Erste, the owner of BCR, Romania’s largest bank, said its net loss attributable to owners of the parent was of EUR1.48 billion in January-September 2014, compared with a profit of EUR430.6 million in the same period a year ago.
Operating income declined 2.8% to EUR5.12 billion, from EUR5.26 billion in January-September 2013, and general administrative costs were also down, by 4.8%, to EUR2.78 billion.
Thus, the operating result declined slightly to EUR2.33 billion for the first nine months, but the provisioning costs were considerably higher.
“The net impairment loss on financial assets not measured at fair value through profit or loss went up by 34.5% to EUR1.67 billion… This was attributable in particular to additional risk costs in Romania resulting from the announced accelerated NPL reduction. The NPL ratio declined substantially to 8.9% (from 9.6% in the same period of 2013) on the back of successful NPL sales in Romania,” Erste said in a statement.
Moreover, Erste wrote down goodwill in the amount of EUR420.9 million as well as of brand and customer relationships in Romania of EUR489.8 million in total. In addition, the bottom-line also includes EUR360.8 million in expenses expected by Erste Group as a result of the consumer loan law passed by the Hungarian parliament.
Total assets amounted to EUR197 billion at the end of September, down from EUR200.1 billion in December 2013.
Erste expects for the Romanian market a full normalization of risk costs at 100-150 basis points of average gross customer loans starting in 2015, accompanied by an accelerated NPL reduction already in 2014; a lower, but sustainable operating result due to a lower unwinding impact on net interest income.