Kearney study: The next phase for banks in Romania after the era of high interest rates

It comes at a time when the banking sector must navigate a high fiscal deficit, fiscal consolidation measures, weak economic growth, inflation above the EU average, pressure on households' disposable income, downgrade risk and rising external funding costs, as well as political volatility. At the same time, Romania's banking market continues to consolidate, with BT having integrated OTP Bank and UniCredit having merged with Alpha Bank.

Four priorities are emerging for Romanian banks. First, profit resilience: the 2027–2028 period will be defined less by growth strategies and more by cost discipline, risk management and customer retention, with M&A transactions offering economies of scale. Second, shifting the growth engine from rate beta to volume growth and relationship banking, accelerating lending across mortgages, secured consumer lending and SME financing.

Third, reducing the cost to serve—Romania's cost-to-income ratio of around 59%, compared with 54% across Europe, suggests digitalisation has focused on the front end rather than end-to-end transformation. Fourth, building fee income streams, as growth in non-interest income becomes critical to sustaining profitability when rates normalise.

"Romanian retail banks have captured the benefits of the higher interest rate environment. The next challenge is to translate this into sustainable growth driven by stronger customer relationships, more diversified revenue streams and higher productivity, rather than balance sheet expansion alone," said Florian Teleabă, Partner Financial Institutions at Kearney. "Their real challenge is entering a more demanding operating environment before fully addressing the structural issues around operational efficiency, customer base monetisation and risk management."

Across Europe, Southern European countries affected a decade ago by the debt crisis are now among the better-performing retail banking markets. Profit per customer across Southern Europe has grown 715% since 2020, ahead of Western Europe at 91% and Eastern Europe at 206%.

Portugal is now Europe's efficiency leader, with a cost-to-income ratio of 32%, followed by Spain at 37%, while France has the highest at 67%. UniCredit's €35 billion bid for Commerzbank, the biggest attempted cross-border banking deal since the financial crisis, reinforces how more efficient banks are now positioned to acquire weaker rivals. Italian banks operate with a cost-to-income ratio of 51%, compared with Germany's 61%.

European income growth slowed to 2.3% in 2025, down from 14.6% during the 2022–23 rate boom, while profit growth slowed to 2.9%. A 20% gap has opened up in regional profit per customer growth, with Eastern Europe up 11.1% while the Nordics and Switzerland fell 9.1%. Kearney's analysis suggests every 10 basis points of rate compression translates into around €26 billion of lost income across EU-27 banks. To maintain profitability, banks would need to remove roughly €14 billion in costs and generate €19–20 per client in additional fee income.