BCR’s YE 2006 Total Assets increased by almost 39% and Consolidated Net Profit rose Y-o-Y by 16.4%, said the bank in a statement.
– Below stated data are un-audited, consolidated business results of Banca Comerciala Romana (BCR) as of 31 December 2006 according to IFRS. If not stated otherwise, the 2006 figures are compared to the figures as of 31 December 2005. Also, if not stated otherwise, foreign exchange rates used for conversion of figures into EURO are the ones provided by the European Central Bank. The income statement is converted using the average exchange rate for the year, while the balance sheet is converted using the closing (year-end) exchange rate.
I. FINANCIAL HIGHLIGHTS FOR THE BCR GROUP:
• Net interest income rose by 20% from RON 1,405.0 million (EUR 398.5 million) to RON 1,686.4 million (EUR 478.3 million)
• Net commission income rose by 5.5% from RON 536.9 million (EUR 152.3million) to RON 566.5 million (EUR 160.7 million)
• Operating income rose by 16.8% from RON 2,156 million (EUR 611.6 million) to RON 2,550.1 million (EUR 723.3 million)
• General administrative expenses increased by 12.7% from RON 1,250.1 million (EUR 354.6 million) to RON 1,409.1 million (EUR 399.7 million)
• Profit for the year before taxes rose by 21.3% from RON 764.5 million (EUR 216.9 million) to RON 927.7 million (EUR 263.1 million)
• Net profit after taxes and minority interests increased by 16.4% from RON 649.9 million (EUR 184.3 million) to RON 756.3 million (EUR 214.5 million)
• Cost-income ratio improved from 57.2% to 55.3%
• Return on equity increased from 17.6% to 18.8%
• Total assets increased by 38.6% from RON 34,235 million (EUR 10,118 million) to RON 47,436 million (EUR 14,020 million)
• Tier 1 capital was RON 3,588.7 million as of YE 2006 (previous year: RON 3,335.1 million), solvency ratio was 11.06 % (previous year: 15.04%)
“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% to EUR 254 million. These results underline the very promising future potential for BCR Group”, said Nicolae Danila, CEO of BCR.
II. BUSINESS PERFORMANCE OVERVIEW FOR THE GROUP
With the 16.8% rise in BCR Group’s operating income significantly exceeding the 12.7% increase in general administrative expenses, the operating result strongly increased by 22.2% from RON 933.5 million to RON 1,409.1 million. Excluding the restructuring costs the operating result went up 37.3%.
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%) generating a good increase in of net interest income (+20%) despite a decline of overall NIM to 6%. Net commission income slight improvement (+5.5%) 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%, the increase being mainly due to substantial network expansion by 101 branches in 2006. Excluding the restructuring costs the operating expenses increase is 10% only.
The requirement for credit risk provisioning increased by 54.1% 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%), due to market development.
The consolidated net profit after taxes and minority interests increased by 16.4% to RON 756.3 million (EUR 214.5 million), to reach the highest level in the history of the BCR Group. Furthermore, the net profit for the year before restructuring costs rose by almost 38% to over EUR 254 million.
Return on equity slightly increased to 18.6% from 17.6%.
Due to the operating income increase the cost/income ratio improved to 55.3% from 57.2 % but the improvement is even higher without restructuring costs.
Total assets increased by 38.6% from RON 34,235 million (EUR 10,118 million) in 2005 to RON 47,436 million (EUR 14,020 million) as of YE 2006. This included increases of 56.5% in loans and advances to customers (before provisions) and 26% in amounts owed to customers.
III. BUSINESS ACTIVITIES INDICATORS (BCR bank stand alone)
2006 saw an excellent overall loan growth. The volume of aggregate Loans to customer portfolio (before provisions) increased y/y by 54.2% to RON 24,571 million (EUR 7,262 million)
As regards the lending activity, three major aspects need to be outlined:
– Retail loans, amounting to an outstanding value of almost RON 9,900 million (over EUR 2,900 million), were BCR’s most dynamic placement in 2006, with an increase yoy of 56.8%, where the RON denominated loans increased by 78%; this result is due primarily to consumer loans, which increased by 70%, to almost RON 7,800 million (app. EUR 2,300 million), exclusive of credit cards. Also mortgage lending increased significantly in volume, by 21%.
– The bank targeted long term financing, encouraging the customers’ investment decisions, M<L reaching to weight about 75% of the loan portfolio;
– Loans in domestic currency are predominant in BCR portfolio – 58% of total loans – on a market still dominated by foreign currency loans.
Corporate Loan portfolio (unconsolidated) increased year-on-year by 53% to approximately RON 14,700 million (EUR 4,350 million). This growth was driven mainly by SMEs sector. Loans to SMEs increased by 77%, to over RON 7,400 million (EUR 2,200 million).
Deposits from customers increased yoy by 26% to RON 24,477 million (EUR 7,234 million) from RON 19,387 million. Retail deposits continued to grow (by 21% to RON 11,670 million), especially due to new saving products launched by BCR in 2006. Corporate deposits enjoyed an even higher increase by 31% up to over RON 12,807 million.
RON deposits had a more dynamic increase, averaging 68% in total deposits, an increase stimulated by improved remuneration.
The loan/deposit ratio saw a significant increase, up to 100% from 82% due to the faster increase in lending than in savings. The Loans to customers / Total assets ratio also improved crossing the 50% threshold rising from 48% to 55%.
BCR continued to consolidate its leading position on the debit and credit cards market reaching a total of 2.17 million active cards (app.19% yoy increase).
The number of active debit cards was 2.0 million, which is a 14.6% increase compared to the previous year. Credit cards are becoming more and more popular: the number of active BCR credit cards increased 2.2 times compared to 2005, up to more than 167,000. BCR continued to expand its ATM network to 1,315 (30% yoy increase) and POS network up to 9,859 units (77% yoy increase).
Moreover, BCR’s network was extended in 2006 by opening 101new branches, reaching to a network of 473 outlets, while the number of employees decreased by 6.4% to 11,091 employees.
IV.OUTLOOK
– Net profit expected to grow above 40% (CAGR 2006-2009)
– 2009 Return on equity to be above 35% – based on a 9% Tier 1 ratio
– Cost/income ratio expected to be about 40% in 2009
