Net loss of BCR, majority-owned by Austrian Erste Group, climbed to RON 307.8 million (EUR 70.8 million) in the first quarter (Q1) of 2012 against a net profit EUR 18.1 million on Q1 2011, due to increased risk provisioning for loans and advances which rose by 52 percent y/y to RON 933.7 million (EUR 215 million), mainly in the corporate segment.
Operating income fell by 2.5 percent y/y to RON 1.02 billion (EUR 236 million), led by weak credit demand and a decrease of interest income of 7.6 percent y/y to RON 750.4 million (EUR 172 million). Net fee income was up 1 percent y/y to RON 155.6 million (EUR 36 million), while the net trading result increased almost three folds to RON 122.9 million (EUR 28 million).
Operating expenses fell by 6.1 percent y/y to RON 418.9 million (EUR 96 million) due to investments in the human capital and banking infrastructure. Cost to income ratio slightly improved to 40.7 percent in Q1.
Lending to customers (before provisions, IFRS) slightly rose by 0.9 percent q/q to RON 53.8 billion (EUR 12.2 billion), driven by retail lending, although corporate lending was also up due to infrastructure and renewable energy projects. Meanwhile, amounts owned to customers lost 0.3 percent y/y to RON 36.6 billion (EUR 9.1 billion), driven by customer deposits and support from the parent bank.
Retail business lending includes refinancing of older loans and borrowing through Prima Casa 4, where BCR’s financing amounts to EUR 395 million for people looking to own their first home. Overall, since the start of the program, the lender’s financing totaled EUR 990 million.
The lender’s increased risk provisioning of EUR 215 million improved the coverage ratio of non-performing loans (NPL) to 52.2 percent. The NPL coverage ratio (collateral and provisions) was 107.6 percent. Most of the new bad loans came from the corporate segment, mainly SMEs that are short of liquidity and or large corporate that re-defaulted.
BCR’s solvency ratios remain above the required level. Tier 1+2 capital ratio stood at 12.31 percent on IFRS against the minimum 10 percent set by the National Bank of Romania. In addition, the solvency rate of BCR Group, in IFRS, stood at 17.09 percent.
BCR group’s total assets fell by 1.6 percent y/y to RON 75.5 billion (EUR 17.2 billion), remaining the leading bank in Romania with a 20.8 percent market share by assets.