Austrian group Raiffeisen Bank International (RBI) made a consolidated net profit of EUR 28 million in Romania in the first quarter of this year, 12% higher compared to the same period of 2015.

The higher profit mainly came from lower risk costs associated with non-performing loans. The group’s risk costs in Romania halved in the first three months of the year, to some EUR 8.1 million.

However, the group expects its risk costs to increase due to the new giving in payment law, which allows mortgage debtors to discharge their debts to banks by giving them the mortgaged assets.

“At the end of the first quarter of 2016, RBI’s Romanian network bank had over EUR 1.3 billion in secured loans to retail customers, around two thirds of which would meet the new law’s criteria. It is currently not possible to accurately estimate the extent to which customers would make use of the option for early settlement. From a current perspective and using first estimates, RBI expects that the new law would have an additional impact in the mid double digit million euro range over the entire period of execution,” reads the RBI quarterly report.

Raiffeisen Bank was the first bank in Romania that decided to increase the down payment for mortgage loans as a reaction to the giving in payment law. Almost all major banks in Romania have announced similar decisions in the past weeks.

editor@romania-insider.com