The Romanian, Hungarian and Slovenian banking industries will remain unprofitable this year, as owners cut spending to boost capital during the financial crisis in the eurozone, according to Moody’s Investors service, quoted by Bloomberg. Moreover, according to Simone Zampa, a senior analyst for Moody's, the lenders in Romania and Hungary are being hurt by their reliance on funding from parent companies in Western Europe.

"The general operating environment for banks in Central and Eastern Europe is likely to remain challenging and will continue to be exposed to external risks mainly related to the euro area," said Simone Zampa, quoted by Bloomberg. "We expect the banking industries in Hungary, Slovenia and Romania to continue to report losses," Zampa added.

The banking industry in Romania reported losses in the last three years, while in Slovenia, increasing bad loans have prompted speculation the eurozone member state will need an international bailout.

A recent Ernst & Young forecast for the financial services sector in the eurozone sent the overall message that the worst is over and the situation will continue to improve in 2014. Reductions in assets held by banks are expected to be less this year than last, before returning to growth in 2014. Lending should also stabilize in 2013 before expected growth next year. More about the report here: Ernst & Young: Worst is over for the eurozone’s banking system.

Irina Popescu, irina.popescu@romania-insider.com

(photo source: Sxc.hu)