Despite some one-off measures, 2015 was probably the best year for the CE banking sector since the global financial crisis of 2009, according to Banking Outlook report from Deloitte Central Europe, a press release informs on Thursday.
“The study reveals significant progress of Romanian banks in solving their balance sheet legacies, thus creating a solid base for the ROE of the Romanian banking sector to normalize
Romania is expected to have the fastest growing economy in the CE region in 2016-2018. Following an acceleration to 3.8 percent in 2015, Romania’s GDP growth is expected to rise again to a minimum of 4.5 percent in 2016 before moderating to 3.3 percent in 2017-18.
“Although margin pressures and a series of structural deficiencies still persist and will continue to limit its upward profitability potential and its capacity to finance certain sectors or geographies, based on our study we expect that the Romanian banking sector is well equipped to support the mainstream Romanian economic growth and thus reach levels of 8-9 percent ROE in 2017-2018, compared with 7.8 percent the CE average expected for 2018,” Petrescu said.
According to her, the Romanian banking sector as a whole is well capitalized and its funding structure has improved, thus being capable to support the demands of a growing economy and become as attractive as its Czech and Polish peers on a longer term.
Deloitte specialists note that the banks will need to optimize processes and use of client and sectorial data to improve accuracy and timeliness of their decision making process – especially in corporate clients area.
The report also highlights some increase in M&A activity recently, with a higher number of transactions on southern markets (i.e. Hungary, Slovenia, Romania) and increased buying by private equity firms.
The region’s banking performance is better in a number of areas than for Eurozone banks – both ROE and loan growth are stronger in CE. While a slower expansion in the Eurozone is expected in 2016-2018, economic conditions should stay relatively favorable for CE banks, Deloitte report reads.
Deloitte CE Banking Outlook presents key challenges and individual factors impacting the banking industry in Central Europe. The report covers banking sectors in eight CE countries: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, Slovakia and Slovenia. The report tackles few aspects such as balance sheet, asset quality, profitability, strategy and digital maturity.