Loan loss provisions cut Banca Transilvaniaĺs H1 net to 2.6 mn euros

Banca Transilvania’s first half profit fell 90% year-on-year to 11 mn lei (2.6 mn euros) as the country’s economic slump forced the bank to increase provisions against bad loans.
Loan loss reserves of Banca Transilvania jumped 94% in first half this year, while the credit risk costs increased almost 14-fold up to 222mn lei.

Non-performing loans past due 90-days accounted for 3.18% of total bank lending at the end of June, compared to year-ago half.

However, the bank booked an operating profit up 57% from a year earlier, from 148 mn lei to 232 million lei. Banca Transilvania’s operating revenues increased by 17% in the period under review, up to 571 million lei, while operating expenses shrank 1.16% down to 338 million lei.

“In first half, the operating profit increased by 57% compared to H1 2008. We are coping very well with this challenging economic environment, by adjusting our strategy and focusing on improving efficiency and optimizing services. Our actions were centered on maintaining stability in the relationships with our clients, by bringing special offers under atypical conditions we are experiencing while reducing spending. Considering BT’s performance and opportunities identified in the market, we are confident the bank will climb out of the crisis even stronger”, said Robert C. Rekkers, CEO of Banca Transilvania.

The increase in operating profit was largely driven by the increase in revenues from financial operations and from interests, according to own statements.

“Due to a severe cost management, cost-to-revenues ratio stood at 62%, compared to 67% in Q1 2008”, the bank said.

Banca Transilvania’s loan book increased to 11.272billion lei, despite the sluggish credit demand. Small-business loans accounted for 57.4%.

“BT has a stable loan book, the majority of the loans being in local currency, with an exposure below 4%in real estate”, BT announced.

Credit-deposit ratio remained at around 0.86% at the end of June. “This proves the bank’s good cash flow and solid position in terms of resources attracted from internal market, resources that increased 8% in 2009, on higher appetite on saving, but also on BT’s market-adjusted offering”, reads the press release remitted to Bucharest Stock Exchange.

The bank’s total assets went up 13% in first half 2009, up to 19.289 billion lei. In the first six months, BT’s capital adequacy ratio stood at a comfortable 14.05%.

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