The Evolution and the Profitability of the Banking System in Romania
Abstract. This paper aims to carry out an analysis of the evolution and profitability of the Romanian financial banking sector. In order to analyse the performance and the evolution of the best performing banks, a set of relevant financial ratios are computed, and the analysis is conducted over a period of three years: 2014, 2015, 2016. Based on the analysis conducted, it was noted that the top 10 leading banks own around 83% out of the total assets, and they continue to flourish. The most impressive evolution in terms of market share was registered by Banca Transilvania, which managed to move on the second place in the hierarchy in 2015, determining the movement of BRD in the third place while in the first place, constantly during the analysed period is situated BCR. In terms of profit, the most impressive financial result was registered in 2016 by Banca Transilvania, followed by BCR and Raiffeisen. BRD managed to register quite a stable growth over the years, and the values obtained by this bank are very similar to those registered by Raiffeisen. However, one significant difference between these two banks is that Raiffeisen has a slower growth rate, but it seems to have a sustained evolution. In contrast, BRD registered more financial fluctuations and implicitly higher growth rates. Regarding the financial ratios analysis, in 2016, Banca Transilvania had the highest Return on Assets (ROA) of 2.37% and the highest Return on Equity (ROE) of 20.53%, having by far the most aggressive growth in terms of return ratios. The remaining three banks recorded for both ratios ery similar results, on average a Return on Assets (ROA) of 1.4% and Return on Equity (ROE) of 12%, which situate all the analysed financial
institutions in the safety gap. Overall, all four banks are considered to be stable and safe, having an interesting evolution over the years. However, some of them remained in the same position as in 2014, while others moved higher and lower in the hierarchy.
Keywords: banking system, financial ratios, capital, profitability, financial sector