ratio ratio of non - performing exposures npl coverage by provisions ( rhs ) texas ratio ( rhs ) source : nbr figure 13. non - performing loan ratio the adjustment pace of the npl ratio in the eu ( september 2014 – june 2017 ) percent percent 21. 5 npl ratio in romania - 2 - 4 7. 96 - 6 - 8 - 10 - 12 - 14 ro cy ie hu bg it lt at hr es lv cz sk gb de dk be fr pl nl fi se lu pt gr note : no data are available for si, mt, ee. source : eba sep. 14 nov. 14 jan. 15 mar. 15 may. 15 jul. 15 sep. 15 nov. 15 jan. 16 mar. 16 may. 16 jul. 16 sep. 16 nov. 16 jan. 17 mar. 17 may. 17 jul. 17 sep. 17 - 16 source : nbr figure 14. breakdown of non - performing loans and npl coverage dynamics of non - performing loan ratio by debtor npl ratio and npl coverage by provisions, by sector and type of loan ( september 2017 ) percent percent dec. 2015 dec. 2016 sep. 2017 source : nbr consumer credit residential real estate loans households commercial real estate loans note : data on non - performing exposures of the banks that are romanian legal entities. smes non - financial corporations non - performing loan ratio non - performing loan coverage by provisions total consumer credit residential real estate loans households commercial real estate loans smes non - financial corporations total consumer credit residential real estate loans households commercial real estate loans smes non - financial corporations total source : eba, nbr figure 15. dynamics of bank liabilities lei bn. non - financial corporation deposits capital and reserves foreign liabilities sep. 17 dec. 16 dec. 15 dec. 14 dec. 13 dec. 12 dec. 11 dec. 10 dec. 09 dec. 08 household deposits other liabilities source : nbr figure 17. impact of implementing the ifrs 9 by banks in romania ( june 2017 ) figure 16. profitability of the banking sector : roa, 2016 1. 5 percent 1. 0 eu median 0. 5 0. 0 percentage points percent - 1 - 2 - 3 - 4 - 5 - 10 - 6 - 20 - 7 - 30 total - 0. 5 change in total capital ratio gr it cy pt de es fr nl at pl ie mt sk si lt ro cz hu bg

discipline economy - wide, which reflects in soft budget constraints in the private sector as well. this contributes to the deepening of vulnerabilities that may affect financial stability through inefficient resource allocation, the rise in non - performing loans, the distortion of market signals and the creation of quasi - broad money with negative effects on inflation. the main risk factors to financial stability are : ( i ) the undercapitalisation of a large number of companies ( 276. 4 thousand firms with net worth below the required threshold, out of which 268. 5 thousand firms with negative equity ), induced particularly by losses ( 217. 3 thousand firms with total losses of lei 33 billion in 2016 ), as well as the high indebtedness level in certain sectors, ( ii ) the increase in past due obligations to the government budget ( up 5. 9 percent in 2016 ), ( iii ) the low capacity to recover commercial claims, especially at the level of micro - enterprises, ( iv ) corroborated by the large number of firms in credit institutions ’ portfolio which have not gone through a full business cycle, ( v ) the return of insolvency to an upward trend in terms of both the number of newly - insolvent firms ( 6. 1 thousand firms in the first eight months of the year ) and the volume of non - performing loans generated in the banking sector ( the volume of non - performing loans generated by the companies undergoing insolvency proceedings increased by about one third to lei 1 billion ) and ( vi ) the rise in overdue payments of the government budget to the real sector ( up 9 percent in the period from september 2016 to september 2017 to lei 223. 1 million ). in a broader perspective, the weak payment discipline economy - wide has highlighted structural vulnerabilities in the balance sheets of companies ( figures 31 - 34 ). it is worth noting that the poor payment discipline economy - wide is not a new risk, but a recurrent vulnerability in romania ’ s economy. it was deemed necessary to be emphasised as a distinct risk that is on the rise on account of three reasons which make it more dangerous today than previously : ( i ) the reduction in the vulnerabilities in banks ’ balance sheets ( through the clean - up of the non - performing loan portfolio ) does not translate into a corresponding decrease in the vulnerabilities in firms ’ balance sheets, which reveals the persistence of structural issues economy - wide ;