CEC’s IDRs and VR reflect the bank’s moderate albeit strengthening business profile, solid capitalisation and reasonable funding and liquidity profile. These offset asset quality and profitability that are weaker than the sector. The bank’s risk profile is commensurate with its relatively simple business model, with underwriting standards broadly in line with domestic industry standards, but with somewhat decentralised lending approval, coupled with relatively unsophisticated risk controls, in line with Fitch report.
CEC is a medium sized, commercial bank in Romania (ranked seventh by assets), fully owned by the Romanian state. The bank has a market share of about 7.9% of the sector’s assets at end-2021, and loans and a modestly higher market share in customer deposits. The bank operates a traditional universal bank business model with lending skewed towards the non-retail segment, including significant exposure to public sector entities, funded largely by retail customer deposits. The strength of the bank ‘s franchise is boosted by a significant branch network outside of the largest cities, where competitive pressure is lower as a greater proportion of the population is underbanked. As a result, the bank is able to generate a good level of fee and commission income, despite a fairly basic product range, Fitch also says in its report.
“CEC Bank’s rating reflects its solid financial position, a good liquidity level and a sustainable business model, considering that its activity is based mainly on the sources attracted from non-banking customers and has the most extensive territorial network in Romania, with a share of over 25% of the total banking units in Romania”, according to CEC representatives.