Page 82 - Central & Southeast Outlook 2020

going up 4% y/y the previous month. Bank loans, which accounted for 65.2% of total assets, ticked up 0.2% y/y in October, after rising 1.6% y/y in September, with total stock reaching €3bn. The increase mainly reflected higher lending to households. Corporate lending went up 1.8% y/y to €1.14bn, while household loans grew 7.2% y/y to €1.34bn at end-October.
Meanwhile, the share of NPLs in Montenegro stood at 4.7% in September, down from 6.7% in September 2018 after the bankruptcies of Atlas Banka and Invest Banka Montenegro.
Montenegro’s banking sector posted a net profit of €48.57mn in the first nine months of 2019, up 62.9% y/y.
5.9 ​Finance - Romania
Romania’s banking system is highly capitalised, the non-performing loans (NPLs) have decreased close to pre-crisis levels and on an aggregate basis it boasts record profits ​despite the so-called “greed tax” that has already sweetened before most likely being abolished by the new government.
The aggregated net profits of Romanian banks reached RON2.23bn (€470mn) in the third quarter of 2019, and despite the slim 3.4% y/y advance this marked the second-best result in the post-crisis period.
Furthermore, the NPL ratio dropped to the lowest level since it started being assessed in 2014 (4.6% under EBA methodology). Higher quarterly profits were posted only in the last quarter of 2015 (€498mn) while the profits reported in the third quarter of 2018 were also outstanding: €461mn.
The banking system’s assets increased by 6.4% y/y at the end of September, which is a modest performance given the nominal GDP annual advance that is now close to double digits, to RON473bn, less than 50% of the year’s GDP. The return on assets ratio (ROA) calculated for whole January-September period was 1.45%, compared to 1.76% in the same period of 2018. The return on equity (ROE) in January-September also edged down from 16.4% in the first three quarters of 2018 to 13.2% in the same period of 2019.
The weaker profitability in the 2019 YTD period was due to the provisions built in the second quarter by two savings-mortgage banks that are required to pay back state grants collected in the past.
Despite the positive trends in the sector, smaller banks are under pressure as they cannot achieve the same levels of productivity as large ones.
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