The central bank expected ever since the spring that the system would return to profit, on the back of a slowdown in non-performing loan accumulation and of a decline in the necessary provisions.
The profit at the end of November, however, does not signal a rebound of the banking business, considering private lending fell by more than 4% in the first eleven months of the year (or close to 6% in real terms).
Still, the system’s return to profit reflects some restructuring steps banks small and large have taken in the last few years, when they resorted to layoffs and branch closures to make sure costs match their new revenue generation capacity as closely as possible. BCR and BRD, the largest banks in Romania stepped into the black in 2013 after the losses of 2012, which made a big difference in the 2013 system-wide profit.
The non-performing loan ratio stood at 21.9% in November, having gone up to almost 24% on the corporate segment in October. Non-performing loans continued to increase in the fall, partly after the central bank pressured bankers to admit the true quality of some loans restructured a number of times in the past so as to make them appear viable.
The net profit after the first 11 months of 2013 takes the return on equity of the banking system to 4.8%. Return on assets stood at 0.53%, as the total assets amounted to EUR80 billion. (EUR1=RON4.5374)
(English version by Loredana Fratila-Cristescu)