Moldovan banks close to pre-crisis profitability

Moldovan banks close to pre-crisis profitability
By bne IntelliNews January 26, 2022

The aggregate profit of the Moldovan banks increased by 54% y/y to MDL2.30bn (€115mn) in 2021, according to data released by the National Bank of Moldova (BNM).

It was a stronger performance in nominal terms compared to 2019, when the aggregated profit reached MDL2.26bn. But more detailed comparisons show that the banks’ profitability still lags behind the record year 2019. 

On the upside, both the aggregated assets and particularly the stock of loans increased significantly in 2021, revealing robust consolidation in the financial intermediation. The broad reforms carried out several years ago, followed by the improvement in the quality and transparency of the bank ownership structure, are now paying dividends. 

Thus, the return on equity (ROE) increased to 12.35% in 2021 from 8.89% in 2020, still lagging behind 14.63% in 2019. Similarly, the return on assets (ROA) was 2.01% last year, a significant improvement from 1.53% in 2020, yet visibly under the 2.47% record set in 2019.

The banking system’s assets-to-GDP ratio remained constant at just over 50% at the end of 2021, well above the 43% level reached in 2018-2019. In nominal terms, the banks’ total assets reached MDL118.5bn at the end of 2021, up 14.2% y/y.

The volume of loans in the banks’ balance sheets increased by 21.7% y/y to MDL54.6bn at the end of 2021, or 23.3% of GDP, up from 21.8% one year earlier and 19.5% at the end of 2019.