BCR registers H1 profit of EUR 127 mln on lower risk costs

The net profit of BCR, controlled by Austria’s Erste Group, reached EUR 126.8 million in the first half against a loss of EUR 124.9 million in the same period of last year, as the lender moved to restructure its operations and lower risk costs.

BCR said the profit was due to a good operating result offsetting risks costs, also accounting for a positive on-off impact, following the release of deferred tax liabilities worth EUR 127.7 million.

Bernd Mittermair, CFO of BCR, said: “The first half of the year confirmed that declining risk costs are driving our return to profitability. Furthermore we are pleased to see strong positive effects of the restructuring program on our operational performance.”

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The lender’s operating result rose by 3 percent to EUR 282.7 million, due to a lower income offset by a reduction of expenses.  The operating income lost 1.1 percent to EUR 453.3 million and the expenses were slashed by 7.3 percent to EUR 170.4 million.

BCR is currently grappling with non-performing loans (NPL) that reached 29.2 percent of the total loan book, due a contracting loan portfolio, although the NPL formation slowed down. Nevertheless, the net charge of risk provisions for loans and advances lost 37.8 percent to EUR 249.2 million, due to lower NPL inflows. The lender has increased the NPL coverage to 61.6 percent.

The loans to customers (before provisioning, IFRS) fell by 4.3 percent to EUR 11.4 billion against the end of 2012. BCR said the new lending was impacted by “weak demand”.

It said the focus on RON lending will be maintained so as to reverse the currency mix of the loan book in order to use the “strong” self-funding capacity in RON.

Deposits, the main funding source of BCR, lost 3.2 percent to EUR 8.2 billion in the first semester.

BCR remained the leading bank in Romania, although its assets fell by 4.9 percent to EUR 15.6 billion. The lender reported a solvency ratio of 12.96 percent and Tier 1+2 capital ratio of 18.6 percent on IFRS standards.

Erste Group’s H1 profits stood at EUR 301.2 million against EUR 453.6 million in the same period of last year, which had been driven by on-off effects.

Ovidiu Posirca