BCR continued to improve its balance sheet and maintained a solid lending stream. We are especially thankful to our clients and partners for their loyalty and trust. We, thus, have the responsibility to continue offering saving and lending solutions which are, above all, simple, transparent and advantageous to our customers. Client satisfaction and their economic well-being stand as certainties on which we ground our ambitious improvement plans.
In a context of economic and legislative challenges, BCR stands by its mission. BCR stand as an anchor to the financial stability of the economy and a bank of long term engagements to people, companies and public institutions. Romania needs infrastructure, as it needs to profit from economic opportunities or answer social challenges. BCR holds substantial capital, excellent liquidity and a significant solvency to support these priorities of our country, Sergiu Manea, CEO of BCR, stated.
H1 2016 commercial and financial highlights
Banca Comerciala Romana (BCR) in H1 2016 achieved a strong net profit of RON 636 million (EUR 141.5 million), supported by operating performance and continued improvement of portfolio quality.
The operating result stood at RON 704.7 million (EUR 156.8 million), 9.5% lower than the previous year at RON 778.5 (EUR 175.1), driven by lower operating income, impacted by reduced unwinding contribution, margin pressure and low interest rate environment coupled with higher costs from booking full contribution to deposit insurance fund in Q1 2016.
In bank retail business, strong performance in volume generation by the franchise resulted in new loans totalling RON 2.6 bn, with solid sales of both unsecured and secured loans – driven by acceleration of Prima Casa, due to supplementation of available ceiling, presently already exhausted.
In bank corporate business, new volumes added on the balance sheet totalled RON 1.5 billion. Co-financing of EU funded projects was also solid with BCR holding over 30% market share and a portfolio of over RON 7.2 bn co-financed. The corporate book growth is supported by a solid pipeline of better quality new business, particularly in overdraft, working capital and supply chain financing.
Net interest income was down by 7.8%, to RON 934.7 million (EUR 208.0 million), from RON 1,013.6 million (EUR 237.9 million) in H1 2015, on the back of continued NPL portfolio resolution, efforts to price competitively in the market and a low interest rate environment.
Net fee income was up by 3.6%, to RON 354.1 million (EUR 78.8 million), from RON 341.9 million (EUR 76.9 million) in H1 2015, on the back of higher transaction banking fees.
Net trading result increased by 27.1%, to RON 156.3 million (EUR 34.8 million), from RON 123,0 million (EUR 27.7 million) in H1 2015 on the back of higher results from sales of financial instruments.
The operating income decreased by 1.8% to RON 1,473.0 million (EUR 327.7 million) from RON 1,500.5 million (EUR 337.4 million) in H1 2015, mainly driven by reduced net interest income partly compensated by better net fee and commission income and higher trading result.
General administrative expenses in H1 2016 reached RON 768.4 million (EUR 170.9 million), up by 6.4% in comparison to RON 722.0 million (EUR 162.4 million) in H1 2015 negatively impacted by booking full contribution to deposit insurance fund in Q1 2016 compared to pro-rata in Q1 2015.
As such, cost-income ratio advanced to 52.2% in H1 2016, versus 48.1% in H1 2015.
Risk costs and Asset Quality
In terms of net charge of impairments on financial assets not measured at fair value through profit and loss BCR recorded a provision release of RON 69.3 million (EUR 15.4 million) in H1 2016, versus a charge of RON 26.2 million (EUR 5.9 million) in H1 2015, driven by further recoveries and improved portfolio quality.
NPL ratio at 14%, as of 30 June 2016, significantly decreased versus 23.1% as of 30 June 2015, despite overall reduction of the loan book, determined by recoveries, sales of selected NPL portfolios and write-offs. NPL provision coverage ratio improved to 80.9%, while, collateral included, it comfortably stood at 113.8%.
Capital position and funding
Solvency ratio under local standards (BCR standalone) as of May 2016 stood at 23%, well above the regulatory requirements of the National Bank of Romania. Also, IFRS Tier 1+2 capital ratio of 21.6% (BCR Group), as of March 2016, is clearly showing BCR’s strong capital adequacy and continuing support of Erste Group. In this respect, BCR enjoys one of the strongest capital and funding positions amongst Romanian banks.
BCR will continue to maintain high solvency ratio, proving its ability and commitment to support sustainable quality of lending growth in both Retail and Corporate franchises, further reinforcing core revenue generating capacity.
Deposits from customers grew by 2.9% to RON 43.848.1 million (EUR 9,693.6 million) at 30 June 2016, versus RON 42,626.0 million (EUR 9,422.2 million) at 31 December 2015, particularly driven by retail deposits and slightly higher inflows from corporate clients, yet. Customer deposits remain BCR’s main funding source, while the bank benefits from diversified funding sources, including parent company.
BCR plans to keep focus on RON lending, so as to reverse the currency mix of the loan book in favour of local currency on medium to long term and fully use the strong self-funding capacity in RON.
BCR offers a complete range of financial products and services through a network of 511 retail units located in most towns with more than 10.000 inhabitants, across the whole Romania, as well as 21 business centres and 23 mobile offices dedicated to companies. BCR commands the largest Self-serving banking Equipment network in the country – about 2.600 Equipment (ATMs, Multifunctional Machines, Automated Payment Terminals, FX Exchange Machines) as well as 12.000 POS terminals for payments by card at merchants. As of June 2016, BCR Group was employing 7,153 people.
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Internet page: www.bcr.ro
Telverde: 0800.801.BCR (0800.801.227), toll-free from all national networks