The net profit after taxes and minority interests of Romanian bank BCR, part of the Austrian Erste Bank group,...The net profit after taxes and minority interests of Romanian bank BCR, part of the Austrian Erste Bank group, increased by 16.4 per cent from RON 649.9 million (EUR 184.3 million) to RON 756.3 million (EUR 214.5 million).
Total assets increased by 38.6 per cent from RON 34,235 million (EUR 10,118 million) to RON 47,436 million (EUR 14,020 million), operating income rose by 16.8 per cent from RON 2,156 million (EUR 611.6 million) to RON 2,550.1 million (EUR 723.3 million), while return on equity increased from 17.6 per cent to 18.8 per cent.
“Through a unique combination of efficient business -oriented activity, with the challenges of closing the privatization deal and entering into a comprehensive transformation program we succeeded to have an excellent year 2006. We achieved strong performance with high growth in assets and, at the same time, BCR’s net profit for the year before restructuring costs rose by 38 per cent to EUR 254 million. These results underline the very promising future potential for BCR Group”, said Nicolae Danila, CEO of BCR.
The main driver of this improvement was the BCR Group’s strong increase in loans to customers (loans before provisions went up by 56.5 per cent) generating a good increase in of net interest income (+20 per cent) despite a decline of overall NIM to 6 per cent. Net commission income slight improvement (+5.5 per cent) is mainly due to a change in accrual of upfront lending fees as well as different accounting treatment of credit risk insurance fees.
The operating expenses went up by 12.7 per cent, the increase being mainly due to substantial network expansion by 101 branches in 2006. Excluding the restructuring costs the operating expenses increase is 10 per cent only.
The requirement for credit risk provisioning increased by 54.1 per cent to RON 157.6 million mainly including an adjustment to EBG standards of RON 56.7 million. Excluding that item, provisions remain unchanged compared to 2005 due to improvement in the quality of loan portfolio and increased recoveries of amounts previously written-off.
The net results from insurance business went up strongly (+25 per cent), due to market development.