In late September 2014, a number of 42 banks managed assets worth 351 billion lei, up 18% from the level of September 2008. The asset increase was rather triggered by leu devaluation, but also by the widening portfolios of government paper, not loans.
The bad loan ration, an indicator showing the health of banks’ balance sheets, stood at 15% in September, from 6.5% in 2008, when this indicator was published for the first time. NPLs had climbed to 22% at the start of the year, but have declined in recent months amid a broad balance sheet cleaning process.
A positive effect of the crisis was banks’ move to strengthen their capital, as shareholders had to come up with money to cover losses and keep performance indicators within legal limits. The overall solvency rate peaked at 17% in late September, up from 12% in the same month of 2008.
In recent years, banks have had to rely more on local funding sources, as they lost part of financing lines from their parent companies.
Deposits surged by 50% in the past six years, to RON218 billion, while financing lines from parent banks dwindled by 40%, to EUR13 billion.
Loans dropped by the equivalent of EUR50 billion, so that the loan/deposit ratio became subunitary this year, for the first time since 2007.
One fifth of banks’ employees vanished during the crisis period as bankers had to slash costs amid the low loan demand and falling interest income. At the end of September, 5,300 branches and 58,000 employees were left.
The banking system had three years of losses in 2010-2012 because of NPLs and bankers are readying for another loss this year, triggered by the move to clean up balance sheets.
In the first nine months of this year, losses reached RON1.6 billion. Overall losses posted in 2010-2012 hit RON3.6 billion.
Banks’ ranking also changed. The top two positions are still held by BCR and BRD, but these banks’ market shares narrowed during the crisis period. Banca Transilvania comes third now, a position held in 2008 by Austria’s Volksbank. Now, Volksbank is readying to be taken over by Banca Transilvania.
(English version by Catalina Apostoiu)