The bank’s operating income fell 6.8% on the year to RON914.1 million in the analyzed period, but operating costs were down 12.4% at RON362.5 million, due to “optimization measures in headcount and branch network, as well as strict cost management,” BCR said in a news release.
BCR, a unit of Austria’s Erste Group Bank (EBS.RO), reported an operating result of RON551.7 million, 2.8% lower from RON567.3 million in the first quarter of 2013.
The lender switched to profit in the first three months “on the back of solid operating result fully offsetting risk costs.” The net charge of impairments on financial assets declined 1.5% to RON496.4 million in the first quarter, still reflecting the impact of a difficult economic environment on selected customers, BCR said.
“(Non-performing loan) ratio slightly rose to 30.2% of the total loan portfolio at 31 March 2014, due to contraction of the loan book driven by the corporate business. NPL volume reduced in absolute terms, on the back of efficient recovery efforts, write-offs, as well as sell-offs. NPL coverage ratio, now at 61.1%, stood significantly above 58% in Q1 2013, reflecting a key management priority to improve asset quality.”
BCR said it remained the largest bank in Romania by assets, despite a 6.8% drop in total assets to RON65.8 billion at 31 March 2014, versus RON70.6 billion in the same period of 2013.
The asset decline is mainly due to a significant reduction of the loan portfolio. BCR said the volume of aggregate loans to customers decreased by 14.7% to RON36.7 billion, with new lending, impacted by weak demand, only partially offsetting repayments and loan book contraction.
“BCR plans to keep focus on RON lending, so as to reverse the currency mix of the loan book in favor of local currency on medium to long term and fully use the strong self-funding capacity in RON.” Deposits from customers remained rather stable at RON37.4 billion as of 31 March 2014.
Solvency ratio under local standards stood at 14.7%, well above the central bank’s minimum requirement of 10%. (EUR1=RON4.4403)