1-9 2017 commercial and financial highlights
Banca Comerciala Romana (BCR) achieved in 1-9 2017 a significant net profit of RON 559.8 million (EUR 123.0 million), supported by good operating performance and continuous improvement of portfolio quality. Compared to the same period of last year, net profit declined mainly due to base effect from substantial risk provision releases and from significant gain following the sale of certain participations in 1-9 2016.
The operating result stood at RON 1,072.0 million (EUR 235.5 million), higher by 0.4% than the previous year, when it stood at RON 1,067.9 million (EUR 238.1 million), due to lower operating expenses.
In bank retail business, BCR granted new loans totalling RON 4.1 billion with solid sales of both unsecured and secured loans. Secured loans have been consistently backed by the Prima Casă Program on the basis of new allocated funds and consequently higher drawings in the third quarter, an evolution that is expected to continue in the fourth quarter. These sales contributed to an advance in net retail loans stock of 3.6% against December 2016.
In bank corporate business, new volumes added on the balance sheet totalled RON 1.9 billion. Co-financing of EU funded projects was also solid, with BCR holding a portfolio of RON 7.82 billion co-financed. The corporate book growth is further supported by a solid pipeline of better quality new business, with a shift from working capital loans towards more investment financing, net corporate loans stock advancing by 1.3% against December 2016.
Net interest income was down by 3.3% to RON 1,311.33 million (EUR 288.08 million), from RON 1,356.35 million (EUR 302.45 million) in 1-9 2016, on the back of continued NPL portfolio resolution and a still low interest rate environment.
Net fee income decreased by 3.2% to RON 515.77 million (EUR 113.31 million), from RON 532.67 million (EUR 118.78 million) in 1-9 2016, on the back of lower cash withdrawals over the counter (as a consequence of the successful strategy to enhance electronic channels usage), as well as lower maintenance and card business fees.
Net trading result increased by 11.2% to RON 281.07 million (EUR 61.75 million), from RON 252.85 million (EUR 56.38 million) in 1-9 2016, on the back of positive effect from revaluation of FX participations.
The operating income decreased by 1.2% to RON 2,158.26 million (EUR 474.13 million) from RON 2,183.97 million (EUR 487.0 million) in 1-9 2016, driven by reduced net interest income and lower fee and commission income partly compensated by higher trading result.
General administrative expenses dropped in 1-9 2017 by 2.7% to RON 1,086.24 million (EUR 238.63 million) from RON 1,116.08 million (EUR 248.87 million) in 1-9 2016, mainly impacted by methodology adjustments for booking contribution to the bank deposit insurance fund.
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 of RON 61.36 million (EUR 13.48 million) in 1-9 2017, versus a net risk provisions release of RON 227.73 million (EUR 50.78 million) in 1-9 2016, while continuing efforts to improve the quality of the portfolio.
NPL ratio2 at 10.5% as of 30 September 2017 significantly decreased from 13.3% as of 30 September 2016 and 22.2% as of 30 September 2015, due to reduction of NPL book through recoveries, healings, sales on NPL portfolios and write-offs. NPL provisioning coverage further improved to 94% as of September 2017, while total coverage including collateral reached 125.5%.
Capital position and funding
Solvency ratio under local standards (BCR standalone) as of August 2017 stood at 23.1%, well above the regulatory requirements of the National Bank of Romania. Also, IFRS Tier 1+2 capital ratio of 22.3% (BCR Group), as of June 2017, is clearly showing BCR’s strong capital adequacy and continuous 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.
Loans and receivable to customers increased by 2.5% to RON 33,101.77 million (EUR 7,197.13 million) at 30 September 2017, from RON 32,291.13 million (EUR 7,114.15 million) at 31 December 2016, as a result of increased lending volumes on both retail and corporate segments.
Deposits from customers decreased by 1.2% to RON 47,646.61 million (EUR 10,359.54 million) at 30 September 2017, versus RON 48,235.20 million (EUR 10,626.83 million) at 31 December 2016, due to a decrease in 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, continuously increasing the share of loans extended in local currency, already predominant in bank’s overall loan portfolio, fully using the strong self-funding capacity in RON.
Banca Comerciala Romana (BCR), a member of Erste Group, is the most important financial group in Romania, including operations of universal bank (retail, corporate & investment banking, treasury and capital markets), as well as specialized companies on the leasing market, private pensions, housing banks and banking services. BCR is No. 1 Bank by number of clients and No. 1 bank by savings and financing segments. BCR is the most valuable financial brand from Romania, considering the degree of trust of the clients and the number of people for whom BCR is the main banking institution.
BCR offers a complete range of products and financial services through a network of 22 business centres and 18 mobile offices for companies and 515 retail units located in major cities across the country with over 10,000 inhabitants. BCR is the No. 1 bank in Romania on the bank transaction market, BCR clients having available the largest national network of ATMs – over 2,000 ATMs and POSs – over 15,200 card payment terminals to merchants, as well as full service Internet banking, Mobile Banking, Phone-banking and E-commerce.
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