Domestic banks are using different standards when reporting financial data , which makes comparisons impossible and creates a lack of transparency on the market, says Sorin Popa, deputy chief executive officer of BRD - SocGen.
The relevance of certain indicators, such as market share in terms of assets, is questioned by most bankers, given that several players in the system "outsource" the loans granted to their foreign shareholders in order to avoid some of the regulatory costs imposed by the NBR (National Bank of Romania).
According to the BRD executive, several banks exclusively report operating incomes, which do not include risk costs and fail to publish indicators such as returns on equity and the cost/revenue ratios.
As a bank listed on the Bucharest Stock Exchange, BRD is required to give detailed quarterly accounts concerning its financial data. Only two other players on the local banking market - Banca Transilvania and Carpatica - are listed on the Stock Exchange. Although most local banks are held by foreign financial groups and listed on various stock exchanges, they use different methods for reporting data.
Additionally, the NBR no longer publishes data on banks' profitability, but only indicators such as solvency, which are calculated for the whole sector. "There is the need for more transparency. Clients should be aware of how solid the bank they are dealing with is," Popa says.
BRD does not follow the trend of the market share in terms of overall assets, according to the bank official, preferring instead to use specific indicators (shares on specific market segments) in order to asses its performance.
On another subject, Popa insists that the BRD is very careful when it comes to the quality of funding it grants, although other players are more concerned with the rapid growth of their businesses.
In fact, the bank will implement a stricter set of criteria in the coming period to assess individual clients that want credits in foreign currency, in order to avoid clients reaching too high an indebtedness level, amid unfavourable exchange rate fluctuations. However, when the new criteria will be applied, and in what form remains undecided.
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