Romania's banking sector to thrive through 2017 fueled by strong economy

WARSAW, Poland - Aug. 11, 2017 - PRLog -- Romanian economy has accelerated in 2016 with Gross Domestic Product (GDP) advancing at 4.8 % annual rate. The key driver of the growth was private consumption fueled by lower taxes, surging wages and falling unemployment. Labour market improved further with unemployment rate decreasing to 5.3% in Q2 2017 as opposed to 6.0% a year earlier. The consumer price index (CPI) rebounded from a negative territory in 2016 to +0.7% YoY in June 2017 and it remains on an ascending path.

Romania has the 4^th largest banking sector in the CEE with nearly € 87 billion in total assets and a 7.5% regional share. Total banking assets in Romania increased by 4.4% YoY to a record of RON 394 billion as of December 2016. Client deposits at banks recorded strong 12% YoY growth to nearly RON 333 billion with government and household deposits increasing most quickly. By contrast, the outstanding client loans increased only by a fraction in 2016 and reached RON 231 billion.  This was a consequence of a continued contraction in corporate lending and a still slow growth in retail loans. One of most encouraging trends recently has been the falling ratio of non-performing loans which has halved since 2014. Banking sector has also made a significant progress in reducing currency risk as the share of outstanding loans denominated in foreign currency has fallen substantially, in particular in case of corporate and mortgage loans.

In the mid-term, a fast growth in wages and falling unemployment will support increases in banking volumes, in particular within retail segment. The recently underperforming corporate lending is likely to rebound in 2017 and to grow fast in 2018/2019. This will be the effect of stable interest rates, increasing liquidity in the banking sector and growing investment needs of corporate clients. Following favourable trends in key segments, total banking assets are expected to advance at ca. 7% p.a. through 2019.

For more information on recent developments in the Romanian banking sector, please refer to the publication "Banking Market in Romania, 2017" at:

http://www.inteliace.com/en/00158_Banking_market_in_Romania_2017.html

About The Report
"Banking Market in Romania 2017" is our compact publication about the banking sector in Romania. It describes the present market structure and recent trends in the market and also provides short-term estimates of key banking volumes through 2019.

About Inteliace Research
Inteliace Research is an independent consulting company that focuses on the financial markets in Central and Eastern Europe. Inteliace Research specializes in management consulting and custom research services, including market-entry strategies, product launches, and performance and benchmarking analyses.

During 2005–2017, Inteliace Research provided its products and services to more than 65 clients, including major CEE banks and several "The Banker" top world banks. To learn more about the company, visit Inteliace Research's webpage:www.inteliace.com.

Inteliace Research

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00-372 Warszawa, POLAND

Tel. +48 22 408 66 20, Tel. +48 502 512 178, Fax. +48 22 349 21 40

email: info@inteliace.com

www: www.inteliace.com

Table of contents

Executive Summary

1. Macroeconomic overview

Slide 1: Background: country map, demographic & social statistics, 2016

Slide 2: Consumer markets in Europe and Romania, 2015/2016

Slide 3: GDP, CPI, Exchange rate, 2010-2016

Slide 4: Consumption expenditure of households, 2010-2016

Slide 5: Wages and unemployment, 2010-2016

Slide 6: Government budget and taxation, 2010-2017F

Slide 7: Foreign trade, current account and FDI, 2010-2016

Slide 8: Stock market performance and capitalization, 2010-2016

Slide 9: Market interest rates, 2012-1H2017

Slide 10: Interest rates at banks and NPLs, 2012-1H2017

2. Banking market

Slide 11: CEE banking markets: growth vs. assets per capita, 2014-2016

Slide 12: CEE benchmarks: Assets/capita,  Assets/GDP penetration, 2016

Slide 13: Banking assets evolution, in RON and EUR

Slide 14: Market concentration, share of top banks, HHI index, 2014-2016

Slide 15: TOP 12 banks in Romania by assets, market share, 2016

3. Market segments

Slide 16: Total client deposits,  evolution by segment, 2012-2016

Slide 17: Household  deposits,  by currency and by maturity, 2012-2016

Slide 18: Personal Financial Assets by type , 2014-2016

Slide 19: Total client loans,  evolution by segment, 2012-2016

Slide 20: Household  loans,  evolution by currency and by type, 2012-2016

Slide 21: Mortgage loans,  evolution by currency, 2012-2016

Slide 22: Corporate  loans,  evolution by currency and by type, 2012-2016

Slide 23: Top players, retail banking, by deposits and by loans, 2016

Slide 24: Top players, retail banking, by deposits and by loans, 2016

Slide 25: Payments: # cards, ATMs, POS, card payments, 15Q1-17Q1

4. Profitability & top bank profiles

Slide 26: Top 5 banks profitability tree, 2016, percent of average assets, cost income ratio, ROE

Slide 27: Bank profile: Banca Comercială Română

Slide 28: Bank profile: Banca Transilvania

Slide 29: Bank profile: BRD-Groupe Société Générale

5. Mid-term forecasts

Slide 30: Forecast: Retail volumes at current prices, 2017-2019

Slide 31: Forecast: Corporate volumes at current prices, 2017-2019

Slide 32: Forecast: Banking assets at current prices, 2017-2019