Romanian banks capital adequacy down to 14.2% at end-Q2.

By bne IntelliNews August 10, 2011
The capital adequacy of the Romanian banking system dropped by 0.1pps on the year and by 0.7pps year to date to 14.2% at the end of Q2, central bank announced. The capital adequacy ratio, statutory above 8% and recommended by the central bank at above 10%, has been particularly robust in the past years, reaching 15% at the end of last year. The high ratio, however, reflects the slightly inefficient, yet cautious, use of banks own resources. The profitability ratios of the countrys banking system deteriorated in Q2 in line with the aggregated losses for the quarter. Thus, the central bank announced a 0.06% ROA (Annualised net profit / Total average assets) and a 0.6% ROE (Annualised net profit / Average own capital) for H1. Based on the central banks data, we estimated an aggregate net loss of EUR 69mn in Q2, after a EUR 94mn aggregate net profit in Q1.
Romania Banking System Indicators
Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11
Assets (EUR bn, eop) 78.1 75.6 76.4 79.8 79.9 82.1
Capital adequacy 15.0% 14.3% 14.6% 15.0% 14.9% 14.2%
ROA [ytd] 0.6% -0.2% -0.2% -0.2% 0.5% 0.1%
ROE [ytd] 6.0% -1.6% -2.1% -1.7% 5.0% 0.6%
Credit Risk Ratio* (%, eop) 17.2% 17.8% 20.2% 20.8% 22.0% 21.9%
NPL Ratio** 9.11% 10.20% 11.67% 11.85% 12.71% 13.35%
Net Profit*** (ytd, EUR mn) 109 -56 -109 -123 94 24
Net Profit**** (quarterly, EUR mn) 109 -165 -53 -14 94 -69
RON to EUR1 4.096 4.369 4.267 4.285 4.114 4.127
Source: BNR, calculations
*Gross exposure of non-bank loans and interest classified as doubtful and loss / Total classified non-bank loans and related interest, excluding off-balance sheet items ** Gross exposure of non-bank loans and interest classified as loss 2 that is overdue more than 90 days and /or for which legal proceedings were initiated against the debtor or against the operation / Total classified non-bank loans and related interest, excluding off-balance sheet items *** Calculated as average of Assets times the fraction of ROA proportional to the number of quarters in the ytd period [0.25% for Q1, 0.5 for Q2, etc] **** Calculated as the differential of ytd net profit
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