Romanian lender BCR ups profit by 6% in first three months

Banca Comerciala Romana (BCR), the second-largest lender in the country, controlled by Austrian group Erste, reported a net profit of RON 267.9 million (EUR 56.6 mln) in the first quarter of 2019, up 6% from the same period in 2018.

The stock of loans increased, driven by more substantial financing extended to small and medium-sized enterprises (up 17% in year-on-year terms). In contrast, the deposits declined, dragged down by corporate clients.

The "greed tax" is estimated to have an impact of EUR 20 million for the whole year, according to Erste group estimates.

The bank explains its higher net profit reported in Q1 by the "robust operational results, low cost of risk and good performance across all business lines."

Although the operating income improved, the operating result of BCR decreased by 11% compared to the first quarter of 2018, to RON 330.8 million (EUR 69.9 million), mainly hit by the higher annual contribution to the deposit insurance fund in 2019, which is paid in the first quarter in advance for the whole year. The increase in the contribution (to EUR 12.4 million, from EUR 4 million last year) was the largest among all Erste Group's subsidiaries and had the main impact on the 18.8% advance of general administrative expenses (EUR 99.2 million) in the first quarter. The cost-income ratio thus increased to 58.7%, from 51.5% in the first quarter of last year.

This year, BCR will also pay the new asset tax (so-called "greed tax"), at a significant level compared to similar taxes paid in other countries.

Outside Romania, Erste Group will pay EUR 38.8 million in such charges, including bank fees in Hungary amounting to EUR 12.5 million (down from EUR 13.7 million last year) reported in advance for the full year 2019.

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