Romania’s largest lender posts EUR 546 mln losses on portfolio clean-up

Romania’s largest bank by assets, BCR, which is part of Austrian Erste Group, posted EUR 546 million losses for the first nine months of 2014, compared to a net profit of EUR 127 million in the same period of last year. The losses are a result of the acceleration of the portfolio cleanup process, which consists in the removal of non-performing loans (NPL) from the bank’s balance sheet. The bank’s total assets were down by 8%, to EUR 13.8 billion, as of September 30, 2014. “Net result in the first nine months of this year was materially impacted by significant increase in risk provisions, as we continued to work hard toward extensive clean-up of our NPL portfolio. By year-end our aim is to reduce the NPL portfolio by a quarter up to a half, depending on market conditions,” said Tomas Spurny, BCR CEO. The costs related to non-performing loans almost tripled compared to the first nine months of 2013, to EUR 911 million. BCR was managing a non-performing loan portfolio of EUR 2.2 billion, which was 26.5% of the bank’s total loan portfolio, as of September 2014. The NPL portfolio went down from EUR 2.9 billion, at the end of June and the NPL ratio improved from 29.3%. BCR is currently in the process of selling about EUR 91 million worth of bad loans, after it sold another EUR 226 million NPL portfolio in July this year. “Aside from accelerated resolution of NPL legacy, the most important thing is that BCR consistently returned in the market. BCR is capturing 25% of the newly underwritten mortgage market and we have seen a significant uplift in both secured and unsecured retail lending. We will continue to further strengthen our competitive capacity in both retail and corporate franchises of the bank,” Tomas Spurny added. BCR increased retail lending, with its performing retail loans portfolio reaching EUR 3.87 billion at the end of September 2014. The performing corporate loans portfolio was EUR 2.76 billion. The bank’s operating income decreased by 12.6% to EUR 590 million, due to a 16% decline in net interest income, which was EUR 400 million. BCR also managed to reduce administrative expenses by 14%, to EUR 237 million. The operating result was EUR 353 million, down by 12% compared to the first nine months of last year. Andrei Chirileasa, andrei@romania-insider.com