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March 31, 2023

Banking system losses tripled

Local currency is gaining a boost.

The banking system’s net profit has dropped from RON 373 M in March to RON 94.5 M at the end of June, against the backdrop of threefold growth in the cumulated losses of banks that posted negative results, Mediafax informs.
According to the data centralized by the National Bank of Romania (BNR), 22 banks had a cumulated profit of RON 1.076 bln at six months, up by 56 per cent compared to the profit reported at the end of Q1 this year. Approximately two thirds of that profit is concentrated in four large banks.

At the same time, 20 banks reported total losses of RON 982 M, approximately three times higher than the ones reported in the first three months. On the other hand, in June the banking system recovered the losses it reported in May back when the data pointed to net cumulated losses of RON 56 M. In the first six months the banks’ provisions climbed by RON 3.4 bln, from RON 23.63 bln to RON 27.02 bln.

For the first time since 1999, the banking system reported a net loss of RON 516 M (rectified data) at the end of last year, in contrast to a net cumulated profit of RON 815 M in 2009. 20 banks reported profits and 22 posted negative results.

In other developments, yesterday’s reference exchange rate posted by BNR dropped by RON 0.013 to RON 4.2430/EUR in a market characterized by low trading volumes, the appreciation of the RON and that of regional currencies continuing to be backed by an expected solution for the crisis in Greece. The RON appreciated against the USD too, the reference exchange rate dropping by RON 0.0143, from RON 3.0012/USD to RON 2.9869/USD.

The RON’s appreciation was more visible against the CHF, the reference exchange rate dropping by RON 0.0259, from RON 3.66/CHF on Tuesday to RON 3.6341 on Wednesday. Thus, the RON/CHF exchange rate dropped for the second day after reaching a historical high of RON 3.7187/CHF on Monday.

The first transactions on the interbank market were made at an exchange rate of RON 4.2490-4.2505/EUR, slightly below the RON 4.2540-4.2580 levels reported at the end of the previous session. In the first hour of trading the parity dropped to a minimum level of RON 4.2390-4.2400/EUR.

Quotations subsequently returned above the RON 4.24/EUR level and by mid-session varied slightly above that level in the context of low trading volumes. Shortly after 1 PM, when BNR announced the reference exchange rate, banks were trading EUR at a price of RON 4.2430-4.2450, RON 0.011-0.013 lower than the level reported at the closing of the previous session.

Thus, the RON appreciated by approximately 0.2 per cent against the EUR, in line with the PLN and HUF. When the trading session was halfway through in Bucharest, the PLN and HUF had appreciated by 0.2 per cent and 0.4 per cent respectively.

The appreciation of the RON and of other regional currencies was determined by investors’ optimism, the latter expecting the finance ministers of Euro Zone states to find a solution for the crisis in Greece and thus to bring financial stability to the whole region.

The interest rate posted by commercial banks for one-day deposits rose slightly on Wednesday too, to 2.09-2.59 per cent, after reaching a level of 2.14-2.64 per cent on Tuesday. On the other hand, the returns posted for one-week deposits have grown from 2.53-3.03 per cent to 2.61-3.11 per cent since Saturday marks the beginning of a new period in which the banks have to build up their minimum required reserves as required by BNR.

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