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Financial situation of the banking system in the first quarter of 2015



In the first quarter of 2015, the evolution of the indicators of the banking sector remains as a whole heavily distorted by the activities of the banks under special administration (B.C. ”BANCA SOCIALĂ” S.A., Banca de Economii S.A. and B.C. „UNIBANK” S.A.).

The total assets of the sector were MDL 98,270.1 million, increasing by MDL 737.3 million (0.8 percent) compared with the year-end. It should be mentioned that the asset growth in the first 3 months of 11 banks amounted to MDL 3695.3 million (6.2 percent). At the same time, the assets of the three banks under special administration decreased by MDL 2958.0 million (7.9 percent).

As of 31.03.2015, Tier I capital was MDL 9,044.1 million, increasing by MDL 331.4 million (3.8 percent) during the first quarter of 2015. Tier I capital increase was driven by the profit in the amount of MDL 306.7 million obtained in the first quarter of 2015. Simultaneously, the calculated amount but unreserved of the allowances for impairment losses on assets and conditional commitments decreased by MDL 62.9 million (2.1 percent). As of 31.03.2015, the Tier I capital of all banks complied with the minimum required capital (minimum required level is ≥ MDL 200 million).

Average risk-weighted capital adequacy on the system was 14.3 percent, increasing by 1.1 percentage points compared to the end of the previous year. This is due to the fact that the risk-weighted capital adequacy of the banks under special administration (Banca de Economii S.A., B.C., ”BANCA SOCIALĂ” S.A. and B.C. „UNIBANK” S.A.) recorded ratios of 2.7 percent, 3.2 percent and 13.7 percent, respectively (which is below the minimum allowable level of 16.0 percent), while the average risk-weighted capital adequacy of the remaining 11 banks is 23.4 percent.    

The share of foreign investments in the capital of licensed banks remains at high level, registering 77.4 percent on 31.03.2015.

Gross loan portfolio amounted to MDL 41,974.3 million on 31.03.2015, increasing by MDL 1,132.3 million (2.8 percent) during the first quarter of 2015.

The balance of non-performing loans (substandard, doubtful and loss) increased in absolute value by MDL 624.0 million (13.0 percent), representing MDL 5,414.3 million, while the share of non-performing loans in total loans increased by 1.2 percentage points compared to the end of the previous year, amounting to 12.9 percent on 31.03.2015. The share of net non-performing loans in total regulatory capital increased by 2.4 percentage points, amounting to 16.6 percent on 31.03.2015.

It should be mentioned that the share of non-performing loans in total loans of 11 banks accounted for 9.4 percent is more favourable compared to the share of non-performing loans in total loans of the 3 banks under special administration, which accounted for 43.7 percent, increasing by 3.0 percentage points compared to the end of the previous year. Respectively, the indicator of the 3 banks under special administration has influenced negatively the indicator of the banking sector. Simultaneously, net non-performing loans to total regulatory capital on the sector, which constituted 16.6 percent, was influenced by the indicator of the 3 banks under special administration, which accounted for 35.3 percent.

Total volume of new loans dropped by 13.3 percent in the first quarter of 2015 as compared to the same period of the previous year and totalled MDL 5,991.1 million. Concomitantly, total volume of new term deposits accounted for MDL 12,664.7 million or by 32.5 percent more.

As of 31.03.2015, the profit of the banking sector for the period accounted for MDL 306.7 million. Compared to the same period of the previous year, the profit increased by 21.7 percent due to the increase in non-interest related income by 202.5 percent and interest related income by 17.5 percent. It should be mentioned that the profit of 11 banks was MDL 453.3 million on 31.03.2015, while the profit of the 3 banks under special administration recorded losses in the amount of MDL 146.6 million (mainly due to the losses recorded by Banca de Economii S.A. in the amount of MDL 139.2 million, which influenced the profit obtained by the banking sector).

Return on assets and return on equity represented 1.2 percent and 9.7 percent as on 31.03.2015, increasing by 0.3 percentage points and 3.7 percentage points compared to 31.03.2014.

Long-term liquidity ratio of the banking system (assets with terms more than two years/financial resources with potential withdrawal term of over two years) recorded a level of 1.5. This is determined by the fact that B.C. ”BANCA SOCIALĂ” S.A. recorded a long-term liquidity ratio of 22.6 (maximum allowable level is ≤1), while the average of the remaining 11 banks is 0.7.  

Current liquidity on the system (liquid assets, expressed in cash, deposits with the NBM, liquid securities, and net interbank credits with maturity up to one month / total assets ×100%) accounted for 25.2 percent, increasing by 3.6 percentage points. This has also influenced by the liquidity deficit in banks under special administration, which recorded current liquidity ratios below the 20 percent minimum allowable level: B.C. ”BANCA SOCIALĂ” S.A. - 5.5 percent, Banca de Economii S.A.  - 6.3 percent and B.C. ”UNIBANK” S.A. - 7.8 percent, while the average of remaining banks is 35.6 percent.

The balance of deposits, according to prudential reports of 31.03.2015, increased by 2.0 percent during the first quarter up to MDL 66,764.8 million, as a result of the increase in deposits of banks by 7.7 percent up to MDL 14,788.8 million and deposits of individuals by 1.2 percent up to MDL 35,007.9 million. The balance of deposits of legal entities decreased by 1.0 percent up to MDL 16,968.1 million.

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