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Romanian banks post record profit in Q3


The aggregated net profit of Romanian banks surged to RON 2.88 bln (EUR 581 mln) in the third quarter of the year (Q3), 25% more compared to the same period last year, according to calculations based on data published by the National Bank of Romania (BNR).


For the year-to-date period January-September, the profit rose by 17.8% YoY to RON 7.57 bln (+18.2% YoY to EUR 1.53 bln).


The annualised return on equity (ROE) in January-September rose to 16.6%, a significant 3pp up from 13.6% in the same period last year.


The outstanding performance of the banking system was partly driven by the advance of lending activity, but the higher interest rates have also contributed. Thus, during the third quarter of this year, bank loan stock increased by just over 16% compared to the same period last year.


In Q3, the average interbank interest rate used by banks to set loan interest rates, 3M ROBOR (for funds with a 3-month tenant), soared to 7.7% – 5 times more compared to Q3/2021 (when it was 1.5%). Over the first 9 months of 2022, the average 3M ROBOR was 5.6% compared to 1.6% last year.


Stronger lending resulted in better use of resources. The loan-to-deposit ratio rose to 73.4% – the highest level since Q3 2019. The ratio, which reflects how efficient banks are in using the stock of deposits, plunged to 65.9% at the end of 2020 amid a significant accumulation of deposits during the lockdown period not matched by a similar pace of lending. But the Government stepped in and backed corporate lending under various schemes, and the ratio has improved.

The credit quality, as reflected by the non-performing loan (NPL) ratio calculated under EBA methodology, improved as the NPL ratio dropped to 2.8% at the end of Q3, from 3.0% at the end of Q2 and 3.7% at the end of Q3 last year. The ratio has constantly decreased since 2014 when first calculated – with a slight increase in mid-2020 before the moratorium on bank loan repayment enforced by the National Bank of Romania (BNR).