First nine months (1-9) 2016 commercial and financial highlights
Banca Comerciala Romana (BCR) in 1-9 2016 achieved a strong net profit of RON 1,145.4 million (EUR 255.4 million), supported by new client business and continued improvement of portfolio quality.
The operating result stood at RON 1,067.9 million (EUR 238.1 million), 11.1% lower than the previous year at RON 1,201.2 (EUR 270.5), driven by lower operating income, impacted by reduced unwinding contribution, low margin and low interest rate environment.
In bank retail business, strong performance in volume generation by the franchise resulted in new loans totalling RON 3.8 bn, with solid sales of both unsecured and secured loans – driven by Prima Casa, due to supplementation of available ceiling, presently already exhausted.
BCR successfully targets client activation by means of internet & mobile banking services (up by 30%, 150% yoy, respectively), free base current account and debit card, as well as ATM and POS transactions (up by 20% yoy).
The bank was the first local institution compliant with EU Directive 17 on consumer credit. The bank has also reached a milestone 200.000 clients to whom it has offered in the last years commercial solutions to reduce financial burden and increase loyalty.
In bank corporate business, new volumes added on the balance sheet totalled RON 2.2 billion. Co-financing of EU funded projects was also solid with BCR holding over 30% market share and a portfolio of over RON 7.1 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 10.0%, to RON 1,356.3 million (EUR 302.4 million), from RON 1,506.5 million (EUR 339.3 million) in 1-9 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 0.2%, to RON 532.7 million (EUR 118.8 million), from RON 531.6 million (EUR 119.7 million) in 1-9 2015, on the back of higher transaction banking fees.
Net trading result increased by 8.9%, to RON 252.9 million (EUR 56.4 million), from RON 232.1 million (EUR 52.3 million) in 1-9 2015.
The operating income decreased by 5.3% to RON 2,184.0 million (EUR 487.0 million) from RON 2,307.3 million (EUR 519.6 million) in 1-9 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 1-9 2016 reached RON 1,116.1 million (EUR 248.9 million), up by just 0.9% in comparison to RON 1,106.2 million (EUR 249.1 million) in 1-9 2015.
As such, cost-income ratio advanced to 51.1% in 1-9 2016, versus 47.9% in 1-9 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 227.7 million (EUR 50.8 million) in 1-9 2016, versus a charge of RON 55.1 million (EUR 12.4 million) in 1-9 2015, driven by further NPL resolution and recoveries and coupled with improved portfolio quality.
NPL ratio at 13.3%, as of 30 September 2016, significantly decreased versus 22.2% as of 30 September 2015, despite overall reduction of the loan book, determined by recoveries, sales of selected NPL portfolios and write-offs. NPL provision coverage ratio stood at 79.7%, while, collateral included, it comfortably stood at 113%.
Capital position and funding
Solvency ratio under local standards (BCR standalone) as of August 2016 stood at 22.9%, well above the regulatory requirements of the National Bank of Romania. Also, IFRS Tier 1+2 capital ratio of 21.3% (BCR Group), as of June 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 4.6% to RON 44.606.2 million (EUR 10,015.5 million) at 30 September 2016, versus RON 42,626.0 million (EUR 9,422.2 million) at 31 December 2015, driven by retail and corporate deposits. 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 512 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 September 2016, BCR Group was employing 7,115 people.
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