Traian Halalai, EximBank: Profitability levels of SEE banks will remain much lower than in pre-crisis period

Bucharest, October 21, 2014 – The biggest challenge for the decision makers in the SEE countries is cleaning up the balance sheets of the banks and the quality improvement of the assets in order to be able to re-start engines for credit activities and economic growth” said today Traian Halalai, President of EximBank during the ”The EU-Southeast Europe Summit” organized by the The Economist in Bucharest.

„ Balance sheet cleaning is important, since it would improve the assets quality and lay ground for financing the economy. Together with a return of loan growth, they will set the stage for profitability recovery on medium and long term. However, SEE banking sector profitability will be much lower than pre-crisis levels, since it will face ongoing burdens from higher capital requirements, tightened regulation and implementation of various sets of structural reforms. Moreover, bank margins in SEE tend to be positively correlated with interest rates and the current low interest rate environment is not supportive of high profitability compared to the pre-crisis period” Traian Halalai also said.

He added that although the performance of individual markets on medium and long term will greatly vary, the SEE banking sectors will all depend crucially on economic growth, sector restructuring and implementation of economic reforms. There are also other economic risk factors to the sector performance, including geopolitical risk, currency and interest rate risk, competition, development of capital markets, etc.

The EximBank representative expressed the conviction that decision makers in SEE countries will identify alternatives for stimulating economic growth that is critical for the future of the banking system. In his opinion, the experience of the EU states in approaching the economic crisis is a starting point and the specific measures implemented by some SEE states may bee extended to several countries in the region.

“Croatia has offered a good practice sample in European funds attraction in the accessing phase; Bulgarian experience in operating a development bank may be useful in finding solutions for the financing of the economic development. Romania has managed to intensify and diversify the state role in economy by state owned banks as well as by the use of specific instruments such as, for instance, the programs for stimulating the acquisitions of houses and cars” said Traian Halalai, President of EximBank.

EximBank is a specialized institution whose threefold product portfolio focused on financing, guarantees and insurance enables it to grant assistance to current activities and development of exporters, SME-s and companies involved in projects pertaining to key economic sectors, particularly those contributing to the absorption of EU funds.

The bank got up seven positions in Top 100 Banks in South Eastern Europe as per profits registered last year, being now on the 31st position, according to the annual rankings drafted by SeeNews. This year’s edition
includes 22 Romanian banks, EximBank maintaining its position in top 10 most profitable banks, by holding the 8th place.

According to the assets registered at the end of 2013, EximBank holds the 73rd position in this year’s edition of Top 100 Banks in South Eastern Europe, out of a 250 participant banking institutions in 10 countries.