BCR, BRD, and Banca Transilvania groups, which include the three largest banks in Romania, posted about 3 billion lei (EUR680 million) net profits in the first half, compared with only RON34 million in the same time last year. The main reason for the rise in profit was the decline in provision costs and the higher trading revenue, as well as one-off revenue.
Banca Transilvania posted consolidated net profit (which includes the results of the subsidiaries) of RON2.3 billion in the first half, RON1.6 billion coming from the acquisition of Volksbank, which it acquired in the spring. The bank itself posted RON190 million profit, largely from government paper operations, since net interest income was down.
The assets of the Cluj-based group reached about RON45 billion at the end of June, RON9 billion more than at the end of June 2014. However, despite the increase in assets, following the takeover of local Volksbank operations, it is still behind BRD, whose assets stood at RON48 billion. The top three banks in Romania have kept their positions unchanged since 2010.
“Government paper trading revenue went up especially in the first quarter, because in the second quarter such revenue went down as bond yields went up,” says Adriana Marin, chief analyst with brokerage firm Ipopema Securities.
The loan-loss provisions the three banks set aside in the first half stood at RON550 million, compared with the RON2 billion of the first half of 2014, as banks aggressively cleaned up their non-performing loan portfolios accumulated during the crisis. BCR saw the steepest decline in provisions, from RON1.3 billion to merely RON36 million.
The decline in provision spending offset the sharp decline in interest income but analysts expect interest income to rebound soon.
Net interest income of the three banking groups in the first half stood at RON2.4 billion, RON200 million less than in the first half of 2014, considering interests dropped from one all-time low to another on a monthly basis.
As a group, Banca Transilvania was the only one of the top three that saw an increase in traditional income, that is interest and fee income (9% and 15%). The growth is because the results include those of Volksbank, unlike last year. The bank alone saw an 8% decline in interest income. BRD’s interest income fell 8%, while BCR’s dropped 17%.
On the other hand, BCR’s loan stock reached RON32.5 billion at the end of June, down RON100 million compared with the end of last year and about RON2 billion lower than in June 2014. BRD’s loan stock was flat, while Banca Transilvania’s rose by 13% in the first half.
(English version by Loredana Fratila-Cristescu)