AfCFTA) creation of a single African market and the explosion in Africa of e-commerce.

“The advent of regional payment infrastructures across Africa facilitates cross-border payments in all countries within the region,” Kamuta explains. Ecobank has plugged into this infrastructure to accelerate the expansion of its cash management capabilities and continue facilitating easy payments and collection.

Part of this evolving foundation is the Pan-African Payment and Settlement System (PAPSS), a cross-border financial market structure that enables payment transactions across Africa. Spearheaded by African Export-Import Bank (Afreximbank), a pan-African multilateral trade finance institution, PAPPS—launched in early 2022—aims to facilitate payment, clearing and settlement for intra-African trade.

These changes come with a broad set of challenges. Clients are faced with the “urgent need” to upgrade their digital footprint, Berthout says. And as the market quickly evolves, so does the regulatory context and environment.

“The deconstruction of the traditional banking model sets up a range of key compliance challenges,” she says. SocGen is addressing these by holding regular discussions with regulators to ensure that clients are kept abreast of the rapidly evolving environment.

   Despite increasing integration of payment and other platforms across Africa—and, more broadly, the continent’s economies—there remain significant challenges around how banks navigate local and multicountry/multiregional regulations. And the rapidly evolving global economic environment promises more challenges in 2023. Rising interest rates in developing and developed countries, including Africa, pose new opportunities and challenges for treasury and cash management operations. And the importance of effective TCM—with the value of cash greater than it has been in more than a decade—will pile on the pressure for both corporates and banks in Africa to up their game.

As pandemic-related lockdowns have mostly dissipated, corporates—and the banks that serve them—are refocusing on the fundamentals.

One of the essential themes in coming months will be a “resurgent focus on business resiliency and rise of regionalization, coupled with a reconfiguration in Asia,” according to Rachel Chew, group Cash Product Management head, Global Transaction Services at DBS, winner as the Best Bank for Liquidity Management in the Asia-Pacific region. “In a world of uncertainty where costs of doing business are increasing, solutions to de-risk treasury operations and fortify business resilience are in demand,” she adds.

Digital transformation has only accelerated since the pandemic. This process requires that treasury functions be a part of a broader organization-wide emphasis, which will need a cultural mindset shift to allow the greater use of machine-driven tools. “Digital transformation is a continuous journey for organizations willing to take a leap of faith,” Chew says.

Citi, our repeat winner for Best Bank for Payment and Collections, has supported its customers in the Asia-Pacific region and globally through its Citi Global Instant Payments–which delivers connectivity to more than 30 instant payment schemes, reaching over 60 countries around the world, with the broader aim of helping customers remain competitive in today’s digital economy.

And digital transformation includes blockchain. DBS, JP Morgan and Temasek are behind Partior, a payments system that’s an interbank network supporting multicurrency payments. The recent investment in Partior by Standard Chartered—our Asia-Pacific winner as Best Bank for Cash Management—says David Rego, global head of payments in transaction banking at Standard Chartered, “will allow us to use blockchain technology to bring the speed, efficiency and visibility of domestic settlement systems to cross-border transactions.”

Standard Chartered also introduced its first programmable payout capability powered by a modular and interoperable application programming interface. Rego explains that a payouts-as-a-service offering is “a bank-grade fintech solution that allows digital and traditional businesses to seamlessly manage one-to-many payments to parties in their ecosystem.”

Fintechs are biting at the heels of large, established financial institutions to wrest away the mantle of technological innovation. “The explosion of fintechs gave rise to a myriad of payment solutions, and accelerated onboarding experiences have created healthy competition for all financial institutions,” Chew says. Moreover, she explains, “Beyond the certainty of settlement, we see the next frontier of instant fulfillment in cross-border connectivity.”

On another front, the HSBC Jintrust Money Market Fund, a repeat winner as Best Provider of Short-Term Investments/Money Market Funds, is an open-end fund incorporated in China and an excellent option for corporates in search of short-term liquidity solutions. The fund, which invests in relatively short-term securities, meets liquidity objectives and capital preservation needs.

Meanwhile, macro concerns are front and center in the Asia-Pacific region. “Geopolitical concerns, high inflation and spurring interest rates have caused significant stress on corporate balance sheets in 2022 and are likely to be top of mind in 2023,” cautions Ankur Kanwar, head of Cash Management for Singapore and the Association of Southeast Asian Nations, and global head of structured solutions development at Standard Chartered.

What’s more, the supply chain disruptions from the Covid-19 pandemic still drive change. “Many corporates have to adjust inventory levels and move toward a ‘just-in-case’ approach instead of ‘just-in-time’ for inventory management,” Kanwar says.

Other macroeconomic wild cards for 2023 for TCM include the impacts of the reopening Chinese economy on regional and global growth and economic patterns. Furthermore, high inflation and highinterest rates—for the first time in more than a decade—along with reduced liquidity from monetary authorities have resulted in greater pressure on treasury and cash management operations throughout the Asia-Pacific region.

   “Market volatility is here to stay through 2023,” according to Philip Panaino, global head of Cash at Standard Chartered. And it will “make the effective management of the balance sheet even more critical.”

If it has felt more crowded on planet Earth lately, you’d be right.

The world’s population recently hit 8 billion people, according to the United Nations. That’s up from 7 billion as recently as 2011, and 5 billion in 1987. There are five times more people on the planet today than there were in 1900.

And the chart leaders are whom you’d think: China has more people than any other country, with 1.43 billion inhabitants. It’s closely followed by India, at 1.42 billion (India will likely overtake China next year, though). The US takes third position, at 339 million, followed by Indonesia, at 276 million. The top four account for a little less than half of all people on Earth.

Each billion-person increment has come faster than the previous one, and the reason is simple: Births are outstripping deaths. In 2022 alone, as of mid-November, births outnumbered deaths by around a two-to-one margin. This resulted in total population growth for the year of about 60 million.

Also, people are simply living longer, and fewer babies are dying—even though women are giving birth less often. The average global life expectancy today of just under 73 years compares to 52.6 years as recently as 1960. In 1990, one out of every 11 children worldwide died before celebrating their fifth birthday. In 2020, one out of every 27 children died prior to turning 5. 

While it took just 11 years for the latest billion people to be added to the Earth’s population, population growth is slowing down. It is currently at its lowest level since the 1950s. The UN forecasts that the global population will peak at 10.4 billion inhabitants in the 2080s—though demographic forecasts are notoriously unreliable. Most of that growth will happen in just a handful of countries, most notably in Africa. The developed world, and much of Asia, will see a decline in population.

Economic growth is a function of improvements in productivity and increases in population. After the first 8 billion, growth in population is going to come more slowly. And that will be a headwind for economic growth everywhere.

Following Russia’s invasion of Ukraine, hundreds of multinational companies abruptly pulled out of the country—temporarily, they hoped. And as the war has dragged on, Russian President Vladimir Putin signaled that he’s ready to apply pressure to absentee foreign shareholders via asset nationalization.

In early July, Putin ordered the transfer of the rights to the massive Sakhalin-2 natural gas project in the country’s Far East region to a Russian entity. The Kremlin’s decree, citing “the threat of an environmental and technological emergency” due to Western sanctions, gives current investors a month to decide whether they’ll remain shareholders.

The Russian government’s concerns for the future of Sakhalin-2 aren’t altogether unreasonable. Production fell by more than three-quarters after ExxonMobil, the 30% shareholder in the neighboring Sakhalin-1 project, stopped work in March. The Kremlin is anxious to head off a similar decline at Sakhalin-2, which supplies around 4% of global liquified natural gas (LNG).

Western energy major Shell is the second-largest shareholder in the project, with a 27.5% (minus one share) stake, and is joined by Japan’s Mitsubishi and Mitsui (22.5% together). Weeks after the start of the conflict in Ukraine, Shell announced that it would exit—ideally, sell—its stakes in projects with Russian state gas giant Gazprom, including Sakhalin-2. The project was first launched in the mid-1990s. Gazprom joined in 2006 when it paid $7.45 billion to the other shareholders for a 50%+1 share stake.

The two Japanese shareholders are likely to opt into the Kremlin’s deal, largely because Japan—though it has supported sanctions on Russia—can ill afford to risk potentially losing access to Russian LNG, which accounts for around 10% of its total gas imports.

Shell has already written down half of the $3 billion book value at which it held Sakhalin-2, and the project accounts for just a bit more than a rounding error for the company’s earnings. More concerning is whether the Kremlin’s assertiveness is a one-off, or whether it’s the first in a series of thinly veiled efforts to expropriate the assets of foreign investors. France’s TotalEnergies, which has sunk huge sums into Russian gas production, and BP—the owner of a 20% stake of state-owned Rosneft, the country’s biggest oil producer—are watching closely.