Romanian banks’ profitability last year, still inferior to those demonstrated by the non-financial companies, was owed to the massive lending activity besides the reversal of loan loss provisions and cost-efficiency driven by digitalization, the Romanian Banks’ Association ARB explained.

Furthermore, 60% of the profits were used to boost the banks’ capital, ARB said.

The aggregated profit of the Romanian banking system surged by 35% y/y to a new record (RON 13.7 billion or EUR 2.76 billion) in 2023. 

The profitability ratios improved significantly as well, with the return on assets (ROA) achieving 1.8% in 2023 from 1.5% in 2022. The return on equity (ROE) reached 20.4% in 2023 from 16.4% in 2022.

In contrast, the stock of loans increased by only 6.4% y/y at the end of 2023, just below the headline inflation rate.

The Romanian banks extended “new loans” in the amount of RON 140 billion (EUR 28 billion), according to ARB. However, this includes the refinancing, which constituted the largest part of the Romanian banks’ activity last year.

iulian@romania-insider.com

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