Banca Comerciala Romana (BCR) recorded a net profit of RON 1,015.2 million (EUR 218.2 million) in the first nine months of 2018, generated a new volume of loans granted in local currency of RON 6.3 billion and recorded a 46 percent increase in personal needs loans.
The operating result increased to RON 1.2 billion (EUR 262.8 million), 14 percent higher than the previous year at RON 1.07 billion (EUR 233.1 million), driven by improving operating income. Net interest income increased significantly by 15.5 percent, to RON 1.5 billion (EUR 325.7 million), helped by the rise in market interest rates and higher size of loans and current accounts.
Net fee income advanced by 2.8 percent, to RON 530.4 million (EUR 114.0 million), on the back of higher fee income from maintenance as well as cash and non-cash transactions. Net trading result increased by 15.9 percent to RON 325.8 million (EUR 70 million).
Operating income increased by 12.8 percent to RON 2.4 billion (EUR 523.4 million) from RON 2.1 billion (EUR 469.3 million) in 9M 2017, driven by significantly higher net interest income, improved fee income and higher net trading result.
General administrative expenses reached RON 1.2 billion (EUR 260.6 million), up 11.6 percent, mainly due to higher personnel expenses as well as investments in the new headquarters and IT projects. As such, cost-income ratio stood at 49.8 percent in 9M 2018, versus 50.3 percent in 9M 2017.
In retail banking business, BCR generated a new volume of loans granted in local currency of RON 6,3 billion in 9M 2018, with over 46 percent increase in “Divers” cash loan and a four-fold increase in sales of standard mortgage product “Casa mea” in the first 9 months compared to the same period of last year. BCR has strengthened its leading position as the main banking partner for the Romanians who want to buy a house, with more than 22 percent of the newly originated mortgage loans.
Micro business sales increased by 5 percent yoy supported by the improved offer and BCR leading position in Start-Up Nation governmental program, while SME financing (small and medium-sized enterprises) recorded a double digit increase, the SME loan stock exceeding RON 5,2 billion (EUR 1.1 billion) of as of September 2018.
In terms of total corporate banking business (large corporates, SMEs and public sector), BCR Bank new approved credits amounted to RON 4.5 billion (EUR 970 million).
Under corporate financing, BCR is involved in several key sectors of the Romanian economy, such as manufacturing (mainly automotive), energy, agriculture and IT. Co-financing of EU funded projects increased over the last year, BCR holding a significant market share and a portfolio of over RON equivalent 8.4 billion granted co-financings.
”Creating prosperity in Romania is a challenging path, yet also an inspiring one. We will achieve this only through wide cooperation and I take this opportunity to thank our customers and our employees who are partnering together to better cope with the ever-changing social and economic environment. Our goal is to consolidate the trust capital in society and we do this by creating new economic opportunities and by learning to act as a reliable adviser. I am particularly thankful to all the people across Romania who invested their trust in our Money School program, in order to reach financial independence,” said Sergiu Manea, CEO at BCR.
Risk costs and Asset Quality
Lower risk costs registered in the first nine months of 2018 in comparison with the same period of last year (RON 43.8 million versus RON 61.4 million), due to higher releases of provisions registered in 2018, triggered by significant cash recoveries and reimbursements in the corporate segment.
NPL ratio at 6.8 percent, as of 30 September 2018, reduced versus 10.5 percent as of September 2017, driven by good trend in recoveries and transition to IFRS 9. NPL coverage ratio was 93.8 percent as of September 2018.
Capital position and funding
Solvency ratio under IFRS (BCR standalone) as of August 2018 was 21 percent, well above the regulatory requirements of the National Bank of Romania. Furthermore, Tier 1+2 capital ratio of 20.7 percent (BCR Group) as of June 2018 is clearly showing BCR’s strong capital adequacy and continuing support of Erste Group. In this respect, BCR enjoys one of the strongest capital and funding positions amongst Romanian banks.
BCR will continue to maintain high solvency ratio, proving its ability and commitment to support sustainable quality of lending growth in both Retail and Corporate franchises, further reinforcing core revenue generating capacity.
Loans and receivables to customers increased by 7.4 percent to RON 35.9 billion (EUR 7.7 billion) as of 30 September 2018, mainly on the back of strong advance in retail (+12.5 percent ytd), while corporate loans marginally up.
Deposits from customers stood rather stable at RON 52.6 billion (EUR 11.2 billion) as of 30 September 2018 driven by increase in retail deposits, while corporate deposits declined. Customer deposits remain BCR’s main funding source, while the bank benefits from diversified funding sources, including parent company.
BCR focuses on lending in RON, which becomes more and more predominant in the overall currency mix of the bank’s loan book, thus fully using the strong self-funding capacity in RON.
Erste Group net profit
Austrian financial group Erste Group, which also includes Romanian bank BCR, posted a 24.4 percent gain on net profit in the first nine months, up to EUR 1.23 billion.
Net interest income grew, mainly in the Czech Republic and Romania, to EUR 3.3 billion, up 4.4 percent in the first nine months, compared to the same period last year.
At the same time, net income from fees and commissions increased to EUR 1.4 billion (+ 5.1 percent), mainly driven by significantly higher brokerage commissions, as well as payment services, asset management and lending. Operating revenue rose to EUR 5.09 billion (+ 3.2 percent).
At the same time, the Group recorded the increase in general administrative expenses up to EUR 3.1 billion (+ 2.9 percent), mainly due to higher personnel costs. Total assets rose to EUR 234.8 billion, 6.4 percent higher than the same period of last year. Cash and cash equivalents decreased to EUR 15.2 billion, while loans and advances to credit institutions increased to EUR 20 billion.