BCR reports 84.3 percent drop in profits, nine months into 2011

BCR, the leading bank in Romania with 20 percent market share and assets totaling EUR 17 billion, has reported a decline in net profit of 86.3 percent to EUR 16.1 million, in the first nine months of 2011. This was attributable to a decrease in net operating income and high levels of provisioning in corporate lending.

The net operating income of the lender went down by 11.2 percent year-on-year to EUR 749.1 million. This was attributable to a 17.5 percent decrease in net interest income to RON 2.38 billion in the first nine months of 2011. However, the net commission income slightly increased by 3.2 percent, reaching EUR 105.7 million at end-September.

The net trading result of BCR increased by 39.2 percent year on year, from RON 232 million at end September 2010 to RON 323 million. The net charge of the lender with risk provisions for loans and advances totaled EUR 382.5 million in the first three trimesters of this year, reflecting a delay in the economic recovery.

The volume of aggregated loans to customers (before provisions, IFRS) increased by 1.3 percent in the first nine months of 2011 to EUR 12.141 billion, mainly driven by corporate lending.
Meanwhile, the amounts owed to customers rose by 3.2 percent at end September to EUR 8.96 billion.

The non-performing loans ratio stood at 20.8 percent of the total loan portfolio, due to the corporate segment. According to BCR, SMEs are still short on liquidity and some large corporate re-defaulted. However, the bank has a stable NPL coverage ratio of 118 percent, including collateral and provisions.

The cost-income ratio stood at 40 percent at the end of September 2011, from 35.1 percent in the same period of 2010.

The bank’s solvency ratios remains at 10.7 percent, against the 10 percent minimum RAS (Romanian Accounting Standards) ratio requiered by the National Bank of Romania. Also, the 16.4 solvency ratio on IFRS standards at end June 2011 is reassuring.

Erste Group announced it will inject EUR 144 million in BCR, a process that is ongoing. Also, the Austrian group is preparing the acquisition of SIFs participations in BCR.

Ovidiu Posirca