Romania’s biggest lender Banca Comerciala Romana (BCR), part of Austrian group Erste, registered a net profit of EUR 203.6 million in the first nine months of the year, supported by substantially lower risk costs, as a result of better portfolio quality and recoveries after extensive loan book screening in 2014.

BCR recorded losses of EUR 548 million in the first nine months of 2014, as the bank took EUR 914 million charges related to non-performing loans. In the first nine months of this year, the risk costs were EUR 12.4 million.

The bank’s operating result was EUR 270.5 million, 23.5% lower than the result registered the previous year, of EUR 353 million. The drop was driven by lower operating income, impacted by reduced unwinding contribution and low interest rate environment and higher costs related to running IT projects, according to BCR.

However, the non-performing loans NPL ratio was of 22.2% at September 30 was significantly lower than the 26.5% reported on the same day the year before. The NPL coverage ratio stood at 79.1%.

The net interest income went down by 15.5% year-on-year in the first nine months, to EUR 339.3 million, on the back of accelerated NPL portfolio resolution, efforts to price competitively in the market and a low interest rate environment. Moreover, the net fee income also decreased by 1.6% to EUR 119.7 million, mainly due to lower fees from loan management and current accounts, yet supported by pension fund coverage.

The operating income decreased by 12.1% to EUR 519.6 million, driven by reduced net interest income along with lower trading result.

The cost-income ratio advanced to 47.9% in the first nine months of 2015, compared to 40.1% in the same period last year.

Deposits from customers went slightly down by 0.5% to EUR 8.99 billion, as positive development in retail deposits was offset by a seasonal decrease in corporate deposits. Customer deposits remain BCR’s main funding source, while the bank benefits from diversified funding sources, including parent company, according to the bank.

“BCR plans to keep focus on RON lending, so as to reverse the currency mix of the loan book in favour of local currency on medium to long term and fully use the strong self-funding capacity in RON,” reads BCR’s statement.

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Irina Popescu, irina.popescu@romania-insider.com