Fitch sees positive trend for Romanian banks

Fitch Ratings said that the overall trend for Romanian banks continues to be positive despite narrowed margins due to an improving operating environment, strong economic growth and the major restructuring of the banks by their foreign shareholders.

However, rapid loan growth and a high share of foreign currency lending, albeit declining, are the main sources of risk, the agency noted.

"The general trend is positive for Romanian banks despite sustained pressure on margins stemming both from falling inflation and intensifying competition in the Romanian banking system, particularly from foreign-owned banks with similar resources and structures," Gulcin Orgun, director at Fitch's bank team, said in an agency report.

"Future profitability improvements will depend on improvements in efficiency and greater scale of operations without creating operational losses or substantial asset quality deterioration in the event of an economic downturn," he added.

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