AN ANALYSIS OF THE SIMILARITY OF SELECTED BANKS IN CENTRAL AND EASTERN EUROPE

This paper compares analyses banks 'performance in three Central and Eastern European countries (the Czech Republic, Hungary and Poland). The aim of the paper is to make a comparison of the chosen banks and bank sectors in each country based on statistic methods. We provide peer analysis on the basis of financial indicators in the chosen banks. Those indicators encompass all key groups of financial indicators (profitability, property and capital, credits, costs and revenues, liquidity and absolute indicators). First, we undertake the peer analysis through the main components and the factor analyses. Second, we provide the cluster analysis. The method of the main components and the factor analysis will be used for the first viewing the data and to investigate the similarity of chosen banks. The cluster analysis will make relatively homogenous clusters (bank groups) that will show certain similarities in chosen indicators. The algorithm of the cluster analysis follows the hierarchical agglomerative clustering. All in all, 25 banks have been selected for the analysis (8 Polish, 8 Hungarian and 9 Czech banks). Clustering was selected based on the cophenetic correlation coefficient. Cophenetic correlation coefficient selected on the basis of achieving value approaching the value of the one furthest neighbour method. Determination of the relevant number of clusters was started from the schedule clustering which identified peace distance of approximately 50%. After the cluster analysis was done, there were six clusters done plus one cluster represented by one bank, which was Equa Bank, a.s., which was similar to the last cluster. The choice of the banks was determined by banks 'size in the countries of Central and Eastern Europe, because seven biggest banks of this region reside in these countries. We conclude that Czech and Polish banking sectors are stable unlike the Hungarian one, whose performance has been negatively affected by strengthening government regulation.