“The banking system was loss-making for three years in a row, between 2010-2012, and 2013 brought a slight increase. Nonetheless, the banking system is solid and in this context bankers need to boost lending activities. The regulation framework for banks is ever tougher,” stated Ghetea at an event organized by ARB.
Banks in the first eight months of this year posted overall losses of some RON100 million on the additional provisions they set up amid the cleanup process. In 2013, the banking system registered overall profit of just RON50 million.
In mid-2014, the banking system had a record solvency ratio of 17%, a comfortable level against the 10% minimum required by BNR. Bankers say they have the resources to speed up lending, considering deposits added RON11 billion in the past year, but they cannot find enough creditworthy clients for the time being, particularly among companies.
“Related to the conversion of foreign currency-denominated loans into lei ones, at various exchange rates, BNR made an assessment that shows the average solvency of the banking system will contract by 6%, which is very much,” added Ghetea.
In late September, banks had loans worth RON213 billion granted to the population and companies, down 4.5% from the year-earlier period. It is only leu-denominated loans that are going up, but the pace is not enough to offset the plunging foreign currency lending.
Ghetea also reminded that BNR announced, after the release of stress test results, that the subsidiaries of banking groups assessed and operating in Romania have capital adequacy ratios above the regulated thresholds.
ARB president also said that commercial companies’ insolvency is not only problematic, but it also requires the setting up of new provisions in the banking system. Five years ago, only one in 30 companies went insolvent, whereas at present the ratio is one to seven.
(English version by Catalina Apostoiu)