The rise in profits banks posted in the first half was because portfolio quality improvement and provision decline, after they got rid of a significant chunk of non-performing loans, as well as because of the increase in new loans. The loan-deposit interest margin and the increase in fee and commission income also helped the banks’ bottom line. A significant contribution also came from the sale of the Visa shares.
“I think the upward trend will continue in the second half, as swell. There is every reason for this trend to continue by yearend. There will be good results in the second half, too,” says economic analyst Aurelian Dochia.
“The full-year result will be good and may be around or even higher than the 2008 level. Lending will probably continue to grow. Except for the Visa influence, which was only a first half thing, the other factors may continue to grow.”
The first half was the best since 2008 for new home loans and second best for consumer loans. Local lenders approved more than RON15 billion worth of new leu and euro-denominated loans for consumers in the first half.
The banking system profit stood at about RON1.17 billion at the end of the first quarter, so it managed to double it by the end of the second quarter.
The rise in lending took the banking system assets to RON380 billion, the solvency ratio remained high, at more than 19%, and the non-performing loan ratio continued to shrink towards 11% in the first half.
Banks posted RON4.5 billion profit in 2015, according to Romania’s central bank data, close to the 2008 record. (EUR1=RON4.4679)
(English version by Loredana Fratila-Cristescu)