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F cus
UniCredit occupies a strategic position in Italy, Germany
and Austria. With about 4,171 branches in Italy, 851 in
Germany and 290 in Austria, UniCredit comprises one
of the largest banking networks in the heart of Europe.
Accounting for more than one-third of the GDP of the
European Union, these three countries benefit from
their close ties to the growing economies of Central and
Eastern Europe.
Following the introduction of the ECB’s Outright
Monetary Transactions (OMT) program in the summer of
2012, markets’ normalization process is enduring, with a
gradual restoration of investors’ risk appetite.
At the beginning of 2014, the growth recovery across
the OECD area is gaining good momentum, while global
trade is picking up quite nicely. We expect eurozone
growth accelerate to an annual average of about 1.5%
in 2014, from -0.4% in 2013. Germany is projected to be
the engine of growth in 2014, on the wake of brighter
export prospects, the unloading of pent-up demand in
investment in machinery and equipment, and some
strengthening of private consumption; the tight intraEuropean trade links will secure that the positive effect
will be felt in the eurozone periphery as well as Central
Eastern Europe. In Italy, the recovery is underway,
although the pace of GDP growth is likely to remain
subdued at 0.7% in 2014. The main growth drivers will
be a steady recovery in exports and a moderate pick-up
in capital expenditures, amid still tight credit conditions,
while private consumption is likely to be the weak spot.
Finally, while the recovery of export markets is kickstarting the domestic economy, domestic demand,
mainly investment, will ultimately constitute the main
pillar of economic growth in Austria in 2014.
In the medium-to-longer term, the OMT has helped
to create a more favorable environment for politicians
to implement structural reforms, while repairing the
transmission mechanism of monetary policy remains
the ECB’s most daunting challenge. Pushing ahead
with the structural reforms remains essential to
achieving a sufficient degree of macroeconomic and
fiscal convergence across the eurozone, while efforts
continue to shape a credible pan-European architecture.
This process is vital to making the eurozone stronger
and more competitive moving forward. In Italy, the
sustainability of the recovery will largely depend on the
effective implementation of reforms to restore longterm competitiveness and reduce public debt.
Taking into account the reforms that have already
been implemented in Italy, we expect real economic
growth to continue at an average annual rate of
roughly 1% in Italy and 1.8%-1.9% in Austria and
Germany from 2015 to 2018.
Market share1 (%)
1. Market share in terms of total Customer Loans as at 31 December 2013.
Source: UniCredit, National Central Banks.
UniCredit is a market leader in Central and
Eastern Europe, it has a broad network of roughly
3,600 branches.*
more supportive of domestic demand. In many of the
newer EU states we expect GDP growth of above
2% this year.
Its regional footprint is diverse, and include a direct
presence in 14 countries. It is ranked in the top five in
10 of these counties*. In fact the CEE now accounts for
28 percent of the Group ‘s revenues.**
Across the newer EU states, economic performance is
expected to continue improve. A recovery was already
visible over much of 2013. In part this improvement
captures a stronger external environment, supporting
industry and exports as EMU continues to use much of
the region as a competitive production base.
Over 2014 this recovery should extend more visibly into
domestic demand. Following a multi year period of fiscal
consolidation, the drag to growth on this front should be
much more muted going forward while some countries
will enjoy a positive impulse. Public debt ratios remain
considerably below the average for advanced economies.
In many cases labour markets have stabilized.
Within Turkey and Russia the near term challenges are
greater. Following a multi year period of strong growth,
momentum will slow this year in Turkey. Political
uncertainty plays a role. A slowdown in foreign capital
inflows, prompted in part by Fed tapering, is also
having an impact. In contrast, stronger industry and
export performance brings benefits, as is the case in
the newer EU states.
Monetary policy is also exceptionally accommodative
across the region while rate hikes are likely to
materialize only gradually. Progress on banking union
should also bring positive spillovers to the newer EU
states while in many countries we see credit proving
Market share2 (%)
Ukraine3 (UCI UA + USB)
Czech Republic
Bosnia and Herzegovina
* as at 30 September 2013.
** as at 30 June 2013.
*** as at 31 December 2012.
2. Market Share in terms of Total Assets as 30 September 2013.
Market share in Azerbaijan not available.
3. Pro-forma (Ukrsotsbank + UniCredit Bank Ukraine).
Source: UniCredit Research, UniCredit CEE Strategic Analysis.
Russia continues to adjust to stable rather than
consistently increasing energy prices. This adjustment
is aided by increased currency flexibility, a large stock
of foreign reserves and improvements in the inflationtargeting regime. Within this environment, real GDP
growth over the coming 1-2 years will be more muted
than in the past but remain positive.
From a medium- to long - term perspective, we
believe that the majority of Central and Eastern Europe
economies will continue to see an increase in living
standards as growth is supported by competitive labor
costs, flexible labor markets and a gradual recovery in
foreign direct investment.