According to data published by central bank BNR, the banking sector had a negative return on equity of -0.34%, from -0.96% at the end of September. Return on assets was -0.04%.
It is not surprising that the system has remained loss making as BCR and BRD, the top two banks by assets, reported losses in the third quarter.
Banks continue to be affected by a rise of non-performing loans, with their share reaching 17.34% at the end of September, more than three percent higher than a year before. However, non-performing loans rose at a slower pace in the last two quarters, rising 0.6% between July and September.
The rise of non-performing loans became increasingly more visible as production of new loans remained very weak and many banks started to sell packages of loans that they cannot retrieve, adjusting their volumes on purpose.
Under the circumstances, the banking system ended the third quarter with assets of RON373.5 billion (around EUR82.6 billion), slightly up by 0.7% against the first half of 2012. Expressed in euros, overall balance sheet assets fell by over EUR1 billion in the third quarter, as the Romanian currency depreciated by 1.8% against the euro during the same interval.
In the past year the assets of the banking system went up by around 8.5% in lei, a minimum rise in real terms, though not so much based on the rise of lending, but rather on an increase in government bond portfolios.
As far as bank capitalization is concerned, the third quarter did not come with any changes, with the average solvency of the system staying at 14.6% for the third quarter in a row. The loan/deposit ratio has also stayed at around 120.6%, with banks failing to improve the coverage of loans through deposits attracted from clients, despite parent banks pressuring local subsidiaries to be less reliant on parent money.
(English version by Daniela Stoican)