BCR, a unit of Austria’s Erste Group Bank (EBS.RO), reported net profit after tax and minority interests of 591.2 million lei (EUR133.8 million), compared with a loss of RON1.23 billion in 2012.
The result came “on the back of good operating result offsetting still elevated risk costs, also accounting for a positive one-off effect from the release of deferred tax liabilities of RON560.8 million in Q2 2013,” the bank noted in a statement.
BCR’s net charge of risk provisions for loans fell 41.2% to RON2.13 billion, from RON3.62 billion in 2012, while the non-performing loan coverage ratio improved to 65.8% in December 2013, versus 58.6% a year before.
The bank’s operating profit rose 5.6% on the year to RON2.49 billion, despite a slight decrease in revenue. Operating income went down 1.2% to RON3.99 billion, but BCR managed to slash operating costs by almost 11%, to RON1.5 billion.
“We achieved a challenging job in 2013 returning to breakeven after one-off items and, most importantly, dealing with bold decisions, regarding costs, organization and strategy, aimed at consolidating the fundamentals of BCR as the leading bank in Romania,” said Tomas Spurny, the lender’s chief executive officer.
However, the lending activity is still depressed, as the total loan portfolio declined 12.2% to RON46.7 billion at the end of last year. “New lending, impacted by weak demand, only partially offset redemptions and loan book contraction,” BCR said.
BCR remained the largest bank in Romania by assets, despite a 8.9% decline in total assets to RON66.73 billion in December 2013, versus RON73.29 billion in the year-earlier period.
The bank noted that its solvency ratio stood at 14.7% at the end of 2013, well above the central bank’s minimum regulatory requirement of 10%.
“Our main priority in 2014 is healthy business growth … We continue to face significant challenges ahead of us, not least resolving the NPL stock amidst promising economic growth delaying to translate yet into more solid loan demand,” Spurny also said.
For 2014, BCR estimates a net profit of RON647 million.