Romanian banks confirm robust profitability in Q1 despite sluggish credit expansion

Romanian banks’ aggregated net profit increased by nearly 11% y/y to RON 3.7 billion (EUR 748 million) in Q1, marking a new record, according to data published by the National Bank of Romania (BNR).

The aggregated banks’ assets increased by 15% y/y to RON 823 billion (EUR 166 billion) at the end of March – three times faster than the stock of non-government loans – in the quarter.

The equity increased by 20% to RON 75.2 billion (EUR 15.1 billion) at the end of March, boosted by capital consolidation and accumulation of profits.

The larger denominators resulted in slightly lower profitability ratios in Q1 this year compared to the same period last year: 1.8% return on assets (ROA, 1.9% in Q1, 2023) and 19.8% return on assets (ROA, 21.3% in Q1, 2023).

On the upside, capital adequacy increased to 22.9% in Q1 this year from 21.6% in the same period last year.

The loan-to-asset ratio (66%), which reflects how much of their resources the banking system is using to extend loans, dropped to the weakest level since the COVID-19 crisis froze lending in a first stage before the Government intervened with targeted guarantees.

The non-performing loan (NPL) ratio dropped to 2.4% at the end of March 2024, down from 2.7% one year earlier.

(Photo source: Inquam Photos/Octav Ganea)