Romanian banks have become some of the most profitable lenders in the European Union, after having cleaned their balance sheets of bad loans.

The local banking system had a ROE indicator (return on equity) of 13.5% in the first quarter of this year, more than double compared to the EU average. The return on assets reached almost 1.59%, four times higher than the EU average, according to data centralized by the European Banking Authority (EBA), quoted by local Ziarul Financiar.

Banks in the euro zone control almost 80% of the Romanian banking system, but the local subsidiaries are more profitable than some of the large banks in Europe. For example, the banks in Austria, France, and Italy have profitability rates that are 2-4 times lower than in Romania and below the alert level of 6% set by the European Banking Authority.

The average ROE at EU level amounted to only 5.8% at the end of the first quarter. Banks in Poland have a return on equity of 9.8%, while in Hungary and the Czech Republic profitability stands at 11.3%, respectively 12%.

Starting 2008, the Romanian banking system has experienced four years of profit and four years of losses. In 2015 the banks returned to profit, with a record profit of about EUR 1 billion.

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editor@romania-insider.com