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Isarescu :Prudential, financial position of Romanian banking sector is adequate, increasing risks locally, internationally
The prudential and financial position of the Romanian banking sector is adequate, but the risks are increasing both locally and internationally, the governor of the National Bank of Romania (BNR), Mugur Isarescu, said on Thursday, during the conference "investments in difficult times: how can Romanian companies prosper in the new context?".
"The total capital ratio remained adequate, above the EU average, but the capital buffer fell once with the market value, due to the rapid rise in interest rates. Asset quality continued to improve, with the non-performing loan ratio falling to European levels and coverage of non-performing loans by provisions remaining at significantly higher levels than the European average; profitability has increased. However, the Romanian banking sector faces a number of vulnerabilities: expectations of a higher risk of loan defaults in the private sector against the backdrop of worsening macroeconomic conditions, the uncertainty regarding future developments and the increase in debt service due to higher interest rates, the close connection between the banking sector and the government sector and the polarization of credit institutions according to size," stated Mugur Isarescu.
According to the governor of the BNR, the slowdown in lending, which began in the second half of 2022, was also due to the increase in financing costs amid the tightening of both monetary policy and credit standards.
He said that, with regard to the challenges posed by climate change and energy efficiency, from May 2022, the BNR began to collect information on green loans from banks, and the data shows that, between May and September 2022, companies contracted green loans totaling 976 million RON (0.56% of the corporate loan portfolio).
Isarescu declared that for 2022, the annual growth of real GDP is estimated to reach around 5%, lower than that recorded in 2021.
The governor of the BNR emphasized that the institution aims to anchor inflationary expectations in the medium term, to return the annual inflation rate to the target, in a manner that leads to sustainable economic growth.