Volksbank shuts down franchises, but keeps staff

Volksbank Romania said it expected a pre-tax profit of 46.25 million euro in 2009, up by roughly 22% from 2008 at a 2% advance of assets, reads the report remitted by the bank.

Volksbank Romania will not shut down units or layoff staff, however it will relinquish the franchises that don’t return profit, following to reach 50-55 franchises at the end of 2009, against 70 it holds now, said the CEO of Volksbank Romania, Gerald Schreiner.

“We had agreed by consensus to shut down 25 franchises in last quarter of 2008 and in first months of 2009, now reaching to 70-units chain. By yearend, we plan on shrinking the network to 50-55 units”, Schreiner explained.

He added that the franchises that can stay afloat with their monthly revenues will remain, but the unprofitable ones will be shut down.

“As long as costs are under control, we have no intention to layoff staff”, said Schreiner. In 2009, the bank aims at reducing the costs/revenues ratio to 44.7% from 49.6% in 2008.

The bank targets asset volume of 5.416 bln euros by the end of this year, compared to 5.307 billion euros in prior-year period. Last year, the bank reported 37.85 million euro profit.

“We will remain focused on effective stewardship of expenditures. We won’t see the growth rates we were used to in the past anymore, but we still have positive forecasts”, said Gerald Schreiner.

For late 2009, Volksbank expects a total loan volume at 3.4 bln euros, up slightly from 3.3 billion euros in 2008.The risk provisions afferent to loan portfolio would increase to 68 million euros, versus 34 million euros a year earlier.

“The loans will be granted only within our long-term liquidity framework. The credit standards will be more conservative, which reflects the current poor market conditions”, Schreiner explained.

Pre-tax profit - 54% hike in 2008

Pre-tax profit of Volksbank Romania soared 54% in 2008 from prior year, up to 37.8 million euros, as the asset volume of the bank increased at a roughly similar pace, reads the financial report remitted by the bank.

In 2007, the bank marked a pre-tax profit of 24.5 million euros.

At the end of last year, the bank’s assets climbed to 5.3bln euros, up 51% from end 2007.

The loan volume extended by 49% up to 3.3 bln euros last year.

As for deposits, the annual growth was 6%, up to a 567-million euro balance account, on period ending in December 31, 2008. In 2008, the bank set up risk provisions for loans worth 34 million euros up from 19 million euro a year earlier.

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