“I expect bank profitability to decrease, because of high costs, of the higher risks in Romania compared with the countries in the region and because of the weak demand,” said Rasvan Radu.
Radu said local banks are under pressure to reduce costs, after having booked provisions for bad loans in 2010. Last year, the banking system has switched to losses for the first time in 11 years, on the backdrop of a 57% increase in provisions.
End-June, the banks reported a combined net profit of 94.5 million lei (EUR21.8 million), from RON373 million in the first quarter. According to central bank data, 22 out of 40 active lenders reported profit in the second quarter.