The bad loans ratio advanced in October by 0.1 points to 21.7 pc, the head of the supervisory department of BNR, Nicolae Cinteza announced, adding that he is not worried by this figure and considers that things will be the same next year too.
Crediting will not be reinvigorated until the autumn of next year, because banks are unwilling to take new risks at a moment when an analysis of the quality of assets throughout the system will be made in 2014, followed by a stress test, the head of the supervisory department of the National Bank of Romania (BNR), Nicolae Cinteza announced during the Romanian Banking Forum.
“Until we know the results of the asset quality evaluation and the stress test, I do not see a resuming of the crediting process. I think that the crediting activity will not experience a reinvigoration until September-October next year,” Cinteza added. He explained that the Central Bank cannot demand banks to make supplementary provisions anymore, but can increase the cash reserve, which would be costlier for banks than provisioning. According to a survey conducted by BNR on the top 10 banks based on assets, expectations regarding the crediting offer in the last quarter of the year are on the decrease in the segment of real estate loans for the population, same as the financing for companies, while they are stagnating in the case of consumer loans.
According to the BNR official, the bad loans ratio advanced in October by 0.1 percent points against September, to 21.7 percent. “I think it will continue to increase next year too, at the same rate registered in October this year,” Cinteza added. The Central Bank expert also explained that BNR recently made some checks of the banking system, because there were suspicions that banks were repaying to quickly the resources attracted from mother-banks, and the suspicions proved to be true. According to Cinteza, there will be a shock during November-December, provoked by the verification made by the Central Bank, which wants that January 1, 2014 “finds banks as close to reality as possible.” “All in all, I think 2014 will be the worst year so far,” Cinteza concluded, because regulations will toughen and banks will be subject to stress test and asset analyse processes.
The banking system will end the year with a profit
The banking system will end this year with a profit, after the end of October found crediting institution with a consolidated positive result exceeding RON 1.6 bln, the head of the BNR’s supervisory department, Nicolae Cinteza announced. He explained that approximately half of the crediting institutions operating in Romania will have profit for the entire year, while the others will register losses, but the system as a whole will be profitable. Nonetheless, there also were situations when, although the bank posted very good indices in the past, at some moment it experienced an unprofitable activity which it covered with resources attracted from the population. With this regard, Cinteza gave as example the Romanian International Bank (RIB). On the same occasion, he announced that the Polish financial group Getin Holding finalised the takeover of the crediting institution and became full-right shareholder Wednesday, December 4. He mentioned that the RIB problem was brought to his attention two months ago by the shareholder of the bank, which said that he could not support the bank anymore.
Asked if other banks from the system are confronted with similar problems, Cinteza gave a negative answer, explaining that the solvency rate is so high and the risk taking at such a low level that he does not think that other similar situations could appear. In a different move, Cinteza confirmed the news posted by zf.ro that Volksbank Romania will soon sell some bad loans that affect its financial results, adding that the bank admits its loss. “This means that they can afford it,” Cinteza commented.