Romanian banks’ profits up 5% y/y in 2024 despite weaker Q4

The Romanian banking system’s aggregated profits increased by 5.4% y/y to RON 14.0 billion (EUR 2.8 billion) in 2024, after it contracted by 19.2% y/y to RON 2.35 billion (EUR 473 million) in Q4, according to calculations based on profitability ratios published by the National Bank of Romania (BNR).

The return on assets (ROA) ratio deteriorated to 1.68% in 2024 from the record 1.80% in 2023, but it remains the second-highest in the past decade.

Seasonally, the banks’ profit was lower in the last quarter of the year, but in 2024, the decline was more marked.

The return on equity (ROE) ratio followed the same pattern and eased to 18.4% in 2024 from 20.1% in 2023, staying at a high level in absolute terms.

The slight decline in the banking system’s profitability last year occurred despite the steady increase in the loan-deposit interest rate spread, which reached 3.34 percentage points in December 2024 (for the stock of local currency loans and deposits) from 2.96pp in December 2023 and 2.90pp in December 2022. The banks have widened the spread despite the decline in overall deposit and loan interest rates over the past two years. Indeed, the spreads were wider before 2022 (when inflation spiked), namely 3.82pp in December 2021.

In terms of asset quality, the non-performing loan ratio (NPL) edged up marginally to 2.5% at the end of 2024, from 2.4% in 2023 – remaining for five consecutive quarters within a narrow band at a reasonable level.

The aggregated assets of the banking system increased by 9.8% y/y to RON 882 billion (EUR 177 billion) at the end of 2024, while the annual rise of the average assets advanced by 12.8% y/y (to RON 836 billion).

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