Banking Brief: CEE Banks Can Stomach Headwinds In The Auto Industry

This report does not constitute a rating action. That said, CEE banks are well-capitalized, highly profitable, and have improved asset quality metrics, which will provide a solid foundation if stress arises in their automotive portfolios. European original equipment manufacturers (OEMs) and suppliers are facing pressure due to weak car demand in key markets, insufficient cost competitiveness, and the difficult transition to electric vehicles (EVs), which are an important growth area for OEMs. The automotive sector accounts for approximately 5%-10% of the CEE region's GDP, with a gross value added (GVA) of 4.1% in 2023, compared with 3.1% for the EU. As of Sept. 30, 2024, about 5% of the working-age population in CEE countries was employed in this sector. Western

...January 14, 2025 This report does not constitute a rating action. While Central and Eastern European (CEE) banks have limited direct exposure to the automotive industry, current challenges in the sector could impair the broader regional economy and have ripple effects on banks' credit losses. That said, CEE banks are well- capitalized, highly profitable, and have improved asset quality metrics, which will provide a solid foundation if stress arises in their automotive portfolios....

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