BVB 2015 profits tumble 41 percent, says preliminary report

The Bucharest Stock Exchange (BVB) ended 2015 with a preliminary net profit of RON 7 million, down 41 percent from 2014 “given the increasingly challenging international and local context, which brought volumes, capitalisation and indices lower”, according to the BVB preliminary report for 2015.

Despite political instability experienced in Romania in 2015, the “local capital market was influenced less by politics and more by dynamics of the global markets, falling oil prices and a controversial law related to mortgage loans, seen to affect local banks if passed,” according to the BVB report.

The main market index BET saw a decline of 1.1 percent at the end of 2015 after increasing by 0.3 percent (in RON) during the last quarter of the year. BET-TR (the total revenue version of BET) gained 3.1 percent after incorporating dividends paid by constituent companies, with “Bucharest Stock Exchange companies [having] registered one of the highest dividend yields in the region,” as detailed by the BVB report.

The stock market trading activity saw a 23 percent increase in terms of turnover (offers included) in the fourth quarter compared to the previous one, meaning RON 2.7 billion. Set against 2014, a 9 percent decline was registered, while for the regulated market alone, the average daily turnover for the quarter was RON 33.1 million (excluding offers), 3 percent above both periods of reference.

In terms of trading activity, the capital market registered lower equities markets turnover in 2015, where trading value including offers reached RON 9 billion, 32 percent below 2014. The fixed income markets fared much better, due to several deals including the sale of Bucharest Municipality bonds and the sale of government securities dedicated for retail investors, the first such issue in 10 years.

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The BVB revenues from services reached RON 17.21 million in 2015, 36 percent lower year-on-year, with the main driver being the 43 percent decline in trading revenues to RON 13.14 million.

The stock market, including both the regulated market and AeRO, generated almost RON 9 billion in trading value, including offers, 32 percent below 2014 when the IPO for Electrica marked “a milestone difficult to reach”, says the BVB report. Excluding offers, the decline was 16 percent, triggered by the increased investor risk aversion towards frontier and emerging markets.

Trading revenues also reflected the lower fees charged by BVB starting with the fourth quarter of 2014, with regular trades executed on the shares markets experiencing a decline of approximately 15 percent. At the same time, less negotiated trades on the deal markets were registered, averaging 17 percent of the 2015 regulated market total trading value, compared to 45 percent before the BVB implemented the fees cut. In total, operating revenues were RON 17.73 million in 2015, 35 percent lower than in 2014, says the preliminary report.

Operating expenses declined to RON 14.49 million (10 percent decrease from 2014) due to lower personnel costs, a decline in events and travel related costs, provisions and expenses with non-deductible VAT and FSA costs. On the other hand, depreciation charges went up to RON 1.15 million, 50 percent above the figure registered in 2014, due to investments in tangible and intangible assets commissioned during 2014 and 2015, further says the BVB report.

Also in 2015, shareholders’ equity reached RON 94.12 million, down by 4 percent since the beginning of the year, following the registration of the net profit accumulated during the year.

Andreea Tint