BCR, the largest Romanian Bank by assets, controlled by the Austrian Erste Group Bank, posted a net profit of RON 494.5 million (EUR 117.7 million) for the first nine months of this year, down by 29.3% on end-September 09, according to BCR Group’s consolidated financial statements.

The drop in profit was caused by higher provision expense due to the tough market conditions heavily impacting BCR’s customers and due to OUG 50 implementation impact on fees, according to the bank.

The net charge with risk provisions for loans and advances totaled RON 1,590.3 million (EUR 378.5 million), which is a 7 percent increase compared to the same period of last year, as mainly SME segment continued to experience cash-flow, liquidity and profitability constraints and the macroeconomic adjustments inevitably affected households’ income level and their spending behavior as well.

“We are taking a prudent approach to our risk positions as the economic environment remains tough” stated Dominic Bruynseels, BCR CEO.

Operating result increased to RON 2,304.4 million (EUR 548.4 million) in the first three quarters 2010 up 3.6% on nine months 2009. The main driver of this improvement was the increase in net interest income up by 7.3 percent to RON 2,886.9 million (EUR 687.1 million) although it was pressured by the lower interest rate environment, increasing competition for quality business and low demand.

The fee and commission net income declined by 3.6 percent year on year, to RON 647.8 million (EUR 154 million) as a result of OUG 50 implementation which reduced fee income and on lower business volumes. The operating result was also impacted by the decrease of the net trading result by 28.7% RON 232 million (EUR 55.2 million) due to a period of RON volatility at the start of the quarter.

Total assets of the bank increased by 1.6 percent to RON 65.57 billion (EUR 15.35 billion) as of September 30th. The volume of aggregate loans to customers portfolio (before provisions) slightly rose by RON 325.9 million (up 0.70%) to RON 46.84 billion (EUR 10.96 billion).

editor@romania-insider.com