Profits of banks present in Romania totaled EUR 517 mln in 2010, says KPMG

The leading 15 European banks made collective profits of EUR 85 billion in 2010, double the amount recorded in 2009 and up from losses of EUR 25 billion in 2008, according to a new report on European banking from KPMG.

The report finds that the performance of retail and commercial banking in 2010 has improved amidst rowing emerging market activity and economic recovery, while banking revenues were off slightly by 2 percent to EUR 121 billion. A substantial amount of the banks’ increased profits is the result of a significant decrease in loan impairment charges. Impairments in retail and commercial banking fell 27 percent to EUR 79 billion while in investment banking they fell by 29 percent to EUR 80 billion.

Cezar Furtuna, Financial Services Partner in KPMG Romania, considers that the Romanian banking system had a healthy growth in profits back in 2008, when banking systems in Western Europe were struggling, but the recession that started to bite since 2009 lead to a general slow-down in economic activity and to decreasing profits for 2009 and 2010. Furtuna added that only the full 2011 year results will show whether Romanian banks will reverse the current trend, but this is will depend on the speed of Romania’s economic recovery and on the development of the sovereign debt crisis.

The collective IFRS profits for 25 Romanian banks stood at EUR 517 million, down 27 percent from the 2009 level. These banks made up EUR 71 billion in assets. According to the same report, only 15 of the 25 banks considered recorded profits in 2010. Another 11 banks were profitable in both years but only 4 of them had increases in profits as compared to 2009.

Cezar Furtuna considers that Romanian companies and individuals have serious problems in reimbursing loans taken out in Euros, Swiss Francs or other foreign currencies. Furtuna added that the number of non-performing loans has increased considerably since 2009.

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KPMG is a global network of professional firms providing Audit, Tax and Advisory services. In Romania and Moldova, KPMG operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chisinau.

Ovidiu Posirca