The banking system in Romania and Hungary still remains on the risky side and with a negative outlook in 2014, according to a recent report by Fitch Ratings.

"The balance of risks remains negative in Hungary and Romania, and Fitch expects some adverse trends to continue in Bulgaria and Croatia, while Polish, Czech and Slovak banks should again outperform regional peers. Key sector metrics may stabilise following the recapitalisation exercise in Slovenia,” reads the recent report.

Fitch expects further deterioration of the Romanian banking sector’s reported asset quality to end-2013 and into 2014, accompanied by additional impairment provisions, putting pressure on regulatory capital.

The ratings agency also expects banks' profitability to stay weak in 2014, on a difficult business environment and fragile economic recovery. However, it expects for profitability to pick up slightly, as the non performing loans will stay flat.

More about this in Fitch's report here (in English, in pdf). 

editor@romania-insider.com