Net profit of RON 315.1 M for BCR in Q1, NPL ratio continues to decrease

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Banca Comerciala Romana (BCR) achieved a net profit of RON 315.1 million (EUR 70.2 million) in Q1 2016, supported by “operating performance and continued improvement of portfolio quality”, a press release informs on Wednesday.

The operating result stood at RON 330.6 million (EUR 73.6 million), 15.7 percent lower than the previous year at RON 392.3 (EUR 88.1), driven by lower operating income, impacted by reduced unwinding contribution, margin pressure and low interest rate environment coupled with higher costs from booking full contribution to deposit insurance fund in Q1 2016.

“(…) Our capital and liquidity position enable us to provide sustained, yet discerning, financing to households and the real economy at large. At the same time, the current context, including the legislative framework, generates a series of challenges, the effect of which we can’t minimize. We’d very much like to be financially successful, together with our clients, in a country which prospers based on clear and simple rules,” Sergiu Manea, CEO of BCR stated.

In bank retail business, the performance in volume generation by the franchise resulted in new loans in local currency totalling RON 1.10 billion, with solid sales of both secured and unsecured loans, despite Prima Casa (First House) programme slowdown due to exhausting available ceiling.

In bank corporate business, new volumes added on the balance sheet totalled RON 0.9 billion, supported by double digit growth yoy in Group Large Corporate business. Co-financing of EU funded projects was also solid with BCR holding a 33 percent market share and a portfolio of over RON 7.1 billion co-financed.

Net interest income was down by 10 percent, to RON 459.2 million (EUR 102.2 million), from RON 510.5 million (EUR 114.7 million) in Q1 2015, on the back of continued NPL portfolio resolution, efforts to price competitively in the market and a low interest rate environment.

The operating income decreased by 1.8 percent to RON 736.2 million (EUR 163.9 million) from RON 749.9 million (EUR 168.5 million) in Q1 2015, mainly driven by reduced net interest income partly compensated by better net fee and commission income and higher trading result.

NPL ratio at 19.5 percent, as of March 31, 2016, significantly decreased versus 25.6 percent as of March 31, 2015, despite overall reduction of the loan book, determined by recoveries, sales of selected NPL portfolios and write-offs. NPL coverage ratio improved to 78.4 percent. Deposits from customers were down, by 1.9 percent to RON 41,806.3 million (EUR 9,348.9 million) at end-March 2015, versus RON 42,626.0 million (EUR 9,422.2 million) at end-December 2015, driven by seasonal outflows of corporate clients, yet slightly up retail deposits. Customer deposits remain BCR’s main funding source, while the bank benefits from diversified funding sources, including parent company.

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