BCR, a unit of Austria’s Erste Group Bank, reported Thursday a net loss of 276.6 million lei (EUR61.9 million) for the first half of the year, compared with net profit of RON560.9 million in the same period of 2013.
The negative net result was mainly due to “elevated provisioning generated by accelerated balance sheet clean-up, with the view to improved near term performance and considering the fact that diminishing the ratio of non-performing loans is critical to restoring credit extension, economic growth and creation of jobs in the economy,” BCR said in a statement.
Loan provisions increased by 29.5% to RON1.3 billion, from RON1 billion at the end of June 2013. The NPL ratio remains at 29.3% of total loan portfolio, despite overall decrease of the loan book caused by natural repayments, write-offs and sales of selected NPL portfolios, BCR said.
BCR manages a non-performing loans portfolio of around RON12.9 billion, but aims to reduce it by 25% until year-end. In that respect, BCR signed in July a sale transaction of RON1 billion for a non-performing corporate loans package to a consortium of foreign investors and available funding lines.
In the first six months, the bank’s operating income declined 9.5% on the year to RON1.8 billion, mainly due to a decrease in net interest income, on the back of a lower interest rate environment, efforts to price competitively in the market and accelerated NPL portfolio resolution.
General administrative costs fell 13.2% to RON707.6 million, after restructuring measures and strict cost management, the bank said.
BCR added that it kept its market leading position, despite decline in total assets by 5.1% to RON63.3 billion at the end of June, from RON66.7 billion at December 31, 2013.