The aggregated profit of the Romanian banking system decreased by 9% y/y in Q1, to RON1.61bn (€334mn), according to calculations based on the profitability ratios published by the central bank on May 31.
The return on assets (ROA) dropped to under 1.3% in Q1 from 1.6% in the same period last year. The return on equity (ROE) also went down from 14.5% to 11.7%.
The coronavirus pandemic drove down the local banks' profits as several lenders set aside provisions to mitigate the higher risks generated by the COVID-19 crisis.
The banking system's aggregate assets at the end of March were 14.7% higher y/y, at RON518bn.
The quality of assets also improved. The non-performing loan (NPL) ratio calculated under EBA methodology further declined to 3.9% in March 2020 from 4.9% one year earlier.
The solvency ratio increased slightly to 20.3% at the end of March from 20% one year earlier, remaining roughly twice as robust as the statutory minimum requirements.