This was the conclusion of the second day of the ZF Bankers Summit ‘15 event.
“The total loan volume on certain segments is in decline because many loans were outsourced or sold. What matters is the new loan volume,” said Andrei Caramitru, senior partner with advisory firm McKinsey, the first speaker in the second day of the ZF Bankers Summit ’15.
“It will take a while to return to a very positive trend. Now margin decline is greater than volume decline so revenue is decreasing.”
ZF Bankers Summit ‘15 was organized in partnership with Alpha Bank, MasterCard, Vodafone, CEC Bank, Imobiliare.ro, Garanti Bank, Marfin Bank and PwC.
Banks have to get used to low interest margins and therefore lower lending revenue, which forces them to look for other streams of revenue by boosting transaction services and to cut costs by finding new distribution channels.
“Banks are now faced with a fast-paced margin decline and this trend is becoming alarming. We are also worried about the relaxation of the lending structures because we’ve noticed loans are granted easily again,” said Mihaela Bitu, corporate vice-president with ING Bank.
The margins are going down now that interests are at an all-time low and banks affected by the significant decline in revenue are fighting for every customer and every bankable project.
This decline in margins might mean that for many small lenders, which have been unable to secure a critical mass of customers, it will no longer make sense to remain universal banks so they will decide to either specialize or sell their operations to larger rivals.
“There will be four or five universal banks left, which will concentrate three quarters of the banking system assets,” said Omer Tetik, chief executive officer of Banca Transilvania. Banca Transilvania took over the local operations of Volksbank last year and Tetik says it is still looking for acquisitions and opportunities.
(English version by Loredana Fratila-Cristescu)