BCR Q1 profit at EUR 200,000 on lower banking income

BCR Group, controlled by Austria’s Erste Bank, said on Wednesday its net profit reached EUR 200,000 in the first quarter from a loss of EUR 2.3 million in the same period of last year, on the back of falling banking income.

Its operating income lost 6.8 percent to EUR 203 million due to a reduction in the net interest income and the net trading result, while the net fee income grew by almost one quarter.

The lender saw expenses fall by 12.4 percent to EUR 80.5 million, due to optimization measures in headcount and branch network, as well as strict cost management. Its cost-income ratio improved to 39.7 percent against 42.2 percent in Q1 2013.

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“The net charge of impairments on financial assets not measured at fair value through profit and loss in Q1 2014 decreased by 1.5 percent to EUR 110.3 million from EUR 114.9 million in Q1 2013, still reflecting the impact of a difficult economic environment on selected customers, but also lower NPL inflows in retail and SME sectors, in line with expectations,” said the bank in a statement.

The non-performing loans slightly rose to 30.2 percent, due to the shrinking loan book in the corporate segment. However, the bank said that NPL volumes have reduced in absolute terms, due to recovery efforts, write-offs and sell-offs. Its NPL coverage ratio improved slightly by 61.1 percent.

The bank has registered a 14.7 percent decrease in aggregate loans to customers to EUR 8.2 billion, hit by weak demand. Deposits, meanwhile, remained stable at EUR 8.3 billion.

BCR said it has diversified funding sources, including deposits, the parent support and funding deals with international lenders. Its solvency ratio stood at 14.7 percent.

The bank’s assets fell 6.8 percent to EUR 14.7 billion, as new business generation partially offset clear-up of the loan book. BCR remained the biggest lender in Romania by assets.

Erste Group posted a first quarter profit of EUR 103.3 million from EUR 176.6 million in the same period of last year, due to weak loan demand, the low interest environment for loans and the banking and transaction taxes in Austria, Hungary and Slovakia.

Ovidiu Posirca