Romania Financial Sector Report

Published by: Intellinews

Published: Jan. 18, 2010 - 3 Pages

Table of Contents

The banks’ aggregated net profits strengthened to EUR 140mn in Q3, from just EUR 17mn in H1, according to central bank data. The capital adequacy ratio of the banking system inched up by 0.22bps q/q to 13.73% at end-Sep, slightly below the 13.76% level at the end of 2008, but substantially above the 10% ceiling agreed jointly by IMF, central bank and the banks. Nonetheless, credit quality continued to worsen and was aggravated by the depreciation of the local currency. Accordingly, the provisions for bad loans kept rising and are likely to turn into real losses for the lenders.

The performance of the insurance market has also been impacted by the shrinking economic activity and the depreciation of the local currency. The insurance market reached EUR 1.6bn in Jan-Sep, which is down by 13.9% y/y in euro terms and stagnant in local currency. The insurance penetration rate (share of gross written premiums in GDP) reached 2% at the end of September, from 1.8% in full year 2008 and in 2007. Such low level when compared to other European countries shows solid growth potential once the economy revives, even though at a more moderate pace than the record levels during the past years.

The leasing financing plunged by 74% y/y to EUR 1.07bn in Jan-Sep and the full year decline is expected to maintain in the same value range. The leasing companies are facing legal problems in forced execution of bad debtors and the losses incurred due to full payment of VAT for the goods purchased but returned by lessees. Currently, the companies concentrate on re-selling goods returned by lessees and restructuring existing contracts rather than seeking expansion.

On the other hand, the private pension funds reported good performance last year. The private pension funds managing mandatory contributions reported an average yield of 17.7%, while the funds managing voluntary contributions reported an average yield of 15.8% in 2009.

Abstract

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 300,000 market research reports, company profiles and country profiles from over 700 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.