In 2023, Romanian banks had an above-average income increase…

In 2023, Romanian banks registered an above-average revenue increase compared to European banks, but they must recover the gap, even compared to some banks in Central and Eastern Europe, in terms of productivity indicators, such as profit per customer or income per employee, said Florian Teleaba, Principal and office head of Kearney Bucharest, commenting on a study carried out by the global consulting company at the European level.

According to the European Retail Banking Radar, the income per employee in the Nordic countries was 821,000 euros, while in Romania it was on average 88,000 euros. The profit per customer was the highest in Switzerland, at 967 euros, compared to 72 euros in Romania.

At the European level, the profit per customer increased by 45% on average, to 337 euros. Certain countries, such as Italy, Slovenia and Poland, have doubled their profitability per customer within a single year.

According to Florian Teleaba, in order to prepare for the next economic cycle, banks in the local market have two main options: diversifying sources of income in areas other than lending, net fees and commissions, charging more for services and providing more value customers (other than charging for money, i.e. lending) or strong optimization of the cost base, and by strong we mean a 2-digit improvement in the cost-to-income ratio (CIR).

However, some banks have to work on both fronts, and this is not easy: to grow while cutting costs.

In the last year, high interest rates continued to support a favorable context for local banks, but the situation is likely to change, once net interest income will decrease much faster than costs can be optimized.

At the European level, 2023 was an exceptional year for the revenues, efficiency and profitability of the banking sector, with the revenues of banks covered by the European Retail Banking Radar reaching 365 billion euros, an increase of 18% compared to 2022. Net interest income has increased by 23.5%, while net fee income increased by only 1.5%.

Also, income per client and income per employee increased to 830 euros (2022: 686 euros), respectively 356,000 euros (2022: 301,000 euros). Revenue growth led to significant improvement in the cost-to-income ratio for most banks, to an average of 53%, falling from 60% in 2022.