BNR paid the largest profit tax in Romania: €232 mln

Data regarding the general consolidated budget execution shows that the profit tax generated RON 11.13 billion (about €2.6 bln) worth of revenues, in the first ten months of 2009. “I believe it was about reassessing foreign currency reserves, but probably profit was due to interventions as well. It is good that the National Bank can support the budget. Anyway, the central bank is an independent institution and has no use for profit,” said the Chief Economist of ING Bank, Nicolaie Chideşciuc.

Adrian Vasilescu, Advisor to BNR’s Governor, told The Money Channel that the profit tax paid by the central bank “does not save the budget, but is helping it.” “BNR is the only institution in Romania which does not comply with the flat tax, because the law states that 80 percent of the bank’s profit must go to the [state] budget,” said the BNR official.

Analyst Bogdan Baltazar previously said that the profits of banks were affected this year by the stagnation in lending and by provisions. “I believe that they will post total earnings of some €200 million in 2009, earnings that will come mainly from operations with the Ministry of Finance,” said Baltazar.

Romanian banks marked a profit of RON 680 mln (€160 mln) in the first three quarters of 2009, five times lower year-on-year. “In general and theoretically speaking, central banks that lend to institutions they supervise make a profit. Regarding BNR’s contribution to the state budget, I believe that the role of the National Bank is to obtain macro-stability,” said Lucian Anghel, Chief Economist of Banca Comercială Română (BCR).

Calculations made by Business Standard indicate that banks could register earnings of over €185 mln in 2009, only from the difference in interest rates for money obtained from BNR and lent to the Ministry of Finance.

The budget deficit forecast for the end of this year is 8.1 percent of gross domestic product, namely over RON 40 billion, of a total of RON 497.3 bln. At an average interest rate of 10 percent, interest-related costs amount to RON 4 bln. At a bank profit margin of two percentage points, we arrive at some RON 800 mln, or an equivalent of €185 mln. Practically speaking, from financing the state alone, banks could gain €50 mln more than their profits forecast in the most recent estimate, by UniCredit.

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