Profitability of Romanian banks improves in Q2 after weaker Q1

The aggregated profits of Romanian banks increased by 5.5% y/y to RON 3.9 billion (EUR 748 million) in Q2, after the 9.3% y/y decline in Q1 - resulting in a marginal nominal drop of 1.9% y/y (to RON 7.3 billion or EUR 1.4 billion) for the entire first half of the year. The profitability ratios improved compared to Q1, but remained the second-weakest in four years along a downward trend that remains in the robust profitability range, however.

The banking system’s assets rose by 9.7% y/y to RON 981 billion (EUR 187 billion) at the end of June. The banking assets to GDP ratio has hovered around 50% historically, remaining below the benchmark in recent years, indicating rather modest financial intermediation.

Despite the nominal stability of the banking system’s profits, the profitability ratios remain the weakest in four years except for the first quarter. Annualised return on assets (ROA) was 1.5% in H1, up from 1.4% in Q1 but below 1.68% in 2024-2025 and 1.8% in 2023. The annualised return on equity (ROE) similarly improved to 15.5% in H1, from 14.1% in Q1 – while lagging below 17.6% in 2925, 18.4% in 2024 and 20.1% in 2023.

The non-performing loan (NPL) ratio edged up to 2.9% at the end of June from 2.8% at the end of March, hitting the upper limit of the narrow 2.5%-2.9% band where it remained for the past three years. The moderate deterioration is consistent with the economic slowdown but remains within the manageable region.

(Photo source: Elizaveta Elesina/Dreamstime.com)