BCR and BRD make two thirds of lenders’ earnings

The two companies manage one third of total assets administered by Romanian banks, whose value reaches €79.6 bln.

The 2008 profit registered by lenders could double compared to last year’s net income, worth €825 mln, considering that BCR, Romania’s largest bank in terms of assets, has not yet received the payment from the sale of its BCR Asigurari and BCR Asigurari de Viata divisions.

“The net profit of banks amounted to RON 3.653 billion (€1 billion) at the end of September. In the past months, the growth pace on assets has slowed. Loans are granted at a lower rate, and this rate will continue to drop, as banks are currently reevaluating their risk profile,” Nicolae Cinteza, Director of the Surveillance Bureau of the National Bank of Romania (BNR), told Business Standard. Profit growth rate forecasts for 2009 are not optimistic, as bankers are unable to add loans to their portfolio at the same rate as they did before the crisis.

“We are beginning to feel the effects of the crisis and funds attracted by banks are becoming increasingly more expensive. We may see a drop in the profit margin,” said Dragos Cabat, Managing Partner of the Financial View advisory company. The value of assets in the banking sector amounted to RON 297.225 bln (€79.6 bln) at the end of September, up 4 percent compared to August 2008, and by 39.5 percent compared to September 2007.

BCR and BRD claim a total 36 percent market share in terms of assets at the end of this year’s first nine months, down from the 39.3 percent share registered at the end of 2007, due to the aggressive policies of some banks to gain market share.    

BCR, which manages assets worth €16.57 bln, posted a net profit of €341.5 mln in the first nine months, a 71.8 percent annual increase in lei.

“We are still trying to improve the quality and efficiency of our business. BCR is in good shape, capable of fighting off all effects of the turbulence registered on international financial markets,” said Dominic Bruynseels, BCR’s Chief Executive Officer. Analysts expect BCR’s net profit to exceed the €600 mln threshold in 2008.

BRD posted a net profit in the first nine months of 2008 above that registered in the whole of 2007, of RON 1.039 billion (€285 mln), up 52 percent year-on-year.

At the end of September, BRD owned total assets worth €11.9 bln, up 14.2 percent year-on-year. Patrick Gelin, President and General Manager of BRD-Groupe Societe Generale said that growth can be explained by virtue of the application of strict principles in terms of risk in a relatively difficult market context.

The solvency of the 40 banks operating in the Romanian banking sector dropped one percentage point in the first half of 2008, down to 12.78 percent, due to aggressive attempts by certain banks to gain market share.

‘We are beginning to feel the effects of the crisis and funds attracted by banks are becoming increasingly more expensive. We may see a drop in the profit margin Dragos Cabat Managing Partner, Financial View