Domestic banking system to return to profit this year, but not completely healed, Deloitte study shows

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In Romania, the banking sector is expected to get back to profit as of this year with profitability ratios of 2.7 percent for 2015 and 3.9 percent for 2016, but at a lower level than in most countries in Central Europe where the average ROE – return on equity ratio – is estimated at 8.1 percent -8.7 percent in 2015-2016, according to Deloitte study, quoted by Agerpres.

However, the study forecast that operational revenues will continue to drop and net provisioning will remain high.

Romania has a structural disadvantage given to the lack of scale of the banking sector, an unbalanced GDP structure and difficult environment for the recovery of bad loans, the study also reads.

“In the coming years, markets in Southern Europe, including Romania, should stabilize its quality assets and restore its ROE”, the study also shows. According to the quoted document, banks in Romania will focus on maximizing net profit, putting even more emphasis on the effective management of non-performing loans through activities supported by the collecting, restructuring / rescheduling and sale.

According to Deloitte, the lending will return to growth this year by 2.3 percent and 4.3 percent in 2016, while the deposits will increase slowly by 1 percent.


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