The first month in 2008 therefore created the premise for banks' profit to exceed one billion euros this year, driven by the increase in revenues from fees, as well as by maintaining significant interest margins.
The profits of the banking industry went up to about 825 million euros last year, with the market registering a monthly average of almost 69 million euros, according to data centralized by the NBR.
The growth driver, however, resides with big banks, which manage to collect higher sums from a higher business volume and can cope with expansion costs and attracting new clients better.
This is why the top two banks on the market, BCR and BRD made over 600 million euros in net profit together - more than 70% of the profit of the entire system. On the other hand, some medium-sized and small banks concluded 2007 with little profit or even in the red.
The average net profit per bank amounted to about 2.2 million euros in January, compared with a monthly average of 1.7 million euros last year.
The solid growth of the profit made by the banking system in 2007 helped the return on equity (ROE) improve by 0.2% compared with 2006, to 10.4%. On the other hand, the return on assets (ROA) fell 0.2%, to 1.1%.
Despite the compression trend, the interest margins maintained above 5% for RON and 4% for euros and, along with the fast-paced increase in revenues from fees, they continue to drive the increase in profits made by banks.
The biggest two banking groups on the market increased their net revenues from fees by more than 50%, that is 53% for BRD to 296 million euros and 51.4% for BCR to 256 million euros. At the same time, the net interest margin went up by 29% for BRD generating 356 million euros and net revenues from interests rose by 16.4% to 587 million euros in BCR's case.
Banks began to apply higher charges to the services they provide in 2007, starting from the management of a current account. Moreover, the practice of charging a monthly fee on a loan to offset lower nominal interests expanded.
Many banks are this way finding resources to boost their revenues faster than their expenses, yet things are different when it comes to several lenders that have yet to make substantial investments in expansion and to gain market share from their competitors. Under the circumstances, a great challenge comes from the quality and availability of specialized work force, with higher training investments now needed besides salary costs.
January saw 101 new branches opened on the bank market, taking the total to 5,582, an increase of 1.181 from 2006. At the same time, the number of employees rose by merely 177 to 65,832, indicating that large banks still have human resources available that can be moved from the back-office to the front office when positions are modernized and centralized. Net profit per employee improved against the previous months of 2007 to 5,000 RON (some 1.388 euros).