Romania: Banking sector robust but profitability low
Overview:
Despite the significant challenges posed by the global economic crisis, the Romanian banking system has proved robust. Bank capitalisation has increased and liquidity has remained ample. Asset quality has inevitably deteriorated because of increase credit risk and the FX indebtedness of unhedged borrowers must continue to be monitored. The need to set aside more resources to cover a higher share of non-performing loans has necessarily impacted temporarily on bank profitability. Bank lending standards have been tightened during the crisis but there are no signs of an increase in lending. The National Bank of Romania (BNR) has conducted a series of stress tests and believes the leading banks are sound.