Romanian companies have not only failed to capitalise over the last four years, but they have also taken out from the reserves previously made, with the share of dividends in total profits in the case of the real economy being 107%, Deputy Director of the Financial Stability Directorate of the National Bank of Romania (BNR) Florian Neagu said on Tuesday.

„The banking sector, as you can see from figures, also has a good degree of coverage of expected losses by provisions, it also has a good degree of coverage of unexpected losses by capital and we expected to see a reasonable preparation from the real sector as well. For example, to use the good periods that have manifested themselves in previous years to strengthen corporate solvency. You know that we have a great vulnerability in the economy, a very high share of undercapitalised companies and our expectations would have been that in previous years, when profits were significant in the real economy, we would see part of these capitalised profits. However, if we look at what happened in the last four years, we find that the share of dividends in total profits in the case of the real economy was 107%, which means that not only that the economy failed to capitalise, but it also took out of the reserves made in previous years,” Neagu told the 12th edition of the ZF Bankers Summit.

In his opinion, the situation is a source of concern, because it comes against a structural background of the vulnerability of chronic undercapitalisation of the economy.

„For comparison, the banking sector in Romania has also had good years of profitability, but the share of dividends in total profit is somewhere around 47%, which means that more than half of all the profit derived by the banking sector was not distributed to shareholders, but was distributed to the capitalisation of banks,” he said.

According to him, the main risk channel comes from non-financial companies, and the rate of non-performing loans there was the highest. Thus, the rate of non-performing loans generated by companies was, on average, in the European Union, at its peak, over 22%.

Neagu said that Romanian companies prefer to resort to commercial loans to a greater extent than those in Europe. That might seem like a good strategy, but a closer look shows that the default rate for trade loans is three times higher than that for bank loans.

AGERPRES