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Romanian banks' H1 profit falls 23.4% y/y, NPLs drop

Romanian banks' H1 profit falls 23.4% y/y, NPLs drop Romania's central bank - BNR

BUCHAREST (Romania), August 22 (SeeNews) - The combined profit of Romanian banks fell by 23.4% year on year to 2.76 billion lei ($648 billion/584 million euro) in the first half of 2019, central bank data showed on Thursday.

The non-performing loan (NPL) ratio of Romania's banking system decreased to 4.74% at the end of the first half of 2019, from 5.71% a year earlier, figures showed.

Return on assets (ROA) and return on equity (ROE) both ended the first six months of the year in positive territory - at 1.21% and 11.58%, respectively.

Romanian banks' total net assets increased to 458.8 billion lei at the end of June 2019 from 434.6 billion lei a year earlier.

The Romanian banking system's capital adequacy ratio fell to 19.60% at the end of June from 20.09% at the end of last year.

There were 34 banks operating in Romania at the end of June 2019, compared to 35 in June 2018. The change reflects the merger of Banca Transilvania [BSE:TLV] with Bancpost in October 2018. Banca Transilvania acquired Bancpost from Greece's Eurobank Group in April 2018.

Banca Transilvania was the largest bank in Southeast Europe (SEE) in 2018, according to the TOP 100 Commercial Banks in SEE ranking compiled by SeeNews in June.

According to Banca Transilvania economists, the overall performance of Romania's banking sector is expected to improve in the third quarter.

"We expect an improvement in the financial performance of the banking sector in Q3, a development influenced by the decline in interest rates on government securities. However, we draw attention to the challenges that the internal banking sector will face in 2020: the end of the post-crisis external economic cycle and the prospect of adjusting macroeconomic imbalances internally," Banca Transilvania economists said in a note on Thursday.

The combined profit of Romanian banks rose 35% year-on-year to 7.17 billion lei in 2018, as the NPL ratio dropped to 4.95%.

(1 euro= 4.7274 Romanian lei)