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August 14, 2022

Austrian Central Bank: Romanian banking system ravaged by crisis

According to the National Bank of Austria’s latest report on financial stability, non-performing loans make up a quarter of the loans given by Romanian banks, Money.ro informs. The Romanian and Ukrainian banking systems are the region’s worst hit. In Poland and Hungary non-performing loans represent only 6-7 per cent of the banks’ total assets. In 2008 the Romanian banking system was one of the most profitable in Central and Eastern Europe, with a return on assets of 1.6 per cent. The bank analyzed the main regional markets on which Austrian banks are active. In 2009 the return on assets dropped eight times and Romania became the second most unprofitable country for bankers after Ukraine, a country whose financial system has major problems. And things could get worse for financial institutions in Romania.

Erste: Romanians’ available incomes to drop by 10 pc this year and by 0.8 pc in 2011

According to an Erste Bank release, in Romania the population’s available incomes will drop by approximately 10 per cent in real terms this year and by another 0.8 per cent in 2011 despite the fact that workforce competitiveness will hike available incomes in the region by 1 – 2.5 per cent.

Available incomes, which represent on average 65 per cent of GDP, were recently affected by the rise in unemployment and the reduction of other incomes (rents, profits, and incomes from interest). Against the backdrop in which the adverse effect of the labor market’s deterioration was partially compensated by the slight rise in pensions and other social benefits, the available income dropped by a level smaller than the one that would have resulted from the employment cuts. Analysts anticipate that the available incomes will grow by 1 – 2.5 per cent in the region next year when considering the productivity growth, the strong salary hike outlook in the private sector and the fact that the growth in unemployment is approaching its peak. Specialists also note that the consumption’s evolution is powerfully influenced by the hiking of available income, which means that next year the consumption will grow by 1 – 2.5 per cent in real terms at regional level. In the case of Romania Erste anticipates a household consumption growth of approximately 1 per cent in 2011 although it estimates a drop in available incomes.

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