“We’re in a new phase of development and we’re relying on a business model centered less on lending and more on transactional products and services. Lending accounts for only a third of the range of financial services a client needs and we’re now focusing on the other two thirds,” said Johann Lurf, Volksbank Romania president, in an interview with ZF.
The bank developed aggressively during the boom years by relying almost exclusively on mortgage loan sales, which left it vulnerable to the real estate market collapse. Bad loan provisions led to a EUR36 million loss for Volksbank in 2010, but the bank has budgeted profit for the current year.
“The challenging economic conditions are still here, but we’re upbeat after the first half figures and we plan to make profit by yearend. After the first half, we posted losses of around EUR1 million,” stated Volksbank head.
Lurf, who came at the helm of the Romanian subsidiary last year, says the pace of loan portfolio deterioration has slowed down visibly, with provisions set aside in the first half being 50% lower than in the same period of 2010.
“Revenue has been stable in the past two years, but we plan to expand our client base on the retail and SME segment”. Volksbank currently has 160,000 active clients.
Volksbank’s president says that unlike the retail segment, the bank has never stopped corporate lending and that funding demand is currently rising on this segment.
As for retail lending, Lurf says the bank will focus on consumer loans and credit cards, without leaving out mortgage-backed loans, either.
The bank has also started a territorial network restructuring process, with around 30 branches being closed since early 2011. Volksbank currently has 152 branches.
(English version by Cătălina Apostoiu, Editing by Loredana Frățilă-Cristescu)