At end-November 2021, the net profit of the local banking system reached RON7.558 billion, according to a presentation by Romania’s central bank governor Mugur Isarescu.
In the first nine months of 2021, the entire Romanian banking system, made up of 34 banks, had generated record high net profit of over RON6.4 billion, up over 40% year-over-year, being the best nine-month profit for Romania’s banks.
The gain of the first nine months of 2021, of RON6.4 billion, had already topped the entire 2020 profit of around RON5 billion, as well as the entire 2019 gain, of RON6.3 billion.
Banks have around 52,000 employees left and the average salary stands at RON5,700, hence the level of annual wage expenses revolves around RON6 billion, lower than banks’ profit.
The question is wherefrom did banks generate the record high profits during the pandemic given that interest rates were still low last year.
So far, the high gains obtained by lending institutions have been generally correlated with lending and economic growth as well. However, a major, one-off, influence over the increase in banks’ gains in 2021 came from dwindling risk costs.
(English version by Catalina Apostoiu)