Banks paid a profit tax of RON1.2 billion in 2018, up 76% from 2017. The profit tax paid by banks in 2018 was the highest of the last eight years and the second largest of the last decade. Only in 2009 did banks pay a higher profit tax than in 2018, that is nearly RON1.23 billion.
The return on assets (ROA) and the return on equity (ROE) stood at 1.59% and 14.85%, respectively, at the end of 2018, higher than the level recorded at the end of 2017 and comparable with the level reported for 2008, the year of economic boom and lending surge.
At the end of the first quarter of 2018, the local banking system reported a profit of nearly RON1.77 billion and by the end of the first half of 2018, the banks had doubled their profits, to nearly RON3.6 billion. The growth trend accelerated in the third quarter and boosted the profit to RON5.7 billion, according to central bank data.
The low level of expenses incurred by IFRS loan loss provisions newly setup was significantly reduced by the resumption of income provisions registered by nearly a third of credit institutions, including by several large-sized banks, mostly due to a higher recovery rate, against the backdrop of a higher market value of guarantees, the central bank said in the latest edition of a financial stability report at the end of 2018.
The increase in banks’ profits was backed by enhanced operating activities and higher interest rates, with new loan portfolios being on the rise.
Lending picked up speed in December 2018. Total private lending for consumers and companies saw a 7.9% growth in December 2018 compare with December 2017. The average growth rate of the private lending exceeded 6.6% in 2018, the best performance in six years.