Intellinews Romania Financial Sector Report - February 2012


March 12, 2012
33 Pages - SKU: ISI3810444
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Executive summary
I. Macroeconomic Outlook Emerging Europe Banking – still counting, sharing losses.
Foreign banks increase four times exposure to Emerging Europe in 2003-2008.
Losses were generally associated with GDP contraction.
Lending slowdown caused by demand-side drivers also, besides visible supply-side caution.
Disintermediation also reflects broken trust.
McKinsey argues top European banks create little value…
…but this depends on the definition and coverage of value creation term.
Romania’s banking system in regional perspective.
Foreign banks’ exposure vis-à-vis Romania’s banking system down 22% three years after credit crunch.
Bank lending gains ground modestly in Romania for second year in row in 2011, but stays in the red for the second year also.
Bulgaria’s banking system avoids losses but intermediation lingers; past experience with banking crisis might have helped.
Hungary’s banking system faces high costs of massive CHF loans after promising performances so far.
A. Growth Outlook
Romania’s GDP grows 1.9% y/y in Q4, up 2.5% in 2011.
EC downgrades Romania’s 2012 GDP projection, warns of downside risks
EBRD cuts Romania’s 2012 growth projection to 0.8% on base effects.
World Bank sees Romania’s economic growth decelerating to 1.5% in 2012.
B. Relationship with IFIs IMF confirms Romania's funding programme remains on track.
Romania faces medium to low vulnerability to Eurozone shocks – S&P
C. Monetary Policy
Central bank could further cut interest rate if disinflation persists.
D. Monetary Aggregates
E. Interest Rates
Interest rates on local and foreign currency deposits converge.
Yields on Romania’s 10-year bond drop to 6.75%.
Banking
A. Top Stories
Stability measures for Austrian banking system may limit lending in CEE, SEE.
Austria’s regulations not to hinder lending in Eastern Europe – Fitch.
B. Loans & Deposits
Corporate loans up 10% y/y at end-Jan 2012
Bank deposits up 5.5% y/y in Jan 2012 on household savings
C. Bank Loan Quality
Overdue payments on bank loans up 31% y/y at end-2011.
Share of bad loans held by Romanian banks hits 23.5% at end-2011.
Romanian banks’ provision costs shrink to before-crisis level in Q4 2011.
D. Corporate News
Romania's largest bank BCR says its 2011 consolidated net profit shrinks 85%
Alpha Bank's Romanian arm tries to recover EUR 44mn from real estate firm Ibiza.
Raiffeisen Bank International lends EUR 95.5mn to Romanian real estate project.
Volksbank Romania confirms anticipated EUR 200mn capital hike
ATEbank Romania says not affected by parent group’s restructuring
Leasing & Consumer Finance
Romania’s leasing market up 15% y/y to EUR 1.3bn in 2011.
Pensions, Investments, Insurance
A. Pension Funds
Yield of Romanian mandatory pension funds drops to 3.1% in 2011 – report.
B. Insurance
Romania’s insurance market shrinks 4.3% in 2011. Public Finance
General government deficit narrows by 29% to 4.35% of GDP.
Romania to tap foreign financial markets again in H2
Romania’s public debt hits 34.3% of GDP at end-2011
Appendix
Appendix 1: Main indicators of the Romanian banking system.
Table 1: Return on equity [ROE, %]
Table 2: Synthetic comparison of Romania's Bulgaria's and Hungari's banking systems 2011 vs. 2008. [EUR mn where appliable
Table 3: Banking profitability ratios for Romania vs. Bulgaria
Table 4: Romania's banking system; key indicators, ratios; Source: BNR, IntelliNews; EUR mn where appliable.
Table 5: Bulgaria’s banking system; key indicators, ratios; Source: CEIC, IntelliNews; EUR mn where appliable.
Table 6: Hungary’s banking system; key indicators, ratios; Source: CEIC, IntelliNews; EUR mn where appliable.
Table 7: Serbia’s banking system; key indicators, ratios; Source: CEIC, IntelliNews; EUR mn where appliable.
Table 8: Overdue payments (eop)
Table 9: Romania's Public debt (% of GDP)
Table 10: Assets quality, risk and profit ratios of the Romania's banking system; eop unless otherwise indicated; quarterly data, 1Q 2008 to 4Q 2011
Table 11: Ranking of all Romanian banks by assets, 2009 to 2011; plus banks' profit in 2011.
Table 12: Quality of the stock of bank loans (eop, RON mn unless otherwise indicated)
Table 13: Total bank loans (EUR bn) Table 14: Romania's insurance market: breakdown, 2009-2011.
Figure 1: Foreign Banks' Exposure to Emerging Europe Markets; by creditor [CIS incl., 2003-2011, quarterly, USD mn]
Figure 2: GDP drop 2008-2011 vs. Loan quality
Figure 3: Foreign banks' exposure to Emerging Europe's banking system [Sep-11; Source: BIS]
Figure 4: Foreign banks' exposure to Emerging Europe's banking system [EUR, Sep-08=100] Source: BIS, IntelliNews
Figure 5: Stock of bank loans in selected countries [EUR, Sep-08=100] Source: CEIC, central banks
Figure 6: Annual change in the stock of bank loans in Romania; EUR mn and % of initial stock; Source: BNR, IntelliNews.
Figure 7: Annual change in the stock of bank loans in Bulgaria; EUR bn and % of initial stock; Source:CEIC,IntelliNews.
Figure 8: Annual change in the stock of bank loans in Hungary; EUR mn and % of initial stock; Source: BNR, IntelliNews.
Figure 9: GDP, seasonally and workday adjusted [2005=100]
Figure 10:M3 and its components [RON mn]
Figure 11: Net profit vs.Provision cost [EUR mn, 2008-2011]
Figure 12: Total bank loans; up to end-January 2012.
Figure 13: Loans: local vs. forex currency
Figure 14: Structure, dynamics of bank loans end-January 2012
Figure 15: Total bank deposits
Figure 16: Overdue, % of total loans
Figure 17: Credit Quality vs. Capital adequacy [2008-2010]
Figure 18: Performance of the Net Unit Value for the 2nd Pillar pension funds [EUR]
Figure 19: Aggregated net assets of the 2nd Pillar of the pension system [EUR mn]
Figure 20: Romania's general government budget, 2011 and 4Q11 [RON mn, nominal y/y]
Figure 21: Largest insurance firms by collected premiums, for each market segment; 2009, 2010 and Jan- Sep 2011.
 
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