Romania’s central bank revised the aggregated 2012 ROA for the banking system to minus 0.64% from previous 0.58%, data published by the monetary authority indicated. Based on this revision, we also adjusted the estimate for the 2012 net aggregated loss of the banking system to RON 2.35bn [EUR 530mn at eop exchange rate] from an earlier estimated RON 2.13bn [EUR 455mn].
The system’s loss in Q4 alone was RON 2.24bn [EUR 505mn]. The central bank does not disclose directly the aggregated profit/loss of the banking system, but leaked data confirmed our estimates* with a margin of a couple of percentage points.
ROA for the banking system, however, returned in the positive territory to plus 0.55% in Q1 – in annualised terms, the central bank also announced. Based on this, we have estimated an aggregated profit of RON 505mn [EUR 114mn] in the quarter. Earlier in May, leaked reports from the central bank indicated a RON 520mn [EUR 118mn] aggregated profit for Jan-Mar.
The capital adequacy of the banking system increased to 15% at the end of March this year from 14.6% at the end of 2012, the central bank said. The ratio stands well above the 10% level recommended by the central bank. Excessive solvency ratios tend to indicate inefficient use of resources and this is consistent with the local banks avoiding extending loans.
Largest lender BCR-Erste Group reported a 13% solvency ratio at the end of March 2013. The second largest bank, BRD-Societe Generale, reported a 14.6% ratio at end-Feb [as a proxy for end-Q1] and the ratio of the third largest lender - Banca Transilvania, was 12.2% at end-March.
* The main source of error in our estimates is the approximation of average assets with the average of assets at the beginning and at the end of the quarter.
|Banking system ratios||2008||2009||2010||2011||2012||Q4 12||Q1 13|
|Assets (RON bn, eop,)||314.4||330.2||341.9||353.9||365.9||365.9||356.2|
|Credit Risk Ratio  (%, eop)||6.5%||15.3%||20.8%||23.3%||29.9%||29.9%||30.0%|
|Non-performing Loans Ratio||n.a.||7.9%||11.9%||14.1%||18.2%||18.2%||19.1|
|Loan to deposit ratio ||131%||119%||118%||119%||114%||114%||112%|
|RAS provisions (EUR mn)||1,904||3,540||5,498||7,117||8,848||8,848||9,281|
|RAS Provision cost (EUR mn) ||1,006||1,745||2,005||1,663||1,907||565||406|
|IFRS Provision cost (EUR mn) ||n.a.||n.a.||n.a.||n.a.||n.a.||650||391|
|Aggr. Profit (EUR mn) ||1,107||193||-121||-181||-530||-505||114|
 (eop, annualised net profits per ytd/avg. assets)  (eop, annualised net profit per ytd/avg. equity)  Gross exposure of loans to non-bank clients and interest classified as doubtful and loss / Total classified loans to non-bank clients and related interest, excluding off-balance sheet items  loans/deposits to/of private sector alone  of period (year, quarter) converted at eop XR – also for the stock of provisions; for years may be different from the sum of quarterly values, which are converted at each quarter’s end-XR.
NOTE: We have simplified for better understanding the national accounting RAS and the international IFRS provisioning denominations. In fact, we are speaking about Prudential value adjustments under RAS [used until Jan 2012 for provisioning but still calculated afterwards] and Adjustments for impairment under IFRS [used after Jan 2012 for provisioning for fiscal purposes]. We recall that Romania's banking system shifted to IFRS since 2012 but is currently under a transition period when RAS reporting is still used for precautionary policies, while IFRS is used for taxation. Supplementary revenues resulting from the migration to IFRS have a special regime.
Romanian President Klaus Iohannis said on April 16 he is rejecting a request from the justice minister to dismiss the head of the National Anticorruption Directorate (DNA), Laura Codruta Kovesi. ... more
International steel and mining company ArcelorMittal said on April 13 it has proposed a divestment package to the European Commission in a bid to obtain approval for its planned acquisition of ... more