Banca Transilvania boasts 36% stronger profit and outstanding ROE in Jan-Sept

The net profit of Romania's largest financial group by assets, Banca Transilvania Group, surged by 36.6% y/y to RON 2.29 billion, out of which the bank contributed RON 1.86 billion (+29% y/y), according to a note to investors. The return on equity consequently improved from last year to 25.8%.

Although the bank highlights its advance in expanding digitalisation and boosting the volume of transactions operated, the main source of profit remains the traditional net interest income.

The bank assigns the bright financial results to the increase in the business volumes and the number of processed transactions. Indeed, lending has been sluggish – like across the entire banking system. However, at the group level, the stock of loans and advances increased by 6.3% ytd to RON 69.3 billion, of which the bank alone contributed RON 68.4 billion (+7.9% ytd).

"It has been a good nine months for Banca Transilvania, in which we have further increased our transaction volumes and thus strengthened our market leadership," said Ӧmer Tetik, CEO of Banca Transilvania.

But the net interest derived by the bank was a substantial source of profit as well – actually the main source: the net interest income increased indeed by only 20.6% y/y (to RON 3.79 billion), but the increase in absolute value (RON 647.8 million) was slightly higher than the rise in net profit (RON 613.6 million) indicating it as the main driver for financial group's profitability.

The same for the bank alone, which reported RON 3.10 billion net interest income, 18.5% up y/y, but enough to explain the rise of the net profit.

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