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Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at iulian@romania-insider.com. 

 

Study: Romanian banks’ NPL ratio not likely to hit 7% under worst-case scenario

The lifting of the COVID-19 moratoria extended by the Romanian banks to clients in trouble will increase the average non-performing loan (NPL) ratio by 3pp under the worst-case scenario.

The estimate is included in a study carried under the supervision of Daniel Daianu, head of the Fiscal Council and former member in the board of Romania's National Bank (BNR), in line with the procedures of the European Banking Association (EBA).

At this moment, only 10% of the loans placed under the moratoria are still subject to such a facility, according to data included in the study, Economica.net reported.

The NPL ratio has declined to 3.8% at the end of 2020 from 4.1% one year earlier, meaning that the impact of the problem-loans generated by the crisis and currently covered by the loan repayment moratoria will predictably not exceed 7%. This will keep the indicator in the so-called "yellow area" - somewhere between the safe "green area" and the "red zone" that indicates problems.

Under the European scoreboard, the health of the Romanian banking sector deteriorated slightly in December 2020 compared to December 2019, the study shows. The aggregate net profit amounted to RON 5.15 bln (EUR 1.1 bln), 23% lower than in the previous year. Three factors contributed to this: the establishment of provisions, low interest rates, and the decrease of revenues from fees and commissions.

While the Romanian banking system has weathered the crisis on average, the small banks are more exposed to risks - the study also reveals. The operational efficiency remains problematic for small banks (representing half of the total number of active credit institutions at the end of 2020), all the more so if the high costs imposed by the need to increase investment in the IT component are taken into account, the document reads.

iulian@romania-insider.com

(Photo source: Dreamstime.com)

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Profile picture for user iuliane
Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at iulian@romania-insider.com. 

 

Study: Romanian banks’ NPL ratio not likely to hit 7% under worst-case scenario

The lifting of the COVID-19 moratoria extended by the Romanian banks to clients in trouble will increase the average non-performing loan (NPL) ratio by 3pp under the worst-case scenario.

The estimate is included in a study carried under the supervision of Daniel Daianu, head of the Fiscal Council and former member in the board of Romania's National Bank (BNR), in line with the procedures of the European Banking Association (EBA).

At this moment, only 10% of the loans placed under the moratoria are still subject to such a facility, according to data included in the study, Economica.net reported.

The NPL ratio has declined to 3.8% at the end of 2020 from 4.1% one year earlier, meaning that the impact of the problem-loans generated by the crisis and currently covered by the loan repayment moratoria will predictably not exceed 7%. This will keep the indicator in the so-called "yellow area" - somewhere between the safe "green area" and the "red zone" that indicates problems.

Under the European scoreboard, the health of the Romanian banking sector deteriorated slightly in December 2020 compared to December 2019, the study shows. The aggregate net profit amounted to RON 5.15 bln (EUR 1.1 bln), 23% lower than in the previous year. Three factors contributed to this: the establishment of provisions, low interest rates, and the decrease of revenues from fees and commissions.

While the Romanian banking system has weathered the crisis on average, the small banks are more exposed to risks - the study also reveals. The operational efficiency remains problematic for small banks (representing half of the total number of active credit institutions at the end of 2020), all the more so if the high costs imposed by the need to increase investment in the IT component are taken into account, the document reads.

iulian@romania-insider.com

(Photo source: Dreamstime.com)

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