RAB & EY 2016 BANKING BAROMETER: MORE INTEREST FOR ASSET PURCHASING AND FOR PARTNERSHIPS

 


Less interest for banks to sell their assets and more interest for asset purchasing and for partnerships, according to the RAB & EY Banking Barometer, the 2016 edition
The expectations regarding corporate business developments are similar to those in 2015, but the expectations concerning retail business are aff ected by the Law on datio in solutum
About 90% of bankers expect that the law on datio in solutum aff ect lending negatively, while 95% of them expect a drop in housing prices
40% of bankers expect a drop in the solvent demand for real estate loans compared to 5% in 2015; merely 35% of banks expect an increase in the real estate loan demand compared to 90% in 2015
Less appetite for lending to the Construction sector and more appetite for lending to the IT, SMEs and healthcare sectors
As regards retail lending, banks’ appetite for real estate and mortgage loans plunges
70% of banks estimate to maintain or slightly increase the number of their staff , compared to only 45% in 2015; total expenditure with staff remuneration will be similar to that in the year 2015 or slightly higher

EY Romania has conducted, based on a partnership with the Romanian Association of Banks (RAB), the third edition of the banking industry index called the RAB & EY 2016 Banking Barometer, via a questionnaire distributed together with the management of the banks that are RAB members. At this year’s edition of the survey, banks totaling a market share function of assets of about 90% have participated.

50% of banks anticipate a medium and high-level consolidation of the banking industry in the next 12 months, similar with the situation in 2015, according to the RAB & EY Banking Barometer, the 2016 edition. On a three-year horizon, the percentage goes up to 90%, while for the same time horizon, 30% of banks expect a high-scope consolidation, compared to 40% of banks in the previous year.

The RAB & EY Banking Barometer is deployed annually with the members of the Romanian Association of Banks, being an instrument to inform bankers as regards the manner in which the management of the Romanian banking sector sees the developments in the economic, legal and business environments and their implications upon the banks they lead. The main activities banks are expected to engage in the next 12 months are lending to customers and initiatives to promote growth, but at slightly lower levels compared to the year 2015.

Moreover, 45% of banks are interested to purchase assets compared to merely 32% in 2015. Interest for asset selling dropped: only 40% of banks are interested to sell assets compared to 59% in 2015. In addition, the interest for partnerships and other forms of association grew signifi cantly to 45% compared to less than 15% in the previous years.

Bankers’ expectations concerning the development of their corporate business are similar to those of 2015. Banks expect that their corporate lending policies in the next 12 months become more restrictive for the Construction segment and more relaxed for the IT segment (58% compared to 45% in 2015), the healthcare segment (56% compared to 40% in 2015) and the SMEs segment (70% compared to merely 53% in the previous year).

A major change compared to the previous year is represented by the massive drop in the appetite for real estate / mortgage loans, 85% of banks adopting more restrictive lending criteria compared to 17% in the previous year.

A major change compared to the previous year is represented by the massive drop in the appetite for real estate / mortgage loans, 85% of banks adopting more restrictive lending criteria compared to 17% in the previous year.

The expectations regarding the retail business development are aff ected by the law on debt discharge, merely 60% of banks expecting a better development compared to over 80% in 2015.

As regards the demand for retail products, banks foresee developments similar to those in 2015 for consumer loans and for saving but they are more pessimistic as regards the demand for real estate and mortgage loans, 40% of bankers expecting a drop in the solvent demand for real estate loans compared to only 5% of bankers in 2015.

About 90% of bankers are of the opinion that the law on datio in solutum will negatively aff ect the process of granting new real estate / mortgage loans to a high and to a very high extent. Moreover, 95% of banks consider that the law on debt discharge will lead to a drop in housing prices.

Merely 25% of banks contemplate issuing covered bonds in the next 12 months. About 70% of banks estimate maintaining or even increasing slightly the number of their employees compared to only 45% of banks in 2015. Total expenditure with staff remuneration will be at the same level as it was in 2015 or will slightly go up, merely 5% of banks expecting a drop here. Similar with the previous year, currently, the fi rst issues on bankers’ agendas include risk management (85% compared to 86% in 2015) and reputation risk (85%, by 6% less than in 2015).