BCR’s Net Profit strongly increased by 82.4% in the first quarter 2008

Autor: Bancherul.ro
2008-04-30 16:30

Highest Q1 net profit in the history of BCR.
• Net profit after taxes and minority interests increased by 82.4% from RON 209.8 million (EUR 62.0 million) to RON 382.74 million (EUR 103.6 million) • Operating income climbed by 48.5% from RON 664.5 million (EUR 196.3 million) to RON 987.2 million (EUR 267.1 million) • Pre Tax Profit rose by 88.8% from RON 243.27 million (EUR 71.9 million) to RON 459.24 million (EUR 124.2 million)

Excellent improvement of efficiency as a result of the transformation process.
• Return on equity increased from 19.4% in Q1 2007 to 30.7% in Q1 2008• General administrative expenses slightly increased by 6.87% from RON 367 million (EUR 108.4 million) to RON 392.2 million (EUR 106.1 million) • Cost-income ratio significantly improved from 55.2% in Q1 2007 to 39.7% in Q1 2008

Strong income growth.
• Net interest income rose by 63.2%from RON 419.54 million (EUR 123.9 million) to RON 684.59 million (EUR 185.2 million) • Net commission income climbed by 61.9% from RON 153.38 million (EUR 45.3 million) to RON 248.35 million (EUR 67.2 million)

“We are proud to see the positive impact of the transformation process on the overall development of the bank to the benefit of our customers”, said Manfred Wimmer, CEO of BCR. “Our aim is to continuously improve the quality and efficiency of our business in order to be able to create higher value for our stakeholders and to strengthen our leading market position. We proved to be successful in controlling cost while capturing the opportunities of the market on the back of solid and stable growth of the Romanian economy ” continued Wimmer.

II. BUSINESS PERFORMANCE OVERVIEW FOR THE GROUP

With a 48.5% rise in BCR Group’s operating income - exceeding by far the 6.87% increase in general administrative expenses – the operating result almost doubled (+ 99.98%) from RON 297.5 million (EUR 87.9 million) to RON 595 million (EUR 161 million).

The main driver of this impressive improvement was BCR Group’s strong increase in net interest income (+63.2%) and in net commission income (+61.9%).

Operating expenses went up moderately (+6.87%) mainly driven by the successful costs optimization measures while continuing the retail branch network expansion.

The increase in efficiency is mainly attributable to the achievements of the transformation process. During Q1 08 BCR accomplished the centralization of the major parts of back office, risk management and support functions, implemented a new centralized loan approval processes, developed enhanced functionalities of alternative channels, established a centralized Ombudsman Office etc.

In line with expectations risk provisions for loans and advances more than doubled year-on-year to RON 118.2 million (EUR 32.0 million) mainly due to the fact that consumer loans had been covered by risk insurances until Q2 07. As part of the integration programme this practice has been terminated and loans are now adequately provisioned in the bank’s income statement.

The consolidated net profit after taxes and minority interests climbed by 82.4% to RON 382.74 million (EUR 103.6 million), the highest quarterly net result of BCR.

Due to better operating results the cost/income ratio improved significantly to 39.7% from 55.2%.

As a result, return on equity increased to 30.7% for the first quarter of 2008, compared to 19.4% for the first quarter of 2007.

III. BUSINESS ACTIVITIES INDICATORS (bank only – unconsolidated, IFRS)

BCR continued its sound business development, supported by the transformation and integration measures.

While the volume of aggregate Loans to customers portfolio (before provisions, IFRS) increased by 7% from RON 36,888 million (EUR 10,224.8 million) as at 31 December 2007 to RON 39,282 million (EUR 10,540.41 million), total assets increased by just 2% from RON 59,611 million (EUR 16,523 million) as at 31 December 2007 to RON 60,692.8 million (EUR 16,285 million) as of Q1 2008. One can see a significant reduction of loans to credit institutions which were replaced with customer loans.

The share of loans in domestic currency in BCR’s portfolio – 50.08% of total loans – is above the market average, showing a well balanced structure. FX loan portfolio is only EUR and USD denominated. No loans were extended in SFR or other “exotic” currencies.

Corporate Loan portfolio portion of total customer loans is 46% while Retail (including micro businesses) is 54%.

Deposits from customers increased YTD March by 5% to RON 31,600 million (EUR 8,479 million) from RON 30,251 million (EUR 8,385 million) as at 31 December 2007.

One can see a general shift in the savings preferences towards sight deposits – which went up by 22% - supported by the current account bundles.

At the same time loan/deposit ratio saw an increase, up to 124.3% as at 31 March 2008 from 122% at year-end 2007 due to the faster increase in lending than in savings.

BCR continued to expand its ATM network to 1,530 units (13% YOY increase) and POS network up to 13,085 units (20,8% YOY increase).

BCR continued to consolidate its leading position on the debit and credit cards market reaching a total of about 2.4 million active cards.

Moreover, BCR’s network was extended in Q1 2008 by opening 18 new branches in high business potential areas. BCR is reaching to a network of 580 outlets as of end-March, while the number of employees slightly decreased against December 07 to 9,638 employees.

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