While assets went up to a decade high, the loan-to-deposit ratio fell to a new low, solvency dropped and the non-performing loan ratio fell, Romania’s central bank’s statistics show.
The results banks posted show that the debt discharge law and the law on the conversion of the Swiss franc loans at the exchange rate valid at the time the loans were granted, which have both reached the Constitutional Court, did not ultimately affect lenders as expected.
The rise in banks’ profits was made possible by the improvement in portfolio quality and the decline in provisions, after they got rid of a significant amount of non-performing loans, as well as by the new loan sales, which went up in some cases.
The loan-deposit interest margin and the increase in fee and commission income also helped the banks’ bottom line. A one-off contribution to profit in 2016 came from the sale of the Visa shares, as well.
The banking system profit had reached a record high in 2015, comparable to the boom year 2008 (RON4.7 billion), according to the initial estimates. Final data released by the central bank, however, showed lenders made RON4.5 billion profit in 2015 and the record high was partly because of the takeover of Volksbank’s operations by Banca Transilvania.
The loan-to-deposit ratio dropped to a low of 79.3% in 2016, as banks had resources attracted from the local market to boost lending.
Private lending growth rate across the banking sector was slow in 2016, only 1.2%, so the volume of loans reached a mere RON220.1 billion.
Banking system assets went up to RON393.9 billion at the end of 2016, RON16.7 billion more than in 2015.
NPL ratio dropped to 9.46% in 2016 from 13.5% in late 2015, according to the central bank data using the new definitions of the European Banking Authority.
(English version by Loredana Fratila-Cristescu)