Rasvan Radu, Executive President of UniCredit Tiriac Bank, told Business Standard that he observed a drop in revenues from interest and fees, combined with a slowing of economic activity, and a constant rise in the cost of risk, which forces the company to adjust its budget almost on a daily basis. The balance sheet of UniCredit Tiriac Bank, one of the top ten players in the local system in terms of assets, indicates that profit was in line with expectations in the first quarter of 2009, at a level similar to that registered in the final months of 2008. Also, the volume of loans is similar to that posted at the end of last year, as the lender initiated new outsourcing procedures to the mother group. Like all other banks, the player is trying to cut costs and plans to grant as many lei-denominated loans as possible, in order to contract its foreign currency loan portfolio, considering that its foreign currency exposure is 70 percent.
Radu expects deposit interest to decline once liquidity increases on the market, and loan-related costs to slide similarly. Additional liquidity is to come from the cash reserve ratio, a measure which is expected to be approved by the National Bank of Romania.
“We expect interest rates on deposits to decline, leading to a drop in interest rates on loans and a relative rebound in margins. At present, we are working with very low margins, especially on foreign currency loans. The margin is some one percent on foreign currency,” Radu said.
