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May 26, 04:59

Banca Transilvania CEO: Growing demand for financing from small Romanian companies and retail, acquisition in sight

Romanian small and medium enterprises (SMEs) and retail are more interested in accessing financing products from local banks and are now making longer term plans as the economy is showing recovery and interest rates are lower, said Omer Tetik, the CEO of Banca Transilvania, the third largest bank in Romania.

“The number of financing requests we get from Romanian individuals and SMEs has grown lately and statistics for the market show a slight but stable recovery in demand for credits. When it comes to SMEs there is an increase in requests for investment financing which is a good thing. Interest rates are low enough and the market is more stable, which encourages SMEs to make plans for the medium and long term not just for the short term”, Tetik said.

He expects Banca Transilvania SME credit portfolio to grow by 10 percent this years, while total operational revenues for this segment, including other services, to increase by 15 percent. For the retail segment, he wants to maintain a growth of over 10 percent both in credits and in operational services. These two business lines should bring Banca Transilvania a 9 percent growth for the overall credit portfolio and a 7 percent increase in operational revenues, according to the 2014 budget approved by the bank’s shareholders in April.

In the first quarter, the bank’s net credit portfolio (which excludes provisions for non-performing loans) grew by 2.2 percent, to RON 17 billion (EUR 3.8 billion), and the operational revenues were up 19 percent, to RON 425 million (EUR 95.5 million). Net income for the period was up 23 percent at RON 103 million (EUR 23 million), according to the bank’s quarterly report on the Bucharest Stock Exchange.

Tetik says that the bank has the resources to achieve the targets in this year’s budget. The bank’s loans to deposits ratio at the end of the first quarter was 73.6 percent, well below the average for the Romanian banking sector, which means that Banca Transilvania has enough liquidity to offer new financings. Also, the solvability rate for the bank was 13.5 percent at the end of the first quarter.

Banca Transilvania recently managed to increase its capital base by securing a USD 40 million financing from the International Finance Corporation (IFC), which is the investment arm of the World Bank. “This new facility will allow us to continue our ambitious plans for organic growth and to capture further market share, mainly in the segment where we are already a trend-setter,” said Omer Tetik. IFC is one of the largest international financers, as well as a shareholder in Banca Transilvania.

He mentioned that Banca Transilvania is also prospecting the market for possible takeovers. “We are in discussions with some local banks, but we will only consider buying a local bank or a credit portfolio if we feel this will bring added value to our bank. We aren’t interested in buying troubled assets,” Tetik explained. He also said that any new acquisition should be “digestible” because “1+1 doesn’t always make 2.”

Banca Transilvania’s main international shareholders are the European Bank for Reconstruction and Development (EBRD), with a 14.6 percent stake, and IFC, with a 3.6 percent stake. However, more than 54 percent of the bank’s shares are held by Romanian investors, such as Horia Ciorcila, the bank’s president, who has a 5 percent stake, and five investment companies (SIFs) which own close to 20 percent.

Banca Transilvania is listed on the Bucharest Stock Exchange and has a market capitalization of RON 4.21 billion (EUR 951 million). The bank’s shares, which trade with the TLV ticker, gained 15.8 percent year-to-date, compared to a 1.7 percent gain for the BET Index, the main reference for the Bucharest Stock Exchange.

Andrei Chirileasa, andrei@romania-insider.com

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