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Bucharest
September 22, 2019
ECONOMY FINANCE&BANKING

Banking system’s profit on the rise


• Greek-capital banks show no risks

Romanian banks registered a profit of RON 2.25 bln in the first nine months and will close on profit, but the profit’s level will depend on the provisions that banks will have to set up in the last quarter of the year, the head of the National Bank of Romania’s Supervisory Directorate stated at a special conference last Friday, Agerpres informs.

“After many years, it has been a good period for the banks. It is the first time when profit is registered, one that in my opinion will stand at the end of the year too. There will still be some provisions that have to be registered in the fourth quarter,” Cinteza stated, pointing out that 15 banks registered losses and 24 registered profit at nine months.

The BNR Director also stated that he asked the banks for supplementary data on loan restructuring, in order to see whether it was correctly done. “I have a suspicion. IFRS provisions have dropped; there was no write-off, no loan sales. The drop in provisions is not reflected in profit growth, against the backdrop in which the stock of loans experienced massive restructuring and refinancing. It could be that the shareholders’ pressure determined the banks to accept restructuring that they otherwise would not have,” Cinteza said.

He added that around 11 per cent of the loans (RON 24.9 bln) experienced restructuring, however there were cases in the past too when a loan was restructured 20 times and nothing was paid. “I have asked the banks to file a history of all restructured loans. I’m afraid we will find loans with 20 restructurings, without them collecting at least the interest,” Cinteza added.
On the other hand, the non-performing loans rate continued to drop, reaching 12.33 per cent in September based on European Banking Authority methodology.

Nevertheless, the Romanian non-performing loans rate continues to be the highest in Europe, and the degree of provision coverage is still the highest in Europe (58.05 per cent).
However, the BNR Director claims that Romanian banks are very well capitalized, the rate of own funds being even “incredibly high and unprofitable for the banks,” namely 18.7 per cent.

In what concerns future risks for the system, Nicolae Cinteza stated that the biggest risk continues to be the external one caused by the crisis in Greece, which is “far from dying out,” and it invariably affects Greek-capital banks in Romania too, which are basically isolated from the other banks in the system, several banks deciding to withdraw their deposits.

“We had to set up a treasury with the four Greek banks. The other banks isolated them, unjustifiably! Solvency, from the point of view of the origin of the Greek banks’ capital, is extraordinarily good. On September 30, it stood at 18.7 per cent within the system, while Greek banks registered 19.45 per cent, Austrian banks 18.25 per cent, French banks 17.15 per cent and
Italian banks 13.34 per cent. I repeatedly announced that BNR is ready to back any of those banks’ liquidity needs. Nobody paid attention. All banks closed their lines with Greek banks, they were refusing any contact with them,” Cinteza added.

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