Poland's Bank Pekao claims title of best-performing European bank stock in 2021

Poland's Bank Polska Kasa Opieki SA was the best-performing stock among Europe's 50 largest banks in 2021, while Greece's Piraeus Financial Holdings SA had the worst annual share price return, S&P Global Market Intelligence data shows.

The Polish lender, better known as Bank Pekao, registered a share price return of 104.91% as of Dec. 28, 2021. Its stock rose steadily throughout the year after almost halving in value in 2020.

In March 2021, Pekao unveiled a new strategy through which it will aim to reach return on equity of more than 10% and reduce its cost-to-income ratio to 42% by 2024. The bank has indicated that it aims to earmark 75% of its 2021 earnings for dividends.

UniCredit SpA was the next-best performer with an 81.52% share price return. Andrea Orcel took over as CEO in April and has since walked away from a potential merger with Banca Monte dei Paschi di Siena SpA and laid out an overhaul of the Italian lender that includes heavy investment in digitalization and significant shareholder distributions. Nearly 30% of the stock's yearly gain was made since details of the plan were first reported in late November.

At the other end of the table, Piraeus's stock lost 93.91% of its value during the year, Market Intelligence data showed. The Greek lender has been focused on reducing its bad loans and improving profitability. Much of the decline came in the first quarter, including a precipitous drop in the days following the bank's release of its full-year 2020 results and the announcement that it would sell its merchant acquiring business unit.

Turkish banks Türkiye Vakiflar Bankasi Türk Anonim Ortakligi, Türkiye Halk Bankasi A.S., Akbank TAS, Türkiye Is Bankasi A.S. and Yapi ve Kredi Bankasi A.S. were also among the worst-performers in the sample amid central bank instability and an ongoing currency crisis in the country.

Swiss lender Credit Suisse Group AG, which spent much of the year managing the fallout of its dealings with the collapsed Archegos Capital and Greensill Capital (UK) Ltd., as well as a fraudulent loan case in Mozambique, recorded a 20.29% share price drop in the year to Dec. 28, 2021.

A comparison of indexes shows that European bank stocks outperformed those in Asia but lagged behind U.S. lenders. The S&P Europe BMI Banks index returned 29.42%, while the U.S.-based S&P 500 Bank index returned 35.93%.