Biggest lender in Romania sees higher profit in Q1 despite “greed tax”

Cluj-Napoca-based Banca Transilvania, the biggest lender in Romania by assets, recorded a net profit of RON 436 million (EUR 93 million) in the first quarter of this year, up 19% compared to the same period of 2018.

The bank estimates that it will have to pay a tax on assets of RON 136 million (EUR 29 million) this year.

“According to such estimates, considering a proportional calculation, if the bank were to recognize the effect of such tax for the 3-month period ended on March 31, 2019, the net profit as at March 31, 2019 would be of RON 407.5 million,” the bank’s representatives wrote in a report to investors. Even so, the adjusted net profit would still be 11% higher than in Q1 2018 (RON 366 million).

The Romanian Government introduced the tax on bank assets, also known as the greed tax, in December 2018. The initial form of this tax was much harsher than the current one, which was adopted following intense negotiations between the Finance Ministry, Romania’s National Bank (BNR) and local banks’ representatives.

Banca Transilvania had total assets of RON 75.9 billion (EUR 16.1 billion), at the end of March, up 2.3% compared to the end of December 2018. The net loan portfolio went up 1.9% in the first quarter, reaching RON 37.04 billion (EUR 7.9 bln) at the end of March. Client deposits reached RON 62.7 billion (EUR 13.3 bln), almost 70% of which were deposits from individuals.

Banca Transilvania’s shareholders voted on April 24 the cash dividends to be distributed from last year’s profit, namely RON 0.17 per share. The dividend yield is 7.9% considering the current share price (RON 2.145 per share, as of April 30). The bank will also increase its share capital by RON 400.8 million (EUR 85 mln) by capitalizing the remaining profit.

Banca Transilvania has 63.7% Romanian capital and more than 30,000 Romanian individual shareholders. Its market capitalization amounts to EUR 2.2 billion.

(Photo source: Banca Transilvania)