Each employee in the banking system had a contribution of around 3,300 euros to the banks' overall net income in the first quarter of this year, while the assets per employee amounted to approximately 916,000 euros, according to NBR's calculations.

The number of banking sector employees amounted to around 68,000 in late February 2007, a rise of around 10,000 from February 2006, according to the latest available statistics.

Overall, banks managed to improve their profitability during the first two months of 2007. After a sudden correction in 2006, the ROE increased from 10.7% in December, to 12.5% at the end of February, very close to the level of 12.7% recorded in December 2005.

During 2006, the ROE across the banking sector dropped from 12.7% to 10.7% amid visibly narrower interest rate margins, in particular in the first half of last year. As a result, many banks started to focus on increasing revenues from fees to offset the dwindling interest rate margins. This trend is expected to continue with the introduction of new fees and increases in current ones, as banking services diversify.

The banks' levels of solvency continued on a visibly downward trend that began in late 2005.

On March 31, financial indicators had dropped to 15.82% from 17.3% in December 2006 and 21.1% in December 2005. Large banks witnessed the biggest declines in the solvency index in 2006, as they used larger resources for lending. The amount of non-performing loans within the banking system increased by almost half a percentage point, in the first two months of this year, from 1.6% to 2.1% in the banks' overall equity capital, according to a presentation by NBR first vice-governor Florin Georgescu. Such a high level had not been seen since late 2004, while a low of 1.4% was registered in December 2005.

At the end of March, the amount of credits classified as