Profit of RO banking system shrinks by 22.5% yoy in Q3

The aggregated net profit of the Romanian banking system contracted by 22.5% in the third quarter of 2020 compared to the same period last year, to EUR 363 million, according to calculations based on data released by Romania's National Bank (BNR).

On the upside, the non-performing loan (NPL) ratio dropped to 4.1% at the end of September, from 4.4% three months earlier and 4.6% at the end of September 2019.

The capital adequacy rate (22.8%) remains at historic high levels and well above the requirements.

In the first three quarters of the year, the banking system's net profit contracted by 10.5% year-on-year to EUR 936 mln.

The profitability ratios have deteriorated by roughly one fifth.

The return on assets (ROA) dropped to 1.17% in Jan-Sep this year from 1.45% in the same period of 2019.

The drop mainly came from the provisions built by banks for expected deterioration of their loan portfolios and the effects of the loan repayment moratorium (which resulted in lower revenues).

The lending advanced at slow rates, and the loan-to-deposit ratio dropped to 69% at the end of September from 75% one year earlier - meaning that the banks are increasingly unable to use their resources.

The banking system's assets rose by 12.7% year-on-year in local currency and by 10% in euro to RON 533 bln (EUR 110 mln) at the end of September.

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