Romanian banking system still weak

Romania, the second largest country in the region after Poland, ranks last as for banking development, the share of banking assets in the GDP and the volume of credits granted in the real economy.

One banking unit corresponds to 8,084 inhabitants in Romania, while this indicator is much lower in the neighbouring countries.

According to the latest report on Romania drafted by the financial assessment agency Fitch, the ratio between the banking assets and the GDP stands at 29%, while the average is 68% in the other countries in the region.

The countries raking on the first positions are the Czech Republic (139%), Slovakia (91%), Slovenia (81%), Hungary (70%) and Poland (66%).

The specialists of PricewaterhouseCoopers Romania drafted a report regarding the Romanian banking system also warning that “the total banking assets in the Romanian system are on the increase, but the share of banking assets in the GDP is among the lowest in the area.”

According to them, it is likely that the banking assets increase should outpace the GDP increase over the next five years, but this depends on several factors, such as continuation of the macro-economic reform, higher revenues and GDP per capita ratio and improved macro-economic background, privatisation acceleration and higher foreign investments.

It is also likely that the banking penetration degree should increase from 28% to 30% in the future.

The banking system this year slightly recovered after having been cleaned up last year and after a battle waged by the banks to regain the customers’ confidence.

This was actually the first year when no bankruptcies were registered. The banks started to open more subsidiaries, launched new products and services and focussed on gaining new clients.

Moreover, although Romania ranks among the last positions as for the non-government credit/GDP ratio, which stands around 10%, the net non-government credit, namely the loans granted to the real economy, have maintained an upward trend over the past months.