Romania's banking system remains profitable despite EUR 114 mln June loss

Romania’s banking system lost EUR 114 mln in June, remains profitable

Newsroom 08/09/2014 | 19:03

Banks in Romania have lost around EUR 114 million in June, reducing their combined profits to EUR 47.5 million after the National Bank of Romania (BNR) has asked lenders to remove some bad loans from their balance sheets, which lead to a reduction of over EUR 455 million in provisions in the same month, reports Mediafax newswire.

According to data by BNR, the lowering of provisions for bad loans has started in May and has accelerated in June, when they fell from EUR 9.96 billion to EUR 9.32 billion under Romanian accounting standards (RAS) and from EUR 8.3 billion to EUR 7.6 billion under IFRS standards.

BNR data show that lenders will have to further get rid of bad loans, which could see banking system fall bank in the red in September, said Mediafax. Banks returned in the black last year, when they reported a combined profit of around EUR 11 million after two consecutive years of losses.

The rate on non-performing loans for the system has slightly decreased to 19.2 percent in June from 20.3 percent in the previous month. Both the solvency rate and the core-tier 1 capital of the banking system have increased to 17 percent and 14.9 percent, respectively, compared to last year.

The exposure of Romanian subsidiaries of foreign lenders against their parent-banks has reached EUR 13 billion in June. It fell by EUR 9.1 billion compared to December 2008, when the financial crisis started to unravel in Romania. The reimbursement of financing lines to parent banks amounted to EUR 1.2 billion in the first semester.

However, banks have injected close to EUR 160 million worth of fresh capital into the system in the first half of the year, with banks holding EUR 5.9 billion in total capital.

The number of banking staff has been cut by close to 200 to 58,009, while the number of subsidiaries has lost 139 units to 5,353.