BCR 1Q Loss Narrows To RON12.1M Vs RON307.8M

04.29.2013 By Bogdan Neagu

Romania’s largest bank BCR, a unit of Austria’s Erste Group Bank (EBS.RO), Monday reported a net loss of 12.1 million lei (EUR2.8 million) for the first quarter, compared with RON307.8 million in the same period of 2012.

The narrower loss is mainly due to a lower net charge for risk provisions, the bank said. The net risk costs fell 38.3% to RON575.7 million in January to March, versus RON933.7 million in the same period a year before, “reflecting the impact of a still weak economic recovery, but also lower NPL (non-performing loan) inflows, in line with expectations.”

However, NPL ratio further rose to 28.2% of the total loan portfolio at the end of March, due to contraction of the loan book, while NPL formation significantly reduced in both absolute and relative terms, BCR said.

On the other hand, the bank’s operating profit declined 2.4% to RON595.2 million, impacted by lower income. The operating income dropped 5% to RON977.9 million, due to a weak consumer credit demand, that led to a 3.7% decrease in net interest income and a 8.2% fall in net fee income.

Operating costs were also down, to RON382.7 million from RON 418.9 million in the first quarter of 2012, so that the cost to income ratio improved to 39.1% in Q1 2013, versus 40.7% in Q1 2012.

“Our efforts show encouraging signs that we are on the right track in positioning BCR for future growth. Although the economic recovery is still slow, impacting our business, Romania is set to record one of the superior growth rates in the region in 2013. We expect to benefit from that uplift, also considering our very strong capital and funding position,” said Tomas Spurny, chief executive officer of BCR.

The bank’s solvency ratio stood at 13% at the end of March, above the central bank’s minimum requirement of 10%.

BCR remains the country’s largest bank by assets, despite decline in total assets by 3.7% to RON70.6 billion (EUR15.9 billion) at the end of March from RON73.3 billion at 31 December 2012.