Worst May Be Still To Come For Romanian Banks – Ctrl Bker

Speaking at a seminar Wednesday, Cinteza said the weight of non-performing loans in the Romanian banking system might increase further in 2010.

„In my opinion, the 2010 year will be worse than 2009 and the first six months of 2010 will be decisive for the Romanian banking system. Fortunately, we have a high solvency ratio, of 13.7%, but this also indicates limited capability to make profit,” Cinteza said.

The central bank’s official said the banking system was able to report profit in the first nine months of 2009 thanks to a regulation allowing lenders to cut provisions on non-performing loans by 25% of the guarantee value.

According to Cinteza, the central bank’s amendment was the most significant legal change in the banking system in 2009. Without it, the banks would have surely report losses in the first nine months, he added.

„By October, we can see a slight recovery and the profit is somewhat rising,” Cinteza said.

Romanian lenders reported combined profit of RON680 million in the first nine months, down nearly five times from the same period a year earlier, according to central bank data.

In the third quarter alone, the combined profit climbed six and a half times to RON590 million from RON90 million in the first six months.

The banks’ provisions amounted to RON12.9 billion in the first nine months, up nearly 70% from the end of last year.

Overall net assets rose stood at RON322.46 billion at the end of September, 2.55% higher compared with the end of 2008.

End September, Romanian banking system’s solvency ratio was at 13.73%, similar to the 13.77% ratio recorded in December 2008.

In 2008, Romanian lenders reported combined net profit of RON4.4 billion.